<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 1995
------------------
Commission file number 0-14513
-------------
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
- --------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
District of Columbia 52-1420605
- ----------------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11200 Rockville Pike, Rockville, Maryland 20852
- ----------------------------------------- ----------------------
(Address of principal executive officer) (Zip Code)
(301) 468-9200
- -------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class which registered
- ----------------------------------------- -----------------------
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
- -------------------------------------------------------------------------
(Title of Class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-Q or any amendment to this
Form 10-Q. [X]
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1995
Page
----
PART I. Financial Information (Unaudited)
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1995
and December 31, 1994 . . . . . . . . . . . . . . 3
Consolidated Statements of Operations - for the
three and nine months ended September 30, 1995
and 1994 . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Partners' Deficit - for
the nine months ended September 30, 1995 . . . . 9
Consolidated Statements of Cash Flows - for the nine
months ended September 30, 1995 and 1994 . . . . 10
Notes to Consolidated Financial Statements . . . . 12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . 24
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 30
Signatures . . . . . . . . . . . . . . . . . . . . . . . . 31
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
As of As of
September 30, December 31,
1995 1994
------------- -------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,677,238 $ 1,649,561
Restricted cash and cash equivalents 1,212,477 1,450,904
Accounts receivable, less
allowance for doubtful accounts
of $43,265 and $70,249,
respectively 1,135,105 1,089,424
Prepaid expenses 1,133,474 848,339
Current portion of deferred rent
receivable 328,636 322,343
Inventory and other 74,224 84,897
------------- -------------
Total current assets 5,561,154 5,445,468
------------- -------------
Property and equipment:
Buildings and tenant improvements 121,219,469 120,588,435
Furniture and equipment 14,610,117 14,064,248
------------- -------------
135,829,586 134,652,683
Less-accumulated depreciation (49,128,938) (45,528,938)
------------- -------------
Total property and equipment 86,700,648 89,123,745
------------- -------------
Other assets:
Deferred charges, less
accumulated amortization of
$1,535,358 and $1,069,159,
respectively 2,426,189 2,630,629
Deferred rent receivable, less
reserve of $346,052 368,328 712,745
Escrows and deposits 163,480 319,429
------------- -------------
Total other assets 2,957,997 3,662,803
------------- -------------
Total assets $ 95,219,799 $ 98,232,016
============= =============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-3-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS - Continued
LIABILITIES AND PARTNERS' DEFICIT
<TABLE>
<CAPTION>
As of As of
September 30, December 31,
1995 1994
------------- -------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Current portion of first mortgage
note $ 6,109,198 $ 5,840,861
Accounts payable 611,597 604,542
Accrued expenses 947,293 609,006
Due to affiliates 2,494,980 2,381,955
Other liabilities 36,078 35,228
------------- -------------
Total current liabilities 10,199,146 9,471,592
First mortgage note 67,754,670 68,779,767
Second mortgage note 18,408,353 19,413,456
Third mortgage note 5,766,131 5,509,500
Due to guarantor of operating deficits 2,213,188 2,120,800
Deferred gain on debt forgiveness 87,244,898 101,900,391
Deferred revenue and security deposits 629,749 393,176
------------- -------------
Total liabilities 192,216,135 207,588,682
------------- -------------
Commitments and contingencies (note 6)
Partners' deficit (96,996,336) (109,356,666)
------------- -------------
Total liabilities and
partners' deficit $ 95,219,799 $ 98,232,016
============= =============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-4-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the three months ended
September 30,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Revenue:
Rooms $ 2,745,003 $ 2,531,624
Food and beverage 978,400 822,488
Telephone 140,371 102,306
Office retail and parking rentals 2,071,864 2,099,044
Other 31,013 17,519
------------ ------------
5,966,651 5,572,981
------------ ------------
Departmental expenses:
Rooms 584,592 540,117
Food and beverage 776,820 720,291
Telephone 97,827 99,432
Other -- 51
------------ ------------
1,459,239 1,359,891
------------ ------------
Gross operating income 4,507,412 4,213,090
------------ ------------
Unallocated operating expenses:
Administrative 435,272 402,174
Marketing 351,927 292,302
Energy costs 559,058 579,204
Property operations and maintenance 514,907 444,914
------------ ------------
1,861,164 1,718,594
------------ ------------
Operating income before other income, fixed
charges and other deductions 2,646,248 2,494,496
------------ ------------
Interest and other income 6,959 10,034
------------ ------------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-5-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS - Continued
(UNAUDITED)
<TABLE>
<CAPTION>
For the three months ended
September 30,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Fixed charges and other deductions:
Depreciation 1,200,000 1,239,187
Amortization 92,566 149,117
Interest expense 207,974 3,294,664
Management fees 216,325 187,983
Real estate and personal property
taxes 281,225 278,514
Ground rent 400,000 400,000
Net cash flow participation -- --
Other 136,939 146,870
------------ ------------
2,535,029 5,696,335
------------ ------------
Net income (loss) before extraordinary
gain 118,178 (3,191,805)
Extraordinary gain-debt forgiveness 3,496,050 --
------------ ------------
Net income (loss) 3,614,228 (3,191,805)
Net (income) loss attributed to minority
interest (3,628,215) 3,189,093
------------ ------------
Net loss attributed to partnership $ (13,987) $ (2,712)
============ ============
Net loss allocated to general
partners and affiliated initial
limited partner (1.01%) $ (141) $ (27)
============ ============
Net loss allocated to additional
limited partners (98.99%) $ (13,846) $ (2,685)
============ ============
Net loss allocated to limited partners
per unit $ (23.08) $ (4.48)
============ ============
Limited partnership units issued
and outstanding 600 600
