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 March 31, 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: 2-98786
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 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
March 31, December 31,
Assets 1995 1994
Real estate, at cost:
Land $ 4,166,230 $ 4,166,230
Building 43,241,060 43,241,060
Improvements 6,391,276 6,354,635
53,798,566 53,761,925
Less accumulated depreciation
and amortization (10,429,686) (9,997,420)
43,368,880 43,764,505
Cash 6,262,669 5,661,047
Restricted cash 2,100,000 2,100,000
Cash-held in escrow 533,627 370,993
Accounts receivable, net of allowance
of $156,195 in 1995 and $294,059
in 1994 519,342 639,739
Deferred rent receivable 282,238 257,901
Note receivable 816,000 816,000
Deferred charges, net of accumulated
amortization of $278,104 in 1995
and $230,023 in 1994 1,625,875 1,671,299
Prepaid expenses 210,360 343,516
Total Assets $ 55,718,991 $ 55,625,000
Liabilities, Minority Interest and Partners' Capital
Liabilities:
Accounts payable and
accrued expenses $ 153,759 $ 169,474
Mortgage loan payable 51,000,000 51,000,000
Accrued interest payable 340,425 340,425
Due to affiliates 20,000 40,251
Security deposits payable 59,656 59,656
Deferred income 404,945 417,989
Distribution payable 288,826 288,826
Total Liabilities 52,267,611 52,316,621
Minority interest (313,120) (328,580)
Partners' Capital (Deficit):
General Partner (76,623) (77,899)
Limited Partners (4,575 limited
partnership units authorized,
issued and outstanding) 3,841,123 3,714,858
Total Partners' Capital 3,764,500 3,636,959
Total Liabilities,
Minority Interest and
Partners' Capital $ 55,718,991 $ 55,625,000
Consolidated Statements of Operations
For the three months ended March 31, 1995 and 1994
Income 1995 1994
Rental income $ 2,005,855 $ 1,904,707
Escalation income 851,594 793,848
Interest income 99,560 41,428
Miscellaneous income 10,208 6,854
Total Income 2,967,217 2,746,837
Expenses
Interest expense 995,775 1,007,285
Property operating expenses 842,559 699,794
Depreciation and amortization 480,347 526,567
Real estate taxes 144,200 137,511
General and administrative 43,594 42,753
Total Expenses 2,506,475 2,413,910
Income before minority interest 460,742 332,927
Minority interest (44,375) (32,978)
Net Income $ 416,367 $ 299,949
Net Income Allocated:
To the General Partner $ 4,164 $ 2,999
To the Limited Partners 412,203 296,950
$ 416,367 $ 299,949
Per limited partnership unit
(4,575 outstanding) $ 90.10 $ 64.91
Consolidated Statement of Partners' Capital (Deficit)
For the three months ended March 31, 1995
Limited General
Partners Partner Total
Balance at December 31, 1994 $ 3,714,858 $ (77,899) $ 3,636,959
Net income 412,203 4,164 416,367
Distribution payable (285,938) (2,888) (288,826)
Balance at March 31, 1995 $ 3,841,123 $ (76,623) $ 3,764,500
Consolidated Statements of Cash Flows
For the three months ended March 31, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income $ 416,367 $ 299,949
Adjustments to reconcile net income
to net cash provided by operating
activities:
Minority interest 44,375 32,978
Depreciation and amortization 480,347 526,567
Increase (decrease) in cash arising
from changes in operating assets
and liabilities:
Cash-held in escrow (162,634) (108,803)
Accounts receivable 120,397 15,765
Deferred rent receivable (24,337) (25,000)
Deferred charges (2,657) (12,627)
Prepaid expenses 133,156 127,442
Accounts payable and
accrued expenses (15,715) (133,288)
Accrued interest payable -- 326,435
Due to affiliates (20,251) (15,152)
Deferred income (13,044) (13,558)
Security deposits payable -- 2,451
Net cash provided by operating activities 956,004 1,023,159
Cash Flows from Investing Activities:
Additions to real estate (36,641) (141,681)
Net cash used for investing activities (36,641) (141,681)
Cash Flows from Financing Activities:
Deferred charges -- (20,552)
Distributions paid (288,826) --
Distributions paid-minority interest (28,915) --
Net cash used for financing activities (317,741) (20,552)
Net increase in cash 601,622 860,926
Cash at beginning of period 5,661,047 6,724,590
Cash at end of period $ 6,262,669 $ 7,585,516
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period
for interest $ 995,775 $ 680,850
<PAGE>
Notes to the Consolidated Financial Statements
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1994 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 March 31, 1995 and the results of operations and cash
flows for the three months ended March 31, 1995 and 1994 and the statement of
changes in partners' capital (deficit) for the three months ended March 31,
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 March 31, 1995 the Partnership had a cash balance of $6,262,669 compared
with $5,661,047 at December 31, 1994. The $601,622 increase is attributable to
an increase in cash provided by operating activities which was partially offset
by additions to real estate and cash distributions paid to the partners. 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. $1.1
million of this balance 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. The increase in
Cash-held in escrow of $162,634 is attributable to monthly fundings, in excess
of payments for real estate taxes and insurance, by the Partnership.
