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 June 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
June 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 6,451,705 6,354,635
---------- ----------
53,858,995 53,761,925
Less accumulated depreciation and amortization (10,862,803) (9,997,420)
---------- ----------
42,996,192 43,764,505
Cash 5,493,117 5,661,047
Restricted cash 2,100,000 2,100,000
Cash-held in escrow 696,831 370,993
Accounts receivable, net of allowance of
$115,000 in 1995 and $294,059 in 1994 737,165 639,739
Deferred rent receivable 303,638 257,901
Note receivable 816,000 816,000
Deferred charges, net of accumulated
amortization of $326,338 in 1995 and
$230,023 in 1994 1,581,704 1,671,299
Prepaid expenses 85,212 343,516
---------- ----------
Total Assets $ 54,809,859 $ 55,625,000
========== ==========
Liabilities, Minority Interest
and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 117,931 $ 169,474
Mortgage loan payable 51,000,000 51,000,000
Accrued interest payable 340,425 340,425
Due to affiliates 40,964 40,251
Security deposits payable 57,573 59,656
Deferred income 390,156 417,989
Distribution payable 288,826 288,826
---------- ----------
Total Liabilities 52,235,875 52,316,621
Minority interest (390,144) (328,580)
Partners' Capital (Deficit):
General Partner (84,626) (77,899)
Limited Partners (4,575 limited partnership
units authorized,issued and outstanding) 3,048,754 3,714,858
---------- ----------
Total Partners' Capital 2,964,128 3,636,959
---------- ----------
Total Liabilities, Minority Interest
and Partners' Capital $ 54,809,859 $ 55,625,000
========== ==========
Consolidated Statements of Operations
Three months ended Six months ended
June 30, June 30,
Income 1995 1994 1995 1994
Rental income $ 1,982,740 $ 1,921,852 $ 3,988,595 $ 3,826,559
Escalation income 836,142 695,587 1,687,736 1,489,435
Interest income 97,038 83,753 196,598 125,181
Miscellaneous income 24,298 50,019 34,506 56,875
--------- --------- --------- ---------
Total Income 2,940,218 2,751,211 5,907,435 5,498,050
--------- --------- --------- ---------
Expenses
Interest expense 1,033,147 1,018,477 2,028,922 2,025,762
Property operating expenses 685,505 803,229 1,528,064 1,503,024
Depreciation and amortization 481,351 430,111 961,698 956,678
Real estate taxes 144,200 137,511 288,400 275,023
General and administrative 44,851 46,770 88,445 89,523
--------- --------- --------- ---------
Total Expenses 2,389,054 2,436,098 4,895,529 4,850,010
--------- --------- --------- ---------
Income before minority
interest 551,164 315,113 1,011,906 648,040
Minority interest (52,975) (31,787) (97,350) (64,765)
--------- --------- --------- ---------
Net Income $ 498,189 $ 283,326 $ 914,556 $ 583,275
========= ========= ========= =========
Net Income Allocated:
To the General Partner $ 4,982 $ 2,833 $ 9,146 $ 5,833
To the Limited Partners 493,207 280,493 905,410 577,442
--------- --------- --------- ---------
$ 498,189 $ 283,326 $ 914,556 $ 583,275
========= ========= ========= =========
Per limited partnership
unit (4,575 outstanding) $107.80 $61.31 $197.90 $126.22
Consolidated Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1995
Limited General
Partners Partner Total
Balance at December 31, 1994 $ 3,714,858 $ (77,899) $ 3,636,959
Net income 905,410 9,146 914,556
Distributions (1,571,514) (15,873) (1,587,387)
--------- ------- ---------
Balance at June 30, 1995 $ 3,048,754 $ (84,626) $ 2,964,128
========= ======= =========
Consolidated Statements of Cash Flows
For the six months ended June 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income $ 914,556 $ 583,275
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest 97,350 64,765
Depreciation and amortization 961,698 956,678
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Cash-held in escrow (325,838) (272,007)
Accounts receivable (97,426) (52,028)
Deferred rent receivable (45,737) (52,000)
Deferred charges (6,720) (16,546)
Prepaid expenses 258,304 268,752
Accounts payable and accrued expenses (51,543) (136,246)
Accrued interest payable -- 323,637
Due to affiliates 713 (743,767)
Deferred income (27,833) (23,984)
Security deposits payable (2,083) 2,451
--------- ---------
Net cash provided by operating activities 1,675,441 902,980
--------- ---------
Cash Flows from Investing Activities:
Additions to real estate (97,070) (211,207)
--------- ---------
Net cash used for investing activities (97,070) (211,207)
--------- ---------
Cash Flows from Financing Activities:
Deferred charges -- (20,552)
Distributions paid (1,587,387) --
Distributions paid-minority interest (158,914) --
--------- ---------
Net cash used for financing activities (1,746,301) (20,552)
Net increase (decrease) in cash (167,930) 671,221
Cash at beginning of period 5,661,047 6,724,590
--------- ---------
Cash at end of period $ 5,493,117 $ 7,395,811
