SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 10-Q
___
/ X / Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange
Act of 1934
For the quarter ended: September 30, 1995
OR
___
/___/ Transition Report Under Section 13 or 15 (d) of the Securities Exchange
Act of 1934
For the transition period from: ______________ to ______________
Commission file number: 0-14986
AETNA REAL ESTATE ASSOCIATES, L.P.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 11-2827907
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
28 Trumbull Street, Hartford, Connecticut 06156
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 275-2178
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 30 days. Yes X No
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The summarized financial information contained herein is unaudited; however, in
the opinion of management, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of such financial information
have been included.
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Balance Sheets
As of September 30, 1995 and December 31, 1994
(in thousands)
September 30, December 31,
1995 1994
(unaudited)
Assets
Investments in real estate:
Properties $243,787 $241,333
Less: accumulated depreciation
and amortization (42,138) (36,979)
Total investments in real estate 201,649 204,354
Cash and cash equivalents 9,449 9,373
Rent and other receivables 4,484 4,114
Other 13 13
Total assets $215,595 $217,854
Liabilities and Partners' Capital
Liabilities:
Investment portfolio fee payable
to related parties $ 1,201 $ 1,188
Accounts payable and accrued expenses 490 608
Accrued property taxes 1,359 755
Security deposits 836 814
Other liabilities 191 92
Total liabilities 4,077 3,457
Partners' capital:
General Partners 119 79
Limited Partners 211,399 214,318
Total partners' capital 211,518 214,397
Total liabilities
and partners' capital $215,595 $217,854
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Statements of Income
For the Three and Nine Months Ended September 30, 1995 and 1994
(in thousands, except units and per unit amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Revenue:
Rental $ 6,924 $ 6,461 $20,757 $19,312
Interest 91 74 270 194
Other income 224 87 366 185
7,239 6,622 21,393 19,691
Expenses:
Property operating 2,321 2,394 6,848 6,976
Depreciation and amortization 2,468 1,651 6,008 4,954
Investment portfolio
fee - related parties 1,200 1,191 3,602 3,523
General and administrative 148 204 524 599
Bad debt 117 0 419 0
6,254 5,440 17,401 16,052
Net income $ 985 $ 1,182 $ 3,992 $ 3,639
Net income allocated:
To the General Partners $ 10 $ 12 $ 40 $ 37
To the Limited Partners 975 1,170 3,952 3,602
$ 985 $ 1,182 $ 3,992 $ 3,639
Weighted average number of
limited partnership units
outstanding 12,724,547 12,724,547 12,724,547 12,724,547
Earnings per limited
partnership unit $ .08 $ .09 $ .31 $ .28
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Statements of Partners' Capital
For the Nine Months Ended September 30, 1995 and 1994
(in thousands - unaudited)
General Limited
Partners Partners Total
Balance at January 1, 1995 $ 79 $ 214,318 $ 214,397
Capital contributions 69 0 69
Cash distributions (69) (6,871) (6,940)
Net income 40 3,952 3,992
Balance at September 30, 1995 $ 119 $ 211,399 $ 211,518
Balance at January 1, 1994 $ 34 $ 221,426 $ 221,460
Capital contributions 69 0 69
Cash distributions (69) (6,871) (6,940)
Net income 37 3,602 3,639
Balance at September 30, 1994 $ 71 $ 218,157 $ 218,228
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1995 and 1994
(in thousands - unaudited)
Nine Months Ended
September 30,
1995 1994
Cash flows from operating activities:
Net income $ 3,992 $ 3,639
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 6,008 4,954
Bad debt expense 419 0
Accrued rental income (115) (147)
Increase (decrease) in cash arising
from changes in operating assets
and liabilities:
Rent and other receivables (674) (473)
Investment portfolio fee payable
to related parties 13 1,209
Accounts payable and accrued expenses (118) 13
Accrued property taxes 604 316
Security deposits 22 (16)
Other liabilities 99 (43)
Net cash provided by
operating activities 10,250 9,452
Cash flows from investing activities:
Investments in real estate (3,303) (5,587)
Net cash used in investing
activities (3,303) (5,587)
Cash flows from financing activities:
Cash distributions (6,940) (6,940)
Capital contributions 69 69
Net cash used in financing
activities (6,871) (6,871)
Net increase (decrease) in cash and cash equivalents 76 (3,006)
Cash and cash equivalents at beginning of period 9,373 13,234
Cash and cash equivalents at end of period $ 9,449 $10,228
AETNA REAL ESTATE ASSOCIATES, L.P.