============ ============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-6-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the nine months ended
September 30,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Revenue:
Rooms $ 8,810,398 $ 8,216,745
Food and beverage 3,414,830 3,116,542
Telephone 442,470 352,723
Office retail and parking rentals 6,741,173 6,741,406
Other 67,738 49,641
------------ ------------
19,476,609 18,477,057
------------ ------------
Departmental expenses:
Rooms 1,820,229 1,728,326
Food and beverage 2,544,843 2,410,805
Telephone 309,606 280,108
Other -- 1,133
------------ ------------
4,674,678 4,420,372
------------ ------------
Gross operating income 14,801,931 14,056,685
------------ ------------
Unallocated operating expenses:
Administrative 1,266,386 1,245,948
Marketing 1,083,296 1,034,975
Energy costs 1,391,566 1,455,609
Property operations and maintenance 1,535,720 1,450,795
------------ ------------
5,276,968 5,187,327
------------ ------------
Operating income before other income, fixed
charges and other deductions 9,524,963 8,869,358
------------ ------------
Interest and other income 26,709 47,918
------------ ------------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-7-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS - Continued
(UNAUDITED)
<TABLE>
<CAPTION>
For the nine months ended
September 30,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Fixed charges and other deductions:
Depreciation 3,600,000 3,717,561
Amortization 277,698 447,352
Interest expense 619,960 9,889,514
Management fees 681,020 621,128
Real estate and personal property
taxes 834,811 1,017,995
Ground rent 1,200,000 1,200,000
Net cash flow participation 150,000 --
Other 555,075 462,136
------------ ------------
7,918,564 17,355,686
------------ ------------
Net income (loss) before extraordinary
gain 1,633,108 (8,438,410)
Extraordinary gain-debt forgiveness 10,727,222 --
------------ ------------
Net income (loss) 12,360,330 (8,438,410)
Net (income) loss attributed to minority
interest (12,388,975) 8,416,406
------------ ------------
Net loss attributed to partnership $ (28,645) $ (22,004)
============ ============
Net loss allocated to general
partners and affiliated initial
limited partner (1.01%) $ (289) $ (222)
============ ============
Net loss allocated to additional
limited partners (98.99%) $ (28,356) $ (21,782)
============ ============
Net loss allocated to limited partners
per unit $ (47.26) $ (36.30)
============ ============
Limited partnership units issued
and outstanding 600 600
============ ============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-8-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIT
For the nine months ended September 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Losses not
General Limited Allocable
Partners Partners to Partners Total
--------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Balance,
December 31, 1994 $(528,763) $383,083 $(109,210,986) $(109,356,666)
Net loss attributed
to Partnership (289) (28,356) -- (28,645)
Net income attributed
to Minority
Interest (Note 2) -- -- 12,388,975 12,388,975
--------- -------- ------------- -------------
Balance,
September 30, 1995 $(529,052) $354,727 $ (96,822,011) $ (96,996,336)
========= ======== ============= =============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-9-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the nine months ended
September 30,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 12,360,330 $ (8,438,410)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation 3,600,000 3,717,561
Amortization 277,698 447,352
Extraordinary item-gain on debt
forgiveness (10,727,222) --
Interest expense related to the
amortization of financing costs 188,500 --
Net interest expense added to debt 349,020 1,960,012
Decrease in restricted cash and
cash equivalents 238,427 --
(Increase) decrease in accounts
receivable, net (45,681) 159,262
Increase in prepaid expenses and
other (285,135) (167,377)
Decrease in deferred rent receivable,
net 338,124 --
Decrease in inventory and other 10,673 --
Decrease in escrows and deposits 155,949 47,193
Increase (decrease) in accounts
payable 7,055 (53,054)
Increase in accrued expenses 338,287 104,086
Increase in other liabilities 850 77,095
Increase (decrease) in deferred revenue
and security deposits 236,573 (14,749)
------------ -----------
Net cash provided by (used in)
operating activities 7,043,448 (2,161,029)
------------ -----------
Cash flows from investing activities:
Purchase of building improvements (631,034) (507,938)
Purchase of furniture and equipment (545,869) (419,914)
Payment of leasing costs (261,759) (199,984)
------------ -----------
Net cash used in investing
activities (1,438,662) (1,127,836)
------------ -----------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-10-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(Unaudited)
<TABLE>
<CAPTION>
For the nine months ended
September 30,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from financing activities:
Net (payment of) proceeds from debt (5,690,134) 3,015,228
Net proceeds from advances from
affiliates 113,025 700,563
------------ ------------
Net cash (used in) provided by
financing activities (5,577,109) 3,715,791
------------ ------------
Net increase in cash and cash equivalents 27,677 426,926
Cash and cash equivalents, beginning of
period 1,649,561 794,133
------------ ------------
Cash and cash equivalents, end of period $ 1,677,238 $ 1,221,059
------------ ------------
Supplemental disclosure of cash flow
information:
Cash paid during the year for interest $ 4,931,800 $ 7,929,502
============ ============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-11-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
In the opinion of C.R.I., Inc. (CRI), the Managing General Partner, the
accompanying unaudited consolidated financial statements of Capital Income
Properties-C Limited Partnership (the Partnership) contain all adjustments of a
normal recurring nature necessary to present fairly the Partnership's
consolidated financial position as of September 30, 1995 and December 31, 1994
and the results of its consolidated operations for the three and nine months
ended September 30, 1995 and 1994 and its consolidated cash flows for the nine
months ended September 30, 1995 and 1994.
These unaudited consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. While CRI believes that the disclosures
presented are adequate to make the information not misleading, it is suggested
that these consolidated financial statements be read in conjunction with the
consolidated financial statements and the notes included in the Partnership's
annual report filed on Form 10-K for the year ended December 31, 1994.