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 2,028,922 $ 1,702,125
========= =========
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 June 30, 1995 and the results of operations and cash
flows for the six months ended June 30, 1995 and 1994 and the statement of
changes in partners' capital (deficit) for the six months ended June 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, 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 June 30, 1995 the Partnership had a cash balance of $5,493,117 compared with
$5,661,047 at December 31, 1994. The decrease is primarily due to the payment
of a special cash distribution of $218.50 per unit on June 7, 1995. The
Partnership also paid a regular first quarter cash distribution of $62.50 per
unit on May 15, 1995. The level of future cash distributions will be reviewed
on a quarterly basis and will depend on the level of cash flow generated by
the Mall and the Partnership's cash flow requirements. The Partnership
maintains a restricted cash account representing a loan reserve of $2,100,000
as established under the terms of the new first mortgage. Of this balance,
$1.1 million represents a portion of the proceeds of the Partnership's new
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
$696,831 at June 30, 1995 compared with $370,993 at December 31, 1994. The
increase is primarily attributable to monthly fundings made to the real estate
tax escrow, for payments to be made during the third quarter of 1995, in
excess of disbursements made for insurance payments as specified under the
terms of the Partnership's first mortgage loan.
Prepaid expenses decreased from $343,516 at December 31, 1994 to $85,212 at
June 30, 1995, due primarily to the recognition of real estate expense for the
first half of 1995.
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 expects to receive from the claim,
although, with 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 new
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 1995 when the first mortgage secured by the Ames parcel,
retained by the Partnership pending a final decision on Consolidated's claims,
is extinguished.
Following the execution of the Release Agreement, the Partnership reinstated
quarterly distributions to the limited partners, commencing with the second
quarter of 1994. Distributions for the second quarter of 1995 will be paid in
the amount of $62.50 per unit on August 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 six months ended June 30, 1995, the Partnership recognized
net income of $498,189 and $914,556, respectively, compared to $283,326 and
$583,275 for the corresponding periods in 1994. The increase in net income is
primarily attributable to increases in rental and escalation income.
The Partnership generated total income for the three and six months ended June
30, 1995 and 1994 of $2,940,218 and $5,907,435, respectively, compared with
total income of $2,751,211 and $5,498,050 for the corresponding periods in
1994. Rental income increased for both the three and six month periods,
reflecting scheduled rent increases in leases with existing tenants, higher
base rents due to lease renewals and new food court 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 increased for both the three- and six-month periods in comparison to a
year earlier, primarily as a result of an increase in property operating
expenses, which are charged back to tenants.
Interest income increased for the three and six months ended June 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 six months ended June 30, 1995, total expenses were
$2,389,054 and $4,895,529, respectively, compared with $2,436,098 and
$4,850,010 for the comparable periods in 1994. The decrease for the
three-month period is primarily attributable to a decrease in property
operating expenses, reflecting lower promotional expense and professional fees
incurred at the Mall. The $45,519 increase in total expenses for the six-month
period reflects minor increases in most major expense categories. General and
administrative expense for the three- and six-month periods were largely in
line with prior period levels.
Total Mall tenant sales (exclusive of anchor tenants) were $25,501,000 for the
five months ended May 31, 1995, up 5.4% from $24,187,000 for the five months
ended May 31, 1994. Sales for tenants (exclusive of anchor tenants) which
operated at the Mall for each of the last two years were $24,201,000 and
$23,297,000, respectively, an increase of 3.9%. As of June 30, 1995, the Mall
was 94% occupied, excluding anchor tenants and office space, unchanged from
June 30, 1994.
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits-none
(b) Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended June 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: August 11, 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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