FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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: 33-3657
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
as successor to Glenborough Limited pursuant to Rule 15d-5
-----------------------------------------------------------------
-
(Exact name of Registrant as specified in its charter)
94-3193010
California (successor to 94-2997842)
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 South El Camino Real,
Suite 1100
San Mateo, California 94402
--------------------- ------------
(Address of principal (Zip Code)
executive offices)
(415) 343-9300
-----------------------------
(Registrant's telephone number)
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 1 of 20
Total number of units outstanding as of September 30, 1995: 2,961,853
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Balance Sheets
(In thousands, except units outstanding)
(Unaudited)
September 30, December 31,
1995 1994
---------- ----------
Assets
------
Real estate investments, at cost:
Land $ 2,054 $ 2,045
Buildings and improvements 16,173 16,076
-------- --------
18,227 18,121
Less:
Accumulated depreciation (3,156) (2,901)
-------- --------
Net real estate investments 15,071 15,220
Real estate held for sale, net 4,370 4,558
Other Assets:
Cash and cash equivalents 242 2,604
Receivables 29 15
Deferred financing and other fees, net
of accumulated amortization of $258
and $205 at September 30, 1995 and
December 31, 1994, respectively 413 362
Notes receivable 460 -
Prepaid expenses and other assets 162 227
Deposits 169 199
Investment in joint venture 1,050 -
-------- --------
Total assets $ 21,966 $ 23,185
======== ========
(continued)
Page 2 of 20
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Balance Sheets - continued
(In thousands, except units outstanding)
(Unaudited)
September 30, December 31,
1995 1994
-------- --------
Liabilities and Partners' Equity
--------------------------------
Liabilities:
Notes payable 16,585 17,160
Accounts payable 11 85
Accrued expenses 221 496
Advances from related parties - 60
Deposits and other liabilities 148 95
-------- --------
Total liabilities 16,965 17,896
-------- --------
Partners' equity:
General partners 429 435
Limited partners, 2,961,853
units outstanding 4,572 4,854
-------- --------
Total partners' equity 5,001 5,289
-------- --------
Total liabilities and partner's
equity $ 21,966 $ 23,185
======== ========
See accompanying notes to consolidated financial statements.
Page 3 of 20
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Operations
(in thousands, except per unit amounts)
(Unaudited)
Nine months ended Three months ended
September 30, September 30,
---------------- -----------------
1995 1994 1995 1994
------ ------ ------ ------
Revenues:
Rental $ 2,224 $ 5,290 $ 735 $ 671
Interest and other 247 172 (28) 76
------ ------ ------ ------
Total revenues 2,471 5,462 707 747
------ ------ ------ ------
Expenses:
Operating (including $94
and $414 paid to affiliates
in the nine months ended
September 30, 1995 and 1994,
respectively) 497 2,470 168 152
General and administrative
(including $219 and $500
paid to affiliates in the nine
months ended September 30,
1995 and 1994, respectively) 330 1,073 98 358
Interest expense 1,377 2,741 417 183
Depreciation and amortization 497 1,766 168 130
------ ------ ------ ------
Total expenses 2,701 8,050 851 823
Loss before other income and
expense (230) (2,588) (144) (76)
(continued)
Page 4 of 20
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Operations - continued
(in thousands, except per unit amounts)
(Unaudited)
Nine months ended Three months ended
September 30, September 30,
---------------- -----------------
1995 1994 1995 1994
------ ------ ------ ------
Other income and (expense):
Gain on sale - 1,503 - -
Loss on investment in real
estate (58) - - -
------- ------- ------- -------
Loss before extraordinary
item (288) (1,085) (144) (76)
Extraordinary item - 119,855 - (172)
------- ------- ------- -------
Net income/(loss) $ (288)$118,770 $ (144) $ (248)
======= ======= ======= =======
Loss before extraordinary
item per limited partnership
unit $ (0.10)$ (0.33) $ (0.05) $ (0.05)
Extraordinary item per limited
partnership unit - 36.49 - (0.06)
------- ------- ------- -------
Net income/(loss) per limited
partnership unit $ (0.10)$ 36.16 $ (0.05) $ (0.11)
======= ======= ======= =======
Distributions per limited
partnership unit $ - $ - $ - $ -
======= ======= ======= =======
See accompanying notes to consolidated financial statements.
