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 March 31, 1998
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
(Exact name of registrant as specified in its charter)
California 94-3199021
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 South El Camino Real, Suite 1100
San Mateo, California 94402-1708
(Address of principal executive offices) (Zip Code)
(650) 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 ____
Total number of units outstanding as of March 31, 1998: 2,899,314
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Balance Sheets
(in thousands, except units outstanding)
(Unaudited)
March 31, December 31,
1998 1997
--------- ----------
Assets
Real estate investments:
Rental property, net of accumulated depreciation
of $120 at March 31, 1998 $ 2,249 $ --
Land held for sale 265 265
Cash and cash equivalents 140 2,545
Marketable securities of affiliate, at fair value
(cost $2,408 and $1,851 at March 31, 1998 and
December 31, 1997, respectively) 2,927 2,385
Deposits in escrow 721 1,762
Notes receivable 410 457
Investment in affiliated partnerships 973 973
Investment in unaffiliated partnerships 2,984 2,441
Investments in management contracts, net 1,372 1,450
Minority interest -- 10
Other assets 758 571
--------- ---------
Total assets $ 12,799 $ 12,859
========= =========
Liabilities and Partners' Equity
Notes payable $ 6,382 $ 5,021
Accounts payable and accrued expenses 569 912
Reservation deposits 721 1,654
--------- ---------
Total liabilities 7,672 7,587
--------- ---------
Minority interest 84 --
Partners' equity:
General partner 441 439
Limited Partners, 2,860,895 and 2,898,722
units outstanding at March 31, 1998 and
December 31, 1997, respectively 4,602 4,833
--------- ---------
Total partners' equity 5,043 5,272
--------- ---------
Total liabilities and partners' equity $ 12,799 $ 12,859
========= =========
See accompanying notes to consolidated financial statements.
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GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Operations
(in thousands, except per unit amounts)
(Unaudited)
Three months ended
March 31,
1998 1997
--------- ---------
Revenue:
Rental income $ 182 $ 27
Income from management contracts 1,299 --
Income from investment in partnership 295 185
Equity in earnings of partnership 96 30
Dividends, interest and other income 53 2
--------- ---------
Total revenue 1,925 244
--------- ---------
Expenses:
Operating, including $4 paid to affiliates
during the three months ended March 31, 1997 445 62
General and administrative, including $51 and
$43 paid to affiliates during the three months
ended March 31, 1998 and 1997, respectively 443 88
Depreciation and amortization 61 1
Interest expense 125 65
--------- ---------
Total expenses 1,074 216
--------- ---------
Income from operations before minority interest 851 28
Minority interest (184) --
--------- ---------
Net income $ 667 $ 28
========= =========
Net income per limited partnership unit $ 0.23 $ 0.01
========= =========
Distributions per limited partnership unit $ 0.20 $ 0.10
========= =========
Weighted average number of limited partnership units
outstanding 2,886,113 2,910,899
========= =========
See accompanying notes to consolidated financial statements.
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GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Partners' Equity
For the three months ended March 31, 1998 and 1997
(in thousands)
(Unaudited)
Total
General Limited Partners'
Partner Partners Equity
Balance at December 31, 1997 $ 439 $ 4,833 $ 5,272
Net income 9 658 667
Unrealized loss on marketable securities -- (14) (14)
Cash distributions (7) (580) (587)
Redemption of units -- (295) (295)
-------- --------- --------
Balance at March 31, 1998 $ 441 $ 4,602 $ 5,043
======== ========= ========
Balance at December 31, 1996 $ 404 $ 3,359 $ 3,763
Net income 1 27 28
Cash distributions (4) (291) (295)
-------- --------- --------
Balance at March 31, 1997 $ 401 $ 3,095 $ 3,496
======== ========= ========
See accompanying notes to consolidated financial statements.
