UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 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: 33-8105
STAMFORD TOWERS LIMITED PARTNERSHIP
and
STAMFORD TOWERS DEPOSITARY CORP
(Exact name of registrant as specified in its charter)
Stamford Towers Limited Partnership
is a Delaware limited partnership 13-3392080
Stamford Towers Depositary Corp.
is a Delaware corporation 13-3392081
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
3 World Financial Center, 29th Floor,
New York, NY
ATTN: Andre Anderson 10285
(Address of principal executive offices) (Zip code)
(212) 526-3237
(Registrant's telephone number, including area code)
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
Balance Sheets
June 30, December 31,
Assets 1995 1994
Real estate investments, at cost:
Land $ 14,714,483 $ 14,714,483
Buildings and improvements 52,698,875 52,537,022
Tenant improvements 6,631,075 6,618,562
Furniture, fixtures and equipment 372,541 372,541
74,416,974 74,242,608
Less accumulated depreciation (13,548,854) (12,226,266)
60,868,120 62,016,342
Cash and cash equivalents 5,751,458 5,768,902
Restricted cash 91,306 89,294
5,842,764 5,858,196
Accounts receivable 60,497 103,201
Deferred rent receivable 1,969,477 2,381,869
Deferred charges, net of
accumulated amortization of
$509,487 in 1995 and $445,587 in 1994 245,596 309,496
Prepaid expenses, net of
accumulated amortization of
$710,729 in 1995 and $636,235 in 1994 214,950 320,021
Total Assets $ 69,201,404 $ 70,989,125
Liabilities and Partners' Capital
Liabilities:
Accounts payable and
accrued expenses $ 850,230 $ 857,084
Interest payable 95,400 95,400
Due to affiliates 152,081 159,091
Revolving loan payable 15,407,772 15,407,772
Total Liabilities 16,505,483 16,519,347
Partners' Capital (Deficit):
General Partner (191,026) (173,287)
Limited Partners 52,886,947 54,643,065
Total Partners' Capital 52,695,921 54,469,778
Total Liabilities and
Partners' Capital $ 69,201,404 $ 70,989,125
Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1995
General Limited
Partner Partners Total
Balance at December 31, 1994 $ (173,287) $ 54,643,065 $ 54,469,778
Net loss (17,739) (1,756,118) (1,773,857)
Balance at June 30, 1995 $ (191,026) $ 52,886,947 $ 52,695,921
Statements of Operations
Three months ended Six months ended
June 30, June 30,
Income 1995 1994 1995 1994
Rental $ 617,347 $ 623,014 $ 1,232,349 $ 1,227,377
Interest 77,280 41,028 155,978 82,030
Other 28,690 107,137 66,848 185,914
Total Income 723,317 771,179 1,455,175 1,495,321
Expenses
Depreciation and
amortization 730,714 729,113 1,460,982 1,454,315
Property operating 520,974 580,576 1,070,010 1,199,396
Interest 286,200 283,927 572,399 616,587
Professional fees 39,775 17,857 66,576 57,763
Partnership service fees 23,296 29,459 42,944 51,155
General and administrative 7,766 4,823 16,121 12,774
Total Expenses 1,608,725 1,645,755 3,229,032 3,391,990
Net Loss $ (885,408) $ (874,576) $(1,773,857) $ (1,896,669)
Net Loss Allocated:
To the General Partner $ (8,855) $ (8,746) $ (17,739) $ (18,967)
To the Limited Partners (876,553) (865,830) (1,756,118) (1,877,702)
$ (885,408) $ (874,576) $(1,773,857) $ (1,896,669)
Per limited partnership unit
(7,826,300 outstanding) $(.11) $(.11) $(.22) $(.24)
Statements of Cash Flows
For the six months ended June 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net loss $ (1,773,857) $ (1,896,669)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and amortization 1,460,982 1,454,315
Increase (decrease) in cash
arising from changes in operating
assets and liabilities:
Restricted cash (2,012) (12,207)
Accounts receivable 42,704 (5,179)
Deferred rent receivable 412,392 (345,492)
Prepaid expenses 30,577 23,899
Accounts payable and accrued
expenses (6,854) (79,570)
Interest payable -- (47,651)
Due to affiliates (7,010) (5,644)
Net cash provided by (used for)
operating activities 156,922 (914,198)
Cash Flows from Investing Activities:
Additions to real estate assets (174,366) (30,193)
Net cash used for investing activities (174,366) (30,193)
Cash Flows from Financing Activities:
Borrowings under the revolving loan payable -- 456,452
Deferred charges -- (137,622)
Net cash provided by financing activities -- 318,830
Net decrease in cash and cash equivalents (17,444) (625,561)
Cash and cash equivalents at beginning of period 5,768,902 6,552,078
Cash and cash equivalents at end of period $ 5,751,458 $ 5,926,517
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period
for interest $ 572,399 $ 664,238
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of June 30, 1995 and the results of operations for the three and
six months ended June 30, 1995 and 1994, cash flows for the six months ended
June 30, 1995 and 1994 and the statement of changes in partners' capital
(deficit) for the six months ended June 30, 1995. Results of operations for
the period are not necessarily indicative of the results to be expected for the
full year.
