UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-16024
EASTPOINT MALL LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 13-3314601
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
3 World Financial Center, 29th Floor, NY, NY
Attention: Andre Anderson 10285
(Address of principal executive offices) (Zip code)
(212) 526-3237
(Registrant's telephone number, including area 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 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
Consolidated Balance Sheets
September 30, December 31,
Assets 1995 1994
Real estate, at cost:
Land $ 4,166,230 $ 4,166,230
Building 43,241,060 43,241,060
Improvements 6,723,080 6,354,635
54,130,370 53,761,925
Less accumulated
depreciation and amortization (11,300,660) (9,997,420)
42,829,710 43,764,505
Cash 5,667,420 5,661,047
Restricted cash 2,100,000 2,100,000
Cash-held in escrow 283,490 370,993
Accounts receivable,
net of allowance of $71,103 in
1995 and $294,059 in 1994 1,007,541 639,739
Deferred rent receivable 320,604 257,901
Note receivable 816,000 816,000
Deferred charges, net of
accumulated amortization of
$375,103 in 1995 and $230,023
in 1994 1,561,165 1,671,299
Prepaid expenses 508,934 343,516
Total Assets $ 55,094,864 $ 55,625,000
Liabilities, Minority
Interest and Partners' Capital
Liabilities:
Accounts payable and
accrued expenses $ 163,334 $ 169,474
Mortgage loan payable 51,000,000 51,000,000
Accrued interest payable 340,425 340,425
Due to affiliates 41,000 40,251
Security deposits payable 57,573 59,656
Deferred income 432,615 417,989
Distribution payable 288,826 288,826
Total Liabilities 52,323,773 52,316,621
Minority interest (370,447) (328,580)
Partners' Capital (Deficit):
General Partner (82,852) (77,899)
Limited Partners (4,575
limited partnership units
authorized, issued and
outstanding) 3,224,390 3,714,858
Total Partners' Capital 3,141,538 3,636,959
Total Liabilities,
Minority Interest and
Partners' Capital $ 55,094,864 $ 55,625,000
Consolidated Statements of Operations
Three months ended Nine months ended
September 30, September 30,
Income 1995 1994 1995 1994
Rental income $ 1,978,770 $ 1,954,614 $ 5,967,365 $ 5,781,173
Escalation income 872,640 1,005,187 2,560,376 2,494,622
Interest income 99,471 62,300 296,069 187,481
Miscellaneous income 42,442 72,215 76,948 129,090
Total Income 2,993,323 3,094,316 8,900,758 8,592,366
Expenses
Interest expense 1,021,275 1,034,586 3,050,197 3,060,348
Property operating
expenses 772,035 919,005 2,300,099 2,422,028
Depreciation and
amortization 486,622 460,858 1,448,320 1,417,536
Real estate taxes 144,137 144,200 432,537 419,223
General and
administrative 54,405 58,778 142,850 148,301
Total Expenses 2,478,474 2,617,427 7,374,003 7,467,436
Income before minority
interest 514,849 476,889 1,526,755 1,124,930
Minority interest (48,613) (47,693) (145,963) (112,459)
Net Income $ 466,236 $ 429,196 $ 1,380,792 $ 1,012,471
Net Income Allocated:
To the General Partner $ 4,662 $ 4,292 $ 13,808 $ 10,125
To the Limited Partners 461,574 424,904 1,366,984 1,002,346
$ 466,236 $ 429,196 $ 1,380,792 $ 1,012,471
Per limited partnership unit
(4,575 outstanding) $100.89 $92.88 $298.79 $219.09
Consolidated Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1995
Limited General
Partners Partner Total
Balance at December 31, 1994 $3,714,858 $(77,899) $3,636,959
Net income 1,366,984 13,808 1,380,792
Distributions (1,857,452) (18,761) (1,876,213)
Balance at September 30, 1995 $3,224,390 $(82,852) $3,141,538
Consolidated Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income $1,380,792 $1,012,471
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest 145,963 112,459
Depreciation and amortization 1,448,320 1,417,536
Increase (decrease) in cash arising
from changes
in operating assets and liabilities:
Cash-held in escrow 87,503 68,996
Accounts receivable (367,802) (395,671)
Deferred rent receivable (62,703) (82,099)
Deferred charges (34,946) (25,186)
Prepaid expenses (165,418) (188,033)
Accounts payable and
accrued expenses (6,140) (943,745)
Accrued interest payable 0 332,031
Due to affiliates 749 (254,627)
Deferred income 14,626 42,622
Security deposits payable (2,083) 2,451
Net cash provided by operating activities 2,438,861 1,099,205
Cash Flows from Investing Activities:
Additions to real estate (368,445) (256,853)
Purchase of mortgage loan receivable 0 (1,187,500)
Net cash used for investing activities (368,445) (1,444,353)
Cash Flows from Financing Activities:
Deferred charges 0 (530,552)
Distributions paid (1,876,213) (288,826)
Distributions paid-minority interest (187,830) (28,916)
Net cash used for financing activities (2,064,043) (848,294)
Net increase (decrease) in cash 6,373 (1,193,442)
Cash at beginning of period 5,661,047 6,724,590
Cash at end of period $5,667,420 $5,531,148
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period
for interest $3,050,197 $2,728,317
Notes to the Consolidated Financial Statements
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1994 consolidated financial
statements within Form 10-K.
