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, 1997
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 06103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (860) 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 90 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, 1997 and December 31, 1996
(in thousands)
June 30, December 31,
1997 1996
(unaudited)
Assets
Investments in real estate:
Properties $ 241,466 $ 239,889
Less accumulated depreciation
and amortization (51,156) (47,772)
Total investments in real estate 190,310 192,117
Cash and cash equivalents 9,823 9,133
Rent and other receivables 4,364 4,487
Other 13 13
Total assets $ 204,510 $ 205,750
Liabilities and Partners' Capital
Liabilities:
Investment portfolio fee payable
to related parties $ 1,150 $ 1,195
Accounts payable and accrued expenses 395 496
Accrued property taxes 935 766
Security deposits 936 934
Unearned income 157 189
Total liabilities 3,573 3,580
Partners' capital (deficiency):
General Partners (55) (43)
Limited Partners 200,992 202,213
Total partners' capital 200,937 202,170
Total liabilities and partners' capital $ 204,510 $ 205,750
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Statements of Income
For the Three and Six Months Ended June 30, 1997 and 1996
(in thousands, except units and per unit amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Revenue:
Rental $ 7,190 $ 6,936 $ 14,249 $ 13,950
Interest 93 77 181 165
Other income 92 167 229 270
7,375 7,180 14,659 14,385
Expenses:
Property operating 2,464 2,300 4,865 4,727
Depreciation and amortization 1,712 1,724 3,409 3,499
Investment portfolio
fee - related parties 1,150 1,237 2,353 2,452
General and administrative 168 148 329 287
Bad debt 132 100 309 371
5,626 5,509 11,265 11,336
Net income $ 1,749 $ 1,671 $ 3,394 $ 3,049
Net income allocated:
To the General Partners 17 16 34 30
To the Limited Partners 1,732 1,655 3,360 3,019
$ 1,749 $ 1,671 $ 3,394 $ 3,049
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 $.14 $.13 $.27 $.24
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Statements of Partners' Capital (Deficiency)
For the Six Months Ended June 30, 1997 and 1996
(in thousands - unaudited)
General Limited
Partners Partners Total
Balance at January 1, 1997 $ (43) $ 202,213 $ 202,170
Distributions (46) (4,581) (4,627)
Net income 34 3,360 3,394
Balance at June 30, 1997 $ (55) $ 200,992 $ 200,937
Balance at January 1, 1996 $ 85 $ 205,721 $ 205,806
Distributions (139) (4,581) (4,720)
Net income 30 3,019 3,049
Balance at June 30, 1996 $ (24) $ 204,159 $ 204,135
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1997 and 1996
(in thousands - unaudited)
Six Months Ended
June 30,
1997 1996
Cash flows from operating activities:
Net income $ 3,394 $ 3,049
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 3,409 3,499
Bad debt expense 309 371
Accrued rental income (25) 46
Increase (decrease) in cash arising
from changes in operating assets and liabilities:
Rent and other receivables (161) (646)
Investment portfolio fee payable to related parties (45) 24
Accounts payable and accrued expenses (67) (48)
Accrued property taxes 169 135
Security deposits 2 32
Unearned income (32) (140)
Net cash provided by operating activities 6,953 6,322
Cash flows from investing activities:
Investments in real estate (1,636) (1,430)
Net cash used in investing activities (1,636) (1,430)
Cash flows from financing activities:
Cash distributions (4,627) (4,720)
Net cash used in financing activities (4,627) (4,720)
Net increase in cash and cash equivalents 690 172
Cash and cash equivalents at beginning of period 9,133 8,971
Cash and cash equivalents at end of period $ 9,823 $ 9,143
AETNA REAL ESTATE ASSOCIATES, L.P.
(a Delaware limited partnership)
Notes to Consolidated Financial Statements
(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, 1996. The financial
data included herein as of December 31, 1996 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. The applicable percentage,
for the purpose of calculating this fee, declines to 2% per
annum for Investments in Properties held by the Partnership
more than 10 years but less than 15 years, and to 1.75% per
annum for Investments in Properties held more than 15 years.
For the six months ended June 30, 1997, Aetna/AREA and AREA
GP earned fees of $1,006,314 and $1,346,344, respectively.
For the similar period of the prior year, Aetna/AREA and
AREA GP earned fees of $980,721 and $1,471,081,
respectively.
