SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1996 Commission File Number 0-14536
WINTHROP CALIFORNIA INVESTORS LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 04-2869812
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
One International Place, Boston, MA 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 330-8600
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
WINTHROP CALIFORNIA INVESTORS LIMITED PARTNERSHIP
FORM 10-Q
MARCH 31, 1996
INDEX
Part I. Financial Information
Item I. Financial Statements
Consolidated Balance Sheets as of
March 31, 1996 and December 31, 1995
Consolidated Statements of Operations for
the three months ended March 31, 1996 and 1995
Consolidated Statements of Cash Flows for
the three months ended March 31, 1996 and 1995
Consolidated Statement of Change in Partners'
Equity for the three months ended March 31, 1996
and 1995
Notes to Consolidated Financial Statements
<PAGE>
WINTHROP CALIFORNIA INVESTORS LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
<TABLE>
ASSETS
Mar. 31, Dec. 31,
1996 1995
-------- ------
(Unaudited) (Audited)
(Amounts in Thousands)
<S> <C> <C>
Land ....................................................................... $ 16,757 $ 16,757
Buildings and improvements...................................................... 239,813 239,769
-------- --------
256,570 256,526
Less: Accumulated depreciation................................................. 124,653 122,065
-------- --------
131,917 134,461
Cash and cash equivalents....................................................... 10,464 9,216
Investment securities........................................................... 3,600 3,672
Other deposits.................................................................. 221 221
Prepaid expenses and other assets............................................... 5,162 5,511
Deferred costs, net of accumulated amortization
of $12,889 and $12,639 as of March 31,
1996 and December 31, 1995, respectively.................................... 6,144 6,394
Equity investment in Development Partnership.................................... 20,699 20,898
---------- --------
Total Assets........................................................... $178,207 $180,373
======== ========
</TABLE>
LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
Liabilities:
<S> <C> <C>
Mortgage loan............................................................... $198,307 $198,650
Accounts payable, accrued expenses, accrued
interest and other......................................................... 11,308 9,854
-------- --------
Total Liabilities...................................................... 209,615 208,504
-------- --------
Commitments and Contingencies
Partners' Capital:
Limited Partners - Units of Investor Limited
Partnership Interest, $65,000 stated value
per cash unit and $66,000 stated value per
deferred unit; 3,500 units, authorized,
issued and outstanding................................................. (10,769) (7,557)
General Partners............................................................ (20,639) (20,574)
--------- --------
Total Partners' Capital................................................ (31,408) (28,131)
---------- ----------
Total Liabilities and Partners' Capital................................ $178,207 $180,373
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WINTHROP CALIFORNIA INVESTORS LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
For the Three Months
Ended March 31,
1996 1995
------ -----
(Amounts in Thousands)
REVENUES:
<S> <C> <C>
Base rental revenue....................................................... $ 6,180 $ 6,280
Common area expense reimbursements........................................ 2,712 3,165
Interest and other income................................................. 126 155
------- -------
Total Revenues......................................................... 9,018 9,600
------- -------
EXPENSES:
Utilities................................................................. 427 509
Repairs, maintenance and security......................................... 1,430 1,338
Real estate taxes......................................................... 683 632
General and administrative................................................ 494 492
Asset and property management fee......................................... 188 188
Interest expense.......................................................... 5,882 5,917
Depreciation and amortization............................................. 2,933 3,245
Insurance................................................................. 87 85
------- -------
Total Expenses......................................................... 12,124 12,406
------- -------
Operating loss......................................................... (3,106) (2,806)
Equity in Gain (Loss) of Development
Partnership................................................................... (199) 81
---------- --------
Loss Before Minority Interest.......................................... (3,305) (2,725)
Minority Interest in Operating Partnership
