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, 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 No.
Incorporation or Organization
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 At June 30, At December 31,
1996 1995
Assets
Real estate, at cost:
Land $14,714,483 $14,714,483
Buildings and improvements 52,844,269 52,729,013
Tenant improvements 7,630,124 6,786,915
Furniture, fixtures and equipment 293,864 372,541
75,482,740 74,602,952
Less accumulated depreciation (15,202,662) (14,405,825)
60,280,078 60,197,127
Cash and cash equivalents 5,609,571 5,873,982
Restricted cash 337,677 91,458
5,947,248 5,965,440
Accounts receivable 40,459 71,052
Deferred rent receivable 1,819,185 1,855,670
Deferred charges, net of accumulated amortization
of $637,287 in 1996 and $573,387 in 1995 117,796 181,696
Prepaid expenses, net of accumulated amortization
of $851,699 in 1996 and $775,742 in 1995 1,623,433 1,399,363
Total Assets $69,828,199 $69,670,348
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $1,373,590 $1,464,994
Interest payable 123,781 124,036
Due to affiliates 144,562 146,292
Revolving loan payable 17,798,761 16,483,152
Total Liabilities 19,440,694 18,218,474
Partners' Capital (Deficit):
General Partner (214,110) (203,466)
Limited Partners (7,826,300 units outstanding) 50,601,615 51,655,340
Total Partners' Capital 50,387,505 51,451,874
Total Liabilities and Partners' Capital $69,828,199 $69,670,348
Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1996
General Limited
Partner Partners Total
Balance at December 31, 1995 $(203,466) $51,655,340 $51,451,874
Net loss (10,644) (1,053,725) (1,064,369)
Balance at June 30, 1996 $(214,110) $50,601,615 $50,387,505
Statements of Operations
Three months ended June 30, Six months ended June 30,
1996 1995 1996 1995
Income
Rental $1,075,210 $617,347 $1,881,697 $1,232,349
Other 80,872 28,690 114,974 66,848
Interest 60,477 77,280 129,655 155,978
Total income 1,216,559 723,317 2,126,326 1,455,175
Expenses
Property operating 585,201 520,974 1,213,811 1,070,010
Depreciation and amortization 524,353 730,714 1,021,620 1,460,982
Interest 369,460 286,200 746,360 572,399
Professional fees 91,928 39,775 140,795 66,576
Partnership service fees 27,915 23,296 49,267 42,944
General and administrative 7,338 7,766 18,842 16,121
Total expenses 1,606,195 1,608,725 3,190,695 3,229,032
Net Loss $(389,636) $(885,408) $(1,064,369) $(1,773,857)
Net Loss Allocated:
To the General Partner $(3,896) $(8,855) $(10,644) $(17,739)
To the Limited Partners (385,740) (876,553) (1,053,725) (1,756,118)
$(389,636) $(885,408) $(1,064,369) $(1,773,857)
Per limited partnership unit
(7,826,300 outstanding) $(.05) $(.11) $(.14) $(.22)
Statements of Cash Flows
For the six months ended June 30,
1996 1995
Cash Flows From Operating Activities
Net loss $(1,064,369) $(1,773,857)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation 881,763 1,322,588
Amortization 139,857 138,394
Increase (decrease) in cash arising from changes in
operating assets and liabilities
Restricted cash (246,219) (2,012)
Accounts receivable 30,593 42,704
Deferred rent receivable 36,485 412,392
Prepaid expenses (300,027) 30,577
Accounts payable and accrued expenses (91,404) (6,854)
Interest payable (255) -----
Due to affiliates (1,730) (7,010)
Net cash provided by (used for) operating activities (615,306) 156,922
Cash Flows From Investing Activities
Additions to real estate (964,714) (174,366)
Net cash used for investing activities (964,714) (174,366)
Cash Flows From Financing Activities
Borrowings under the revolving loan payable 1,315,609 -----
Net cash provided by financing activities 1,315,609 -----
Net decrease in cash and cash equivalents (264,411) (17,444)
Cash and cash equivalents, beginning of period 5,873,982 5,768,902
Cash and cash equivalents, end of period $5,609,571 $5,751,458
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $746,615 $572,399
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 June 30, 1996 and the
results of operations for the three and six months ended June 30,
1996 and 1995, cash flows for the six months ended June 30, 1996
and 1995, and the statement of changes in partners'capital (deficit)
for the six months ended June 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 "Project"). Through June 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 Project'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 $1,315,609 increase in principal
outstanding from December 31, 1995 to June 30, 1996 was
attributable to funds advanced to pay for costs associated with
recent leasing activity.
