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, 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: 33-8105
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 Incorporation or Organization I.R.S. Employer Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn.: Andre Anderson 10285
Address of Principal Executive Offices Zip Code
(212) 526-3183
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,
1998 1997
Assets
Real estate assets held for disposition $ 60,676,448 $ 59,532,125
Cash and cash equivalents 4,071,860 3,960,408
Restricted cash 1,268,967 1,213,209
Accounts receivable 91,057 65,764
Deferred charges, net of accumulated
amortization of $23,524 in 1998 and
$12,667 in 1997 128,479 139,336
Prepaid expenses 58,093 24,211
Total Assets $ 66,294,904 $ 64,935,053
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 770,928 $ 1,903,249
Interest payable 115,944 116,775
Due to affiliates 47,604 80,110
Revolving loan payable 18,234,910 18,365,631
Total Liabilities 19,169,386 20,465,765
Partners' Capital (Deficit):
General Partner (246,730) (273,292)
Limited Partners
(7,826,300 units outstanding) 47,372,248 44,742,580
Total Partners' Capital 47,125,518 44,469,288
Total Liabilities and Partners' Capital $ 66,294,904 $ 64,935,053
Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1998
General Limited
Partner Partners Total
Balance at December 31, 1997 $ (273,292) $ 44,742,580 $ 44,469,288
Net income 26,562 2,629,668 2,656,230
Balance at June 30, 1998 $ (246,730) $ 47,372,248 $ 47,125,518
Statements of Operations
Three months ended June 30, Six months ended June 30,
1998 1997 1998 1997
Income
Rental $ 1,809,652 $ 1,192,468 $ 3,202,486 $ 2,441,327
Interest 56,272 63,763 99,995 125,709
Real estate tax abatement _ _ 1,109,340 _
Other 135,420 90,497 462,160 216,267
Total income 2,001,344 1,346,728 4,873,981 2,783,303
Expenses
Property operating 702,709 600,170 1,261,590 1,284,761
Depreciation
and amortization 5,429 557,685 10,857 1,091,045
Interest 348,252 378,963 697,755 781,204
Professional fees 27,879 17,235 124,789 57,628
Partnership service fees 38,005 61,917 77,830 125,270
General and administrative 36,697 26,930 44,930 53,362
Total expenses 1,158,971 1,642,900 2,217,751 3,393,270
Net Income (Loss) $ 842,373 $ (296,172) $ 2,656,230 $ (609,967)
Net Income (Loss) Allocated:
To the General Partner $ 8,424 $ (2,962) $ 26,562 $ (6,100)
To the Limited Partners 833,949 (293,210) 2,629,668 (603,867)
$ 842,373 $ (296,172) $2,656,230 $ (609,967)
Per limited partnership unit
(7,826,300 outstanding) $.11 $(.04) $.34 $(.08)
Statements of Cash Flows
For the six months ended June 30, 1998 1997
Cash Flows From Operating Activities:
Net income (loss) $ 2,656,230 $ (609,967)
Adjustments to reconcile net income (loss)
to net cash provided by (used for)
operating activities:
Depreciation and amortization 10,857 1,091,045
Increase (decrease) in cash arising
from changes in operating assets
and liabilities:
Restricted cash (55,758) (764,804)
Accounts receivable (25,293) (14,817)
Deferred rent receivable _ 43,971
Deferred charges _ (151,441)
Prepaid expenses (33,882) (108,686)
Accounts payable and accrued expenses (1,132,321) (371,710)
Interest payable (831) (16,505)
Due to affiliates (32,506) 23,159
Net cash provided by (used for) operating
activities 1,386,496 (879,755)
Cash Flows From Investing Activities:
Additions to real estate (1,144,323) (94,568)
Net cash used for investing activities (1,144,323) (94,568)
Cash Flows From Financing Activities:
Borrowings under the revolving loan payable _ 693,182
Principal payments under the revolving loan payable (130,721) _
Net cash provided by (used for)
financing activities (130,721) 693,182
Net increase (decrease) in cash and cash
equivalents 111,452 (281,141)
Cash and cash equivalents, beginning of period 3,960,408 5,668,459
Cash and cash equivalents, end of period $4,071,860 $5,387,318
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 698,586 $ 797,709
Supplemental Disclosure of Non-Cash Investing Activities:
Write-off of fully depreciated furniture,
fixtures and equipment $ _ $ 61,911
Write-off of fully depreciated tenant improvements _ 76,285
Write-off of full amortized mortgage costs _ 755,083
Building improvements funded through accounts payable _ 27,084
Tenant improvements funded through accounts payable _ 170,640
Notes to the Financial Statements
The unaudited financial statements should be read in conjunction
with the Partnership's annual 1997 audited financial statements
within Form 10-K.