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GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows (in thousands)
(Unaudited)
Three months ended
March 31,
1998 1997
------- -------
Cash flows from operating activities:
Net income $ 667 $ 28
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 61 1
Amortization of loan fees, included in interest expense 8 --
Minority interest 184 --
Equity in earnings of investment in partnerships (96) (30)
Changes in certain assets and liabilities:
Decrease in deposits in escrow 1,041 --
Decrease (increase) in notes receivable 47 --
Increase in other assets (174) (77)
Decrease in accounts payable and accrued expenses (343) (31)
Decrease in reservation deposits (933) --
------- -------
Net cash provided by (used for) operating activities 462 (109)
------- -------
Cash flows from investing activities:
Distribution from investment in partnerships 54 526
Investment in affiliated partnership -- (285)
Investment in unaffiliated partnership (500) (1,536)
Purchase of real estate investments (241) --
Purchase of marketable securities (556) --
------- -------
Net cash used for investing activities (1,243) (1,295)
------- -------
Net cash flows from financing activities:
Proceeds from notes payable 1,115 2,180
Principal payments on notes payable (1,767) (700)
Minority interest in equity (90) --
Distributions to partners (587) (295)
Redemption of limited partnership units (295) --
------- -------
Net cash provided by (used for) financing activities (1,624) 1,185
------- -------
Net decrease in cash and cash equivalents (2,405) (219)
Cash and cash equivalents at beginning of period 2,545 403
------- -------
Cash and cash equivalents at end of period $ 140 $ 184
======= =======
-- continued --
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GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows (in thousands) -continued
(Unaudited)
Three months ended
March 31,
1998 1997
------- -------
Supplemental disclosure of cash flow information:
Cash paid for interest $ 117 $ 54
======= =======
Supplemental disclosure of non-cash financing activities:
Addition to notes payable $ 3,128 $ 2,180
Note payable assumed (2,013) --
------- -------
Proceeds from notes payable $ 1,115 $ 2,180
======= =======
Supplemental disclosure of non-cash investing activities:
Gross purchase of real estate investment $(2,254) $ --
Financed through loan assumption 2,013 --
------- -------
Purchase of real estate investment $ (241) $ --
======= =======
See accompanying notes to consolidated financial statements.
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GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
March 31, 1998
(Unaudited)
Note 1. THE PARTNERSHIP AND SIGNIFICANT ACCOUNTING POLICIES
In the opinion of Glenborough Corporation, the managing general partner, the
accompanying unaudited consolidated financial statements contain all adjustments
(consisting of only normal accruals) necessary to present fairly the
consolidated financial position of Glenborough Partners, a California Limited
Partnership ("Partners") at March 31, 1998 and December 31, 1997, the related
consolidated statements of operations, the consolidated statements of partners'
equity and the consolidated statements of cash flows for the three months ended
March 31, 1998 and 1997.
Consolidation - The accompanying consolidated financial statements include the
accounts of Partners and its majority-owned entities GPA Ltd. (through December
31, 1997), GPA West (through December 31, 1997), Resort Group LLC (commencing
June 1, 1997), Mountain Resorts LLC (commencing June 1, 1997), Casa 31 LLC
(commencing January 1, 1998) and Mountain Resort Properties LLC (commencing
February 23, 1998). All significant intercompany balances and transactions have
been eliminated in the consolidation.
Allocation of net income - As a result of an offer made to all of the
Partnership's investors in 1996, the Partnership repurchased 50,954 limited
partnership units from investors which resulted in 2,910,899 limited partnership
units outstanding as of March 31, 1997. The reduction in outstanding limited
partnership units resulted in revised ownership interests of 2.29% and 97.71% by
the general partners and limited partners, respectively.
During the twelve months ended March 31, 1998, the Partnership repurchased and
canceled 37,827 limited partnership units from its investors which resulted in
2,860,895 limited partnership units outstanding as of March 31, 1998. The
reduction in the number of outstanding limited partnership units resulted in
revised ownership interests of 1.33% and 98.67% by the general partners and
limited partners, respectively.
Reclassifications - Certain items in the 1997 consolidated financial statements
have been reclassified to conform to the 1998 consolidated statement
presentation.
Note 2. REFERENCE TO 1997 AUDITED CONSOLIDATED FINANCIAL STATEMENTS
These unaudited consolidated financial statements should be read in conjunction
with the Notes to Consolidated Financial Statements included in the 1997 audited
consolidated financial statements.