Page 5 of 20
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Partners' Equity (Deficit)
(in thousands)
For the nine months ended September 30, 1995 and 1994
(Unaudited)
Total
General Limited Partners'
Partner Partners Equity
---------- ---------- ----------
Consolidated balance,
December 31, 1993 $ (2,234) $(110,034) $(112,268)
Net income 2,697 116,073 118,770
--------- --------- ---------
Consolidated balance,
September 30, 1994 $ 463 $ 6,039 $ 6,502
========= ========= =========
Consolidated balance,
December 31, 1994 $ 435 $ 4,854 $ 5,289
Net loss (6) (282) (288)
--------- --------- ---------
Consolidated balance,
September 30, 1995 $ 429 $ 4,572 $ 5,001
========= ========= =========
See accompanying notes to consolidated financial statements.
Page 6 of 20
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
For the nine months
ended
September 30,
----------------------
1995 1994
-------- --------
Cash flows from operating activities:
Net income/(loss) $ (288) $118,770
Adjustments to reconcile net
income/(loss) to net cash
used in operating activities:
Depreciation and amortization 497 1,766
Gain on sale - (1,503)
Gain from bankruptcy reorganization
and early extinguishment of debt - (119,855)
Changes in assets and liabilities:
Increase (decrease) in other liabilities 53 (294)
Increase in receivables (7) -
Decrease in accounts payable and
accrued expenses (380) (457)
Decrease in advance from related
parties (60) (1,000)
Decrease (increase) in prepaid expenses
and other assets 65 (309)
Decrease in deposits 30 -
Decrease in prepaid incentive
and transaction fees (paid to a
related party) - 348
Increase in deferred financing and
other fees (105) (575)
Increase in accrued interest 31 108
------- -------
Net cash used in operating activities (164) (3,001)
------- -------
(continued)
Page 7 of 20
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows - continued
(in thousands)
(Unaudited)
For the nine months
ended
September 30,
----------------------
1995 1994
-------- --------
Cash flows from investing activities:
Investment in joint venture (1,050) -
Proceeds from sale of real estate - 1,307
Improvements to real estate (106) (326)
Gross decrease in restricted cash - (35)
Increase in interest receivable (7) -
Purchase of and increase in notes
receivable (2,601) -
Collections on notes receivable 2,141 -
--------- ---------
Cash provided by (used in) investing
activities (1,623) 946
--------- ---------
Cash flows from financing activities:
Borrowings on notes payable 1,200 15,912
Principal payments on notes payable (1,775) (15,024)
--------- ---------
Cash provided by (used in) financing
activities (575) 888
--------- ---------
Net decrease in cash and cash equivalents (2,362) (1,167)
Cash and cash equivalents, beginning
of period 2,604 1,506
--------- ---------
Cash and cash equivalents, end
of period $ 242 $ 339
========= =========
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 1,346 $ 2,632
========= =========
Supplemental disclosure of non cash
transactions:
Bankruptcy reorganization and early
extinguishment of debt:
Rollout and foreclosure of real
estate, net $ - $ 99,867
========= =========
Extinguishment of debt $ - $(280,482)
========= =========
Other net assets $ - $ 60,661
========= =========
See accompanying notes to consolidated financial statements.
Page 8 of 20
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
September 30, 1995
(Unaudited)
Note 1. SUMMARY OF ORGANIZATION
-----------------------
Glenborough Partners, A California Limited Partnership is the
successor to Glenborough Limited, A California Limited
Partnership pursuant to section 15d-5 of the Securities Exchange
Act of 1934.
On May 21, 1992, GPA Ltd, formerly known as GOCO Realty Fund I,
the partnership holding and operating the Partnership's real
property (including its related Brazos Debt), filed a petition in
the United States Bankruptcy Court for the Northern District of
California for reorganization under Chapter 11 of the Federal
Bankruptcy Code. On January 13, 1994, a plan of reorganization
was filed with the Bankruptcy court which became effective
January 24, 1994.
To facilitate the Partnership's holding and transfer of real
property as set forth under the plan of reorganization, two
partnerships were created in February 1994: (i) GPA West, L.P.
("West"); and (ii) GPA Industrial, L.P. ("Industrial"). West and
Industrial are subsidiaries of GPA Ltd. and as such, the
financial statements have been consolidated with Glenborough
Partners. The general partners of West and Industrial are
Glenborough Realty Corporation and Robert Batinovich while the
sole limited partner of each of the two partnerships is GPA Ltd.
A third subsidiary partnership, GPA Bond L.P.("Bond"), was
created in December 1994 to hold and operate a property purchased
on December 29, 1994. The general partners of Bond are
Glenborough Realty Corporation and Robert Batinovich while the
sole limited partner is GPA Ltd.
