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: March 31, 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 06156
- --------------------------------------- ------------
(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 March 31, 1997 and December 31, 1996
(in thousands)
March 31, December 31,
1997 1996
(unaudited)
Assets ------------ ------------
Investments in real estate:
Properties $240,751 $239,889
Less accumulated depreciation
and amortization (49,469) (47,772)
Total investments in real estate 191,282 192,117
Cash and cash equivalents 9,698 9,133
Rent and other receivables 4,211 4,487
Other 13 13
Total assets $205,204 $205,750
Liabilities and Partners' Capital
Liabilities:
Investment portfolio fee payable
to related parties $ 1,203 $ 1,195
Accounts payable and accrued expenses 358 496
Accrued property taxes 1,042 766
Security deposits 943 934
Unearned income 157 189
Total liabilities 3,703 3,580
Partners' capital (deficiency):
General Partners (49) (43)
Limited Partners 201,550 202,213
Total partners' capital 201,501 202,170
Total liabilities and partners' capital $205,204 $205,750
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Statements of Income
For the Three Months Ended March 31, 1997 and 1996
(in thousands, except units and per unit amounts)
(unaudited)
Three Months
Ended March 31,
-----------------------
1997 1996
Revenue:
Rental $ 7,059 $ 7,014
Interest 88 88
Other income 137 103
7,284 7,205
Expenses:
Property operating 2,401 2,427
Depreciation and amortization 1,697 1,775
Investment portfolio fee - related parties 1,203 1,215
General and administrative 161 139
Bad debt 177 271
5,639 5,827
Net income $ 1,645 $ 1,378
Net income allocated:
To the General Partners $ 17 $ 14
To the Limited Partners 1,628 1,364
$ 1,645 $ 1,378
Weighted average number of limited
partnership units outstanding 12,724,547 12,724,547
Earnings per limited partnership unit $.13 $.11
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Statements of Partners' Capital (Deficiency)
For the Three Months Ended March 31, 1997 and 1996
(in thousands - unaudited)
General Limited
Partners Partners Total
---------- ---------- ----------
Balance at January 1, 1997 $ (43) $202,213 $202,170
Distributions (23) (2,291) (2,314)
Net income 17 1,628 1,645
Balance at March 31, 1997 $ (49) $201,550 $201,501
Balance at January 1, 1996 $ 85 $205,721 $205,806
Distributions (116) (2,290) (2,406)
Net income 14 1,364 1,378
Balance at March 31, 1996 $ (17) $204,795 $204,778
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1997 and 1996
(in thousands - unaudited)
Three Months
Ended March 31,
--------------------
1997 1996
Cash flows from operating activities:
Net income $ 1,645 $ 1,378
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,697 1,775
Bad debt expense 177 271
Accrued rental income 3 (31)
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Rent and other receivables 96 (261)
Investment portfolio fee payable to related parties 8 3
Accounts payable and accrued expenses (104) (90)
Accrued property taxes 276 248
Security deposits 9 20
Unearned income (32) (57)
Other liabilities -- (1)
Net cash provided by operating activities 3,775 3,255
Cash flows from investing activities:
Investments in real estate (896) (1,022)
Net cash used in investing activities (896) (1,022)
Cash flows from financing activities:
Cash distributions (2,314) (2,290)
Net cash used in financing activities (2,314) (2,290)
Net increase (decrease) in cash and cash equivalents 565 (57)
Cash and cash equivalents at beginning of period 9,133 8,971
Cash and cash equivalents at end of period $ 9,698 $ 8,914
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 three months ended March 31, 1997, Aetna/AREA and
AREA GP earned fees of $499,309 and $703,722, respectively.
For the similar period of the prior year, Aetna/AREA and
AREA GP earned fees of $486,190 and $729,284, respectively.
3. CASH DISTRIBUTIONS
On or about February 15, 1997, cash distributions paid by
the Partnership aggregated $2,313,554 which related to
operations for the three months ended December 31, 1996.
4. SUBSEQUENT EVENTS
In April 1997, the Partnership declared cash distributions
aggregating $2,313,554 pertaining to the period from January
1, 1997 to March 31, 1997. On or about May 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 quarter ended
March 31, 1997, the Partnership expended approximately $896,000 for
capital improvements. The Partnership has current Reserves of
approximately $4,919,000, including approximately $1,063,000
retained from cash generated from operations for the three months
ended March 31, 1997. At March 31, 1997, the Partnership had
approximately $1,008,000 of outstanding commitments for capital
improvements and approximately $5,402,000 of projected capital
improvements (collectively the "Capital Costs") related to existing
Investments in Properties of which for 1997 the Partnership will
fund if needed approximately $4,983,000 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 three months ended March 31, 1997 increased
approximately $267,000 in comparison to the corresponding period
in 1996, due primarily to a decrease in depreciation/amortization
and bad debt expenses. An increase in revenue of approximately
$79,000 from the corresponding period in 1996 resulted primarily
from increases in revenue at the office/industrial properties.
These revenue increases were partially offset by decreases in
rental revenue at the retail properties. The increase in other
income is mostly attributable to receipt of a lease termination
fee at Town Center Business Park. Expenses for the three months
ended March 31, 1997 decreased approximately $188,000 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 bad debt expense.
The bad debt expense for the quarter ended March 31, 1997 represents
additions to the allowance for doubtful accounts at certain
properties, including approximately $54,000 related to a tenant
experiencing financial difficulties at Marina Bay Industrial Park
and approximately $107,000 related to a tenant in bankruptcy at
Powell Street Plaza.
The Partnership made cash distributions of $.18 per Unit to
Unitholders for the three months ended March 31, 1997 and 1996.
The Net Asset Value of each of the Partnership's Units, based upon
quarterly independent appraisals, increased to $15.70 at March 31,
1997 from $15.29 at March 31, 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.
Reductions in the assumed vacancy rate and the discount rate
resulted in an increase in the appraised value of 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 Oakland Pointe Shopping
Center and Powell Street Plaza. 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. The appraised value of
Powell Street Plaza decreased primarily due to a decrease in
occupancy and a reduction in overage rent income.
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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 9,698,000
<SECURITIES> 000
<RECEIVABLES> 4,828,000
<ALLOWANCES> 617,000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 240,751,000
<DEPRECIATION> 49,469,000
<TOTAL-ASSETS> 205,204,000
<CURRENT-LIABILITIES> 000
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 201,501,000
<TOTAL-LIABILITY-AND-EQUITY> 205,204,000
<SALES> 7,059,000
<TOTAL-REVENUES> 7,284,000
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 5,639,000
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 1,645,000
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 000
</TABLE>
