18
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
and Exchange Act of 1934
For The Quarter Ended September 30, 1999
Commission File Number 2-96042
CAPITAL BUILDERS DEVELOPMENT PROPERTIES,
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
California 77-0049671
State or other jurisdiction of I.R.S. Employer
organization Identification No.
1130 Iron Point Road, Suite 170, Folsom, California 95630
(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (916)353-0500
Former name, former address and former fiscal year, if changed since
last year:
4700 Roseville Road, Suite 206, North Highlands, California 95660
(Former Address of Principal executive offices) (Zip Code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or such shorter
period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days.
Yes X No
<TABLE>
PART 1 - FINANCIAL INFORMATION
Capital Builders Development
Properties
(A California Limited Partnership)
BALANCE SHEETS
September December
30, 31,
1999 1998
<S> <C> <C>
ASSETS
Cash and cash equivalents $22,613 $17,206
Restricted cash 25,650 - - - - -
Accounts receivable, net 69,519 68,742
Investment property, held for sale at
September 30, 1999 at carrying value,
which is less than net realizable
value, net of accumulated depreciation
and amortization of $1,470,519 and
$1,404,343 at September 30, 1999 and
December 31, 1998, respectively 4,016,211 3,727,709
Lease commissions, net of accumulated
amortization of $107,412 and $99,899
at September 30, 1999, and December
31, 1998, respectively 76,708 34,260
Other assets, net of accumulated
amortization of $67,725 and
$43,372 at September 30, 1999, and
December 31, 1998, respectively 81,040 53,389
Total assets $4,291,741 $3,901,306
LIABILITIES AND PARTNERS' (DEFICIT) EQUITY
Notes payable $3,847,782 $3,574,944
Loan payable to affiliate 87,280 24,000
Accounts payable and accrued
liabilities 365,757 87,929
Tenant deposits 43,359 29,043
Total liabilities $4,344,178 $3,715,916
Commitments and contingencies
Partners' (Deficit) Equity:
General partner (58,348) (55,970)
Limited partners 5,911 241,360
Total partners' (deficit) equity ($52,437) $185,390
Total liabilities and
partner's (deficit) equity $4,291,741 $3,901,306
See accompanying notes to the financial statements.
</TABLE>
<TABLE>
Capital Builders
Development Properties
(A California Limited
Partnership)
STATEMENTS OF
OPERATIONS
THREE AND NINE MONTHS
ENDED SEPTEMBER 30,
<CAPTION>
1999 1998
Three Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
<S> <C> <C> <C> <C>
Revenues
Rental and other
income $153,801 $403,144 $166,667 $516,465
Interest income 164 1,086 105 265
Total revenues 153,965 404,230 166,772 516,730
Expenses
Operating expenses 35,258 102,308 39,692 117,817
Repairs and
maintenance 18,248 63,392 20,216 61,327
Property taxes 18,768 45,282 13,807 42,105
Interest 98,926 266,323 85,482 253,199
General and
administrative 19,038 66,711 19,477 69,184
Depreciation and
amortization 10,329 98,041 55,627 170,867
Total expenses 200,567 642,057 234,301 714,499
Net loss (46,602) (237,827) (67,529) (197,769)
Allocated to general
partners (466) (2,378) (675) (1,977)
Allocated to limited
partners ($46,136) ($235,449) ($66,854) ($195,792)
Net loss per limited
partnership unit ($3.35) ($17.08) ($4.85) ($14.20)
Average units
outstanding 13,787 13,787 13,787 13,787
See accompanying notes to the financial statements.