and Management Partnership................................................ 28 24
------- -------
Net Loss............................................................... $(3,277) $(2,701)
======= =======
Net Loss Allocated to General Partners.......................................... $ (65) $ (54)
======= =======
Net Loss Allocated to Investor
Limited Partners.......................................................... $(3,212) $(2,647)
======= =======
Net Loss per unit of Limited Partner Interest $ (1) $ (1)
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WINTHROP CALIFORNIA INVESTORS LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
For the Three Months
Ended March 31,
1996 1995
---------- -------
(Amounts in thousands)
Cash flow from operating activities:
<S> <C> <C>
Net loss.................................................................. $ (3,277) $ (2,701)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.......................................... 2,838 3,153
Minority interest in loss/income of operating
partnership and Management Partnership................................. (28) (24)
Equity in (gain) loss of the Development Partnership 199 (81)
Change in assets and liabilities:
Increase in other deposits............................................. - (2)
Decrease in prepaid expenses and
other assets.......................................................... 377 270
Increase (decrease) in accounts payable,
accrued expenses and other............................................ 1,454 594
Increase in deferred costs related to
operating activities.................................................. - (196)
---------- ---------
Net cash provided by (used in) operating activities 1,563 1,013
Cash flows from investing activities:
Capital expenditures...................................................... (44) (42)
Net (increase) decrease in
investment securities........................................................ 72 (298)
----- ---------
Net cash provided (used) by
investing activities................................................. 28 (340)
------- ---------
Cash flows from financing activities:
Principal payments on mortgage loan....................................... (343) (305)
------- ---------
Net cash used in financing activities.................................. (343) (305)
------- ---------
Net increase (decrease) in cash and cash equivalents 1,248 368
Cash and cash equivalents at beginning of period 9,216 6,767
--------- ---------
Cash and cash equivalents at end of period...................................... $ 10,464 $ 7,135
========== =========
Supplemental disclosure of cash flow information:
Cash paid for interest.................................................... $ 5,881 $ 5,920
============ =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WINTHROP CALIFORNIA INVESTORS LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED) (NOTE 1)
<TABLE>
Investor
Limited General
Partners Partners Total
(Amounts in Thousands)
<S> <C> <C> <C>
Balance, December 31, 1994................................ $ 57,346 $(19,249) $ 38,097
Net Loss.................................................. (2,647) (54) (2,701)
---------- ------------ ---------
Balance, March 31, 1995................................... $ 54,699 $(19,303) $ 35,396
======== ======== ========
Balance, December 31, 1995................................ $ (7,557) $(20,574) $(28,131)
Net Loss.................................................. (3,212) (65) (3,277)
---------- ------------ ----------
Balance, March 31, 1996................................... $(10,769) $(20,639) $(31,408)
========= ======== =========
</TABLE>
<PAGE>
WINTHROP CALIFORNIA INVESTORS LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
1. ORGANIZATION
Winthrop California Investors Limited Partnership (the "Partnership")
was originally organized on January 24, 1985 under the Maryland
Uniform Limited Partnership Act and was reorganized on October 16,
1985 as a Delaware Limited Partnership, to own a 99% General
Partnership interest in Crow Winthrop Operating Partnership, a
Maryland General Partnership (the "Operating Partnership") as well as
a 25% Limited Partnership interest in Crow Winthrop Development
Limited Partnership, a Maryland Limited Partnership (the "Development
Partnership").
The partnership subsequently acquired in March 1992 a 99% limited
partnerhsip interest in Winthrop California Management Limited
Partnership, a Maryland limited partnership (the "Management
Partnership").
On July 30, 1985 (the "Acquisition Date"), the Operating Partnership
acquired the Fluor Corporation World Headquarters Facility (the
"Headquarters Facility") in Irvine, California from Fluor Corporation
("Fluor") consisting of approximately 1,817,000 rentable square feet,
the directly underlying land of approximately 14.8 acres and all
related rights and easements.
As of the same date, the Development Partnership acquired 122.2 acres
of undeveloped land surrounding the Headquarters Facility (the "Excess
Land" - together with the Headquarters Facility, the "Property").