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GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
March 31, 1998
(Unaudited)
Note 3. RELATED PARTY FEES AND EXPENSES
In accordance with the Limited Partnership and Property Management Agreements,
the Partnership shall pay Glenborough Corporation, Robert Batinovich or their
affiliates (the "General Partner") compensation for services provided to the
Partnership and management of the Partnership's assets. All fees and
reimbursable expenses paid to the General Partner and included in the
Partnership's operating expenses for the three months ended March 31, 1998 and
1997 are as follows (in thousands):
Three months ended
March 31,
1998 1997
-------- -------
Property management fees $ -- $ 1
Property management salaries (reimbursed) -- 3
------ -----
Total property management fees and salaries $ -- $ 4
====== =====
The Partnership also reimburses the General Partner for expenses incurred for
services provided to the Partnership such as accounting, investor services, data
processing, legal and administrative services, and the actual costs of goods and
materials used on behalf of the Partnership. The General Partner was reimbursed
$51,000 and $43,000 for such expenses during the three months ended March 31,
1998 and 1997, respectively.
Note 4. REAL ESTATE INVESTMENTS
Effective January 1, 1998, the Partnership purchased for $104,000 from the
Partnership's 20% partner in Resort Group LLC ("Resort") (see Note 7), an 80%
interest in Casa 31 LLC ("Casa"). Casa owns 21 condominiums in Galveston, Texas
with an aggregate net book value of $415,000. Simultaneous with this
transaction, the Partnership and its 20% minority partner in Resort contributed
their respective 80% and 20% interests in Casa to Resort.
On February 23, 1998, Resort purchased a 100% interest in Mountain Resorts
Properties LLC ("MRPLLC") which owns nine rental condominiums in the Steamboat
Springs, Colorado area with an aggregate net book value of $1,834,000 (see Note
7).
Both Casa and MRPLLC consolidates its financial statements with Resort (the 80%
owner) who consolidates its financial statements with the Partnership (the 80%
owner of Resort). The joint venture partners' interest is recognized as minority
interest.
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GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
March 31, 1998
(Unaudited)
Note 5. MARKETABLE SECURITIES OF AFFILIATE
In the first quarter of 1998, the Partnership purchased a total of 20,000
additional shares of Glenborough Realty Trust Incorporated ("GLB") common stock
for $557,000. GLB, an affiliate of the Partnership, is a real estate investment
trust and is publicly traded on the New York Stock Exchange. As of March 31,
1998, the Partnership owns 100,500 shares in GLB with an aggregate market value
of $2,927,000 (based on the closing market price of $29.125 per share on March
31, 1998). This represents a $520,000 unrealized gain on marketable securities,
a net $14,000 decrease in unrealized gain on marketable securities from December
31, 1997, which is reflected on the accompanying statement of partners' equity.
Note 6. INVESTMENT IN AFFILIATED PARTNERSHIP
GLENBOROUGH PROPERTIES L.P.:
At March 31, 1998, the Partnership holds 691,883 limited partnership units or an
approximate 2.2% interest in Glenborough Properties L.P. ("GPLP"), the operating
partnership of GLB, from its various contributions and sales of real estate
assets to GPLP. Since the Partnership holds only a 2.2% interest in GPLP at
March 31, 1998, the Partnership accounts for this investment using the cost
method.
In January 1998, the Partnership received $290,591, representing the fourth
quarter 1997 distribution from GPLP, which is included in income from
investments in partnerships on the accompanying consolidated statement of
operations.
At March 31, 1998, the investment in GPLP is the Partnership's only investment
in affiliated partnerships, with an approximate fair market value of
$20,151,000, based on the closing market price of $29.125 per share of GLB which
is equivalent to the price per GPLP unit.
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GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
March 31, 1998
(Unaudited)
Note 7. INVESTMENTS IN UNAFFILIATED PARTNERSHIPS
WINDSWEPT PORTFOLIO LLC:
The Partnership owns a 50% non-controlling interest in Windswept Portfolio LLC
("Windswept"). Windswept has contracted with Investors Management Trust Real
Estate, Inc. ("IMT") for IMT to manage and operate the following five
multifamily-residential projects in Houston, Texas:
1. Ashley Square, a 117-unit apartment complex
2. Hidden Pines, a 185-unit apartment complex
3. Shenandoah Woods, a 232-unit apartment complex
4. Southern Oaks, a 198-unit apartment complex
5. Unity Pointe, a 109-unit apartment complex
Since the Partnership owns a 50% interest in Windswept, the Partnership accounts
for this investment using the equity method.