The unaudited consolidated financial statements include all adjustments which
are, in the opinion of management, necessary to present a fair statement of
financial position as of September 30, 1995 and the results of operations and
cash flows for the nine months ended September 30, 1995 and 1994 and the
statement of changes in partners' capital (deficit) for the nine months ended
September 30, 1995. Results of operations for the periods are not necessarily
indicative of the results to be expected for the full year.
Certain prior year amounts have been reclassified in order to conform to the
current year's presentation.
No significant events have occurred subsequent to fiscal year 1994, and no
material contingencies exist which require disclosure in this interim report
per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Part I, Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
At September 30, 1995 the Partnership had a cash balance of $5,667,420,
virtually unchanged from $5,661,047 at December 31, 1994. The Partnership
maintains a restricted cash account representing a loan reserve of $2,100,000
as established under the terms of its first mortgage. Of this balance, $1.1
million represents a portion of the proceeds of the Partnership's first
mortgage loan which was withheld pending resolution of the Consolidated dispute
(see "Ames Parcel and Consolidated Release Agreement" below). The remaining
balance constitutes additional collateral which can be used for capital
improvements and leasing commissions. Cash-held in escrow totaled $283,490 at
September 30, 1995 compared with $370,993 at December 31, 1994. The decrease
is attributable to the full payment of real estate taxes for the 1995-1996 tax
year during the third quarter of 1995 partially offset by additional fundings
made to the real estate tax escrow and insurance escrow as specified under the
term s of the Partnership's first mortgage loan.
Prepaid expenses increased from $343,516 at December 31, 1994 to $508,934 at
September 30, 1995, primarily due to the full payment of real estate taxes for
the 1995-1996 tax year during the third quarter of 1995.
As of the filing date of this report, the following tenants, or their parent
corporations, at the Mall have filed for protection under the U.S. Federal
Bankruptcy Code.
Tenant Square Footage Leased
Merry Go 'Round 4,130
No Name 2,000
Marianne 3,750
Marianne Plus 3,000
Jean Nicole* 4,700
Jeans West 2,400
*currently expect tenant to vacate in early 1996
These tenants currently occupy 19,980 square feet, or approximately 6% of the
Mall's leasable area (exclusive of anchor tenants), and at this point their
plans to remain at the Mall remain uncertain. Pursuant to the provisions of
the U.S. Federal Bankruptcy Code, these tenants may, with court approval,
choose to reject or accept the terms of their leases. Should any of these
tenants exercise the right to reject their leases, this could have an adverse
impact on cash flow generated by the Mall and revenues received by the
Partnership.
Ames Parcel and Consolidated Release Agreement
On April 26, 1990, Ames Department Store, Inc. ("Ames") filed for bankruptcy
protection under Chapter 11 of the Federal Bankruptcy Code. On December 18,
1992, the Bankruptcy Court confirmed a Plan of Reorganization for Ames (the
"Plan") pursuant to which Ames has assumed its lease at the Mall. Land leased
to Ames by the Owner Partnership together with the building constructed thereon
by Ames secured a deed of trust held by Consolidated Fidelity Life Insurance
Company ("Consolidated"), as successor to Southwestern Life Insurance Company.
By filing its bankruptcy petition, Ames was in default under the Consolidated
deed of trust.