The following significant events have occurred, subsequent to fiscal year 1994,
or the following material contingencies exist, and require disclosure in this
interim report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Contingencies
In late January of 1989, the Partnership initiated an arbitration proceeding
against Edlar, Inc. ("Edlar") in order to establish Edlar's responsibility for
certain cost overruns, delays, expenses and liquidated damages in connection
with the construction phase of the Stamford Towers office project (the
"Project"). Subsequently, the arbitration was consolidated with a separate
arbitration between Edlar and the Project's construction manager, Gilbane
Building Company ("Gilbane").
In January 1993, the arbitrators issued their decision which, in substance,
awards the Partnership approximately $8.1 million in damages and costs against
Edlar and awards Gilbane approximately $2.6 million in damages and costs
against Edlar. In addition, the arbitrators ordered Edlar to hold the
Partnership harmless with respect to (i) the mechanic's lien filed by Gilbane
against the Partnership, which is presently the subject of an action in
Connecticut state court, and (ii) any similar liens filed by subcontractors who
worked on the Project. The arbitrators further found that the Partnership
properly terminated Edlar under the Development Agreement. That finding has
the effect of eliminating the residual interest of Edlar's affiliate, Feldco,
Inc., in the Project. Edlar was not awarded any amounts on its claims against
the Partnership or Gilbane. The Partnership has entered judgment against both
Edlar and Edward Feldman for the full amount of the arbitration award.
Based on a preliminary investigation by the General Partner, it appears that
Edlar has no significant assets from which to satisfy the arbitration award.
Moreover, based on the General Partner's discussions with Edward Feldman
concerning his proposal for a non-judicial workout, it would appear that his
assets, consisting largely of illiquid real estate investments, are
insufficient to satisfy his substantial outstanding obligations to his
creditors, including the Partnership.
Citicorp Lease
On June 28, 1995, the Partnership executed the First Amendment (the "Citicorp
Lease Amendment") to the lease agreement between the Partnership and Citicorp
North America, Inc. ("Citicorp") dated May 11, 1990 (the "Original Lease") for
approximately 136,000 rentable square feet ("RSF") in the Project's North
Tower. The Amendment, which was effective July 1, 1995, (i) reduces Citicorp's
rent from $29.50 to $25 per RSF for the initial three years and to $24 per RSF
for the next two years and (ii) extends the term of the Original Lease for an
additional five years, through June 30, 2006, at a rental rate of $24 per RSF.
Although the Original Lease was for an 11-year term expiring June 30, 2001,
Citicorp had the option to terminate the Original Lease as of June 30, 1996 by
paying $45 per RSF or approximately $6.1 million to the Partnership on or
before June 30, 1995. The Citicorp Lease Amendment ensures Citicorp's
continued occupancy at the Project through June 30, 2006.
Part I, Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Partnership is currently preserving its funds to lease and operate the
Project which consists of two parcels of land located in Stamford, Connecticut
and two commercial office buildings (the "Buildings") constructed thereon
containing a total of 325,416 net rentable square feet. Through June 30, 1995,
the Partnership's sources of liquidity have been net proceeds from the public
offering of limited partnership units, rental receipts, proceeds from the
mortgage loan discussed below and interest earned on the Partnership's cash
balance.
