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 September 30, 1996
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 Depository Corp.
is a Delaware corporation 13-3392081
State or Other Jurisdiction of I.R.S. Employer Identification
Incorporation or Organization
3 World Financial Center, 29th Floor, 10285
New York, NY Attn: Andre Anderson Zip Code
Address of Principal Executive Offices
(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 At September 30, At December 31,
1996 1995
Assets
Real estate, at cost:
Land $14,714,483 $14,714,483
Buildings and improvements 52,900,982 52,729,013
Tenant improvements 7,770,040 6,786,915
Furniture, fixtures and equipment 293,864 372,541
75,679,369 74,602,952
Less accumulated depreciation (15,652,252) (14,405,825)
60,027,117 60,197,127
Cash and cash equivalents 5,049,293 5,873,982
Restricted cash 337,643 91,458
Accounts receivable 48,743 71,052
Deferred rent receivable 1,795,317 1,855,670
Deferred charges, net of accumulated amortization
of $669,237 in 1996 and $573,387 in 1995 85,846 181,696
Prepaid expenses, net of accumulated amortization
of $893,131 in 1996 and $775,742 in 1995 1,847,894 1,399,363
Total Assets $69,191,853 $69,670,348
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $1,315,563 $1,464,994
Interest payable 131,073 124,036
Due to affiliates 147,958 146,292
Revolving loan payable 17,798,291 16,483,152
Total Liabilities 19,392,885 18,218,474
Partners' Capital (Deficit):
General Partner (219,995) (203,466)
Limited Partners (7,826,300 units outstanding) 50,018,963 51,655,340
Total Partners' Capital 49,798,968 51,451,874
Total Liabilities and Partners' Capital $69,191,853 $69,670,348
Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1996
General Limited
Partner Partners Total
Balance at December 31, 1995 $(203,466) $51,655,340 $51,451,874
Net loss (16,529) (1,636,377) (1,652,906)
Balance at September 30, 1996 $(219,995 $50,018,963 $49,798,968
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
Income
Rental $995,276 $1,003,491 $2,876,973 $2,235,840
Interest 67,833 80,052 197,488 236,030
Other 53,978 189,363 168,952 256,211
Total Income 1,117,087 1,272,906 3,243,413 2,728,081
Expenses
Property operating 657,837 564,412 1,871,648 1,634,422
Depreciation and amortization 522,972 493,629 1,544,592 1,954,611
Interest 397,915 344,803 1,144,275 917,202
Professional fees 84,346 87,810 225,141 154,386
Partnership service fees 33,690 32,448 82,957 75,392
General and administrative 8,864 11,783 27,706 27,904
Total Expenses 1,705,624 1,534,885 4,896,319 4,763,917
Net Loss $(588,537) $(261,979) $(1,652,906) $(2,035,836)
Net Loss Allocated:
To the General Partner $(5,885) $(2,619) $(16,529) $(20,358)
To the Limited Partners (582,652) (259,360) (1,636,377) (2,015,478)
$(588,537) $(261,979) $(1,652,906) $(2,035,836)
Per limited partnership unit
(7,826,300 outstanding) $(.07) $(.03) $(.21) $(.26)
Statements of Cash Flows
For the nine months ended September 30, 1996 1995
Cash Flows From Operating Activities:
Net loss $(1,652,906) $(2,035,836)
Adjustments to reconcile net loss to net cash
used for operating activities:
Depreciation 1,331,353 1,752,217
Amortization 213,239 202,394
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Restricted cash (246,185) (2,088)
Accounts receivable 22,309 (116,307)
Deferred rent receivable 60,353 469,295
Prepaid expenses (565,920) (1,292,220)
Accounts payable and accrued expenses (149,431) 459,088
Interest payable 7,037 28,636
Due to affiliates 1,666 4,883
Net cash used for operating activities (978,485) (529,938)
Cash Flows From Investing Activities:
Additions to real estate (1,161,343) (176,460)
Net cash used for investing activities (1,161,343) (176,460)
Cash Flows From Financing Activities:
Borrowings under the revolving loan payable 1,315,139 1,075,380
Net cash provided by financing activities 1,315,139 1,075,380
Net increase (decrease) in cash and cash equivalents (824,689) 368,982
Cash and cash equivalents, beginning of period 5,873,982 5,768,902
Cash and cash equivalents, end of period $5,049,293 $6,137,884
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $1,137,238 $888,566
Supplemental Disclosure of Non-Cash Investing Activities:
Write-off of fully depreciated furniture, fixtures and
equipment $ 84,926 $ _
Notes to the Financial Statements
The unaudited financial statements should be read in conjunction
with the Partnership's annual 1995 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 September 30, 1996 and the
results of operations for the three and nine months ended
September 30, 1996 and 1995, cash flows for the nine months ended
September 30, 1996 and 1995, and the statement of partners'
capital (deficit) for the nine months ended September 30, 1996.