</TABLE>
<TABLE>
Capital Builders
Development Properties
(A California Limited
Partnership)
STATEMENTS OF CASH
FLOWS
THREE AND NINE MONTHS
ENDED SEPTEMBER 30,
<CAPTION>
1999 1998
Three Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
<S> <C> <C> <C> <C>
Cash flows from
operating activities:
Net loss ($46,602) ($237,827) ($67,529) ($197,769)
Adjustments to
reconcile net loss to
cash flows used in
operating activities:
Depreciation and
amortization 10,329 98,041 55,627 170,867
Changes in assets and
liabilities
(Increase)/Decrease
in accounts receivable (8,589) (777) (5,874) 2,033
Increase in leasing
commissions (8,087) (49,961) (1,092) (1,092)
(Increase)/Decrease
in other assets (3,786) (4,887) 1,598 3,260
Increase in accounts
payable and accrued
liabilities 79,645 92,153 24,464 1,912
Increase/(Decrease)
in tenant deposits 3,378 14,316 1,104 (9,594)
Net cash provided
by/(used in)
operating
activities 26,288 (88,942) 8,298 (30,383)
Cash flows from
investing activities:
Improvements to (135,256) (169,003) - - - - (1,587)
investment properties
Net cash used in
investing
activities (135,256) (169,003) - - - - (1,587)
Cash flows from
financing activities:
Payments on notes &
loan payables (300,625) (321,179) (9,721) (208,506)
Proceeds from notes &
loan payables 461,993 657,297 - - - - 290,000
Payment of loan fees (35,532) (47,116) - - - - (13,098)
Net cash provided
by/(used in
financing
activities 125,836 289,002 (9,721) 68,396
Net Increase/(Decrease)
in cash 16,868 31,057 (1,423) 36,426
Cash, beginning of
period 31,395 17,206 40,159 2,310
Cash, end of period $48,263 $48,263 $38,736 $38,736
Supplemental Disclosure:
Cash paid for interest $98,926 $266,323 $85,482 $253,199
Non cash and financing
activity:
Capital
Improvements financed
through accounts payable
and accrued liabilities $185,675 $185,675 - - - - - - - -
See accompanying notes to the financial statements.
</TABLE>
Capital Builders Development Properties
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND
ORGANIZATION
A summary of the significant accounting policies applied in the
preparation of the accompanying financial statements follows:
Basis of Accounting
The financial statements of Capital Builders Development Properties
(The "Partnership") are prepared on the accrual basis and therefore
revenue is recorded as earned and costs and expenses are recorded as
incurred.
Organization
Capital Builders Development Properties, a California Limited
Partnership, is owned under the laws of the State of California.
The Managing General Partner is Capital Builders, Inc., a California
corporation (CB).
The Partnership is in the business of real estate development and is
not a significant factor in its industry. The Partnership's
investment properties are located near major urban areas and,
accordingly, compete not only with similar properties in their
immediate areas but with hundreds of properties throughout the urban
areas. Such competition is primarily on the basis of locations,
rents, services and amenities. In addition, the Partnership
competes with significant numbers of individuals or organizations
(including similar companies, real estate investment trusts and
financial institutions) with respect to the purchase and sale of
land, primarily on the basis of the prices and terms of such
transactions.
Effective January 1999, the Partnership adopted SOP 98-1, Accounting
for the Costs of Computer Software Developed or Obtained for Internal
Use. SOP 98-1 provides guidance on accounting for the costs of
computer software developed or obtained for internal use. The
adoption of SOP 98-1 did not have a material impact on the
Partnership's financial statements.
Effective January 1999, the Partnership adopted SOP 98-5, Reporting
on the Costs of Start-Up Activities. SOP 98-5 provides guidance on
the financial reporting of start-up costs and organization costs.
The adoption did not have a material impact on the Partnership's
financial statements.
Investment Properties
On July 1, 1999, the Partnership's investment property was
reclassified as a long-lived asset to be disposed of and is
currently listed for sale. Assets to be disposed of are reported at
the lower of the carrying amount or fair value less cost to sell.
Subsequent revisions in estimates of fair value less cost to sell
are reported as adjustments to the carrying amount, provided that
the carrying amount does not exceed the initial carrying amount
before an adjustment was made to reflect the decision to sell the
asset. As of July 1, 1999, the fair value of the Partnership's
investment property less cost to sell exceeded the carrying amount.
Therefore, no adjustment was made to the carrying amount.
The Partnership's investment property consists of commercial land,
buildings and leasehold improvements that are carried net of
accumulated depreciation. Depreciation is provided for in amounts
sufficient to relate the cost of depreciable assets to operations
over their estimated service lives of three to forty years. The
straight-line method of depreciation is followed for financial
reporting purposes. Due to the Partnership's investment property
being reclassified as a long lived asset to be disposed of,
depreciation was not recorded during the third quarter of 1999.
Other Assets
Included in other assets are loan fees, which are amortized over the
life of the related note.
Lease Commissions
Lease commissions are no longer amortized over the related lease
terms due to being an intangible directly related to the investment
property.
Income Taxes
The Partnership does not provide for income taxes since all income
or losses are reported separately on the individual partners' tax
returns.