On September 6, 1995, West made an $1,050,000 investment in an
unconsolidated joint venture, GRC Airport Associates. Since
West's 31% (of current limited partners contribution) investment
in this joint venture is less than 50%, the Partnership accounts
for this joint venture on an equity method.
After the redemption of units as part of the reorganization plan,
the general partners now hold a 2.27% share of the Partnership's
net income or loss and distributions. Conversely, the limited
partners now hold a 97.73% share of the partnership's net income
or loss and distributions.
Note 2. SIGNIFICANT ACCOUNTING POLICY
-----------------------------
In the opinion of Glenborough Realty Corporation, the managing
general partner, the accompanying unaudited financial statements
Page 9 of 20
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
September 30, 1995
(Unaudited)
contain all adjustments (consisting of only normal accruals)
necessary to present fairly the financial position of Glenborough
Partners, A California Limited Partnership as successor to
Glenborough Limited pursuant to Rule 15d-5 (the "Partnership"),
at September 30, 1995 and December 31, 1994, and the related
statements of operations for the nine and three months ended
September 30, 1995 and 1994, and statements of partners' equity
(deficit) and the statements of cash flows for the nine months
ended September 30, 1995 and 1994.
Note 3. REFERENCE TO 1994 AUDITED FINANCIAL STATEMENTS
-----------------------------------------------
These unaudited financial statements should be read in
conjunction with the Notes to Consolidated Financial Statements
included in the 1994 audited financial statements.
Note 4. NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT
----------------------------------------------
Pursuant to the Glenborough Partners and GPA Ltd. partnership
agreements, the general partners held a 2.27% and 1.99% share of
the partnership's net income or loss and distributions in 1995
and 1994, respectively. This percentage is derived from the
general partners' 1% direct interest in GPA Ltd. and a 1.28% and
0.99% indirect interest through their 1% general partner interest
in Glenborough Partners' 99% interest in GPA Ltd. in 1995 and
1994, respectively.
For financial reporting purposes, 2,961,853 and 3,209,622
weighted average units were outstanding to limited partners for
the nine months ended September 30, 1995 and 1994, respectively.
Net income (loss) per unit in 1995 and 1994 is derived by
dividing 97.73% and 98.01%, respectively of the net income (loss)
by the respective weighted average number of units outstanding to
the limited partners.
Note 5. RELATED PARTY TRANSACTIONS
--------------------------
In accordance with the Limited Partnership, Cash Collateral and
Property Management Agreements, the Partnership paid its general
partner, Glenborough Realty Corporation and its affiliates
(collectively "Glenborough") compensation for services provided
to the Partnership and management of the Partnership's assets.
Page 10 of 20
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
September 30, 1995
(Unaudited)
All fees and allocated expenses due to Glenborough and included
in the Partnership's operating expenses for the nine months ended
September 30, 1995 and 1994 are as follows (in thousands):
Nine months ended
September 30,
------------------
1995 1994
-------- --------
Property management fees $ 81 $ 222
Reimbursed general and administrative
expenses 219 500
------ ------
Total management fees and reimbursed
general and administrative expenses $ 300 $ 722
====== ======
In the first nine months of 1995, Glenborough was reimbursed
$13,000 for salaries and wages of on-site management, maintenance
and landscape employees.
In the first nine months of 1994: (i) Glenborough was reimbursed
$192,000 for salaries and wages of on-site management,
maintenance and landscape employees and $32,000 for miscellaneous
reimbursements; (ii) Glenborough was paid $36,000 for leasing
commissions which were capitalized and are amortized over the
terms of the related leases; and (iii) Glenborough was paid
$962,000 for transaction fees on the reorganization discussed in
Note 12 below.
Note 6. REAL ESTATE HELD FOR SALE
-------------------------
The Partnership has Rosemead Springs up for sale. This property
was in escrow through mid 1995 but fell out of escrow due to the
potential buyer's change in internal operating plans. The
Partnership continues to hold this property for sale.
Note 7. NOTE RECEIVABLE FROM AFFILIATES
-------------------------------
On March 28, 1995, GPA West purchased a $1,908,000 mortgage note
receivable from California Federal Bank ("CalFed"), secured by a
first deed of trust on a property owned by a partnership with the
same general partner as the Partnership. This transaction was
funded from the proceeds of a 1994 property sale. The CalFed
mortgage note had been modified and converted into a demand note
retroactive to March 28, 1995, bearing interest at two percentage
Page 11 of 20
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
September 30, 1995
(Unaudited)
points plus the prime lending rate with principal and interest
due when the note is called. This note was repaid in May 1995.