3. CASH DISTRIBUTIONS
On or about May 15, 1997, cash distributions paid by the
Partnership aggregated $2,313,554 which related to
operations for the three months ended March 31, 1997. Cash
distributions paid to Unitholders during the period January
1, 1997 to June 30, 1997 by the Partnership aggregated
$4,580,837 which related to operations for the quarters
ended December 31, 1996 and March 31, 1997. Cash
distributions paid to the General Partners during the period
January 1, 1997 to June 30, 1997 by the Partnership
aggregated $46,271 which related to operations for the
quarters ended December 31, 1996 and March 31, 1997.
4. SUBSEQUENT EVENTS
In July 1997, the Partnership declared cash distributions
aggregating $2,313,554 pertaining to the period from April 1,
1997 to June 30, 1997. On or about August 15, 1997
$2,290,418 ($.18 per Unit) is to be distributed to the
Limited Partners and $23,136 to the General Partners.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At December 31, 1996, the Partnership had working capital reserves
("Reserves") of approximately $4,752,000. During the six months
ended June 30, 1997, the Partnership expended approximately
$1,636,000 for capital improvements. The Partnership has current
Reserves of approximately $5,299,000, including approximately
$2,183,000 retained from operations for the six months ended June
30, 1997. At June 30, 1997, the Partnership had approximately
$991,000 of outstanding commitments for capital improvements and
approximately $4,417,000 of projected capital improvements
(collectively the "Capital Costs") related to existing Investments
in Properties. For the six months ended December 31, 1997 the
Partnership will fund if needed approximately $2,714,000 from
Reserves for these Capital Costs. 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.
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.
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, 1997 increased
approximately $345,000 in comparison to the corresponding period
in 1996, due primarily to an increase in rental revenue. An
increase in revenue of approximately $274,000 from the
corresponding period in 1996 resulted primarily from increases in
rental revenue at 115 and 117 Flanders Road, and Three Riverside
Drive due to improved occupancy at these properties. These
increases were partially offset by decreases in rental revenue at
the majority of the retail properties. Expenses for the six
months ended June 30, 1997 decreased approximately $71,000 in
comparison to the corresponding period in 1996 as a result of
decreases in depreciation/amortization, due to certain assets
becoming fully depreciated/amortized, and lower investment
portfolio fees partially offset by increased property operating
expenses, primarily at the retail properties.
The bad debt expense for the six months ended June 30, 1997, to
write-off certain tenant receivables and to increase the allowance
for doubtful accounts at certain properties, includes
approximately $54,000 related to a tenant experiencing financial
difficulties at Marina Bay Industrial Park and approximately
$119,000 related to a tenant in bankruptcy at Powell Street Plaza.
The Partnership made cash distributions of $.36 per Unit to
Unitholders for the six months ended June 30, 1997 and 1996.
The Net Asset Value of each of the Partnership's Units, based
upon quarterly independent appraisals, increased to $15.94 at
June 30, 1997 from $15.55 at June 30, 1996. The increase in Net
Asset Value per Unit is primarily the result of increases in the
appraised values of certain of the Registrant's properties,
including significant increases in Summit Village Apartments,
Town Center Business Park, Three Riverside Drive and 115 & 117
Flanders Road. The increase in the appraised value of Summit
Village Apartments is a result of an increase in projected market
rents. Town Center Business Park, Three Riverside Drive and 115
& 117 Flanders Road increased in appraised value primarily as a
result of improved occupancy and market rent assumptions. These
value increases were partially offset by decreases in the
appraised value of certain of the Registrant's properties,
primarily Cross Pointe Centre and Oakland Pointe Shopping Center.
The appraised value of Cross Pointe Centre decreased primarily
due to a decrease in occupancy, market rent, and growth rate
assumptions. Factors contributing to a reduction in the
appraised value of Oakland Pointe Shopping Center included a
decrease in anticipated occupancy, resulting from the expected
departure of three major tenants, and a reduction in the market
rent of some small shop space.
Net income for the three months ended June 30, 1997 increased
approximately $78,000 as compared to the corresponding period in
1996. An increase in rental revenue of approximately $254,000 and
a reduction in the investment portfolio fee of approximately
$87,000 were partially offset by an increase in the property
operating expenses of approximately $164,000 and a decrease of
approximately $75,000 in other income. The most significant
increases in rental revenue occurred at Oakland Pointe Shopping
Center and 115 & 117 Flanders Road. The most significant
increases in property operating expenses occurred at Town Center
Business Park and Village Square Shopping Center. The decrease in
other income is primarily attributable to a refund of real estate
taxes for Powell Street Plaza received during the three months
ended June 30, 1996.
PART II - OTHER INFORMATION
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8K
(a) Exhibit No. 27 - Financial Data Schedule
(b) None
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<OTHER-SE> 200,937,000
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