Revenue Recognition
Rental income is recognized on a straight-line basis over the life
of the lease, which may differ from the scheduled rental payments.
Net Loss per Limited Partnership Unit
The net loss per Limited Partnership unit is computed based on the
weighted average number of units outstanding during the quarter
ended September 30 of 13,787 in 1999 and 1998.
Statement of Cash Flows
For purposes of the statements of cash flows, the Partnership
considers all short-term investments with a maturity, at date of
purchase, of three months or less to be cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
NOTE 2 - LIQUIDITY
In November 1998, one of the investment property's major office
tenants, occupying 12,052 square feet, filed Chapter 11 Bankruptcy
and vacated its suites. Although the tenant's lease does not expire
until January 31, 2001, it is unlikely that any future collections
will be received on the lease.
The loss of this tenant has had a significant negative impact on the
Partnership's cash flow. During and subsequent to the quarter ended
September 30, 1999, Management was successful in re-leasing 11,628
square feet of office space and 7,020 of industrial space which also
had become vacant during 1998. Additionally, Management was
successful in leasing 6,424 square feet of the 9,424 square foot pad
building. The pad building is currently under construction, with an
anticipated completion date of December 1999.
The additional lease up of Plaza de Oro's existing Phase I and new
Phase II pad building has increased the project's overall occupancy
to 85%. This additional lease-up has improved the Partnership's
ability to meet current year obligations, but additional leasing is
still required to fully meet its obligations.
During 1999, Management secured a $150,000 interim loan to fund 1999
lease-up costs and a portion of operating expenses in excess of cash
provided by operations. Additionally, the General Partner provided
an affiliate loan to cover additional operating expenses. During
the quarter ended September 30, 1999, Management also obtained
construction loans totaling $1,313,000 to cover the development
costs of Phase II's 9,424 square foot pad building.
Due to the property approaching a stabilized occupancy, Management
listed the property for sale with an independent brokerage firm on
July 1, 1999. The estimated sales proceeds are projected to be in
excess of current obligations, but there are no offers pending or
guaranteed sales price.
NOTE 3 - RELATED PARTY EXPENSE REIMBURSEMENT AND FEE ARRANGEMENT
The Managing General Partner (Capital Builders, Inc.) and the
Associate General Partners are entitled to reimbursement of expenses
incurred on behalf of the Partnership and certain fees from the
Partnership. These fees include: a property management fee up to 6%
of gross revenues realized by the Partnership with respect to its
properties; a subordinated real estate commission of up to 3% of the
gross sales price of the properties; and a subordinated 25% share of
the Partnership's distributions of cash from sales or refinancing.
The property management fee currently being charged is 5% of gross
rental revenues collected.
All acquisition fees and expenses, all underwriting commissions, and
all offering and organizational expenses which can be paid are
limited to 20% of the gross proceeds from sales of Partnership units
provided the Partnership incurs no borrowing to develop its
properties. However, these fees may increase to a maximum of 33% of
the gross offering proceeds based upon the total acquisition and
development costs, including borrowing. Since the formation of the
Partnership, 27.5% of these fees were paid to the Partnership's
related parties, leaving a remaining maximum of 5.5% ($379,143) of
the gross offering proceeds. The remaining fees would not be
payable based on the current listing price of the assets to be
disposed of.
The total management fees paid to the Managing General Partner were
$-0- and $7,960 for the nine months ended September 30, 1999 and
1998, respectively, while total reimbursement of expenses was
$67,584 and $63,162, respectively. The Partnership has accrued
$63,354 of management fees and cost reimbursements as of the period
ended September 30, 1999.
NOTE 4 - INVESTMENT PROPERTIES
The components of the investment property account, are as follows:
September 30, December 31,
1999 1998
Land $1,353,177 $1,353,177
Building and Improvements 3,571,089 3,289,420
Tenant Improvements 562,464 489,455
Investment properties, at cost 5,486,730 5,132,052
Less: accumulated depreciation
and amortization (1,470,519) (1,404,343)
Investment property, net $4,016,211 $3,727,709
NOTE 5 - LOAN PAYABLE TO AFFILIATE
The loan payable at September 30, 1999 and December 31, 1998
represents funds advanced to the Partnership from Capital Builders,
Inc. (General Partner). These funds were utilized to cover negative
cash flow from operations. The loan bears interest at approximately
the same rate charged to the Partnership by a bank for other
borrowings (9.25% as of September 1999) and is payable upon demand.