On November 16, 1994, the First and Second Mortgage Notes of Bethesda Metro
Center Limited Partnership (BMCLP) were amended and restated as part of a
troubled debt restructuring, and are recorded on the accompanying consolidated
financial statements in conformity with FAS No. 15 "Accounting by Debtors and
Creditors for Troubled Debt Restructurings", as discussed in Note 3. This
statement, as amended, requires that differences between the carrying amount and
the total future obligation of certain types of restructured debt be deferred
and amortized as an extraordinary gain or loss over the remaining term of the
restructured debt based on a constant effective yield.
The results for the nine months in the period ended September 30, 1995 are
not necessarily indicative of the results expected for the entire year.
2. THE PARTNERSHIP
The Partnership, a District of Columbia Limited Partnership, was organized
on December 15, 1984. The purpose of the Partnership is to invest in real
estate by acquiring and holding a limited partnership interest in BMCLP. BMCLP
owns and operates a 381-room hotel known as the Hyatt Regency Bethesda Hotel
(the Hotel); an office building containing approximately 336,000 square feet of
net rentable office space and 18,000 square feet of net rentable retail space,
known as Bethesda Metro Office Building (the Office Building); and a parking
facility for approximately 1,300 cars serving the entire development, located in
Bethesda, Maryland.
CRI, as Managing General Partner of the Partnership, has a 0.01% interest.
Other general partner interests which total 0.99% are held by three individuals
affiliated or formerly affiliated with CRI. The total limited partner interest
of 99% is comprised of 0.01% owned by CRICO-Bethesda Growth Partners Limited
Partnership, the Affiliated Initial Limited Partner, and the remaining 98.99%
interest is widely held by unrelated parties. On June 15, 1992, pursuant to a
debt modification (Third Modification) with BMCLP's first mortgage lender,
C.R.C.C. of Bethesda, Inc. (CRCC) replaced the managing general partners of
BMCLP (unrelated parties hereinafter referred to as Special Limited Partners).
-12-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. THE PARTNERSHIP - Continued
Since CRCC is a wholly owned affiliate of CRI, the accompanying financial
statements as of September 30, 1995 have been consolidated with BMCLP.
Although an entity affiliated with the Partnership has assumed
responsibility for management of BMCLP and the Partnership has consolidated its
interest therein in the accompanying financial statements, the Partnership has
not assumed responsibility for any past or future operating deficits of BMCLP.
The deficit in partners' capital generated by activity at BMCLP remains the
obligation of the Special Limited Partners of BMCLP.
Therefore, of the total partners' deficit of $96,996,336 as of September
30, 1995, $96,822,011 is not attributable to the partners of the Partnership,
rather, it is attributable to the Special Limited Partners of BMCLP. The
$96,822,011 is comprised of cumulative BMCLP losses in excess of the
Partnership's investment in BMCLP at June 15, 1992 of $77,472,839, and
additional BMCLP losses subsequent to June 15, 1992 of $19,349,172.
3. INVESTMENT IN BETHESDA METRO CENTER LIMITED PARTNERSHIP
The Partnership invested $42,500,100 in cash in BMCLP through September 30,
1995, to acquire a 92.5% limited partnership interest. BMCLP losses before June
15, 1992, were not recorded in the accompanying financial statements of the
Partnership since cumulative BMCLP losses exceeded the Partnership's investment
in 1992. Prior to June 15, 1992, the Partnership's investment in BMCLP was
accounted for under the equity method which prohibits the recognition of
investment losses in excess of the original investment. However, subsequent to
June 15, 1992, the Partnership's investment in BMCLP has been consolidated in
the accompanying financial statements (see Note 2).
-13-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN BETHESDA METRO CENTER LIMITED PARTNERSHIP - Continued
Condensed financial information of the Partnership on an unconsolidated
basis is as follows:
BALANCE SHEETS
--------------
Assets
<TABLE>
<CAPTION>
As of As of
September 30, December 31,
1995 1994
------------- ------------
(Unaudited)
<S> <C> <C>
Total assets $ 115 $ 113
============= ============
</TABLE>
Liabilities and Partners' Deficit
<TABLE>
<CAPTION>
As of As of
September 30, December 31,
1995 1994
------------- ------------
(Unaudited)
<S> <C> <C>
Accounts payable $ 174,440 $ 145,793
Partners' deficit (174,325) (145,680)
------------- ------------
Total liabilities and partners'
deficit $ 115 $ 113
============= ============
</TABLE>
-14-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN BETHESDA METRO CENTER LIMITED PARTNERSHIP - Continued
STATEMENTS OF OPERATIONS
------------------------
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
September 30,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
Professional fees $ 12,250 $ 1,678
Other expenses 1,737 1,034
------------ ------------
Net loss $ 13,987 $ 2,712
============ ============
</TABLE>
<TABLE>
<CAPTION>
For the nine months ended
September 30,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
Professional fees $ 20,662 $ 14,100
Other expenses 7,983 7,904
------------ ------------
Net loss $ 28,645 $ 22,004
============ ============
</TABLE>
-15-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN BETHESDA METRO CENTER LIMITED PARTNERSHIP - Continued
Condensed financial information of BMCLP on an unconsolidated basis is as
follows:
BALANCE SHEETS
--------------
Assets
<TABLE>
<CAPTION>
As of As of
September 30, December 31,
1995 1994
------------- -------------
(Unaudited)
<S> <C> <C>
Investment in real estate, at cost,
net $ 86,700,648 $ 89,123,745
Current assets 5,561,039 5,445,355
Other assets 2,957,997 3,662,803
------------- -------------
Total assets $ 95,219,684 $ 98,231,903
============= =============
Liabilities and Partners' Deficit
Current liabilities $ 10,024,706 $ 9,325,799
Other liabilities 182,016,989 198,117,090
Partners' deficit (96,822,011) (109,210,986)
------------- ------------
Total liabilities and partners'
deficit $ 95,219,684 $ 98,231,903
============= ============
</TABLE>
-16-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN BETHESDA METRO CENTER LIMITED PARTNERSHIP - Continued
STATEMENTS OF OPERATIONS
------------------------
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
September 30,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
Revenues $ 5,973,610 $ 5,583,015
Expenses (5,841,445) (8,772,108)
------------ ------------
Income (loss) before extraordinary
item 132,165 (3,189,093)
Extraordinary item-gain on debt
forgiveness 3,496,050 --
------------ ------------
Net income (loss) $ 3,628,215 $ (3,189,093)
============ ============
</TABLE>
<TABLE>
<CAPTION>
For the nine months ended
September 30,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
Revenues $ 19,503,318 $ 18,524,975
Expenses (17,841,565) (26,941,381)
------------ ------------
Income (loss) before extraordinary
item 1,661,753 (8,416,406)
Extraordinary item-gain on debt
forgiveness 10,727,222 --
------------ ------------
Net income (loss) $ 12,388,975 $ (8,416,406)
============ ============
</TABLE>
On November 16, 1994, BMCLP's lender sold its First and Second Mortgage
Notes (the Notes) to BMC Lender Partnership (BMC), an unaffiliated entity. BMC
sold the First Mortgage Note to General Electric Capital Corporation (GECC)
which amended and restated the First Mortgage Note to a reduced principal amount
of $48,000,000. BMC amended and restated the Second Mortgage Note to a
principal amount of up to $15,000,000 with $10,000,000 advanced at closing.
