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 September 30, 1999
------------------
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
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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 September 30, At December 31,
1999 1998
(unaudited) (audited)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $3,428,518 $50,641,931
Rent and other receivables 51,812 1,157,368
Other assets -- 5,000
- --------------------------------------------------------------------------------------------------
Total Assets $3,480,330 $51,804,299
==================================================================================================
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 903,424 $ 941,067
Due to affiliates 93,682 480,615
Distribution payable -- 47,456,352
----------------------------
Total Liabilities 997,106 48,878,034
----------------------------
Partners' Capital (Deficit):
General Partners 288,773 (350,297)
Limited Partners (395,169 units outstanding) 2,194,451 3,276,562
----------------------------
Total Partners' Capital 2,483,224 2,926,265
- --------------------------------------------------------------------------------------------------
Total Liabilities and Partners' Capital $3,480,330 $51,804,299
==================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF
PARTNERS' CAPITAL (DEFICIT) (UNAUDITED)
For the nine months ended September 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 (1,082,111) (10,930) -- (1,093,041)
- --------------------------------------------------------------------------------------------------
Balance at September 30, 1999 $ 2,194,451 $ 288,773 $ -- $ 2,483,224
==================================================================================================
</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 September 30, Nine months ended September 30,
1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income
Rent $ -- $10,069,140 $ -- $28,444,487
Interest 41,753 87,198 293,069 246,310
----------------------------------------------------------
Total Income 41,753 10,156,338 293,069 28,690,797
- --------------------------------------------------------------------------------------------------
Expenses
Property operating -- 5,520,553 -- 15,391,129
Depreciation and amortization -- 49,183 -- 147,550
Interest -- 1,331,371 -- 4,156,508
General and administrative 381,589 206,161 886,110 422,994
Litigation and settlement costs -- -- 500,000 --
----------------------------------------------------------
Total Expenses 381,589 7,107,268 1,386,110 20,118,181
- --------------------------------------------------------------------------------------------------
Income (loss) before minority interest (339,836) 3,049,070 (1,093,041) 8,572,616
Minority interest in
consolidated venture -- (915,681) -- (2,714,145)
----------------------------------------------------------
Net Income (Loss) $(339,836) $ 2,133,389 $(1,093,041) $ 5,858,471
- --------------------------------------------------------------------------------------------------
Net Income (Loss) Allocated:
To the General Partners $ (3,398) $ 21,334 $ (10,930) $ 58,585
To the Limited Partners (336,438) 2,112,055 (1,082,111) 5,799,886
- --------------------------------------------------------------------------------------------------
$(339,836) $ 2,133,389 $(1,093,041) $ 5,858,471
==================================================================================================
Per limited partnership unit
(395,169) outstanding: $ (.85) $ 5.35 $ (2.74) $ 14.68
- --------------------------------------------------------------------------------------------------
</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 nine months ended September 30,
1999 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ (1,093,041) $ 5,858,471
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Amortization -- 147,550
Minority interest in consolidated venture -- 2,714,145
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Restricted cash -- (153,575)
Rent and other receivables 1,105,556 (222,308)
Deferred rent receivable -- (1,799,393)
Other assets 5,000 (4,535,016)
Accounts payable and accrued expenses (37,643) 2,823,869
Deferred income -- (708,367)
Due to affiliates (386,933) (81,884)
Security deposits payable -- 79,170
Accrued interest payable -- 79,726
---------------------------
Net cash provided by (used for) operating activities (407,061) 4,202,388
- --------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities
Additions to real estate assets -- (3,820,546)
---------------------------
Net cash used for investing activities -- (3,820,546)
- --------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities
Contributions 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 (47,213,413) 381,842
Cash and cash equivalents, beginning of period 50,641,931 4,786,697
- --------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 3,428,518 $ 5,168,539
==================================================================================================
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ -- $ 4,076,782
- --------------------------------------------------------------------------------------------------
</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 September 30, 1999 and the
results of operations for the three and nine months ended September 30, 1999 and
1998, statements of cash flows for the nine months ended September 30, 1999 and
1998 and the statement of partners' capital (deficit) for the nine months ended
September 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 $3,428,518 at September 30, 1999,
decreasing from $50,641,931 at December 31, 1998. The decrease is primarily due
to distributions paid to the Limited Partners.
Rent and other receivables totaled $51,812 at September 30, 1999, compared to
$1,157,368 at December 31, 1998. The decrease is primarily due to the collection
of rents receivable from certain tenants at the Partnership's former Properties
and a provision for doubtful accounts of $93,000.
Liabilities
- -----------
Accounts payable and accrued expenses decreased by $37,643 to $903,424 at
September 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.
<PAGE>
7
MENDIK REAL ESTATE LIMITED PARTNERSHIP
AND CONSOLIDATED VENTURE
Results of Operations
- ---------------------
For the three and nine-month periods ended September 30, 1999, interest income
was $41,753 and $293,069, compared to $87,198 and $246,310 for the three and
nine-month periods ended September 30, 1998. The increase for the nine-month
period is primarily due to higher average cash balances maintained by the
Partnership in 1999 prior to the distributions to the Partners.
For the three and nine months ended September 30, 1999, the Partnership
generated net losses of $(339,836) and $(1,093,041), compared to net income of
$2,133,389 and $5,858,471 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 nine months ended September 30, 1999 totaled
$-0- and $-0-, compared to $10,069,140 and $28,444,487 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 nine months
ended September 30, 1999, compared to $5,520,553 and $15,391,129 for the
corresponding period in 1998. The decrease is the result of the Sale of the
Properties.
Amortization expense for the three and nine months ended September 30, 1999
totaled $-0- and $-0-, compared to depreciation and amortization expense of
$49,183, and $147,550 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 nine months ended September 30, 1999 is $-0-
and $-0-, compared to $1,331,371 and $4,156,508 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 $381,589 and $886,110 for the three
and nine months ended September 30, 1999, compared to $206,161 and $422,994 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, and a provision for doubtful accounts.
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: November 12, 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> 9-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Sep-30-1999
<CASH> 3,428,518
<SECURITIES> 000
<RECEIVABLES> 51,812
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 3,480,330
<PP&E> 000
<DEPRECIATION> 000
<TOTAL-ASSETS> 3,480,330
<CURRENT-LIABILITIES> 903,424
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 2,483,224
<TOTAL-LIABILITY-AND-EQUITY> 3,480,330
<SALES> 000
<TOTAL-REVENUES> 293,069
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 1,386,110
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> (1,093,041)
<INCOME-TAX> 000
<INCOME-CONTINUING> (1,093,041)
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (1,093,041)
<EPS-BASIC> (2.74)
<EPS-DILUTED> (2.74)
</TABLE>