NOTE 6 - NOTES PAYABLE
Notes Payable consist of the following at:
Sept. 30, Dec. 31,
1999 1998
Mini-permanent loan with a fixed interest
rate of 9.25%, requiring monthly
principal and interest payments of
$28,689, which is sufficient to amortize
the loan over 25 years. The loan is due
April 1, 2002. The note is
collateralized by a First Deed of Trust
on the land, buildings and improvements,
and is guaranteed by the General Partner. $3,253,766 $3,284,944
Land loan of $290,000 due May 1, 1999,
which had been extended to September 1,
1999. The note required interest only
payments and beared interest at 12.5%.
The note was secured by Plaza de Oro's
separately parceled Phase II land. - 0 - 290,000
Construction loan in the amount of
$1,123,000, which accrues interest at
Prime +1% (Prime as of September 30, 1999
is 8.25%) and is due August 19, 2000.
Interest accrues monthly on the
outstanding balance of the cumulative
construction loan draws. This loan is
secured by a First Deed of Trust on Phase
II land and improvements, and is
guaranteed by the General Partner. $254,016 - 0 -
A construction loan in the amount of
$190,000 due March 1, 2001. The note
requires interest only payments and bears
interest at 13.5%. The note is a Second
Deed of Trust on Phase II land and
improvements. A restricted cash reserve
balance is maintained to service monthly
payments until October 31, 2000. The
restricted cash balance as of September
30, 1999 is $25,650. $190,000 - 0 -
Interim tenant improvement/leasing
commission loan of $150,000 due March 1,
2000. The note requires interest only
payments and bears interest at 15%. The
note is secured by a Second Deed Of Trust
on Plaza de Oro's Phase I land and
improvements. 150,000 - - - -
Total Notes Payable $3,847,782 $3,574,944
Scheduled principal payments during 1999, 2000, 2001, and 2002 are
$265,005, $386,236, $50,699, and $3,145,842, respectively.
NOTE 7 - LEASES
The Partnership leases its properties under long-term noncancelable
operating leases to various tenants. The facilities are leased
through agreements for rents based on the square footage leased.
Minimum annual base rental payments under these leases for the years
ending December 31 are as follows:
1999 $481,985
2000 552,411
2001 505,290
2002 226,915
Thereafter 56,100
Total $1,822,701
NOTE 8 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Partnership
in estimating it's fair value disclosures for financial instruments.
Notes payable
The fair value of the Partnership's notes payable are estimated
based on the quoted market prices for the same or similar
issues or on the current rates offered to the Partnership for
debt of the same remaining maturities.
The estimated fair values of the Partnership's financial instruments
are as follows:
September 30, 1999 December 31, 1998
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
Liabilities:
Loan payable
to affiliate $87,280 $87,280 $24,000 $24,000
Note payable $3,253,766 $3,253,766 $3,284,944 $3,284,944
Note payable - - - - - - - - $290,000 $290,000
Note payable $254,016 $254,016 - - - - - - - -
Note payable $190,000 $190,000 - - - - - - - -
Note Payable $150,000 $150,000 - - - - - - - -
NOTE 9 - COMMITMENTS AND CONTINGENCIES
The Partnership has entered into contracts with Brown Construction
(General Contractor) to develop Plaza de Oro's Phase II pad building.
The total contract amount is $603,780, of which $185,675 has been
incurred as of September 30, 1999.
The Partnership is involved in litigation primarily arising in the
normal course of its business. In the opinion of management, the
Partnership's recovery or liability, if any, under any pending
litigation would not materially affect its financial condition or
operations.
NOTE 10 - PROSPECTIVE ACCOUNTING PRONOUNCEMENTS
Accounting for Derivative Instruments and Hedging Activity
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 as amended is
effective for all fiscal quarters of fiscal years beginning after
June 15, 2000. Management believes that the adoption of SFAS No. 133
will not have a material impact on the financial statements due to
the Partnership's inability to invest in such instruments as stated
in the Partnership agreement.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Year 2000 Issue
The potential impact of the Year 2000 issue on the real estate
industry could be material, as virtually every aspect of the industry
and processing of transactions will be affected. Due to the size of
the task facing the real estate industry, the Partnership may be
adversely affected by the problem, depending on whether it and the
entities with which it does business address this issue successfully.