The Properties were acquired for a total price of $337,000,000 (the
"Purchase Price") consisting of $302,000,000 paid on the Acquisition
Date (the "Fixed Purchase Price") and $35,000,000 paid in August 1986
(the "Contingent Purchase Price") when certain development rights were
approved for the Development Partnership.
The General Partners of the Partnership are Winthrop Financial
Associates ("WFA") and Three Winthrop Properties, Inc. ("Three
Winthrop"). The General Partners made capital contributions totaling
$101 for a 2.0% interest in the operating profits and losses of the
Partnership.
2. SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements include the
accounts of the Partnership, the Operating Partnership and the
Management Partnership. The Partnership is the 99% General Partner of
the Operating Partnership and the 99% Limited Partner of the
Management Partnership. The remaining 1% ownership interest held by an
unaffiliated partner of the Operating Partnership (Crow Irvine #2) and
by an affiliated partner of the Management Partnership (First Winthrop
Properties, Inc.) have been included in other assets in the
accompanying consolidated balance sheets. All significant intercompany
accounts and transactions have been eliminated in consolidation.
The Partnership owns a 25% Limited Partner's interest in the
Development Partnership, which is accounted for under the equity
method.
The consolidated financial statements were prepared on the accrual
basis of accounting and reflect the Partnership's results of
operations for an interim period which may not necessarily be
indicative of the results of operations for the year ending December
31, 1996. All adjustments considered necessary for a fair presentation
of results of operations for an interim period have been made in the
accompanying consolidated financial statements.
These consolidated financial statements should be read in conjunction
with the financial statements and notes thereto included in the
Partnership's 1995 Form 10-K.
<PAGE>
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership's assets consist of (i) a general partnership interest
in Crow Winthrop Operating Partnership, a Maryland general partnership (the
"Operating Partnership") which owns a 1.8 million square foot office facility
known as the Fluor Corporation World Headquarters Facility in Irvine (Orange
County), California (the "Headquarters Facility"), (ii) a limited partnership
interest in Crow Winthrop Development Limited Partnership, a Maryland limited
partnership (the "Development Partnership") which owns in excess of 120 acres of
land surrounding the Headquarters Facility (the "Excess Land") and (iii) a 99%
limited partnership interest in Winthrop California Management Limited
Partnership, a Maryland limited partnership ("WC Management").
The Partnership's ability to continue in existence is contingent on (i)
the ability of the Operating Partnership to continue in existence, and in
particular to restructure the mortgage loan encumbering the Headquarters
Facility, and to generate revenue allocable to the Partnership either as a
result of distributions from WC Management (derived from the management of the
Operating Partnership's properties) and/or distributions from operations of the
Operating Partnership and (ii), to a lesser extent, the ability of the
Development Partnership to continue in existence and to generate revenue to the
Partnership as a result of distributions from the Development Partnership.
To date the annual asset management fee due Winthrop Financial
Associates ("WFA") and the monies to pay general and administrative expenses
have been funded by the Partnership's reserves and cash flow from the Operating
Partnership. Commencing in 1990, and through the first quarter of 1996, however,
WFA has not been paid its annual asset management fee. As of March 31, 1996,
$4,687,000 of this fee was payable to WFA. The General Partners do not
anticipate that there will be cash distributions from the Operating Partnership
or the Development Partnership in the near future and the General Partners may
or may not ask WFA to continue to defer the payment of its asset management fee.
The deferred asset management fees will be paid as a priority from available
sources of cash prior to any future distributions to partners of the Partnership
if and when they are paid.
As of March 31, 1996, approximately $3,600,000 remains in the
Partnership's reserve account. These funds will be utilized to satisfy operating
deficits and will be available to the Partnership and Operating Partnership in
its restructuring efforts.
Cash provided by operating activities increased from $1,013,000 for the three
months ended March 31, 1995 to $1,562,000 for the three months ended March 31,
1996. This increase is the result of an increase of $860,000 in accounts
payable, accrued expenses and other primarily due to an increase in prepaid rent
of $600,000 and real estate taxes due of $300,000.