On June 28,1995 the Partnership executed the First Amendment (the "Citicorp
Lease Amendment") to the lease agreement between the Partnership and Citicorp
North America, Inc. ("Citicorp") dated May 11, 1990 (the "Original Lease") for
approximately 136,000 rentable square feet ("RSF") in the Project's North
Tower. The Amendment, which was effective July 1, 1995, (i) reduces Citicorp's
rent from $29.50 to $25 per RSF for the initial three years and to $24 per RSF
for the next two years and (ii) extends the term of the Original Lease for an
additional five years, through June 30, 2006, at a rental rate of $24 per RSF.
Although the Original Lease was for an 11- year term expiring June 30, 2001,
Citicorp had the option to terminate the Original Lease as of June 30, 1996 by
paying $45 per RSF or approximately $6.1 million to the Partnership on or
before June 30, 1995. The Citicorp Lease Amendment ensures Citicorp's
continued occupancy at the Project through June 30, 2006.
In order to meet the Partnership's liquidity requirements during the Project's
leasing phase, on July 19, 1990, the General Partner obtained a $25 million,
seven-year, revolving loan for the Project from People's Bank, a third-party
lender. As of June 30, 1995, the principal balance totaled $15,407,772,
unchanged from December 31, 1994.
On February 17, 1994, the Partnership entered into a loan modification with
People's Bank (the "Loan Modification") which: (i) reduced the interest rate on
the loan from 11.5% to 7.43% commencing February 1, 1994 and through the first
adjustment date on July 19, 1995 at which time the interest rate was reset to
9.03%; (ii) reduced the principal balance of the loan from $25 million to
$24,449,795; and (iii) eliminated the interest reserve line item. Payments of
interest are due monthly in arrears and are required to be paid from the
Partnership's own funds. Loan proceeds may continue to be used on an "as
needed" basis to fund all other approved line items. The remaining loan
proceeds available for funding at June 30, 1995 were $9,042,023.
Cash and cash equivalents was $5,751,458 at June 30, 1995, largely unchanged
from $5,768,902 at December 31, 1994.
As of June 30, 1995, the Partnership had deferred rent receivable of
$1,969,477, compared with $2,381,869 at December 31, 1994. Deferred rent
receivable represents rental income which is recognized on a straight-line
basis over the non-cancelable term of the tenants' leases which will not be
received until later periods as a result of rental concessions. The decrease
is primarily associated with concessions related to Citicorp's Original Lease.
Prepaid expenses decreased from $320,021 at December 31, 1994 to $214,950 at
June 30, 1995. The decrease is attributable to the amortization of insurance
premiums and leasing commissions.
Results of Operations
The Partnership incurred net losses of $885,408 and $1,773,857, respectively,
for the three and six months ended June 30, 1995, compared to net losses of
$874,576 and $1,896,669 for the corresponding periods in 1994. The reduction
in the net loss for the six-month period is primarily the result of an increase
in interest income, as well as decreases in interest and property operating
expense.
Rental income for the three and six months ended June 30, 1995 was $617,347 and
$1,232,349, respectively, virtually unchanged from $623,014 and $1,227,377 for
the corresponding periods in 1994. Interest income was $77,280 and $155,978
for the three and six months ended June 30, 1995, respectively, compared with
$41,028 and $82,030 for the corresponding periods in 1994. The increases are
due to higher yields earned on the Partnership's average cash balance. Other
income decreased from $107,137 and $185,914, respectively, for the three and
six months ended June 30, 1994 to $28,690 and $66,848 for the corresponding
periods in 1995, due to a reduction in tenant reimbursements for electricity
costs, resulting primarily from a reduction in the number of employees
occupying the Citicorp space. The decrease in tenant reimbursements for
electricity costs is offset by the reduction in the Project's electricity
costs.
Total expenses for the three and six months ended June 30, 1995 were $1,608,725
and $3,229,032, respectively, compared with $1,645,755 and $3,391,990 for the
corresponding periods in 1994. Property operating expense was $520,974 and
$1,070,010 for the three and six months ended June 30, 1995, compared with
$580,576 and $1,199,396 for the corresponding periods in 1994. The decreases
are primarily due to lower real estate taxes and lower electricity costs. Real
estate taxes were reduced as a result of a reduction in the City of Stamford's
real estate tax rate and a reduction in the assessed value of the South Tower,
partially offset by a slight increase in the assessed value of the North Tower.