Summary condensed balance sheet information as of March 31, 1998, and the
condensed statement of operations for the three months ended March 31, 1998, are
as follows (in thousands):
Windswept Portfolio LLC
Balance Sheet as of March 31, 1998
Investment in real estate $ 14,829
Cash 143
Other assets 660
----------
Total assets $ 15,632
==========
Notes payable $ 11,854
Other liabilities 153
----------
Total liabilities 12,007
Partners' equity 3,625
----------
Total liabilities and partners' equity $ 15,632
==========
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GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
March 31, 1998
(Unaudited)
Windswept Portfolio LLC
Statement of Operations
Three months ended March 31, 1998
Revenue $ 1,197
Expenses 1,006
----------
Net income $ 191
==========
The Partnership's share of Windswept's net income for the three months ended
March 31, 1998 was $96,000.
The Partnership has received monthly distributions of $18,000 from its
investment in Windswept for a total to date in 1998 of $54,000.
RESORT GROUP LLC:
The Partnership owns an 80% interest in Resort Group LLC ("Resort"). Resort's
primary investments are an 80% interest in Mountain Resorts LLC ("Mountain
Resorts") and 100% interests in Casa and Mountain Resorts Properties LLC
("MRPLLC"). The primary business of Mountain Resorts is the management of
various condominiums and townhouses in the Steamboat Springs area of Colorado,
which includes nine condominiums owned by MRPLLC. As a result of its investment
in Resort, the Partnership consolidates its financial statements with Resort
(after Resort consolidates with Mountain Resorts, Casa and MRPLLC) and
recognizes its joint venture partner's interest as minority interest.
WESTWARD-GULFTON LTD:
On January 8, 1998, the Partnership purchased for $500,000, a 36.36% interest in
Westward-Gulfton Ltd., a Texas Limited Partnership ("Westward"). Westward was
organized to acquire and renovate the Westward Square Apartments, a 672-unit
multifamily residential property in Houston, Texas.
Since the Partnership owns a 36.36% interest in Westward, the Partnership
accounts for this investment using the equity method.
Summary condensed balance sheet information as of March 31, 1998 and the
condensed statement of operations for the three months ended March 31, 1998 are
not available. Management, however, believes that the Partnership's portion of
the net income/loss of Westward is not material at March 31, 1998.
Page 11 of 18
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GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
March 31, 1998
(Unaudited)
CHEESEBURGER IN PARADISE:
The Partnership owns a 5.63% non-controlling limited partnership interest in
Cheeseburger In Paradise - Waikiki, a California limited partnership
("CIP-Waikiki"). CIP-Waikiki owns and operates a Cheeseburger In Paradise
restaurant on Waikiki Beach in Honolulu, Hawaii. Since the Partnership owns a
5.63% interest in CIP-Waikiki, the Partnership accounts for this investment
using the cost method.
RANCON PARTNERSHIPS:
The Partnership owns the following limited partnership units in unaffiliated
real estate partnerships, which were purchased from sophisticated secondary
market investors:
Net
Ownership Acquisition
Partnership Units % Price
----------- ----- ------------- -----------
Rancon Pacific Realty, L.P. 40,093 1.4% $ 113,662
Rancon Income Fund I 715 4.9% $ 213,141
Rancon Realty Fund I 5 * $ 150
Note *: Less than 1%
Since the Partnership owns less than 5% of the individual Rancon partnerships,
it accounts for these investments using the cost method.
Note 8. INVESTMENT IN MANAGEMENT CONTRACTS
Investment in management contracts reflects the unamortized portion of the
management contracts Mountain Resorts holds with various condominium and
townhouse owners in the Steamboat Springs area of Colorado. For book purposes,
these contracts are amortized over seven years.
Note 9. DEPOSITS IN ESCROW
Deposits in escrow represent amounts collected by Mountain Resorts for guest
reservations for visits to the resort within the next six months. This amount is
offset by a comparable reservation deposits liability.
Note 10. NOTES PAYABLE
On January 2, 1998, the Partnership paid down $1,692,000 on the Mid-Peninsula
Bank ("Mid-Pen") revolving line of credit from the proceeds received from the
Partnership's liquidation of a
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GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
March 31, 1998
(Unaudited)
portion of its investments in unaffiliated real estate limited partnerships in
1997. In February 1998, the Partnership drew an aggregate $852,000 on its
Mid-Pen revolving line of credit to fund a special distribution to its partners
and redeem limited partnership units from its limited partners. On March 12,
1998, the Partnership drew an additional $263,000 on its Mid-Pen line of credit
to purchase additional shares of GLB stock.