Cash used in financing activities, specifically the principal payments on the
mortgage loan, remained consistent with prior periods. During the first quarter
of 1995 the Partnership used $340,000 for its investing activities. During the
first quarter of 1996 the Partnership's investing activities provided cash of
$29,000. This is attributable to the net result of $150,000 being drawn from
reserves less $78,000 of interest income going into reserves and $44,000 being
spent on capital items.
<PAGE>
On April 1, 1996 the mortgage held by Pacific Mutual Life Insurance Company
("PAC") matured and the final principal payment of $198 million became due. The
current value of the Headquarters Facility is less than the balance due on its
mortgage debt. The Operating Partnership is not able to refinance the loan or
sell the Headquarters Facility for an amount sufficient to pay the amount
currently due under the loan. On April 10, 1996 PAC notified the Partnership
that it had agreed to extend the maturity date through June 1996. The
Partnership continues to pay debt service on the loan during the extension
period. The Partnership is currently negotiating with the Headquarters
Facility's largest tenant to renegotiate a long term lease that may assist the
Operating Partnership in securing restructured financial terms from PAC. If
these negotiations are not successful and the Partnership is unable to refinance
this debt the headquarters facility could be lost through foreclosure at
maturity. In such event, the Operating Partnership may have to explore
alternative strategies to maintain its interest in the property, including the
filing of a bankruptcy petition.
At this time, it appears that the original investment objective of capital
growth from the inception of the Partnership will not be attained and that
Limited Partners will not receive a return of their invested capital. The extent
to which invested capital is refunded to Limited Partners is dependent upon the
performance of the properties and the market in which they are located. The
ability to hold and operate the properties is dependent upon the Operating
Partnership's ability to restructure or refinance its mortgage indebtedness.
Results of Operations
The net loss realized by the Partnership for the first quarter 1996 was
$3,277,000 compared to $2,701,000 for the same period in 1995. Base rent revenue
and common area expense reimbursements reported for the first quarter of 1996
decreased in comparison to that reported for the first quarter of the prior
year. This decrease is attributed to space vacated during 1995 and being leased
at a lower base rent and higher base for operating expense reimbursement
calculation. For the period ended March 31, 1996 operating expenses, before
depreciation and amortization, were $9,191,000 which is consistent with the same
period in 1995 of $9,161,000. Depreciation and amortization for the same period
decreased by $312,000. Equity in gain (loss) of Development Partnership was
reduced from a gain of $81,000 in the first quarter of 1995 to a loss of
$199,000 in the first quarter 1996.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K: No Report on Form 8-K was filed during the period.
<PAGE>
SIGNATURE
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.
WINTHROP CALIFORNIA INVESTORS LIMITED PARTNERSHIP
(Registrant)
By: Winthrop Financial Associates, A Limited Partnership
Managing General Partner
DATED: May 14, 1996 By: /s/ Michael L. Ashner
Michael L. Ashner
Chief Executive Officer
DATED: May 14, 1996 By: /s/ Edward V. Williams
Edward V. Williams
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from unaudited financial statements for the
three month period ending March 31, 1996 and is
qualified in its entirety by reference to such financial
statements
</LEGEND>
<CIK> 0000776105
<NAME> WINTHROP CALIFORNIA INVESTORS LIMITED PARTNERSHIP
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 10,464,000
<SECURITIES> 3,600,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,285,000
<PP&E> 256,570,000
<DEPRECIATION> (124,653,000)
<TOTAL-ASSETS> 178,207,000
<CURRENT-LIABILITIES> 11,308,000
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (31,408,000)
<TOTAL-LIABILITY-AND-EQUITY> 178,207,000
<SALES> 0
<TOTAL-REVENUES> 9,018,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,242,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,882,000
<INCOME-PRETAX> (3,277,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,277,000)
<EPS-PRIMARY> (1,000.00)
<EPS-DILUTED> 00.00
</TABLE>
