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, 1999
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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: 0-15463
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MENDIK REAL ESTATE LIMITED PARTNERSHIP
--------------------------------------
Exact Name of Registrant as Specified in its Charter
New York 11-2774249
-------- ----------
State or Other Jurisdiction of I.R.S. Employer Identification No.
Incorporation or Organization
3 World Financial Center, 29th Floor,
New York, NY Attn.: Andre Anderson 10285
- -------------------------------------- -----
Address of Principal Executive Offices Zip code
(212) 526-3183
--------------
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
---- ----
<PAGE>
2
MENDIK REAL ESTATE LIMITED PARTNERSHIP
AND CONSOLIDATED VENTURE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
At June 30, At December 31,
1999 1998
(unaudited) (audited)
- -------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $3,471,409 $50,641,931
Rent and other receivables 203,387 1,157,368
Other assets 5,000 5,000
- -------------------------------------------------------------------------------
Total Assets $3,679,796 $51,804,299
===============================================================================
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 802,418 $ 941,067
Due to affiliates 54,318 480,615
Distribution payable -- 47,456,352
-----------------------------
Total Liabilities 856,736 48,878,034
-----------------------------
Partners' Capital (Deficit):
General Partners 292,171 (350,297)
Limited Partners (395,169 units outstanding) 2,530,889 3,276,562
-----------------------------
Total Partners' Capital 2,823,060 2,926,265
- -------------------------------------------------------------------------------
Total Liabilities and Partners' Capital $3,679,796 $51,804,299
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF
PARTNERS' CAPITAL (DEFICIT) (UNAUDITED)
For the six months ended June 30, 1999
Special
Limited General Limited
Partners Partners Partner Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1998 $3,276,562 $(350,297) $ -- $2,926,265
Contributions -- 650,000 -- 650,000
Net loss (745,673) (7,532) -- (753,205)
- -------------------------------------------------------------------------------
Balance at June 30, 1999 $2,530,889 $ 292,171 $ -- $2,823,060
===============================================================================
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
3
MENDIK REAL ESTATE LIMITED PARTNERSHIP
AND CONSOLIDATED VENTURE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended June 30, Six months ended June 30,
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income
Rent $ -- $9,113,859 $ -- $18,375,347
Interest 41,316 96,103 251,316 159,112
----------------------------------------------------
Total Income 41,316 9,209,962 251,316 18,534,459
- ----------------------------------------------------------------------------------------------
Expenses
Property operating -- 5,073,012 -- 9,870,576
Amortization -- 49,184 -- 98,367
Interest -- 1,437,743 -- 2,825,137
General and administrative 406,603 174,317 504,521 216,833
Litigation settlement costs 500,000 -- 500,000 --
----------------------------------------------------
Total Expenses 906,603 6,734,256 1,004,521 13,010,913
- ----------------------------------------------------------------------------------------------
Income (loss) before minority interest (865,287) 2,475,706 (753,205) 5,523,546
Minority interest in consolidated venture -- (843,858) -- (1,798,464)
- ----------------------------------------------------------------------------------------------
Net Income (Loss) $(865,287) $1,631,848 $ (753,205) $ 3,725,082
- ----------------------------------------------------------------------------------------------
Net Income (Loss) Allocated:
To the General Partners $ (8,653) $ 16,319 $ (7,532) $ 37,251
To the Limited Partners (856,634) 1,615,529 (745,673) 3,687,831
- ----------------------------------------------------------------------------------------------
$(865,287) $1,631,848 $ (753,205) $ 3,725,082
==============================================================================================
Per limited partnership unit
(395,169) outstanding: $ (2.17) $ 4.09 $ (1.89) $ 9.33
- ----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
4
MENDIK REAL ESTATE LIMITED PARTNERSHIP
AND CONSOLIDATED VENTURE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the six months ended June 30,
1999 1998
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ (753,205) $ 3,725,082
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities:
Amortization -- 98,367
Minority interest in consolidated venture -- 1,798,464
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Restricted cash -- (165,962)
Rent and other receivables 953,981 190,203
Deferred rent receivable -- (911,375)
Other assets -- (3,115,958)
Accounts payable and accrued expenses (138,649) 2,105,995
Deferred income -- (490,474)
Due to affiliates (426,297) (133,159)
Security deposits payable -- 69,057
Accrued interest payable -- 46,045
---------------------------
Net cash provided by (used for) operating activities (364,170) 3,216,285
- -----------------------------------------------------------------------------------------
Cash Flows From Investing Activities
Additions to real estate assets -- (733,288)
---------------------------
Net cash used for investing activities -- (733,288)
- -----------------------------------------------------------------------------------------
Cash Flows From Financing Activities
Contribution from general partners 650,000 --
Distribution to partners (47,456,352) --
---------------------------
Net cash used for financing activities (46,806,352) --
- -----------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (47,170,522) 2,482,997
Cash and cash equivalents, beginning of period 50,641,931 4,786,697
- -----------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 3,471,409 $ 7,269,694
=========================================================================================
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ -- $ 2,752,775
- -----------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
5
MENDIK REAL ESTATE LIMITED PARTNERSHIP
AND CONSOLIDATED VENTURE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The unaudited consolidated financial statements should be read in conjunction
with the Partnership's annual 1998 audited financial statements within Form
10-K.