The impact of Year 2000 issues on the Partnership will then depend
not only on corrective actions that the Partnership takes, but also
on the way in which Year 2000 issues are addressed by governmental
agencies, businesses and other third parties that provide services or
data to, or received services or data from, the Partnership, or whose
financial condition or operational capability is important to the
Partnership.
The Partnership's State of Readiness
The Partnership engages the services of third-party software vendors
and service providers for substantially all of its electronic data
processing. Thus, the focus of the Partnership is to monitor the
progress of its primary software providers toward Year 2000
readiness.
The Partnership's Year 2000 program has been divided into phases, all
of them common to all sections of the process: (1) inventorying date-
sensitive information technology and other business systems; (2)
assigning priorities to identified items and assessing the efforts
required for Year 2000 readiness of those determined to be material
to the Partnership; (3) upgrading or replacing material items that
are determined not to be Year 2000 compliant and testing material
items; (4) assessing the status of third party risks; and (5)
designing and implementing contingency and business continuation
plans.
In the first phase, the Partnership conducted a thorough evaluation
of current information technology systems and software. Non-
information technology systems such as climate control systems,
elevators and security equipment has also been surveyed.
In phase two of the process, results from the inventory were assessed
to determine the Year 2000 impact and what actions were required to
achieve Year 2000 readiness. For the Partnership's internal systems,
application upgrades of software are needed. The Partnership has
opted for a course of action that will result in upgrading or
replacing all critical internal systems.
The third phase includes the upgrading, replacement and/or retirement
of systems, and testing. This stage of the Year 2000 process is
ongoing and is scheduled to be completed during the fourth quarter of
1999.
The fourth phase, assessing third party risks, includes the process
of identifying and prioritizing critical suppliers and customers at
the direct interface level. This evaluation includes communicating
with the third parties about their plans and progress in addressing
Year 2000 issues. The Partnership's management has identified
critical third parties and developed a letter inquiring about their
company's Year 2000 program. These letters were sent in April, 1999.
Responses received to date indicate all parties expect to be Year
2000 ready prior to December 31, 1999. A second letter has been sent
to those parties who did not respond to the first letter.
Contingency Plan
The final phase of the Partnership's Year 2000 program relates to
contingency plans. The Partnership maintains contingency plans in
the normal course of business designed to be deployed in the event of
various potential business interruptions. The Partnership's
contingency plan includes maintaining hard copies of tenant leases,
vendor contracts, and accounting records to ensure the maintenance of
its accounting system and to help facilitate the collection of rents
and payments to vendors during computer interruptions.
Costs
As the Company relies upon third-party software vendors and service
providers for substantially all of its electronic data processing,
the primary cost of the Year 2000 Project has been and will continue
to be the reallocation of internal resources and, therefore, does not
represent incremental expense to the Partnership.
Risks
Failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities
or operations. The Partnership believes that, with the
implementation of new or upgraded business systems and completion of
the Year 2000 Project as scheduled, the possibility of significant
interruptions of normal operations due to the failure of those
systems will be reduced. However, the Partnership is also dependent
upon the power and telecommunications infrastructure within the
United States. The most reasonably likely worst case scenario would
be that the Partnership may experience disruption in its operations
if any of these third-party suppliers reported a system failure.
Although the Partnership's Year 2000 Project will reduce the level of
uncertainty about the readiness of its material third-party
providers, due to the general uncertainty over Year 2000 readiness of
these third-party suppliers, the Partnership is unable to determine
at this time whether the consequences of Year 2000 failures will have
a material impact.
Liquidity and Capital Resources
The Partnership commenced operations on September 19, 1985 upon the
sale of the minimum number of Limited Partnership Units. The
Partnership's initial source of cash was from the sale of Limited
Partnership Units. Through the offering of Units, the Partnership
has raised $6,893,500 (represented by 13,787 Limited Partnership
Units). Cash generated from the sale of Limited Partnership Units
has been used to acquire land and for the development of a mixed use
commercial project and a 60% interest in a commercial office
project.
During the nine months ended September 30, 1999, a net increase in
cash of $31,057 was recognized by the Partnership. This was the
result of net cash provided by financing in the amount of $289,002,
which was offset by negative cash flow from operations of $88,942,
net cash used for Phase I tenant improvements ($48,755) and net cash
used for Phase II building improvements ($120,248).