The assessed values of the North and South Tower are being contested by the
Partnership and the real estate taxes for both buildings have been paid to the
city of Stamford under protest. There are no assurances that the Partnership
will be successful in obtaining a permanent reduction in the Project's real
estate taxes. Electricity costs were reduced as a result of the reduction in
the number of Citicorp employees. Interest expense related to the revolving
loan payable for the six-month period decreased due to the Loan Modification
discussed above. Professional fees for the three and six months ended June 30,
1995, increased to $39,775 and $66,576 from $17,857 and $57,763 for the
corresponding periods in 1994, primarily due to legal fees associated with the
Citicorp Lease Amendment and the Gilbane litigation.
PART II OTHER INFORMATION
Item 1 Legal proceedings.
On February 1, 1991, the construction manager at the Project,
Gilbane, filed a mechanic's lien against the Project in the sum
of $4,583,481. On August 9, 1991, Gilbane commenced an action
entitled Gilbane Building Co. v. Stamford Towers Limited
Partnership, et. al., in the Connecticut Superior Court for the
Judicial District of Stamford/Norwalk at Stamford (the "Gilbane
Action"). The defendants include the Partnership. Gilbane
alleges breach of various contracts and unfair trade practices
and seeks foreclosure of its mechanic's lien, monetary damages,
attorney fees, punitive damages, possession of the premises,
and the appointment of a receiver. On May 17, 1993, at the
request of the Partnership, Gilbane reduced the amount of the
lien to $2,650,018.
On September 21, 1993, Gilbane filed a motion for Partial
Summary Judgment as to Liability Only. The Partnership
successfully opposed this motion, which was denied by the court
on November 4, 1993. On October 21, 1993, the Partnership
filed its Answer, Special Defenses and Counterclaims to
Gilbane's action. The Partnership's Counterclaim against
Gilbane alleges breach of various contracts, unfair trade
practices and slander of title. On November 10, 1993, Gilbane
filed its reply to Stamford Towers' Special Defenses and Answer
to Stamford Towers' Counterclaim. On October 28, 1993, the
Partnership filed a Motion for Summary Judgment which has not
yet been ruled upon by the court.
On November 3, 1994, the Partnership filed a Request for Leave
to File Amended Special Defenses, Counterclaims, Set-Offs and
Recoupment. On January 25, 1995, this Request was granted by
the Court over Gilbane's objection. On March 27, 1995, the
Partnership filed a Second Amended Answer, Special Defenses,
Counterclaims, Set-offs and Recoupment to Gilbane's action.
The Partnership's Second Amended Counterclaim against Gilbane
adds, in addition to the allegations of its original
Counterclaim, additional allegations of negligence, breach of
warranty, breach of contract, products liability and unfair
trade practices. On May 3, 1995, Gilbane filed a Motion to
Strike two of the twelve counts of the Stamford Towers'
Counterclaim. Gilbane's Motion to Strike has not yet been
ruled upon by the court. The parties are currently engaged in
discovery, and a trial has been tentatively scheduled to begin
on August 25, 1995. The Partnership expects to vigorously
defend against and oppose each of Gilbane's claims.
On December 31, 1990, a subcontractor of the Project, Moliterno
Stone Sales, Inc. ("Moliterno") filed a mechanic's lien against
the Property in the sum of $155,936. On December 11, 1991,
Moliterno filed a cross-claim against the Partnership in the
Gilbane action. Moliterno seeks foreclosure on its mechanic's
lien and monetary damages, along with possession of the
premises. An application to discharge Moliterno's mechanic's
lien was filed by the Partnership on April 30, 1993. The
Partnership expects to vigorously defend against and oppose
Moliterno's claim.
Items 2-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter ended June 30, 1995.
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.
STAMFORD TOWERS LIMITED PARTNERSHIP
BY: STAMFORD TOWERS, INC.
General Partner
Date: August 11, 1995
BY: /s/Rocco Andriola
Name: Rocco Andriola
Title: Director, Chief Financial
Officer and Vice President
Date: August 11, 1995
BY: /s/Regina M. Hertl
Name: Regina M. Hertl
Title: President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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