On July 14, 1994, the Partnership executed a Compromise and Mutual Release (the
"Release Agreement") with Consolidated. Pursuant to the terms of the Release
Agreement, the Partnership paid Consolidated $2 million in return for the
assignment of the deed of trust and related Ames promissory note, as well as
Consolidated's claim in the Ames bankruptcy case relating to such promissory
note. Consolidated's total claims, in the face amount of approximately $2.3
million, consist of the balances due on the Ames promissory note, totaling $1.7
million, and another promissory note. Pursuant to the Release Agreement, the
Partnership is entitled to any recovery based on the Ames promissory note;
Consolidated will receive any recovery on the other note. The trustee in
bankruptcy in the Ames bankruptcy case has entered an objection to this claim;
however, the Partnership is pursuing legal action to collect the claimed
amount. The Partnership recorded a note receivable in the amount of $816,000 ,
representing the amount the Partnership originally anticipated receiving from
the claim, although, due to the subsequent filing of numerous claims by
potential creditors, it is uncertain whether all claims will be paid to the
extent originally anticipated.
The Partnership's mortgage lender withheld certain of the proceeds of the first
mortgage loan until the Partnership resolved the Consolidated dispute. It is
anticipated that these funds, which total $1.1 million, will be released to the
Partnership in 1996 when the first mortgage secured by the Ames parcel,
retained by the Partnership pending a final decision on Consolidated's claims,
is extinguished.
In anticipation of the execution of the Release Agreement, the Partnership
reinstated quarterly distributions to the limited partners, commencing with the
second quarter of 1994. On June 7, 1995, the Partnership paid a special cash
distribution, funded by its cash reserves, in the amount of $218.50 per unit.
Distributions for the third quarter of 1995 will be paid in the amount of
$62.50 per unit on or about November 15, 1995. The level, timing, and amount
of future distributions will be reviewed on a quarterly basis after an
evaluation of the Mall's performance and the Partnership's current and future
cash needs.
Results of Operations
For the three and nine months ended September 30, 1995, the Partnership
recognized net income of $466,236 and $1,380,792, respectively, compared to
$429,196 and $1,012,471 for the corresponding periods in 1994. The increase in
net income is primarily attributable to increases in rental and interest income
and a decrease in property operating expense.
The Partnership generated total income for the three and nine months ended
September 30, 1995 of $2,993,323 and $8,900,758, respectively, compared with
total income of $3,094,316 and $8,592,366 for the corresponding periods in
1994. Rental income increased for both the three and nine-month periods
reflecting lease renewals at higher rates, new food court tenants and higher
income from temporary tenants. Escalation income represents the income
received from Mall tenants for their proportionate share of common area
maintenance and real estate tax expenses. Escalation income decreased for the
three-month period, in comparison to a year earlier, mainly due to an
adjustment made to the recovery rate for common area maintenance fees during
the third quarter of 1994. Escalation income for the nine-month period
increased primarily as a result of an increase in reimbursable expenses which
are charged back to tenants.
Interest income increased for the three and nine months ended September 30,
1995 in comparison to the comparable periods in 1994 due primarily to an
increase in interest rates earned on the Partnership's invested cash.
For the three and nine months ended September 30, 1995, total expenses were
$2,478,474 and $7,374,003, respectively, compared with $2,617,427 and
$7,467,436 for the comparable periods in 1994. The decrease is primarily
attributable to a decrease in property operating expenses, reflecting decreases
in promotional expenses and professional fees as well as a reduction in bad
debt expense. The decrease in property operating expense was partially offset
by an increase in insurance expense due to higher insurance premiums.
Total Mall tenant sales (exclusive of anchor tenants) were $38,708,000 for the
eight months ended August 31, 1995, up 3.8% from $37,278,000 for the eight
months ended August 31, 1994. Sales for tenants (exclusive of anchor tenants)
which operated at the Mall for each of the last two years were $36,576,000 and
$35,530,000, respectively, an increase of 2.9%. As of September 30, 1995, the
Mall was 96% occupied, excluding anchor tenants and office space, compared to
94% at September 30, 1994.
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter ended September 30, 1995.
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.
EASTPOINT MALL LIMITED PARTNERSHIP
BY: EASTERN AVENUE INC.
General Partner
Date: November 14, 1995 BY: /s/Paul L. Abbott
Name: Paul L. Abbott
Title: Director, President,
Chief Executive Officer,
Chief Financial Officer and
Chief Operating Officer
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