The Restated First Mortgage Note requires monthly interest payments in
arrears, payable at 4.25% in excess of the monthly GECC Composite Commercial
Rate, which at September 30, 1995 was 5.93%. In addition to monthly interest
payments, monthly principal payments are due in the amount of $108,333.
-17-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN BETHESDA METRO CENTER LIMITED PARTNERSHIP - Continued
Furthermore, if a major lease (as defined in the Restated First Mortgage Note
agreement) in the Office Building expires, is not renewed, or is cancelled,
additional principal payments equal to 100% of net cash flow, as defined, must
be remitted to GECC quarterly. These payments must continue until minimum
financial conditions in the Restated First Mortgage Note are met. All unpaid
principal is due at the maturity date which is November 30, 2001. Additional
advances may be made by GECC to the extent of previously paid principal
payments. Any additional advances are generally intended to fund tenant
improvements, leasing costs and capital improvements. For the nine months ended
September 30, 1995, GECC advanced $216,666 to BMCLP for tenant improvements.
Additionally, under the terms of the Restated First Mortgage Note, an
interest reserve account to be used as additional collateral under the Restated
First Mortgage Note must be established. Monthly payments of $23,125 must be
made into this reserve beginning January 1, 1995 through December 1, 1998. As
of September 30, 1995, $208,125 had been deposited into the interest reserve
account and is reflected in restricted cash and cash equivalents on the
accompanying consolidated balance sheet.
The Restated Second Mortgage Note stipulates that 16% interest is payable
monthly from available cash flow (as defined) on a cumulative basis. Based on
the provisions of the Restated Second Mortgage Note, BMCLP's cash flow from
operations shall be disbursed in the following priority:
(a) Debt service and reserves on the Restated First Mortgage Note.
(b) Establishment of working capital reserves of $50,000 plus an amount
reasonably required to pay ordinary and necessary expenses of
operations.
(c) Debt service on the Restated Second Mortgage Note (to the extent of
available cash flow).
(d) Principal and interest on additional advances (discussed below), if
any, made to BMCLP by BMC.
(e) 75% of the remaining net cash flow (as defined) to BMC and 25% of the
remaining net cash flow to BMCLP, subject to the establishment of the
reserves as stipulated in the agreement (discussed below).
Furthermore, BMC is entitled to an Economic Value Participation Interest
(as defined) which requires BMCLP to pay the following at the sale or
refinancing of the property or the maturity date of the Restated First and
Second Mortgage Notes.
(a) 75% of the amount by which the Economic Value (as defined) of the
Hotel and Office Building (the Development), up to $100 million,
exceeds the unpaid principal balance and accrued interest under the
Restated First and Second Mortgage Notes, and
(b) 50% of the Economic Value in excess of $100 million.
In general, the Economic Value is defined by the Restated Second Mortgage
-18-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN BETHESDA METRO CENTER LIMITED PARTNERSHIP - Continued
Note as the value of the Development as determined by the average of three
independent appraisals.
In 1995, $150,000 was paid to BMC as 75% of remaining net cash flow for
1994 and is included in net cash flow participation expense on the accompanying
consolidated statements of operations.
The Restated Second Mortgage Note is due on November 30, 2001 and no
principal payments are required until then. However, any amounts remitted to
BMC with respect to its 75% net cash flow participation described above, may be
re-advanced to BMCLP for payment of: debt service on the Restated First
Mortgage Note, repairs, capital improvements, leasing commissions, tenant
concessions and improvements, taxes and ground lease payments. These advances
are limited to 75% of the total amount required to fund these items. The
remaining 25% must be funded by BMCLP. BMC has reserved the right, but does not
have the obligation, to make up to $5,000,000 in additional advances that would
be secured under its Restated Second Mortgage Note. These additional advances
would carry an interest rate of 18% payable from available net cash flow, as
defined, and would also be due on November 30, 2001. As of September 30, 1995,
no additional advances have been made.
