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 March 31, 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 13-3392080 is a Delaware limited
partnership
Stamford Towers Depositary Corp. 13-3392081 is a Delaware corporation
(State or other jurisdiction of (I.R.S. Employer identification No.)
Incorporation or organization)
3 World Financial Center, 29th Floor, New York, NY 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
Consolidated Balance Sheets
March 31, December 31,
Assets 1995 1994
Real estate investments, at cost:
Land $ 14,714,483 $ 14,714,483
Building and improvements 52,646,240 52,537,022
Tenant improvements 6,631,075 6,618,562
Furniture, fixtures and equipment 372,541 372,541
74,364,339 74,242,608
Less-accumulated depreciation (12,887,338) (12,226,266)
61,477,001 62,016,342
Cash and cash equivalents 5,796,591 5,768,902
Restricted cash 89,362 89,294
5,885,953 5,858,196
Accounts receivable 84,911 103,201
Deferred rent receivable 2,175,673 2,381,869
Deferred charges, net ofaccumulated
amortization of $477,537 in 1995 and
$445,587 in 1994 277,546 309,496
Prepaid expenses, net of accumulated
amortization of $673,481 in 1995 and
$636,235 in 1994 453,774 320,021
Total Assets $ 70,354,858 $ 70,989,125
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 1,118,115 $ 857,084
Interest payable 95,400 95,400
Due to affiliates 152,242 159,091
Revolving loan payable 15,407,772 15,407,772
Total Liabilities 16,773,529 16,519,347
Partners' Capital (Deficit):
General Partner (182,171) (173,287)
Limited Partners 53,763,500 54,643,065
Total Partners' Capital 53,581,329 54,469,778
Total Liabilities and
Partners' Capital $ 70,354,858 $ 70,989,125
Statement of Partners' Capital (Deficit)
For the three months ended March 31,1995
General Limited
Partner Partners Total
Balance at December 31, 1994 $(173,287) $ 54,643,065 $54,469,778
Net loss (8,884) (879,565) (888,449)
Balance at March 31, 1995 $(182,171) $ 53,763,500 $53,581,329
See accompanying notes to financial statements.
Statements of Operations
For the three months ended March 31, 1995 and 1994
Income 1995 1994
Rental $ 615,002 $ 604,363
Interest 78,698 41,002
Other 38,158 78,777
Total Income 731,858 724,142
Expenses
Depreciation and amortization 730,268 725,202
Property operating 549,036 618,820
Interest 286,199 332,660
Professional fees 26,801 39,906
Partnership service fees 19,648 21,696
General and administrative 8,355 7,951
Total Expenses 1,620,307 1,746,235
Net Loss $ (888,449) $ (1,022,093)
Net Loss Allocated:
To the General Partner $ (8,884) $ (10,221)
To the Limited Partners (879,565) (1,011,872)
$ (888,449) $ (1,022,093)
Per limited partnership unit
(7,826,300 outstanding) $(.11) $(.13)
See accompanying notes to financial statements.
Statements of Cash Flows
For the three months ended March 31, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net loss $ (888,449) $ (1,022,093)
Adjustments to reconcile net loss
to net cash provided by (used for)
operating activities:
Depreciation and amortization 730,268 725,202
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Restricted cash (68) (11,692)
Accounts receivable 18,290 18,089
Deferred rent receivable 206,196 (172,746)
Prepaid expenses (170,999) (232,382)
Accounts payable and accrued
expenses 261,031 (80,942)
Due to affiliates (6,849) (22,156)
Interest payable 0 (48,496)
Net cash provided by (used for)
operating activities 149,420 (847,216)
Cash Flows from Investing Activities:
Additions to real estate assets (121,731) (30,192)
Net cash used for investing activities (121,731) (30,192)
Cash Flows from Financing Activities:
Borrowings under the revolving loan payable 0 287,073
Deferred charges 0 (122,377)
Net cash provided by financing activities 0 164,696
Net increase (decrease) in cash and
cash equivalents 27,689 (712,712)
Cash and cash equivalents at beginning of period 5,768,902 6,552,078
Cash and cash equivalents at end of period $ 5,796,591 $ 5,839,366
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 286,199 $ 381,156
See accompanying notes to financial statements.
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 March 31, 1995 and the results of operations and cash flows for
the three months ended March 31, 1995 and 1994 and the statement of changes in
partners' capital (deficit) for the three months ended March 31, 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.
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 which
contain a total of 325,416 net rentable square feet. Through March 31, 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.
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 payable for the Project with People's Bank, a third
party lender. As of March 31, 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 continuing until
the first adjustment date on July 19, 1995; (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 March 31, 1995
were $9,042,023.
Cash and cash equivalents increased from $5,768,902 at December 31, 1994 to
$5,796,591 at March 31, 1995. The increase was primarily due to net cash
provided by operations in excess of fundings for building improvements during
the 1995 first quarter.
As of March 31,1995, the Partnership had deferred rent receivable of
$2,175,673, 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 the Citicorp lease
agreement.
Prepaid expenses increased from $320,021 at December 31, 1994 to $453,774 at
March 31, 1995. The increase is attributable to the payment of the
Partnership's semi-annual real estate tax payment in January 1995, offset by
the continued amortization of real estate taxes, insurance premiums, and
leasing commissions.
Accounts payable and accrued expenses increased from $857,084 at December 31,
1994 to $1,118,115 at March 31, 1995. The increase is mainly due to the
receipt of April rental payments from tenants in March.
Results of Operations
The Partnership incurred a net loss of $888,449 for the three months ended
March 31, 1995, compared to a net loss of $1,022,093 for the three months ended
March 31, 1994. The reduction in the net loss is primarily the result of an
increase in interest income, as well as decreases in interest expense and
property operating expense.
Rental income for the three months ended March 31, 1995 totaled $615,002, an
increase of $10,639 from the corresponding period in 1994. Interest income
totaled $78,698 for the quarter ended March 31, 1995 compared with $41,002 in
the 1994 period. The $37,696 increase is due to higher yields earned on the
Partnership's average cash balance in 1995. Other income decreased from
$78,777 for the three months ended March 31, 1994 to $38,158 for the
corresponding period in 1995, due to a reduction in tenant reimbursements for
electricity costs, and a reduction in income generated from cafeteria
operations at the Project.
Total expenses for the quarter ended March 31, 1995 were $1,620,307, compared
with $1,746,235 for the corresponding 1994 period. Property operating expenses
totaled $549,036 for the three months ended March 31, 1995, compared with
$618,820 for the corresponding 1994 period. The decrease is primarily due to
lower real estate taxes, utility costs and building services expenses.
Interest expense related to the revolving loan payable for the quarters ended
March 31, 1995 and 1994 was $286,199 and $332,660, respectively. Interest
expense on the revolving loan payable decreased due to the Loan Modification
discussed above. Professional fees for the first quarter of 1995 decreased
$13,105 from the corresponding period in 1994 due to lower legal fees.
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, and the motion 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
and claimed the action to the jury trial list. 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. Gilbane has not yet answered the
Partnership's Second Amended Counterclaim. The parties are
currently engaged in discovery, and a trial has been
tentatively scheduled to begin on August 1, 1995. The
Partnership expects to vigorously defend against 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 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 March 31, 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: May 12, 1995 BY: /s/Rocco Andriola
Name: Rocco Andriola
Title: Director, Chief Financial Officer and
Vice President
Date: May 12, 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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