(a Delaware limited partnership)
Notes to Consolidated Financial Statements
September 30, 1995
(unaudited)
1. GENERAL
The accompanying financial statements and related notes should be read
in conjunction with the Partnership's annual report for the year ended
December 31, 1994. The financial data included herein as of December
31, 1994 has been drawn from the consolidated financial statements of
the Partnership which were audited by Coopers & Lybrand L.L.P.
2. TRANSACTIONS WITH AFFILIATES
Investment Portfolio Fee
The General Partners are entitled to receive an investment portfolio
fee based on the net asset value of the Partnership's investments. The
fee is payable quarterly, in arrears, from available cash flow and may
not exceed 2.5% per annum of net asset value. For the nine months
ended September 30, 1995, Aetna/AREA and AREA GP earned fees of
$1,440,956 and $2,161,434 , respectively. For the similar period of
the prior year, Aetna/AREA and AREA GP earned fees of $1,409,354 and
$2,114,032, respectively.
3. CAPITAL CONTRIBUTIONS/DISTRIBUTIONS
Cash distributions paid to Unitholders during the period January 1,
1995 to September 30, 1995 by the Partnership aggregated $6,871,257
which related to operations for the quarters ended December 31, 1994,
March 31, 1995 and June 30, 1995. The General Partners' distributions
aggregating $69,405 were withheld by the Partnership since funds of an
equal amount would have to be contributed to the Partnership at the end
of the year as required by the Partnership's Revised Limited
Partnership Agreement.
4. SUBSEQUENT EVENTS
In October 1995, the Partnership declared a cash distribution to
Unitholders aggregating $2,313,553 ($.18 per Unit) pertaining to the
period from July 1, 1995 to September 30, 1995, of which $2,290,418,
representing the Limited Partners' share, is to be distributed on or
about November 15, 1995. For the reasons discussed in Note 3, the
General Partners' distributions aggregating $23,135 will be withheld by
the Partnership.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
At December 31, 1994, the Partnership had working capital reserves ("Reserves")
of approximately $4,887,000. During the nine months ended September 30, 1995,
the Partnership expended approximately $3,303,000 for capital improvements.
The Partnership has current Reserves of approximately $4,598,000 including
approximately $3,014,000 retained from cash generated from operations for the
nine months ended September 30, 1995. At September 30, 1995, the Partnership
had approximately $972,000 of outstanding commitments for capital improvements
and approximately $5,124,000 of projected capital improvements (collectively
the "Capital Costs") related to existing Investments in Properties. These
Capital Costs consist primarily of projected tenant improvements and leasing
commissions for speculative leasing activity at certain properties, which,
based on activity in the marketplace, may or may not materialize. During the
remainder of 1995, the Partnership expects to fund approximately $1,901,000
from Reserves for these Capital Costs. The Partnership anticipates funding
these Capital Costs from existing Reserves and through additions from operating
cash flow to its Reserves. To ensure that the Partnership has adequate
Reserves to fund its Capital Costs, the General Partners will continue to
review the Reserves quarterly. It may be necessary to adjust future cash
distributions to increase the Reserves.
If sufficient capital is not available at the time of a funding of a Capital
Cost, the General Partners will review such Capital Cost and take such steps as
they consider appropriate, including decreasing future cash distributions from
operations, negotiating a delay or other restructuring of the capital funding
requirements related to an Investment in Properties or borrowing money, as
provided in the Partnership Agreement, on a short-term basis to pay Capital
Costs.
