UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996
Commission File Number 1-8893
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 59-2501059
- --------------------------------- ---------------------------------------
(State of other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
2501 S. Ocean Drive
Hollywood, Florida 33019
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (954) 927-3080
NONE
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by checkmark 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 for 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 [ ]
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
CLASS Outstanding at June 30, 1996
----- -----------------------------
Limited Partnership Units 4,485,504 units
<PAGE>
<TABLE>
<CAPTION>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
BALANCE SHEETS
June 30, September 30,
1996 1995
---------- ----------
(unaudited)
ASSETS
<S> <C> <C>
Cash $ 88,051 $ 83,902
Mortgage notes and other receivables:
Mortgage notes receivable -- 236,153
Other 5,745 435,883
Property held for sale 5,176,871 4,607,661
Other assets 78,421 61,891
---------- ----------
$5,349,088 $5,425,490
========== ==========
LIABILITIES AND EQUITY
Liabilities:
Mortgage payable, bank $1,163,797 $1,010,513
Mortgage payable, general partner 527,248 500,000
Mortgage payable, related party 200,000 --
Accounts payable and accrued
liabilities 1,049,410 840,402
Estimated cost of development
of land and property sold 28,953 14,441
Equity:
Partners' equity, 4,485,504 units
outstanding 2,379,680 3,060,134
---------- ----------
$5,349,088 $5,425,490
========== ==========
See notes to financial statements
<PAGE>
<CAPTION>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED
JUNE 30, 1996 AND 1995
(UNAUDITED)
Three Months Ended Nine Months Ended
June 30, June 30,
--------------------- ----------------------
1996 1995 1996 1995
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $ 12,476 $ 10,666 $ 163,717 $ 67,264
--------- --------- ---------- ----------
Cost and expenses:
Cost of sales 5,089 - 111,299 -
Selling, general and
administrative expenses 151,207 292,086 561,964 742,551
Terminated merger costs - - 70,720 -
Depreciation and
property taxes 29,372 46,496 100,188 94,071
--------- --------- ---------- ----------
Total costs and expenses 185,668 338,582 844,171 836,622
--------- --------- ---------- ----------
Net loss $(173,192) $(327,916) $ (680,454) $ (769,358)
========= ========= ========== ==========
Net loss per unit $ (0.04) $ (0.07) $ (0.15) $ (0.17)
========= ========= ========== ==========
Weighted average number of
units outstanding 4,485,504 4,485,504 4,485,504 4,485,504
========= ========= ========== ==========
See notes to financial statements
<PAGE>
<CAPTION>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
THREE MONTHS AND NINE MONTHS ENDED
JUNE 30, 1996 AND 1995
(UNAUDITED)
Three Months Ended Nine Months Ended
June 30, June 30,
----------- ---------- ---------- ----------
1996 1995 1996 1995
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Cash was received from:
Collections on sales
and receivables $ 12,000 $ 16,671 $ 384,292 $ 144,676
Interest income 376 6,339 7,462 70,523
Sale of utility system - - 432,800 85,800
Other 100 200 6,399 1,706
----------- ---------- ---------- ----------
12,476 23,210 830,953 302,705
----------- ---------- ---------- ----------
Cash was expended for:
Selling, administrative
and property taxes 100,434 263,473 567,285 667,899
Improvements to
property held
for sale 147,452 260,022 611,468 1,432,080
---------- ---------- ---------- ----------
247,886 523,495 1,178,753 2,099,979
---------- ---------- ---------- ----------
Net cash used in
operating activities (235,410) (500,285) (347,800) (1,797,274)
---------- ---------- ---------- ----------
Cash flow from investing
activities:
Purchase of property and
equipment (1,335) - (1,335) (758)
---------- ---------- ---------- ----------
<PAGE>
<CAPTION>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
THREE MONTHS AND NINE MONTHS ENDED
JUNE 30, 1996 AND 1995
(UNAUDITED)
(continued)
Three Months Ended Nine Months Ended
June 30, June 30,
----------- ---------- ---------- ----------
1996 1995 1996 1995
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash flow from financing
activities:
Net borrowings from loan
payable:
Mortgage payable, bank 1 53,491 153,284 1,010,513
