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: June 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.)
242 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 June 30, 1995 and December 31, 1994
(in thousands)
June 30, December 31,
1995 1994
(unaudited)
Assets
Investments in real estate:
Properties $ 243,251 $ 241,333
Less: accumulated depreciation
and amortization (40,519) (36,979)
Total investments in real estate 202,732 204,354
Cash and cash equivalents 9,465 9,373
Rent and other receivables 4,151 4,114
Other 13 13
Total assets $ 216,361 $ 217,854
Liabilities and Partners' Capital
Liabilities:
Investment portfolio fee payable
to related parties $ 1,195 $ 1,188
Accounts payable and accrued expenses 489 608
Accrued property taxes 928 755
Security deposits 817 814
Other liabilities 109 92
Total liabilities 3,538 3,457
Partners' capital:
General Partners 109 79
Limited Partners 212,714 214,318
Total partners' capital 212,823 214,397
Total liabilities and partners'
capital $ 216,361 $ 217,854
The accompanying notes are an integral part of
these consolidated financial statements.
AETNA REAL ESTATE ASSOCIATES, L.P.
Condolidated Statements of Income
For the Three and Six Months Ended June 30, 1995 and 1994
(in thousands, except units and per unit amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Revenue:
Rental $ 6,911 $ 6,497 $ 13,833 $ 12,851
Interest 92 59 179 120
Other income 86 48 142 98
Total 7,089 6,604 14,154 13,069
Expenses:
Property operating 2,273 2,219 4,527 4,582
Depreciation and
amortization 1,805 1,668 3,540 3,303
Investment portfolio
fee - related parties 1,195 1,169 2,402 2,332
General and administrative 184 174 376 395
Bad debt 222 - 302 -
5,679 5,230 11,147 10,612
Net income $ 1,410 $ 1,374 $ 3,007 $ 2,457
Net income allocated:
To the General Partners $ 14 $ 14 $ 30 $ 25
To the Limited Partners 1,396 1,360 2,977 2,432
$ 1,410 $ 1,374 $ 3,007 $ 2,457
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 $ .11 $ .11 $ .23 $ .19
The accompanying notes are an integral part of
these consolidated financial statements.
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Statements of Partners' Capital
For the Six Months Ended June 30, 1995 and 1994
(in thousands - unaudited)
General Limited
Partners Partners Total
Balance at January 1, 1995 $ 79 $ 214,318 $ 214,397
Capital contributions 46 - 46
Cash distributions (46) (4,581) (4,627)
Net income 30 2,977 3,007
Balance at June 31, 1995 $ 109 $ 212,714 $ 212,823
Balance at January 1, 1994 $ 34 $ 221,426 $ 221,460
Capital contributions 46 - 46
Cash distributions (46) (4,581) (4,627)
Net income 25 2,432 2,457
Balance at June 30, 1994 $ 59 $ 219,277 $ 219,336
The accompanying notes are an integral part of
these consolidated financial statements.
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1995 and 1994
(in thousands - unaudited)
Six Months Ended
June 30,
1995 1994
Cash flows from operating activities:
Net income $ 3,007 $ 2,457
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 3,540 3,303
Bad debt expense 302 -
Accrued rental income (112) (147)
Increase (decrease) in cash arising
from changes in operating
assets and liabilities:
Rent and other receivables (227) (329)
Investment portfolio fee payable
to related parties 7 18
Accounts payable and accrued
expenses (119) (47)
Accrued property taxes 173 158
Security deposits 3 (17)
Other liabilities 17 (44)
Net cash provided by operating
activities 6,591 5,352
Cash flows from investing activities:
Investments in real estate (1,918) (3,814)
Net cash used in investing activities (1,918) (3,814)
Cash flows from financing activities:
Cash distributions (4,627) (4,627)
Capital contributions 46 46
Net cash used in financing activities (4,581) (4,581)
Net increase (decrease) in cash and cash
equivalents 92 (3,043)
Cash and cash equivalents at beginning
of period 9,373 13,234
Cash and cash equivalents at end of period $ 9,465 $10,191
The accompanying notes are an integral part of
these consolidated financial statements.
AETNA REAL ESTATE ASSOCIATES, L.P.
(a Delaware limited partnership)
Notes to Consolidated Financial Statements
June 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 six months ended
June 30, 1995, Aetna/AREA and AREA GP earned fees of $960,740 and
$1,441,111, respectively. For the similar period of the prior year,
Aetna/AREA and AREA GP earned fees of $932,769 and $1,399,154,
respectively.
3. CAPITAL CONTRIBUTIONS/DISTRIBUTIONS
Cash distributions paid to Unitholders during the period January 1,
1995 to June 30, 1995 by the Partnership aggregated $4,580,837 which
related to operations for the quarters ended December 31, 1994 and
March 31, 1995. The General Partners' distributions aggregating
$46,271 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 July 1995, the Partnership declared a cash distribution to
Unitholders aggregating $2,313,553 ($.18 per Unit) pertaining
to the period from April 1, 1995 to June 30, 1995, of which
$2,290,418, representing the Limited Partners' share, is to be
distributed on or about August 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 Conditions 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 six months ended June 30, 1995, the
Partnership expended approximately $1,918,000 for capital improvements. The
Partnership has current Reserves of approximately $4,823,000, including
approximately $1,854,000 retained from cash generated from operations for the
six months ended June 30, 1995. At June 30, 1995, the Partnership had
approximately $1,400,000 of outstanding commitments for capital improvements
and approximately $3,380,000 of projected capital improvements (collectively
the "Capital Costs") related to existing Investments in Properties. These
Capital Costs consist primarily of estimated 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 $3,324,000
from Reserves for these Capital Costs. The remaining $1,456,000 of these
Capital Costs are projected to be disbursed in 1996. 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 six months ended June 30, 1995 increased approximately
$550,000 in comparison to the corresponding period in 1994. The increase in
rental revenue of approximately $982,000 from the corresponding period in 1994
resulted from increases in rental revenue at most of the properties, with the
most significant increases occurring at Powell Street, as a result of an
increase in percentage rent, and Oakland Pointe, as a result of an increase in
occupancy from 75% to 90%.
Property operating expenses for the six months ended June 30, 1995 decreased
approximately $55,000 in comparison to the corresponding period in 1994, as a
result of decreases in operating expenses at certain office/industrial
properties partially offset by increases in operating expenses at certain
residential properties. Increased amortization expense is a result of tenant
improvements placed in service since June 30, 1994 at certain office/industrial
properties. 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 Partnership made cash distributions of $.36 per Unit to Unitholders for the
six months ended June 30, 1995 and June 30, 1994.
The Net Asset Value of each of the Partnership's Units, based upon quarterly
independent appraisals, increased to $15.03 at June 30, 1995 from $14.72 at
June 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 Oakland Pointe, Cross Pointe
Centre and Powell Street. The increases in appraised value of Oakland Pointe
and Cross Pointe Centre are a result of improved occupancy in conjunction with
a stronger tenant mix, including an expansion of a proven anchor tenant at
Cross Pointe Centre, 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. These value increases were slightly offset by decreases in the
appraised value of some properties, primarily Village Square and Town Center
Business Park. 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 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.
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 June 30, 1995 increased approximately
$36,000 as compared to the corresponding period in 1994. This increase is
primarily attributable to increases in rental revenue at most of the
properties, with the most significant increase occurring at Powell Street,
partially offset by the increase in bad debt and amortization expense as
discussed above and to a lesser extent an increase in property operating
expenses.
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: August 8, 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> 212,823,000
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