Results of Operations
Net income for the nine months ended September 30, 1995 increased approximately
$353,000 in comparison to the corresponding period in 1994. The increase in
rental revenue of approximately $1,445,000 from the corresponding period in
1994 resulted from increases in rental revenue at most of the properties. The
most significant increases occurred at Oakland Pointe and Lincoln Marina Bay,
as a result of increased occupancy, and at Powell Street and Summit Village, as
a result of increases in percentage rents and rental rates, respectively. The
increase in other income is attributable to receipt of a lease termination fee
at Three Riverside Drive.
Property operating expenses for the nine months ended September 30, 1995
decreased approximately $128,000 in comparison to the corresponding period in
1994. The majority of the decrease is attributable to a decrease in operating
expenses at Town Center, specifically related to a real estate tax refund
received and a reduction in repairs and maintenance. Increased amortization
expense is a result of the write-off of the unamortized cost of the tenant
improvements and leasing commissions associated with a tenant that vacated
Village Square. The investment portfolio fee increased slightly due to an
increase in net assets at current value as discussed below. Based on an
analysis performed on each property it was necessary to increase the allowance
for doubtful accounts at certain properties, the majority of which was
established at the retail properties, including approximately $221,000 related
to the tenant that vacated Village Square.
The Partnership made cash distributions of $.54 per Unit to Unitholders for
each of the nine months ended September 30, 1995 and 1994.
The Net Asset Value of each of the Partnership's Units, based upon quarterly
independent appraisals, increased to $15.10 at September 30, 1995 from $15.00
at September 30, 1994. The increase in Net Asset Value per Unit is primarily
the result of increases in the appraised value of several of the Partnership's
properties, including significant increases in Cross Pointe Centre, Powell
Street, Lincoln Square Apartments and Summit Village Apartments. The increase
in appraised value of Cross Pointe Centre is a result of improved occupancy in
conjunction with a stronger tenant mix, including an expansion of a proven
anchor tenant and a reduced vacancy allowance. Powell Street's increase in
appraised value is primarily due to an increase in percentage rent, with stable
cash flow and modest lease expirations projected over the next few years. The
increase in appraised value of Lincoln Square Apartments and Summit Village
Apartments is a result of an increase in projected market rents. These value
increases were partially offset by decreases in the appraised value of Village
Square, Town Center Business Park and Oakland Pointe Shopping Center. The
decrease in appraised value of Village Square is a result of a significant
decrease in its occupancy rate from 56% to 39%. The General Partners are
currently considering options for the future strategy of this property. The
decrease in appraised value of Town Center Business Park is primarily a result
of a decrease in projected income from rents and expense reimbursements. The
majority of the decrease in appraised value of Oakland Pointe is a result of a
change in renewal assumptions associated with a major tenant. In addition, the
increase in Net Asset Value per Unit was partially offset by a decrease related
to the sale of a building at Westgate Distribution Center in October 1994 and
the subsequent special distribution made in December 1994 of a portion of the
sale proceeds.
Net income for the three months ended September 30, 1995 decreased
approximately $197,000 as compared to the corresponding period in 1994. The
increase in expenses is primarily attributable to the increase in amortization
expense as a result of the write-off of the unamortized cost of the tenant
improvements and leasing commissions associated with a tenant that vacated
Village Square. Based on an analysis performed on each property it was
necessary to increase the allowance for doubtful accounts at certain retail
properties, including approximately $98,000 related to Village Square. This
increase in expense was partially offset by increases in rental revenue at
certain retail properties. As discussed above, the increase in other income is
attributable to receipt of a lease termination fee at Three Riverside Drive.
PART II - OTHER INFORMATION
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8K
(a) None
(b) None
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.
Aetna Real Estate Associates, L.P.
BY: AREA GP CORPORATION
General Partner
Date: November 13, 1995 BY: /s/ Paul L. Abbott
Name: Paul L. Abbott
Title: President, Chief Executive
Officer and Chief Financial
Officer
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<OTHER-SE> 211,399,000
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