Mortgage payable,
general partner - 500,000 - 500,000
Mortgage payable,
related party 200,000 - 200,000 -
---------- ---------- ---------- ----------
Net cash provided by
financing activities 200,001 553,491 353,284 1,510,513
---------- ---------- ---------- ----------
Net increase (decrease) (36,744) 53,206 4,149 (287,519)
in cash
Cash, beginning of period 124,795 202,518 83,902 543,243
---------- ---------- ---------- ----------
Cash end of period $ 88,051 $ 255,724 $ 88,051 $ 255,724
========== ========== ========== ==========
See notes to financial statements
<PAGE>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES
THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
Three Months Ended Nine Months Ended
June 30, June 30,
----------------------- -------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net loss $(173,192) $(327,916) $ (680,454) $(769,358)
--------- --------- ---------- ---------
Adjustments to reconcile net
income to net cash provided
by (used in) operating
activities:
Depreciation 688 - 2,739 -
Provision for doubtful
accounts - (24,250) - (24,250)
Change in assets and
liabilities:
Increase in:
Property held for sale (159,621) (233,194) (569,210) (948,333)
Other assets (17,934) - (17,934)
Accounts payable and
accrued liabilities 236,256 - 236,256 -
Estimated costs of
development of land
and property sold 14,512 - 14,512 -
Decrease in:
Mortgage notes and
other receivables (5,495) (112,456) 666,291 123,420
Other assets (40,994) (100,512) - (64,268)
Accounts payable and
accrued liabilities (61,648) 298,843 - 129,994
Estimated costs of
development of land
and property sold (27,982) (800) - (244,479)
--------- ---------- ----------- ----------
Total adjustments (62,218) (172,369) (332,654) (1,027,916)
--------- ---------- ----------- ----------
Net cash flow used in
operating activities $(235,410) $(500,285) $ (347,800) $(1,797,274)
========= ========= =========== ============
See notes to financial statements.
</TABLE>
<PAGE>
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED
JUNE 30, 1996 AND 1995
(UNAUDITED)
Liquidity and Capital Resources
During the nine months ended June 30, 1996, the Partnership incurred
substantial expenses in the planning and development of its properties in
addition to normal ongoing administrative costs. During the fiscal year ended
September 30, 1995, and during most of the quarter ended December 31, 1995, the
Partnership withheld its properties from sale in anticipation of a business
combination which was being negotiated throughout most of the year, but which
negotiations were terminated in December, 1995. Revenues for the three months
ended December 31, 1995, however, included the net proceeds of $140,000 received
upon the sale of four residential lots, offset in part by by approximately
$70,000 of terminated merger expense; and during the three months ended March
31, 1996, the Partnership received $433,000 in payment of an installment on a
contingent note held in respect of a prior sale of a utility system. Revenues
during the three months ended June 30, 1996 were minimal. The Partnership's
deferral of sales in anticipation of the aforesaid business combination was
discussed in Item 1, "Business", (a) "General Development of Business" contained
the Annual Report of the Partnership on Form 10K for the fiscal year ended
September 30, 1995 (hereinafter the "Incorporated 10K"). An extract from the
Incorporated 10K containing said Items 1 and 2 thereof is annexed to this report
as an Exhibit and is incorporated herein by reference. During the three months
ended June 30, 1996 the Partnership also obtained an additional financing
commitment in the amount of $300,000 from Jack Friedland and an affiliate of
Jack Friedland. Mr Friedland is affiliated with Hasam Realty Limited
Partnership, a general partner of the Partnership. The loan is a term ending
October 31, 1996, at an interest rate of 2% over the prime rate of Union Bank,
secured by a first mortgage lien on a 4.54 acre tract of undeveloped land in
Palm Beach County and a tract of approximately 30 acres of commercially zoned
land in the Crestwood tract described in Item 2 of the Incorporated 10-K. As a
result of the foregoing, the Partnership's cash balances, which had declined to
$84,000 at September 30, 1995 increased to $125,000 at March 31, 1996 and
decreased to $88,051 at June 30, 1996.