Results of operations for the period are not necessarily
indicative of the results to be expected for the full year.
No significant events have occurred subsequent to fiscal year
1995, and no material contingencies exist which would require
disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
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 two parcels of land located in Stamford, Connecticut with
two commercial office buildings constructed thereon containing a
total of 325,416 RSF (the "Property"). Through September 30, 1996,
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 Property's leasing phase, the Partnership obtained a
revolving first mortgage loan from People's Bank ("People's") in
July 1990. On February 17, 1994, the Partnership entered into a
modification of the loan's terms with People's which, among other
things, reduced the principal balance of the loan from $25
million to $24,449,795, and 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 $1,315,139 increase in
principal outstanding from December 31, 1995 to September 30, 1996
was attributable to funds advanced to pay for costs associated
with recent leasing activity.
During the third quarter of 1996, the Partnership signed a lease
agreement with Tradition Financial Services, Inc. for 11,605
square feet in the South Tower. The new tenant is scheduled to
take occupancy late in the fourth quarter of 1996. The cost of
the tenant improvements necessitated by this lease will be funded
from drawdowns on the Partnership's revolving loan payable. As a
result of this leasing activity, the Property's overall occupancy
increased to 70% as of September 30, 1996. In addition to the
leasing activity at the Property, the construction of a new
management office was completed in August 1996.
The General Partner is currently reviewing the Partnership's
options regarding refinancing the Property's outstanding mortgage
loan which matures in August 1997.
Cash and cash equivalents totaled $5,049,293 at September 30, 1996,
as compared to $5,873,982 at December 31, 1995. The
decrease was primarily due to net cash used for operating
activities and additions to real estate exceeding cash provided
by borrowings under the revolving loan payable.
Restricted cash at September 30, 1996 totaled $337,643, as
compared to $91,458 at December 31, 1995. The increase is the
result of security deposits received by the Partnership in early
1996 from two tenants in the South Tower.
As of September 30, 1996, the Partnership had deferred rent
receivable of $1,795,317, compared with $1,855,670 at
December 31, 1995. Deferred rent receivable is rental income that
is recognized on a straight-line basis over the non-cancelable term
of the tenants' leases which will not be received until later
periods. The decrease is primarily due to rental concessions
related to the lease with Citicorp North America, Inc.
("Citicorp"), which was partially offset by new leasing activity.
Deferred charges decreased from $181,696 as of December 31, 1995
to $85,846 as of September 30, 1996. The decrease is due to the
amortization of capitalized fees related to the modification of
the revolving loan agreement with People's. Prepaid expenses
increased from $1,399,363 at December 31, 1995 to $1,847,894 at
September 30, 1996. The increase is primarily attributable to
the payment of leasing commissions relating to the Tradition
Financial Services, Inc. and Cardmember Publishing leases, and
the costs associated with the extension of Citicorp's lease in
June 1995 (the "Citicorp Lease Extension"). The increase is also
due to the prepayment of the 1996-97 insurance premium and real
estate taxes.
Accounts payable and accrued expenses decreased from $1,464,994
at December 31, 1995 to $1,315,563 at September 30, 1996. The
decrease is primarily attributable to the recognition of prepaid
rental payments made by Citicorp and the payment of legal fees
relating to the Gilbane litigation. The decrease is also due to
the payment of invoices relating to Consolidated Hydro Inc.'s
tenant improvements which was partially offset by security
deposits received from Cardmember Publishing and Consolidated
Hydro, Inc.
Results of Operations
For the three-month and nine-month periods ended
September 30, 1996, the Partnership incurred net losses of $588,537
and $1,652,906, respectively, as compared to $261,979 and $2,035,836,
respectively, for the corresponding periods in 1995. The larger
net loss for the three-month period is primarily attributable to
a decrease in other income and higher property operating
expenses. The reduction in the net loss for the nine-month
period is primarily the result of higher rental income due to the
increased occupancy at the Property.
For the nine-month period ended September 30, 1996, the
Partnership generated rental income of $2,876,973, as compared to
$2,235,840 for the corresponding period in 1995. The increase is
primarily due to a reduction in the amortization of deferred rent
relating to the Citicorp Lease Extension and the addition of new
tenants in the South Tower.