During the second quarter of 1996, the Partnership signed a lease
with Learning International, Inc. ("Learning") for 36,720 square
feet covering two floors in the South Tower. The terms of the
lease require Learning to fund the necessary improvements for the
space and related leasing commissions. Learning began paying
rent on July 1, 1996. Additionally, Millsport L.L.C., which
occupies 8,589 square feet in the North Tower, expanded its
leased space by 2,341 square feet during the second quarter, with
occupancy on the expansion space to begin late in the third
quarter of 1996. As a result of this leasing activity, the
Project's overall occupancy increased to 66% as of July 1, 1996.
Cash and cash equivalents totaled $5,609,571 at June 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 June 30, 1996 totaled $337,677, 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
Cardmember Publishing and Consolidated Hydro, Inc., a tenant that
signed a lease for approximately 8,600 square feet in the South
Tower in October 1995.
As of June 30, 1996, the Partnership had deferred rent receivable
of $1,819,185, compared with $1,855,670 at December 31, 1995.
Deferred rent receivable represents 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 associated with rental
concessions related to the lease with Citicorp North America,
Inc., offset by new lease activity in the South Tower.
Prepaid expenses increased from $1,399,363 at December 31, 1995
to $1,623,433 at June 30, 1996. The increase is attributable to
the payment of leasing commissions related to the Cardmember
Publishing lease and the costs associated with the Citicorp lease
amendment, and the prepayment of the 1996-97 insurance premium.
Accounts payable and accrued expenses decreased from $1,464,994
at December 31, 1995 to $1,373,590 at June 30, 1996. The
decrease is primarily attributable to the application of prepaid
rental payments made by Citicorp. The decrease is also due to
the payment of invoices relating to Consolidated Hydro Inc.'s
tenant improvements.
Results of Operations
The Partnership incurred net losses of $389,636 and $1,064,369,
respectively, for the three and six months ended June 30, 1996,
as compared with net losses of $885,408 and $1,773,857,
respectively, for the corresponding periods in 1995. The
reduction in the net loss is primarily the result of increased
occupancy at the Project.
Rental income totaled $1,075,210 and $1,881,697, respectively,
for the three and six months ended June 30, 1996, as compared
to $617,347 and $1,232,349, respectively, for the corresponding
periods in 1995. The increase is primarily due to a reduction
in the amortization of deferred rent relating to an extension
of Citicorp North America Inc.'s lease in June 1995
(the "Citicorp Lease Extension") and the addition of two new
tenants totaling 27,262 rentable square feet in the South Tower.
Property operating expenses increased to $585,201 and $1,213,811,
respectively, for the three and six months ended June 30, 1996
from $520,974 and $1,070,010, 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 an increase in repairs and maintenance
expense from increased usage of the Project by the larger tenant
base. Depreciation and amortization for the three and six months
ended June 30, 1996 was $524,353 and $1,021,620 respectively, as
compared to $730,714 and $1,460,982 for the corresponding periods
in 1995. The decline in depreciation and amortization is
attributable to the Citicorp Lease Extension that extended the
length of Citicorp's lease and the corresponding asset life of
the tenant improvements. Interest expense relating to the
revolving loan payable increased to $369,460 and $746,360,
respectively, for the three and six months ended June 30, 1996
from $286,200 and $572,399, respectively, for the corresponding
periods in 1995. Interest expense increased due to the
additional borrowings and an increase in the interest rate from
7.43% during the 1995 period to 9.03% during the 1996 period.
Professional fees totaled $91,928 and $140,795, respectively, for
the three and six months ended June 30, 1996, as compared with
$39,775 and $66,576 for the same periods in 1995. The increase
is primarily attributable to engineering consulting fees
associated with the Gilbane litigation (See Part II, Item 1) and,
to a lesser extent, legal costs associated with the recent
leasing activity.
Part II Other Information
Items 1 Legal proceedings.
On February 1, 1991, Gilbane filed a mechanic's
lien against the Project 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
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, 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 Project.
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 third 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 June 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 June 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: August 13, 1996 BY: /s/ Rocco F. Andriola
Name: Rocco F. Andriola
Title: Director, Vice President
and Chief Financial Officer
Date: August 13, 1996 BY: /s/ Regina M. Hertl
Name: Regina M. Hertl
Title: President and
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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