In connection with the restructuring on November 16, 1994, the Third
Mortgage Note was amended to provide that interest is due and payable annually
only to the extent funds are available after taking into account payment of
amounts due and payable on the Restated First and Second Mortgage Notes and a
payment of up to $50,000 per year to CRCC and/or the Partnership to cover costs
of management and administration. Accrued but unpaid interest shall be deferred
without interest and be paid, together with the outstanding principal balance of
the Third Mortgage Note, upon the earliest of: (i) sale of the assets of BMCLP;
(ii) refinancing of the Restated First and Second Mortgage Notes for an amount
in excess of the aggregate outstanding principal balances due thereunder; or
(iii) one day later than the later of any Maturity Date under the Restated First
and Second Mortgage Notes. As of September 30, 1995, accrued interest of
$2,766,131 has been added to the outstanding principal balance of $3,000,000 in
accordance with the amended Third Mortgage Note. No net cash flow was available
for repayment of this note during the nine months ended September 30, 1995.
Debt Forgiveness
- ----------------
The carrying amount of the outstanding principal and accrued interest that
was forgiven based on the assignment and subsequent restatement of the First and
Second Mortgage Notes is presented as deferred gain on debt forgiveness in the
accompanying consolidated balance sheets. This amount is being amortized as an
extraordinary gain over the remaining terms of the Restated First and Second
Mortgage Notes based on a constant effective yield as required by Statement of
Financial Accounting Standards No. 15, "Accounting by Debtors and Creditors for
Troubled Debt Restructurings" (FAS 15).
Based on the Restated First Mortgage Note's interest rate of approximately
10.18% and 9.98% in effect on September 30, 1995 and December 31, 1994,
respectively, and monthly principal curtailments of $108,333 as stipulated in
the Restated First Mortgage Note, the estimated total future obligation for
-19-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN BETHESDA METRO CENTER LIMITED PARTNERSHIP - Continued
principal and interest at September 30, 1995 and December 31, 1994 was
$73,863,868 and $74,620,628, respectively. Although these obligations were
lower than the carrying amount of $161,108,766 and $176,521,019 at September 30,
1995 and December 31, 1994, respectively, FAS 15 does not permit the entire
difference to be recognized as an extraordinary gain at the time of the
restructuring as the Restated First Mortgage Note's interest rate is variable,
which makes the amount of future debt service payments contingent upon changes
in the index upon which the interest rate is calculated. Accordingly, the
$87,244,898 and $101,900,391 difference between the carrying amount and total
future obligation of the debt at September 30, 1995 and December 31, 1994,
respectively, was deferred and is being amortized as an extraordinary gain in
the accompanying consolidated statements of operations using the effective
interest method over the term of the Restated First Mortgage Note.
As a result of the fluctuations of the interest rate on the Restated First
Mortgage Note, the Partnership continues to remeasure the total future
obligation for principal and interest based upon changes of the underlying
index, as discussed above. Differences in the future obligation resulting from
interest rate changes are reflected as a reclassification between the First
Mortgage Note and deferred gain on debt forgiveness. For the nine months ended
September 30, 1995, $3,733,376 was reclassified from the deferred gain on debt
forgiveness to the Restated First Mortgage Note resulting from an increase in
the future obligation due to changes in the underlying index. The adjusted
deferred gain on debt forgiveness will be amortized as extraordinary gain over
the remaining term of the Restated First Mortgage Note. For the three and nine
months ended September 30, 1995, amortization of this deferred debt forgiveness
amounted to $3,561,015 and $10,922,117, respectively. The amortization of
deferred gain is included in the extraordinary items of $3,496,050 and
$10,727,222, respectively, in the accompanying consolidated statements of
operations which is shown net of the interest expense on the Restated Second
Mortgage Note of $64,965 and $194,895, respectively, discussed below.
With regard to the Restated Second Mortgage Note, the total estimated
future obligation for payment of principal and interest based on the fixed
interest rate of 16% is $21,200,000. This amount exceeds the carrying value of
the Restated Second Mortgage Note at November 16, 1994 of $19,380,974. In
accordance with FAS 15, this difference of $1,819,026 represents an additional
interest obligation, and is to be amortized as a reduction of the extraordinary
gain on the Restated First Mortgage Note, using the effective interest method,
over the term of the Restated Second Mortgage Note. Accrual of this additional
interest for the three and nine months ended September 30, 1995 amounted to
$64,965 and $194,895 and was added to the principal balance of the Restated
Second Mortgage Note.
4. RELATED-PARTY TRANSACTIONS
A summary of indebtedness to affiliates of $2,494,980 and $2,381,955 as of
September 30, 1995 and December 31, 1994, respectively, is presented below:
-20-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. RELATED-PARTY TRANSACTIONS - Continued
<TABLE>
<CAPTION>
Balance at Balance at
Related-Party December 31, 1994 Additions September 30, 1995
- ------------- ----------------- --------- ------------------
<S> <C> <C> <C>
CRI $ 235,879 $ 47,130 $ 283,009
CHG 1,040,285 65,895 1,106,180
Realty 972,233 -- 972,233
Hyatt 133,558 -- 133,558
----------- --------- -----------
$ 2,381,955 $ 113,025 $ 2,494,980
=========== ========= ===========
</TABLE>
The advances from CRI and CHG accrue interest at the prime rate plus one
percent in accordance with the partnership agreement. The additional amount due
to CRI of $47,130 is comprised of $16,547 in accrued interest on previous
advances, plus an additional $30,583 to fund operating deficits of the
Partnership. The additional $65,895 due to CHG represents accrued interest on
previous advances. The advances from Realty and Hyatt are non-interest bearing.
CRCC and/or the Partnership may receive an annual payment of up to $50,000
to cover costs of management and administration, to the extent that funds are
available after payment of amounts due on the Restated First and Second Mortgage
Notes. CRCC received a payment of $50,000 on January 31, 1995 from remaining
net cash flow relating to 1994.