Other income decreased from $189,363 and $256,211, for the three-
month and nine-month periods ended September 30, 1995,
respectively, to $53,978 and $168,952, respectively, for the
corresponding periods in 1996, primarily as a result of
Citicorp's reimbursement in the 1995 period for improvements to
its leased space.
Property operating expenses increased to $657,837 and $1,871,648,
respectively, for the three-month and nine-month periods ended
September 30, 1996 from $564,412 and $1,634,422, respectively,
for the corresponding periods in 1995. The increase is primarily
due to Cardmember Publishing and Consolidated Hydro Inc. taking
occupancy in the South Tower and resulting increases in
utilities, cleaning and security costs, and repairs and
maintenance expenses. Depreciation and amortization for the
three-month and nine-month periods ended September 30, 1996 was
$522,972 and $1,544,592, respectively, as compared to $493,629
and $1,954,611, respectively, for the corresponding periods in
1995. The decline in depreciation and amortization for the nine-
month period is attributable to the Citicorp Lease Extension that
extended the length of Citicorp's lease and the corresponding
asset life of the tenant improvements. For the three-month and
nine-month periods ended September 30, 1996, interest expense
relating to the revolving loan payable increased to $397,915 and
$1,144,275, respectively, from $344,803 and $917,202,
respectively, for the corresponding periods in 1995. Interest
expense increased due to additional borrowings relating to
leasing activity and an increase in average interest rates during
the 1996 periods as compared to the 1995 periods. For the nine-
month period ended September 30, 1996, professional fees totaled
$225,141, as compared with $154,386 for the same period in 1995.
The increase is primarily attributable to legal costs associated
with the significant increase in leasing activity.
Part II Other Information
Items 1 Legal proceedings.
On February 1, 1991, Gilbane filed a mechanic's
lien against the Property in the sum of
$4,583,481. This amount was subsequently reduced
to $2,650,018 at the request of the Partnership.
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, approximately $2.65 million
in monetary damages, interest, costs, attorneys'
fees, punitive damages, possession of the Project,
and the appointment of a receiver.
On October 21, 1993, the Partnership filed its
Answer, Special Defenses and Counterclaims to
Gilbane's Action, which alleged breach of various
contracts, unfair trade practices and slander of
title. On September 13, 1995, the Partnership
filed a Substituted Answer, Special Defenses,
Counterclaims, Set-offs and Recoupment which, in
addition to the allegations of its original
counterclaim, brought additional claims of
negligence, breach of warranty, breach of
contract, products liability and unfair trade
practices. The Partnership, by way of its
counterclaims, seeks approximately $1.7 million in
damages in addition to interest, costs, punitive
damages and attorneys' fees.
On December 31, 1990, a subcontractor of the
Property, 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, monetary damages, and possession
of the Project. An application to discharge Moliterno's
mechanic's lien was filed by the Partnership on
April 30, 1993. On September 1, 1995, the Partnership
filed its answer, special defenses and counterclaims to
Moliterno's cross-claim, alleging that Moliterno
was negligent, breached its contract and an
implied warranty, and engaged in unfair trade
practices in performing its work on the Property.
The Partnership, Gilbane and Moliterno
(collectively, the "Parties") participated in the
trial of the Gilbane Action over the course of
approximately 20 trial days in late 1995. A final
trial day was held and the evidentiary portion of
the trial was completed on April 30, 1996. At
that time, the court ordered the parties to file
initial post-trial briefs within three weeks.
Subsequently, Gilbane requested two extensions of
this deadline. The parties exchanged post trial
briefs on June 14, 1996, followed by reply briefs
on July 26, 1996. Under the court's current
order, all submissions to the court are now
complete. A decision from the trial court,
therefore, is currently not expected until, at the
earliest, late in the fourth quarter of 1996.
While the Partnership believes it has meritorious
defenses and counterclaims against each claim,
pursuant to the provisions of Statement of
Position 94-6, which became effective with
financial statements issued for fiscal years
ending on or after December 15, 1995, the
Partnership is required to disclose that the
ultimate resolution of the matter, which is
expected to occur within one year, could result in
a loss of approximately $2.8 million. The
Partnership has made no accrual for potential
losses related to this litigation as of
September 30, 1996.
Items 2-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were
filed during the quarter ended September 30, 1996.
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: November 13, 1996 BY: /s/ Regina M. Hertl
Name: Regina M. Hertl
Title: President
Date: November 13, 1996 BY: /s/ Rocco F. Andriola
Name: Rocco F. Andriola
Title: Director, Vice President
and Chief Financial Officer
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<PERIOD-END> Sep-30-1996
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