Accounts receivable totalled $519,342 at March 31, 1995 compared to $639,739 at
December 31, 1994. The decrease is due primarily to decreases in the
receivables for base rent and percentage rent. These decreases were offset by
a decrease in the allowance for doubtful accounts.
The decrease in prepaid expenses from $343,516 at December 31, 1994 to $210,360
at March 31, 1995 is due primarily to the recognition of the first quarter's
real estate expense.
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.
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 following completion of certain administrative
procedures required by the first mortgage lender or 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 first quarter of 1995 were paid in the
amount of $62.50 per unit on May 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 months ended March 31, 1995, the Partnership recognized net
income of $416,367 compared to $299,949 for the three months ended March 31,
1994. The increase in net income is primarily attributable to increases in all
income categories which was partially offset by an increase in property
operating expenses for the first three months of 1995.
The Partnership generated total income for the three months ended March 31,
1995 and 1994 of $2,967,217 and $2,746,837, respectively. For the three months
ended March 31, 1995, rental income totalled $2,005,855 compared to $1,904,707
for the three months ended March 31, 1994. Base rents increased due to lease
renewals and new food court tenants. Escalation income for the three months
ended March 31, 1995 totalled $851,594 compared to $793,848 for the three
months ended March 31, 1994. Escalation income represents the income received
from mall tenants for their proportionate share of common area maintenance and
real estate tax expenses. The increase in escalation income is the result of
an increase in property operating expenses which are charged back to tenants.
Interest income for the three months ended March 31, 1995 was $99,560 compared
to $41,428 for the three months ended March 31, 1994. The increase in interest
income is due to the Partnership's maintenance of higher average cash balances
and an increase in interest rates.
Total expenses were $2,506,475 for the three months ended March 31, 1995,
compared to $2,413,910 for the three months ended March 31, 1994. The increase
is due to an increase in building operating expenses and bad debt expense.
Depreciation and amortization expense for the three months ended March 31,
1995, decreased $46,220 from the comparable period in 1994 primarily due to the
write-off in 1994 of vacated tenant improvements. Interest expense totalled
$995,775 for the three months ended March 31, 1995 compared with $1,007,285 at
March 31, 1994. The decrease is due primarily to a refund from the lender of
$25,500 of interest expense paid in the prior year for satisfying
administrative requirements per the new mortgage agreement.
Total Mall tenant sales (exclusive of anchor tenants) were $8,733,000 for the
two months ended February 28, 1995, compared to $8,027,000 for the two months
ended February 28, 1994, a 9% increase. Sales for tenants (exclusive of anchor
tenants) which operated at the Mall for each of the last two years were
$8,299,000 and $7,818,000, respectively, an increase of 6%. As of March 31,
1995, the Mall was approximately 94% occupied, excluding anchor tenants and
office space, compared to 95% as of March 31, 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 March 31, 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: May 15, 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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<PERIOD-END> MAR-31-1995
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