The Partnership is committed to the continuing development of phases II
and III of the Crestwood residential tract, as described in Item 2 of the
Incorporated 10K, as the most efficacious manner in which to enhance liquidation
values. Such development would be financed by approximately $930,000 in net
proceeds from a bond issue currently being prepared by the Indian Trail Water
Control District, and would require additional advances to the Partnership under
its financing arrangements with Union Bank ("Bank"). The Partnership has been
advised that Union Bank is prepared to modify existing loan arrangements to
provide as follows:
(a) The loan commitment, of which $1,163,797 was outstanding at June
30, 1996, would be increased from its current level of $2,175,000 to $2,725,000,
and, as so increased, would continue to be secured by a first mortgage on
Crestwood single family building lots;
(b) The increased loan availability of $1,561,203 would be represented
in part by a Bank letter of credit in the amount of $922,000 for the benefit of
the Indian Trail Water Control District, representing the approximate difference
between the projected remaining cost to develop Phases II and III and the net
<PAGE>
proceeds anticipated from the issuance of bonds by the Indian Trail Water
Control District. Of the balance of the financing availability (approximately
$639,203) $550,000 would be available immediately for Phase II and III
development costs;
(c) The maturity date of the loan would be extended from July 1, 1997
to January 31, 1998.
(d) The Bank would waive the previous requirement that certain sales
occur in Phase I of the Crestwood single-family before funds are made available
for development of Phases II and III.
On August 12, 1996, the Partnership executed an agreement with Lennar
Homes, Inc., a prominent South Florida developer, for the purchase of 86 lots in
the Crestwood Tract for an aggregate of $2,451,000. The Partnership received a
letter of credit deposit of $100,000 (which is currently held in escrow and not
available for current use by the Partnership). Lennar has an inspection period
which expires on or about September 25, 1996, after which, if Lennar determines
to proceed, the deposit will become non-refundable and Lennar will be required
to post an additional letter of credit for $390,200 for a total deposit of
$390,200. The agreement, if Lennar elects to proceed, contemplates that all lots
will be taken and paid for over an 18 month period after completion by the
Partnership of development work, which in turn cannot commence until the bond
issue has been completed. Accordingly, such development completion is not
expected until the summer of 1997. Therefore, it is not anticipated that any
additional funds will be received under the Lennar agreement during the balance
of the current fiscal year or during the fiscal year ending September 30, 1997.
Additional Prospective Land Sales
The Partnership has also negotiated several additional sales of land,
all of which are subject to conditions which the Partnership anticipates will be
satisfied. Such anticipated sales are as follows:
(a) The County of Palm Beach has agreed to purchase 19 partially
developed lots for approximately $100,000 and an additional offer to purchase 16
additional lots for $84,000. The first agreement is expected to close in late
September or early October of 1996. Although a firm contract has not yet been
executed for the second sale, the Partnership believes this sale will also occur
with a closing in November or December of 1996.
(b) The Partnership has executed an agreement to sell 4.54 acres in
the Village of Palm Beach for $325,000, with a closing expected in December,
1996. This sale is subject to zoning and site plan approval, but the Partnership
not not anticipate difficulty in obtaining such approvals.
(c) Sale of the Partnership's mortgagee position in a current
foreclosureof a mortgage held by the Partnership having a net carrying value of
$137,614 which the Partnership anticipates will generate approximately $150,000
prior to the the end of the current calendar year.
(d) In order to enhance the value and salability of the Crestwood
Tract, the Partnership has obtained the rezoning of a 14 acre portion of the
multi-family zoned property in the Crestwood Tract to permit the Partnership to
offer such portion for sale as a shopping center site. The Partnership has
executed an agreement to sell this portion to an unaffiliated shopping center
developer ("Purchaser") in potentially four phases. The first phase relates to
an 11.8 acre tract to be sold for $3.00 per square foot (approximately
<PAGE>
$1,542,024 subject to final survey). While certain conditions remain to be
satisfied, the Partnership expects this Phase to close by late November, 1996
and to produce approximately $1,400,000 in net cash after brokerage and
adjustments.
(e) Pursuant to an option held on lots located within Phase I of the
Crestwood Tract, the Partnership anticipates that 3 lots will be sold for
approximate cash proceeds aggregating $90,000 prior to or shortly after the
close of the current fiscal year.