On February 23, 1998, Resort issued four promissory notes totaling $306,000 to
the prior owners of MRPLLC for Resort's acquisition of its 100% interest in
MRPLLC (see Note 4 above). These notes bear interest at 8.5% per annum, fully
amortizing on March 1, 2001.
The Partnership also increased its notes payable balance by $1,707,000 in the
first quarter of 1998 from Resort's purchase of ownership interests in Casa and
MRPLLC, which includes five existing promissory notes for these two entities.
These notes bear interest at various rates ranging from 7% fixed to "Prime" plus
1% with maturity ranging from November 1998 to November 2011.
Note 11. DISTRIBUTIONS
On February 18, 1998, the Partnership made a $587,000 cash distribution to help
alleviate its partners' tax burden arising from their portion of the
undistributed 1997 taxable income of the Partnership.
Note 12. SUBSEQUENT EVENTS
On April 13, 1998, the Partnership received a first quarter distribution of
$291,000 from GPLP for its 691,883 limited partnership units in GPLP. Also on
April 13, 1998, the Partnership received a first quarter dividend of $42,000 on
its 100,500 shares of common stock in GLB.
Effective May 1, 1998, Glenborough Corporation withdrew as a general partner,
which left Robert Batinovich as the sole general partner.
Also effective May 1, 1998, the Partnership acquired for $340,000, an 80%
interest in Resort Group Inc. ("RG Inc.") from an affiliate of the Partnership.
The primary business of RG Inc. is the management of various condominiums in
Texas. RG Inc. will consolidate its financial statements with Resort (the 80%
owner) who consolidates its financial statements with the Partnership (the 80%
owner of Resort). The joint venture partner's interest will be recognized as
minority interest.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
INTRODUCTION
The following discussion addresses the Partnership's financial condition at
March 31, 1998 and its results of operations for the three months ended March
31, 1998 and 1997. This information should be read in conjunction with the
Partnership's audited December 31, 1997 Consolidated Financial Statements, notes
thereto and other information contained elsewhere in this report.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1998, the Partnership drew a total of
$1,115,000 on the Mid-Peninsula Bank ("Mid-Pen") revolving line of credit to
fund: (i) a $587,000 distribution to its partners to help alleviate its
partners' tax burden arising from their portion of the 1997 undistributed
taxable income of the Partnership; (ii) the redemption of 37,827 of its limited
partnership units; and (iii) the purchase of 10,000 shares of common stock in
Glenborough Realty Trust Incorporated ("GLB"), an affiliate of the Partnership
which is a publicly traded (New York Stock Exchange) real estate investment
trust. During this period, the Partnership paid down $1,692,000 on this
revolving line of credit from the proceeds of the Partnership's liquidation of a
portion of its investments in unaffiliated real estate limited partnerships in
1997. As of March 31, 1998, $3,189,000 remains available on this line of credit.
The Partnership also used $293,000 from its operating cash reserves during the
three months ended March 31, 1998 for the purchase of 10,000 additional shares
of common stock in GLB.
On January 8, 1998, the Partnership invested $500,000 for a 36.36% interest in
Westward-Gulfton Ltd., a Texas Limited Partnership ("Westward"). Westward was
organized to acquire the Westward Square Apartments, a 672-unit multifamily
residential property in Houston, Texas.
During the three months ended March 31, 1998, the Partnership purchased for
$104,000 from the Partnership's 20% partner in Resort Group LLC ("Resort"), an
80% interest in Casa 31 LLC ("Casa"). Casa owns 21 condominiums in Galveston,
Texas with an aggregate net book value of $415,000. The Partnership and its 20%
joint venture partner immediately contributed their respective interests in Casa
to Resort.
Also during the three months ended March 31, 1998, Resort purchased for $487,242
($132,893 cash) a 100% interest in Mountain Resort Properties LLC ("MRPLLC")
which owns nine rental condominiums in the Steamboat Springs, Colorado area with
an aggregate net book value of $1,834,000. Resort assumed $1,335,000 in mortgage
debt as part of the acquisition of MRPLLC and issued four promissory notes
totaling $306,000 to the prior owners of MRPLLC for Resort's purchase of its
100% interest in MRPLLC.
As a result of the Partnership's 80% investment in Resort and Resort's
controlling investments in Mountain Resorts (in 1997), Casa and MRPLLC, the
Partnership consolidates its financial
Page 14 of 18
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statements with Resort (after Resort consolidates with Mountain Resorts, Casa
and MRPLLC) and recognizes its joint venture partner's interest as minority
interest.