The unaudited consolidated interim financial statements include all normal and
recurring adjustments which are, in the opinion of management, necessary to
present a fair statement of financial position as of June 30, 1999 and the
results of operations for the three and six months ended June 30, 1999 and 1998,
statements of cash flows for the six months ended June 30, 1999 and 1998 and the
statement of partners' capital (deficit) for the six months ended June 30, 1999.
Results of operations for the period are not necessarily indicative of the
results to be expected for the full year.
As a result of the sale of the Partnership's three remaining Properties (the
"Properties"), the Partnership paid a cash distribution to Limited Partners
totaling $47,456,352 on February 2, 1999.
No other significant events occurred subsequent to fiscal year 1998, and no
material contingency exists which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
<PAGE>
6
MENDIK REAL ESTATE LIMITED PARTNERSHIP
AND CONSOLIDATED VENTURE
Part I, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
On November 17, 1998, the Partnership completed the sale of its ownership
interests in its Properties (the "Sale") to affiliates of Vornado Realty Trust,
a publicly-traded real estate investment trust ("Vornado") and an affiliate of
Mendik RELP Corporation, a General Partner, for a selling price of $52,212,198,
net of the Partnership's share of existing mortgage debt on Two Park Avenue and
Saxon Woods, litigation settlement costs, and closing adjustments. The
Partnership's approximate 60% interest in Two Park Avenue was sold for
approximately $34.6 million, after deducting $39 million of existing mortgage
debt. The sales proceeds were a combination of cash and common stock of Vornado.
The remaining 40% interest in the Park Avenue Property was owned by an affiliate
of Vornado. Saxon Woods Corporate Center and 330 West 34th Street were purchased
for an aggregate price of $30 million in cash. The Sale resulted in a gain on
sale of real estate of $3,581,009 which was reflected in the Partnership's
results of operations for the year ended December 31, 1998.
The Sale was completed as part of the settlement of three purported class action
lawsuits that were brought in the Supreme Court of the State of New York for New
York County (the "Court") against the General Partners of the Partnership and
certain affiliates of Mendik RELP Corporation by certain limited partners of the
Partnership (the "Settlement"). The Sale occurred following the Court's approval
of the Settlement, which became final on November 6, 1998.
As a result of the completion of the Sale, the Partnership paid a cash
distribution to the Limited Partners on February 2, 1999, in the amount of
$82.45 per Class A Unit and $182.91 per Class B Unit. Certain funds have been
set aside to provide for the Partnership's ongoing liabilities and expenses
through termination. Any cash remaining after payment of these expenses will be
distributed to the Limited Partners when the Partnership is terminated. The
General Partners are currently in the process of winding up the Partnership's
affairs, and expect to terminate the Partnership during 1999.
At December 31, 1998, the Partnership had a distribution payable totaling
$47,456,352, which distribution was paid on February 2, 1999 to Limited
Partners. A distribution of Vornado common shares was made to the Limited
Partners in 1998 for those investors electing to receive Vornado common shares
instead of cash. Such distribution represents net proceeds from the Sale and a
portion of the Partnership's cash reserves.