Note 8. NOTES RECEIVABLE
---------------
On February 24, 1995, Glenborough Partners advanced $125,000 to
an unaffiliated partnership in return for a promissory note which
bore interest at a rate of twelve percent (12%) per annum. The
Partnership received a loan fee of $12,500 at the time the funds
were advanced which was recognized as other income. Total
principal and interest was due on the April 25, 1995 maturity
date but was extended to July 28, 1995.
On April 28, 1995, Glenborough Partners advanced an additional
$60,000 to the same unaffiliated partnership for a promissory
note which consists of terms identical to the February 24, 1995
note above. In addition, the Partnership received a loan fee of
$6,000 at the time the funds were advanced to the affiliate which
was recognized as other income in the second quarter of 1995.
These two notes were paid off in July 1995.
On June 12, 1995, the Partnership advanced $48,000 to another
unaffiliated partnership in return for a promissory note which
also bore interest at a rate of twelve percent (12%) per annum
and matured September 30, 1995. The Partnership received a loan
fee of $2,000 at the time the funds were advanced which has been
recognized as other income. This note was paid off in September
1995.
In July 1995, the Partnership entered into an agreement to
purchase a $925,000 note receivable from an unaffiliated
partnership for $460,000. The note accrues interest at a rate of
eight percent (8%) per annum, payable in predetermined quarterly
amounts. The difference between the interest accrued and the
quarterly predetermined amounts payable is deferred and due at
the note's August 28, 1997 maturity.
Simultaneously, a note modification was agreed upon whereby in
exchange for $10,000 from the borrower at the signing of the
modification and $40,000 at November 15, 1995, the Partnership
has allowed the borrower (the buyer ) the option to purchase the
note for: (i) $625,000 if paid on or before December 29, 1995;
(ii) $775,000 if paid on or before August 28, 1996; or (iii)
$850,000 if paid on or before December 28, 1996.The buyer
expressed an inability to pay before December 29, 1995 and the
general partner felt it was in the best interests of the
Partnership to extend the first option date to March 31, 1996.
Page 12 of 20
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
September 30, 1995
(Unaudited)
Note 9. NOTES PAYABLE
-------------
In May 1995, the $2,500,000 note payable secured by the Rosemead
Springs property matured. The Partnership made a $1,500,000
principal paydown in June 1995 from reserves originating from the
proceeds from a December 1994 property sale. The remaining
$1,000,000 note balance was extended to mature October 1995.
On September 6, 1995, management negotiated a change in the terms
of the loan agreement, allowing the Partnership to draw an
additional $1,200,000 to fund the investment in the GRC Airport
Associates joint venture discussed above. The resulting
$2,200,000 note payable balance, secured by the Rosemead Springs
property and the Partnership's investment interest in the joint
venture (see Note 11), requires monthly interest only payments at
1.25% points over the Mid-Peninsula Bank Base Rate. This debt
matures on April 15, 1996.
In December 1994, GPA Bond purchased the Bond Street building
from Heller Financial, Inc. ("Heller"). Heller financed
$2,835,000 towards this transaction with the difference funded
from the Partnership's working capital reserves. The Heller note
accrues interest at the rate of three hundred fifty (350) basis
points plus the Base Rate (which is defined as the three month
Libor rate). Monthly interest only payments commenced February
1, 1995 and will continue until the maturity date of December 31,
1999. Principal payments are required on a quarterly basis
commencing April 15, 1995 at an amount of excess cash flow, which
is defined as net cash flow less: (i) current payments due on the
loan; and (ii) a ten percent (10%) per annum return on equity to
the borrower.
Note 10. LOSS ON INVESTMENT IN REAL ESTATE
---------------------------------
In order for the Partnership to obtain free and clear title from
Brazos, the previous mortgage holder on the properties known as
the J.I. Case and Navistar buildings, the Partnership made a
$1,000,000 principal paydown on a note payable on behalf of an
affiliated partnership. Financing for the J.I.Case and Navistar
buildings was extremely difficult to find in the current market,
so as an inducement for the lender to finance this release price
purchase, the Partnership paid down a portion of an
unconsolidated affiliate's note payable in good faith. In
December 1994, the Partnership and the affiliated partnership,
UCT Associates, A California Limited Partnership ("UCT") agreed
that the $1,000,000 paid by the Partnership and any subsequent
Page 13 of 20
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
September 30, 1995
(Unaudited)
payments on behalf of UCT was an investment in UCT. Coupled with
that, Robert Batinovich contributed his limited partner interest
in the profits and losses of UCT. This gave the Partnership a 45%
non-voting limited partner interest, a 99% allocation of future
income and losses, and an economic interest in any future upside
of this property, without exposure to any loss. This was made
possible after Glenborough waived a portion of its potential
transaction fees on the disposition of properties in 1994.