Along with draws on the Partnership's Mid-Pen revolving line of credit, the
Partnership was able to fund these capital expenditures from proceeds from the
December 1997 liquidation of its investments in various partnerships and from
distributions and dividends received on its investments in partnerships and
marketable securities.
As of March 31, 1998, the Partnership's assets consisted primarily of its
investments in real estate, marketable securities, management contracts,
reservation deposits held in escrow for future resort guests and miscellaneous
investments in various affiliated and unaffiliated partnerships. The
Partnership's primary liabilities included: (i) amounts due on the Mid-Pen
revolving line of credit; (ii) various mortgage and promissory notes associated
with the purchase of ownership interests in Resort, Casa and MRPLLC; (iii) and
deposits held for future rental use of the condominiums and townhouses.
RESULTS OF OPERATIONS
Rental income increased $155,000 during the three months ended March 31, 1998
compared to the three months ended March 31, 1997 due to the Partnership's first
quarter 1998 investment in Casa and MRPLLC, which own condominiums and
townhouses. Results from operations of these entities have been consolidated
with the Partnership.
Income from investment in partnership increased $110,000 during the three months
ended March 31, 1998 compared to the three months ended March 31, 1997 due to
the increase in units held in Glenborough Properties L.P. ("GPLP"), the
operating partnership of GLB, as well as an increase in the distribution rate
from $0.32 to $0.42 per unit.
The income from management contracts during the three months ended March 31,
1998 represents the revenue earned by Mountain Resorts for managing various
condominiums and townhouses in the Steamboat Springs, Colorado area.
Equity in earnings of investment in partnerships increased $66,000 due to the
increase in earnings recognized from the Partnership's 50% share of income from
Windswept during the first quarter of 1998 over the earnings recognized from the
Partnership's 25% share of income from GRC Airport during the first quarter of
1997. The Partnership invested in Windswept in July 1997 while it transferred
its 25% interest in GRC Airport to GPLP for GPLP units in December 1997.
The $51,000 increase in dividends, interest and other income during the three
months ended March 31, 1998 compared to the three months ended March 31, 1997 is
primarily due to dividends received in January 1998 for its shares of common
stock in GLB. The Partnership did not own any shares in GLB until April 1997.
Page 15 of 18
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The increases in operating, general and administrative, depreciation and
amortization and interest expenses during the three months ended March 31, 1998
compared to the three months ended March 31, 1997 are a result of the
Partnership's investments in, and resulting consolidation of, Resort and its
subsidiary entities (Mountain Resorts, Casa and MRPLLC) during the past twelve
months. The Partnership invested in Resort and Mountain Resorts in July 1997,
Casa in January 1998 and MRPLLC in February 1998.
Year 2000 Compliance
The Partnership utilizes a number of computer software programs and operating
systems across its entire organization, including applications used in financial
business systems and various administrative functions. To the extent that the
Partnership's software applications contain a source code that is unable to
appropriately interpret the upcoming calendar year "2000" and beyond, some level
of modification, or replacement of such applications will be necessary. The
Partnership has completed its identification of applications that are not yet
"Year 2000" compliant and has commenced modification or replacement of such
applications, as necessary. Given the information known at this time about the
Partnership's systems that are non-compliant, coupled with the Partnership's
ongoing, normal course-of-business efforts to upgrade or replace critical
systems, as necessary, management does not expect "Year 2000" compliance costs
to have any material adverse impact on the Partnership's liquidity or ongoing
results of operations. No assurance can be given, however, that all of the
Partnership's systems will be "Year 2000" compliant or that compliance costs or
the impact of the Partnership's failure to achieve substantial "Year 2000"
compliance will not have a material adverse effect on the Partnership's future
liquidity or results of operations.
Page 16 of 18
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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
(a) Exhibits:
#27 - Financial Data Schedule
(b) Reports on Form 8-K.
None.
Page 17 of 18
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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 Corporation,
Robert Batinovich a California corporation,
General Partner its Managing General Partner
By: /s/Andrew Batinovich
Andrew Batinovich
Chief Executive Officer and
Chairman of the Board
By: /s/Terri Garnick
Terri Garnick
Chief Financial Officer
Date: May 15, 1998
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<PAGE>
<TABLE> <S> <C>
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<NAME> GLENBOROUGH PARTNERS
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0
0
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