CIP Management 14, Inc., an affiliate of the Managing General Partner, may
receive an incentive management fee on a noncumulative annual basis equal to
9.08% of net cash flow after payment of certain priorities set forth in the
Partnership Agreement. No incentive management fee has been incurred or paid
for the nine months ended September 30, 1995 and 1994.
During 1995 and 1994 BMCLP entered into transactions with the Keystone
Group, an affiliate of a Special Limited Partner, to provide for the
construction of tenant improvements in the Office Building. For the three and
nine months ended September 30, 1995, $160,808 and $273,719, respectively, was
paid to the Keystone Group. For the three and nine months ended September 30,
1994, $2,832 and $274,469, respectively, was paid to the Keystone Group.
In the nine months ended September 30, 1994, BMCLP was advanced a total of
$175,416 from CRI and an affiliated entity for payment of the Excess Payments
due under the former financing. This amount is classified as due to affiliates
in the accompanying financial statements.
5. ALLOCATION OF PROFITS, LOSSES AND DISTRIBUTIONS OF CASH FLOW
In accordance with the Partnership Agreement, 1% of the Allowable Net Loss
has been allocated to the general partners, and 99% of the Allowable Net Loss
has been allocated to the limited partners. Allocations of cash flow
distributions are specified in the Partnership Agreement.
-21-
<PAGE>
CAPITAL INCOME PROPERTIES-C LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5. ALLOCATION OF PROFITS, LOSSES AND DISTRIBUTIONS OF CASH FLOW - Continued
6. COMMITMENTS AND CONTINGENCIES
Management Agreements
- ---------------------
BMCLP entered into a management agreement with Hyatt Corporation (Hyatt) in
March 1982, pursuant to which Hyatt is to manage the Hotel commencing from the
date the Hotel opened through December 31, 2015 (unless earlier terminated in
accordance with its terms, as modified). Based on the management agreement (as
modified), Hyatt is to be paid a management fee consisting of a base management
fee of 3% of gross revenues, as defined, and an incentive management fee which
is calculated based on 20% of the adjusted gross operating profit, as defined.
Management fees paid to Hyatt for the three and nine months ended September 30,
1995, were approximately $117,000 and $382,000, respectively, and for the three
and nine months ended September 30, 1994 were approximately $104,000 and
$352,000, respectively. No incentive fee was earned for the three and nine
months ended September 30, 1995 and 1994.
The management agreement provides for the establishment of a property
improvement fund. Contributions to the property improvement fund are equal to
3% of gross Hotel revenues (as defined). Unexpended reserves are recorded as
escrows and deposits within the accompanying consolidated balance sheets. The
reserve balances included in escrows and deposits at September 30, 1995 and
December 31, 1994, were approximately $100,000 and $256,000, respectively.
BMCLP entered into a management agreement with Realty Management Company
(Realty), an affiliate of one of the Special Limited Partners, dated January 31,
1985, pursuant to which Realty was to manage the Office Building for a term of
20 years commencing from the date the Office Building opened. In connection
with the debt restructuring which occurred November 16, 1994, BMC paid Realty
$1,000,000 to terminate its former management contract with BMCLP. At that
time, BMCLP entered into a new management contract with Realty for a term of one
year which will automatically renew for successive one year periods so long as
Realty is not then in default. The agreement provides for a management fee in
the amount of 4% of total revenues. Of this amount, one-half shall be paid by
Realty to BMC, during the term of the Restated Second Mortgage Note, in partial
consideration for the $1,000,000 payment to terminate the original contract.
Management fees for the three and nine months ended September 30, 1995, were
approximately $100,000 and $299,000, respectively, and approximately $84,000 and
$269,000 for the three and nine months ended September 30, 1994, respectively.
-22-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Liquidity
---------
The Registrant does not have adequate cash reserves or any source of cash
to fund its projected cash requirements in 1995, which are principally comprised
of professional fees and administrative expenses. Additionally, based on the
projected operating performance of Bethesda Metro Center Limited Partnership
(BMCLP), it is unlikely that the Registrant will receive any cash distribution
from its investment in BMCLP in 1995 due to priorities established for
distribution of excess cash flow pursuant to the restructuring of BMCLP's
mortgage notes. However, the Managing General Partner of the Registrant has
represented a willingness to fund projected cash flow requirements of the
Registrant for the year ending December 31, 1995.
At September 30, 1995 and December 31, 1994, the Registrant had $115 and
$113, respectively, in available cash.
During the first nine months of 1995, the Registrant recorded a slight
increase in available cash and a $28,647 increase in accounts payable. The
increase in accounts payable includes an increase of $30,583 in loan payable to
its Managing General Partner for administrative expenses and a decrease of
$1,936 in third-party payables.
Capital Resources
-----------------
BMCLP, of which the Registrant owns a 92.5% limited partnership interest,
had unrestricted cash and cash equivalents of $1,677,123 and $1,649,448 at
September 30, 1995 and December 31, 1994, respectively. BMCLP had restricted
cash and cash equivalents of $1,212,477 and $1,450,904 at September 30, 1995 and
December 31, 1994, respectively. During the first nine months of 1995,
unrestricted cash and cash equivalents increased only $27,675 despite net income
of $12,388,975. This was due largely as the result of the non-cash gain on debt
forgiveness of $10,727,222, as well as the net debt payments of $5,690,134,
which were offset by depreciation and amortization totalling $3,877,698 and an
increase in accrued expenses of $338,287.