The negative cash flow from operations is primarily the result of the
project's vacant space and the leasing commissions paid during the
second and third quarters to lease up a portion of its vacant space.
In order to temporarily solve the Partnership's cash flow problem,
Management obtained a 10 month, $150,000 interim loan during the
second quarter 1999. This loan has allowed the Partnership to pay
for Phase I lease-up costs and 1999 operating deficits.
For the period ended and subsequent to September 30, 1999, Management
was successful in re-leasing 11,628 square feet of office space,
7,020 square feet of industrial space, and 6,424 square feet of the
pad building, which is currently under construction. This lease up
will continue to decrease future net losses from operations, but it
is still necessary for the property to continue to lease up in order
for the Partnership to meet its current obligations.
During the third quarter 1999, Management began the development of
the remaining pad with a 9,424 square foot office/retail building.
Lease terms for this building have been finalized with a tenant
requiring approximately 6,424 square feet. Construction loans
totaling $1,313,000 have also been obtained during the third quarter
of 1999. The initial proceeds from these loans were used to pay off
the $290,000 Phase II land loan and paid the initial development
costs of the Phase II building. The remaining proceeds should be
sufficient to pay for the remaining construction and lease-up costs
for the Phase II pad building.
Plaza de Oro's Phase I and Phase II were listed for sale on July 1,
1999 with an independent brokerage firm. The project's current
asking price less costs to sell is in excess of the carrying value of
the property and the Partnership's current obligations. Presently,
there are no pending offers or identified buyers; therefore, the
final sales prices cannot be determined at this time.
Results of Operations
During the nine months ended September 30, 1999 as compared to
September 30, 1998, the Partnership's total revenues decreased by
$112,500 (21.8%), while its expenses decreased by $72,442 (10.1%),
all resulting in an increase in net loss of $40,058.
The decrease in revenues is primarily due to one of Plaza de Oro's
major office tenants, who had occupied 12,052 square feet, filing
Chapter 11 Bankruptcy during the fourth quarter of 1998.
Total expenses decreased for the nine months ended September 30, 1999
as compared to September 30, 1998, due to the net effect of:
a) $15,509 (13.2%) decrease in operating expenses due to lower
management fees and utility costs associated with vacant space during
1999;
b) $13,124 (5.2%) increase in interest costs due to the additional
funds borrowed for operating deficits and the Phase II construction
loans; and
c) $72,826 (42.6%) decrease in depreciation and amortization
primarily due to depreciation no longer being taken as of the third
quarter 1999, as the Partnership's property has been reclassified as
a long lived asset to be disposed of. Additionally, fewer tenant
improvements were in place during 1999 as compared to 1998.
During the third quarter ended September 30, 1999 as compared to
September 30, 1998, revenues decreased by $12,807 (7.7%), while
expenses decreased by $33,734 (14.4%). The decrease in revenue is
due to the major office tenant filing for Bankruptcy as previously
discussed.
Total expenses decreased for the third quarter ended September 30,
1999 as compared to September 30, 1998 due to the net effect of:
a) $4,434 (11.2%) decrease in operating expenses due to lower
management fees and utility costs associated with vacant space during
1999;
b) $13,444 (15.7%) increase in interest costs due to additional funds
borrowed for operating deficits and the Phase II construction loans;
and
c) $45,298 (81.4%) decrease in depreciation due to depreciation no
longer taken for long live assets to be disposed of.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
The Partnership does not have a material market risk due to financial
instruments held by the Partnership. The Partnership's only variable
note instrument consists of a loan payable to affiliate in the amount
of $87,280.
PART II - OTHER INFORMATION
Item 1 - Legal Proceeding
The Partnership is not a party to, nor is
the Partnership's property the subject of, any
material pending legal proceedings.
Item 2 - Not applicable
Item 3 - Not applicable
Item 4 - Not applicable
Item 5 - Not applicable
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has dully caused this report to be signed on its
behalf by the undersigned, hereunto dully authorized.
CAPITAL BUILDERS DEVELOPMENT PROPERTIES
a California Limited Partnership
By: Capital Builders, Inc.
Its Corporate General Partner
Date: November 10, 1999 By:
Michael J. Metzger
President
Date: November 10, 1999 By:
Kenneth L. Buckler
Chief Financial Officer
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