(f) The Partnership has received an offer from the State of Florida to
purchase the balance of the Partnership's undeveloped land in Hernando Country
for $125,000. This sale is projected to close in October of 1996.
During the current fiscal year, and based upon management's judgment
that ordinary operating expenses will not increase, the Partnership anticipates
that cash flow and liquidity requirements will be satisfied by current cash, the
Union Bank financing described above, land sales, contingent utility receipts
described under Item 2, Properties, "Utility Contingent Receipts" in the
Incorporated 10K, and the proceeds of the Indian Trail Water Control District
bonds. However, in the event that the increased Union Bank financing described
above were not to be made available or the Indian Trail Water Control District
bonds are not sold, the Company would not be able to continue dewvelopment of
the Phase II and III portions of the Crestwood Tract, or would have to seek
alternative financing arrangements. There is no assurance that such alternative
financing could be obtained. Further, as above indicated, other sales of land
described above are subject to conditions which might not be satisfied, although
the Partnership has no present knowledge of circumstances which would render
likely the non-satisfaction of such conditions.
Affect of Land Sales on Future Cash Flow
As indicated in Item 2 in the Incorporated 10K, the Partnership has
determined to develop portions of its remaining properties in order to enhance
their ultimate selling price. Such development will continue whether or not the
Partnership continues to liquidate, contingent upon the availability of
financing, as discussed in Item 2, Properties, "Village of Royal Palm Beach". As
indicated under Item 1, "Factors Affecting Future Operations and Distributions"
in the Incorporated 10K, it is unlikely, in view of management's decision to
continue development activities as an aid to the enhancement of ultimate
liquidation proceeds, that distributions to partners will be made during fiscal
1996.
Assuming that the Partnership continues to liquidate, total net cash
flow which might become available for distribution remains unpredictable due to
uncertain conditions in the South Florida real estate market in which the
Partnership's remaining real estate is located, and the competitive factors
described in Item 1, Business, "Competition" of the Incorporated 10K. These
conditions will continue to affect the realizable value of the Partnership's
remaining land, including decisions by parties holding options on the
Partnership's land to exercise such options in whole or in part. The execution
and successful completion of sales contracts described under "Additional
Prospective Land Sales" could have a substantial positive affect on liquidity
and cash flow in the 1997 fiscal year and enable the partnership to resume
payment of liquidating dividends in the latter part of such year.
<PAGE>
Environmental Matters
There are no environmental contingencies in respect of the Partnership
or its properties. Use of all of the Partnership's properties is subject to
compliance with state and county land use regulations relating to environmental
matters, which the Partnership takes into account in considering the values of
its properties.
Results of Operations
The most significant differences in the results of operations between
the nine months ended June 30, 1996 and June 30, 1995 are the inclusion in
revenues for the nine months ended June 30, 1996 of the net proceeds of $140,000
received upon the sale of four residential lots and the inclusion of the cost
thereof in the Cost of Land Sold and approximately $70,000 of terminated merger
costs. Revenues decreased during the three and nine months ended June 30, 1996
(exclusive of the $140,000 sale) as compared to the three and nine months ended
June 30, 1995 due to reductions in interest income and recognized profit on
installment sales. Revenues were minimal in the three months ended June 30, 1996
and June 30, 1995, and will be almost entirely dependent upon sales of the
Partnership's properties in the future.
<PAGE>
PART II - OTHER INFORMATION
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 duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROYAL PALM BEACH COLONY,
LIMITED PARTNERSHIP
By: Stein Management Company, Inc.
Managing General Partner
DATE: August 14, 1996 By: /s/ Irving Cowan
----------------------
Irving Cowan, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 88,051
<SECURITIES> 0
<RECEIVABLES> 5,745
<ALLOWANCES> 0
<INVENTORY> 5,176,871
<CURRENT-ASSETS> 0
<PP&E> 21,843
<DEPRECIATION> 15,065
<TOTAL-ASSETS> 5,349,088
<CURRENT-LIABILITIES> 0
<BONDS> 1,891,045
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,349,088
<SALES> 0
<TOTAL-REVENUES> 163,717
<CGS> 0
<TOTAL-COSTS> 844,171
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (680,454)
<EPS-PRIMARY> (0.15)
<EPS-DILUTED> 0
</TABLE>