As of December 31, 1994, the General Partner believed that there
is no real equity in UCT, therefore the $58,000 in additional
costs paid in 1995 on the behalf of UCT was recognized as a loss
on investment in real estate while the Partnership's share of
UCT's net loss in 1995 will be recognized only to the extent of
any income previously recognized.
Note 11. INVESTMENT IN JOINT VENTURE
---------------------------
On September 6, 1995, the Partnership made an $1,050,000
investment in a joint venture, GRC Airport Associates. Since the
Partnership's 31% (of current limited partners' contributions)
investment in this joint venture is less than 50%, the
Partnership accounts for this joint venture on an equity method.
On October 10, 1995, the joint venture purchased a 216,000 square
feet industrial warehouse in San Bruno, California for
$9,225,000. This transaction was financed through the capital
contributions of the joint venture partners, the assumption of
the existing first deed of trust for $5,264,000 and the creation
of second and third deeds of trust for $3,705,000.
Note 12. GAIN ON SALE
------------
On February 4, 1994, the Partnership sold the Coherent Auburn
property to the tenant for $3,650,000. After paying
approximately $93,000 for other fees, $500,000 for the Brazos'
release of the Rosemead Springs Business Park, and $750,000 for
Brazos' release of Burlingame Plaza, the Partnership applied most
of the remaining proceeds towards Brazos' lien release price for
four properties known as the J.I. Case and Navistar buildings.
The gain on sale was $1,503,000.
Note 13. EXTRAORDINARY ITEM
------------------
On May 21, 1992, GOCO Realty Fund I, now known as GPA, Ltd., the
partnership holding and operating the Partnership's real
property, filed a petition in the United States Bankruptcy Court
for the Northern District of California (the "Court") for
reorganization under Chapter 11 of the Federal Bankruptcy Code.
Page 14 of 20
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
September 30, 1995
(Unaudited)
On January 13, 1994, GPA Ltd., entered a plan of reorganization
with the Court. The plan was confirmed by the Court and the plan
became effective January 24, 1994. A brief description of the
principal points of the plan is incorporated by reference to the
Partnership's December 31, 1994 Form 10-K.
The impact of the reorganization is a $119,885,000 extraordinary
gain from the bankruptcy reorganization and early extinguishment
of debt in the nine months ended September 30, 1994.
Page 15 of 20
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
INTRODUCTION
The predecessor partnership commenced operations as of June 30,
1986, following its acquisition of 66 real estate projects
subject to non-recourse institutional debt secured by the
projects and certain other assets, subject to certain
liabilities, most of which related to the operation of the
projects. The predecessor partnership acquired the projects and
other assets in exchange for the Units, in an Exchange
Transaction involving 21 limited partnerships and one individual
property owner. At the end of 1993, there was a technical
termination of the predecessor partnership and Glenborough
Partners commenced as successor to Glenborough Limited
(collectively, "the Partnership").
The following discussion addresses the Partnership's financial
condition at September 30, 1995 and its results of operations for
the nine months ended September 30, 1995 and 1994. This
information should be read in conjunction with the Consolidated
Financial Statements, notes thereto and other information
contained elsewhere in this report.
LIQUIDITY AND CAPITAL RESOURCES
In February 1995 and April 1995, the Partnership advanced
$125,000 and $60,000, respectively to an unaffiliated partnership
in exchange for promissory notes bearing interest at a rate of
twelve percent (12%) per annum. Both notes matured on July 28,
1995 when principal and cumulative accrued interest were due.
These notes were paid off in August 1995. Upon funding these
advances, the Partnership received loan fees of 10% of the
amounts advanced.
In March 1995, the Partnership purchased a $1,908,000 mortgage
note receivable from California Federal Bank ("CalFed"), secured
by a first deed of trust on a property owned by an affiliate.
This transaction was funded from the proceeds of a 1994 property
sale. This CalFed mortgage note had been modified and converted
into a demand note retroactive to March 28, 1995, bearing
interest at two percentage points plus the prime lending rate
(currently 9%) with principal and interest due when the note is
called. This note was paid off in May 1995.