Operating Cash Balances and Other Assets
- ----------------------------------------
The Partnership's cash balances were $3,471,409 at June 30, 1999, decreasing
from $50,641,931 at December 31, 1998. The decrease is primarily due to
distributions paid to unitholders.
Rent and other receivables totaled $203,387 at June 30, 1999, compared to
$1,157,368 at December 31, 1998. The $953,981 decrease is primarily due to the
collection of rents receivable from certain tenants at the Partnership's former
Properties.
Liabilities
- -----------
Accounts payable and accrued expenses decreased by $138,649 to $802,418 at June
30, 1999, compared to $941,067 at December 31, 1998. The decrease is the result
of payment of 1998 expenses and lower 1999 expenses due to the sale of the
Properties and litigation settlement costs.
<PAGE>
7
MENDIK REAL ESTATE LIMITED PARTNERSHIP
AND CONSOLIDATED VENTURE
Results of Operations
- ---------------------
For the three and six-month periods ended June 30, 1999, interest income was
$41,316 and $251,316, compared to $96,103 and $159,112 for the three and
six-month periods ended June 30, 1998. The increase is primarily due to higher
average cash balances maintained by the Partnership in 1999 due to the sale of
the Properties.
For the three and six months ended June 30, 1999, the Partnership generated net
income (loss) of $(865,287) and $(753,205), compared to $1,631,848 and
$3,725,082 for the corresponding period in 1998. The decrease in net income is
primarily attributable to the sale of the Properties on November 17, 1998, and
accrual of $500,000 as part of the litigation Settlement with former Limited
Partners. The $500,000 accrual is an estimated amount which will be finalized
before the Partnership is terminated.
Rental income for the three and six months ended June 30, 1999 totaled $-0- and
$-0-, compared to $9,113,859 and $18,375,347 for the corresponding period in
1998. The decrease is the result of the sale of the Properties on November 17,
1998.
Property operating expenses totaled $-0- and $-0- for the three and six months
ended June 30, 1999, compared to $5,073,012 and $9,870,576 for the corresponding
period in 1998. The decrease is the result of the sale of the Properties.
Amortization expense for the three and six months ended June 30, 1999 totaled
$-0- and $-0-, compared to $49,184 and $98,367 for the corresponding period in
1998. The mortgage costs were charged against the sale of the Properties on
November 17, 1998. The decrease in amortization expense is due to the transfer
of the Partnership's loan to the buyers of the Properties.
Interest expense for the three and six months ended June 30, 1999 is $-0- and
$-0-, compared to $1,437,743 and $2,825,137 for the corresponding period in 1998
as a result of the mortgages and loans that were assigned to the buyers at the
sale of the Properties.
General and administrative expenses totaled $406,603 and $504,521 for the three
and six months ended June 30, 1999, compared to $174,317 and $216,833 for the
corresponding period in 1998. The increase is primarily the result of legal,
audit and other professional fees incurred during the winding down of the
Partnership.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K -
No reports on Form 8-K were filed during the quarter covered
by this report.
<PAGE>
8
MENDIK REAL ESTATE LIMITED PARTNERSHIP
AND CONSOLIDATED VENTURE
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.
MENDIK REAL ESTATE LIMITED PARTNERSHIP
BY: NY REAL ESTATE SERVICES 1 INC.
General Partner
Date: August 16, 1999 BY: /s/Mark J. Marcucci
-------------------------------------
Name: Mark J. Marcucci
Title: President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Jun-30-1999
<CASH> 3,471,409
<SECURITIES> 000
<RECEIVABLES> 203,387
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 3,679,796
<PP&E> 000
<DEPRECIATION> 000
<TOTAL-ASSETS> 3,679,796
<CURRENT-LIABILITIES> 802,418
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 2,823,060
<TOTAL-LIABILITY-AND-EQUITY> 3,679,796
<SALES> 000
<TOTAL-REVENUES> 251,316
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 1,004,521
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> (753,205)
<INCOME-TAX> 000
<INCOME-CONTINUING> (753,205)
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (753,205)
<EPS-BASIC> (1.89)
<EPS-DILUTED> (1.89)
</TABLE>