Operating Deficit Reserve
-------------------------
For operating deficits which arise, the Limited Partnership Agreement (LPA)
provides that Alan I. Kay and Allen E. Rozansky and their affiliates
(collectively, R&K) are required to loan, or cause to be loaned, all amounts
necessary to pay operating deficits up to an aggregate principal amount of
$15,600,000. R&K and the Registrant have agreed that the former Second Mortgage
Note of $10,000,000 was an Operating Deficit Loan "caused to be" made to BMCLP
by R&K. Further, R&K's Operating Deficit Loan obligation of $15,600,000 was to
be increased by (i) the excess interest paid each month on the original First
Mortgage Note as a result of the first loan modification and (ii) the amount
that interest accruing on the original Second Mortgage Note exceeded the
interest that would have accrued had the loan been made directly by R&K. As of
September 30, 1995, R&K have provided $2,213,188 including accrued interest to
BMCLP under this provision of the LPA. This amount is net of $342,734 which is
due from the Alan I. Kay Companies, an affiliate of Alan I. Kay, for advances
from BMCLP. R&K have represented that individually their current net worth is
-23-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------
insignificant and illiquid and that they do not have adequate resources to cover
the operating deficits.
In accordance with the terms of the Restated First and Second Mortgage
Notes dated November 16, 1994, BMCLP has several additional resources to fund
current operating deficits. If BMCLP requires funds to pay for capital
improvements, tenant improvements, leasing commissions, etc., and is in
compliance with the conditions stated in the Restated First Mortgage Note, GECC
shall advance for such purposes up to 50% of the amounts previously paid by
BMCLP as principal payments. On April 25, 1995, GECC advanced $216,666 to BMCLP
for tenant improvements.
Upon approval of BMC Lender Partnership (BMC), BMCLP may draw upon the
$1,038,654 that was placed in an escrow account at the closing of the Restated
Second Mortgage Note. These funds may be used to pay operating expenses of the
Development including payments under the Restated First and Second Mortgage
Notes. On April 3, 1995, BMCLP withdrew $400,000 from the escrow account to
help pay the interest due on the Restated Second Mortgage Note. BMCLP deposited
$100,000 into the escrow account on April 18, 1995.
BMC may advance additional amounts up to $5,000,000 to BMCLP in accordance
with the Restated Second Mortgage Note. Also, BMC may re-advance funds received
from BMCLP as additional interest payments (75% net cash flow) if BMCLP pays its
25% share of net cash flow held in reserves. No advances were made by BMC to
BMCLP in the first three quarters of 1995.
Results of Operations
---------------------
Registrant
- ----------
The Registrant recorded a net loss for the third quarter of 1995 of $13,987
as compared with a net loss of $2,712 for the corresponding period in 1994.
Operating expenses during the third quarter of 1995 were $11,275 higher than
1994 primarily due to an increase in accounting and auditing fees, as well as an
increase in general and administrative expenses.
The Registrant recorded a net loss for the first nine months of 1995 of
$28,645 as compared with a net loss of $22,004 for the corresponding period in
1994. Operating expenses during the first nine months of 1995 were $6,641
higher than 1994 primarily due to an increase in professional fees.
-24-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------
Bethesda Metro Center Limited Partnership
- -----------------------------------------
THREE MONTHS ENDED SEPTEMBER 30, 1995 AS COMPARED TO SEPTEMBER 30, 1994
BMCLP had net income for the third quarter of 1995 of $3,628,215 as
compared with a net loss of $3,189,093 for the corresponding period in 1994.
This was primarily the result of a gain on debt forgiveness of $3,496,050 and a
reduction of interest expense of $3,086,690 relating to the restructuring of the
First and Second Mortgage Notes in November 1994.
Room revenue increased by $213,379 or 8% from the third quarter of 1994.
The Hotel experienced an increase in occupancy from 71% to 75%, and an increase
in average room rate of $2 compared to the third quarter of 1994 primarily due
to the completion of major renovations to the hotel in 1994. Food and beverage
revenues increased by $155,912 or 19% from the same period last year as a result
of increased banquet patronage. The increases in room and food and beverage
revenues resulted in third quarter gross operating profits which exceeded the
same period last year by approximately $260,000, or 25%.
Office building revenue decreased $27,180 or 1% during the third quarter of
1995 compared with the third quarter of 1994. The occupancy of the office
building decreased from 95% to 94%, while the rental rate of the Office Building
remained constant in the third quarter of 1995 as compared to the third quarter
of 1994. The retail and marketplace occupancy increased from 54% to 77%
primarily due to the reclassification of 11,375 square feet of retail space to
office space. The retail and marketplace average rental rate remained constant.
Operating expenses for the Office Building for the third quarter of 1995
increased by $65,901, or 10% primarily due to routine maintenance performed in
September 1995 that was completed over two quarters in 1994.
NINE MONTHS ENDED SEPTEMBER 30, 1995 AS COMPARED TO SEPTEMBER 30, 1994
BMCLP had net income for the first nine months of 1995 of $12,388,975 as
compared with a net loss of $8,416,406 for the corresponding period in 1994.
This was primarily the result of a gain on debt forgiveness of $10,727,222 and a
reduction of interest expense of $9,269,554 relating to the restructuring of the
First and Second Mortgage Notes in November 1994.
Room revenue increased by $593,653, or 7% from the first nine months of
1994. The Hotel experienced an increase in occupancy of from 76% to 79% and an
increase in average room rate of $3 compared to the first nine months of 1994
due to the completion of hotel renovations in 1994, as discussed above. Food
and beverage revenues increased by $298,288, or 10% from the same period last
year as result of increased banquet patronage. The increases in room and food
and beverage revenues resulted in year to date gross operating profits which
exceeded last year by approximately $683,000, or 17%.