In June 1995, the Partnership advanced $48,000 to an unaffiliated
partnership in exchange for a promissory note bearing interest at
a rate of twelve percent (12%) per annum. Upon funding this
advance, the Partnership received a loan fee of $2,000. This
note was paid off in September 1995.
In the nine months ending September 30, 1995, the Partnership
reduced its accrued expenses by paying its outstanding tax and
audit fees, primarily relating to the analysis and accounting of
Page 16 of 20
the plan of reorganization discussed in Note 1, Notes to
Consolidated Financial Statements.
The Partnership's $242,000 cash and cash equivalents balance at
September 30, 1995 is believed by management to be sufficient to
meet near term operating requirements and cover its September 30,
1995, $232,000 balance in accounts payable and accrued expenses.
During the nine months ended September 30, 1995, the Partnership
experienced negative cash flow from operations after debt service
payments and capital and tenant improvements. Short-term
prospects for liquidity and capital resources remain somewhat
problematic since one of the Partnership's current properties,
Rosemead Springs is substantially vacant, but is currently held
for sale. Its related $2,500,000 note payable matured in May
1995, but was partially paid down to $1,000,000 in June 1995. In
September 1995, management negotiated a change in the terms of
the loan agreement, allowing the Partnership to draw an
additional $1,200,000 to fund the investment in the GRC Airport
Associates joint venture (see Note 11, Notes to Consolidated
Financial Statements). The resulting $2,200,000 note payable
balance requires monthly interest only payments at 1.25% points
over the Mid-Peninsula Bank Base Rate. This debt matures on
April 15, 1996. Until Rosemead is sold, management anticipates
that, assuming no new leasing at Rosemead, the Partnership's
near-term cash flow will continue to be negative.
Management is aggressively seeking new tenants and pursuing
renewals of existing leases as they expire for its multi-tenant
Bond Street and Rosemead Springs buildings. Rosemead continues
to be held for sale despite the potential buyer's change in plans
and their decision not to purchase the property. Absent a sale
or dramatic improvement in local economic conditions and demand
for commercial space in and around the Rosemead property,
management anticipates rent concessions and lower effective
rental rates. As always, the Partnership remains vulnerable to a
variety of other factors beyond the Partnership's control, that
may adversely affect capital resources and liquidity, such as
excess supply in relation to demand, increases in unemployment,
population shifts, levels of corporate activity, zoning changes
and changes in tenant's needs.
Management continues to explore other opportunities where it may
invest its capital resources in order to maximize return to
investors.
The Partnership suspended its distributions in 1990 in an attempt
to increase liquidity and capital resources for tenant and
capital improvements, leasing commissions, refinancing costs, and
increasing debt service payments. As of November 10, 1995,
distributions remain suspended and at this time, management is
unable to predict when they may be resumed.
RESULTS OF OPERATIONS
Page 17 of 20
Total revenues and expenses decreased in all areas except
interest and other revenues during the nine and three months
ended September 30, 1995 compared to the nine and three months
ended September 30, 1994 due to the transferring of all but six
ofthe remainingproperties backtothe lenderin the1994 loanworkout.
Interest and other revenue increased during the nine months ended
September 30, 1995 over the same period ended September 30, 1994
largely resulting from the loan fees received upon the advances
to unaffiliated partnerships discussed above and from property
tax refunds from successful property tax appeals on its current
properties. The decrease in interest and other for the three
months ended September 30, 1995 compared to the three months
ended September 30, 1994 is due to the Partnership's requirement
to forward to the lender any refunds received relating to the
properties transferred back to the lender in the 1994 loan
workout.
Page 18 of 20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership is not a party to, nor any of its
assets the subject of any material pending legal
proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K.
No reports on Form 8-K were required to be filed during
this reporting period.
Page 19 of 20
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:
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
By: By: Glenborough Realty
Corporation,
Robert Batinovich its Managing General Partner
General Partner
Date: By:
Robert Batinovich
President and
Chairman of the Board
Date:
By:
Andrew Batinovich
Executive Vice President,
Chief Financial Officer
and Director
Date:
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:
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
By: /s/ Robert Batinovich By: Glenborough Realty
Corporation,
Robert Batinovich its Managing General Partner
General Partner
Date: By: /s/ Robert Batinovich
Robert Batinovich
President and
Chairman of the Board
Date:
By: /s/ Andrew Batinovich
Andrew Batinovich
Executive Vice President,
Chief Financial Officer
and Director
Date:
Page 20 of 20
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0
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