Office building revenue did not change significantly during the first nine
months of 1995 compared with the first nine months of 1994. The occupancy of
the Office Building increased from 95% to 96% while the rental rate decreased
from $24 in the first nine months of 1994 to $23 in the first nine months of
1995. The retail and marketplace occupancy increased from 54% to 76% primarily
due to the reclassification of 11,375 square feet of retail space to office
-25-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------
space. The retail and marketplace average rental rate remained constant at $35.
Operating expenses for the Office Building for the first nine months of
1995 increased by $12,518, or 1% from the first nine months of 1994.
The following tables outline pertinent unaudited data regarding the
operations of the Hotel and Office Building:
OFFICE BUILDING
---------------
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
September 30,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Leasing:
- -------
Average Space Occupied:
Office 94% 95%
Retail and Marketplace 77% 54%
Average Rental Rate:
Office $24 $24
Retail and Marketplace $35 $35
Operations:
- ----------
Total Income $ 2,071,864 $ 2,099,044
Operating Expenses (735,087) (669,186)
------------ ------------
Gross Operating Profits
(Before Depreciation, Management
Fees and Other Fixed Costs) $ 1,336,777 $ 1,429,858
============ ============
</TABLE>
-26-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------
<TABLE>
<CAPTION>
For the nine months ended
September 30,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Leasing:
- -------
Average Space Occupied:
Office 96% 95%
Retail and Marketplace 76% 54%
Average Rental Rate:
Office $23 $24
Retail and Marketplace $35 $35
Operations:
- ----------
Total Income $ 6,741,173 $ 6,741,406
Operating Expenses (1,970,336) (1,957,818)
------------ ------------
Gross Operating Profits
(Before Depreciation, Management
Fees and Other Fixed Costs) $ 4,770,837 $ 4,783,588
============ ============
</TABLE>
-27-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------
HOTEL
---------------
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
September 30,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Operations:
- ----------
Actual Average Occupancy 75% 71%
Actual Average Room Rate $104 $102
Rooms Revenue $ 2,745,003 $ 2,531,624
Food & Beverage Revenues $ 978,400 $ 822,488
Room Profits $ 2,160,411 $ 1,991,507
Food & Beverage Profits $ 201,580 $ 102,197
Gross Operating Profits
(Before Depreciation, Management
Fees and Other Fixed Costs) $ 1,309,471 $ 1,049,638
</TABLE>
<TABLE>
<CAPTION>
For the nine months ended
September 30,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Operations:
- ----------
Actual Average Occupancy 79% 76%
Actual Average Room Rate $107 $104
Rooms Revenue $ 8,810,398 $ 8,216,745
Food & Beverage Revenues $ 3,414,830 $ 3,116,542
Room Profits $ 6,990,169 $ 6,488,419
Food & Beverage Profits $ 869,987 $ 705,737
Gross Operating Profits
(Before Depreciation, Management
Fees and Other Fixed Costs) $ 4,754,126 $ 4,070,770
</TABLE>
-28-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------
It should be noted that BMCLP's investment in the Development is a
high-risk investment involving many factors beyond the control of its General
Partner. Such factors could adversely affect the operation and value of the
Development and, consequently, the value of an interest in the Registrant, to an
extent not currently ascertainable. These factors, include, but are not limited
to, over building of office, hotel or commercial space; changes in the general
or local economic conditions including changes in interest rates; adjacent land
utilization; changes in demand or use with respect to the proximate business
facilities; demographic trends; increases in real estate taxes; changes in the
federal income tax laws, which could be applied retroactively; local, state and
federal environmental, energy, and other regulations (including regulations
governing the maintenance of liquor licenses); possible restrictive changes in
the uses applicable to real estate, zoning and similar land use and
environmental laws and regulations; and acts of God.
In addition, Hotel occupancy and room rates may be adversely affected by a
downturn in the business cycle or by shortages of gasoline or increases in the
price of gasoline, increases in airline fare rates or the curtailment of airline
service, or other constraints upon travel. Furthermore, in the event mortgage
payment and/or tax assessment obligations are not met, the Registrant may
sustain a loss of its equity investment as a result of foreclosure of the
Restated First Mortgage Note.
PART II. OTHER INFORMATION
-----------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
No reports on Form 8-K were filed with the Commission during the quarter
ended September 30, 1995.
All other items are not applicable.
-29-
<PAGE>
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 duly authorized.
CAPITAL INCOME PROPERTIES-C
LIMITED PARTNERSHIP
(Registrant)
By: CRI, Inc.,
Managing General Partner
November 13, 1995 By: /s/ H. William Willoughby
- -------------------- ---------------------------------
Date H. William Willoughby
President
By: /s/ Richard J. Palmer
---------------------------------
Richard J. Palmer
Senior Vice President, Finance
Principal Financial and
Principal Accounting Officer
-30-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE THIRD QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,677,238
<SECURITIES> 0
<RECEIVABLES> 1,178,370
<ALLOWANCES> 43,265
<INVENTORY> 74,224
<CURRENT-ASSETS> 5,561,154
<PP&E> 135,829,586
<DEPRECIATION> 49,128,938
<TOTAL-ASSETS> 95,219,799
<CURRENT-LIABILITIES> 10,199,146
<BONDS> 94,142,342
<COMMON> 0
0
0
<OTHER-SE> (96,996,336)
<TOTAL-LIABILITY-AND-EQUITY> 95,219,799
<SALES> 0
<TOTAL-REVENUES> 19,476,609
<CGS> 0
<TOTAL-COSTS> 9,951,646
<OTHER-EXPENSES> 7,298,604
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 619,960
<INCOME-PRETAX> 1,633,108
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,633,108
<DISCONTINUED> 0
<EXTRAORDINARY> 10,727,222
<CHANGES> 0
<NET-INCOME> 12,360,330
<EPS-PRIMARY> (47.26)
<EPS-DILUTED> (47.26)
</TABLE>