The unaudited financial statements include all normal and
reoccurring adjustments which are, in the opinion of management,
necessary to present a fair statement of financial position as of
June 30, 1998 and the results of operations and cash flows for
the six-month period ended June 30, 1998 and 1997 and the
statement of partners' capital (deficit) for the six-month period
ended June 30, 1998. Results of operations for the period are
not necessarily indicative of the results to be expected for the
full year.
Certain prior year amounts have been reclassified in order to
conform to the current year's presentation.
The following significant event has occurred subsequent to fiscal
year 1997, which requires disclosure in this interim report per
Regulation S-X, Rule 10-01, Paragraph (a)(5).
On July 1, 1998, the Partnership consummated the sale of its
property, Stamford Towers, to Reckson Operating Partnership, L.P.
(the "Buyer"), a Delaware limited partnership unaffiliated with
the Partnership. Pursuant to the terms of a Purchase Agreement
dated March 17, 1998, the Buyer acquired Stamford Towers for
consideration in the amount of $61,315,000 in cash, subject to
adjustments for certain closing costs (the "Sale"). The selling
price was determined by arm's length negotiations between the
Partnership and the Buyer. The Sale was subject to the
satisfaction of certain conditions, including the right of
Limited Partners holding a majority of limited partnership
interests to disapprove of the Sale. On May 1, 1998, an
information statement was mailed via certified mail to the
Limited Partners detailing the proposed Sale and the estimated
distribution of net sales proceeds by the Partnership, as well as
Limited Partners' rights to disapprove the Sale pursuant to the
terms of the Partnership Agreement. A majority of Limited
Partners did not disapprove, and the Sale was consummated on July
1, 1998. The transaction resulted in a loss on sale of
approximately $281,324.
Part I, Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
On July 1, 1998, the Partnership consummated the sale of its
property, Stamford Towers (the "Property"), to Reckson Operating
Partnership, L.P. (the "Buyer"), a Delaware limited partnership
unaffiliated with the Partnership. Pursuant to the terms of a
Purchase Agreement dated March 17, 1998, the Buyer acquired the
Property for consideration in the amount of $61,315,000 in cash
(the "Sale"). The Sale was subject to the satisfaction of
certain conditions, including the right of Limited Partners
holding a majority of limited partnership interests to disapprove
of the Sale. On May 1, 1998, an information statement was mailed
via certified mail to the Limited Partners detailing the proposed
Sale and the estimated distribution of net sales proceeds by the
Partnership, as well as Limited Partners' rights to disapprove
the Sale pursuant to the terms of the Partnership Agreement. A
majority of Limited Partners did not disapprove, and the Sale was
consummated on July 1, 1998.
As a result of the Sale, a cash distribution should be paid to
the Limited Partners in the third quarter of 1998, representing
the net proceeds from the Sale and a portion of the Partnership's
cash reserves.
In anticipation of a sale of the Partnership's property, the
Partnership's real estate assets, deferred rent receivable and
prepaid leasing commissions were reclassified on the balance
sheet commencing September 30, 1997 to "Real estate assets held
for disposition." Effective October 1, 1997, the Partnership
suspended depreciation and amortization in accordance with the
Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of."
Cash and cash equivalents totaled $4,071,860 at June 30, 1998
compared to $3,960,408 at December 31, 1997. The increase is
primarily due to the increase in rental revenue at the Property.
Restricted cash at June 30, 1998 totaled $1,268,967, compared to
$1,213,209 at December 31, 1997. Restricted cash represents
tenant security deposits and escrows required under the terms of
the first mortgage loan. The increase is primarily the result of
funding of the real estate tax escrow pursuant to the terms of
the first mortgage, partially offset by disbursements from the
escrow.
The General Partner appealed the Property's assessed value for
real estate tax purposes for the years 1993 through 1997. On May
27, 1998, the City of Stamford (the "City") agreed to reduce the
Property's real estate taxes for each of the appealed years. As a
result, the Partnership received a credit of approximately
$842,000 from the City primarily representing the excess amount of
real estate taxes which had been paid based on the prior assessed
value of the Property. The credit was applied first,
approximately $564,000 for the Partnership's obligation due the
City for fees in lieu of parking, and second, approximately
$267,000 due the City for real estate taxes for the six months
ended June 30, 1998. At the consummation of the Sale, the Buyer
of the Property credited the Partnership for the six months ended
June 30, 1998 with the full amount of the remaining balance of
such credit applicable to the July 1998 real estate tax payment.
Subsequent to the Sale, the City claimed that there was an error
in the calculation of the credit which could result in an
approximately $37,000 reduction of the credit. The Partnership is
currently evaluating such claim.
Prepaid expenses totaled $58,093 at June 30, 1998, compared to
$24,211 at December 31, 1997. The increase is primarily due to
the timing of insurance payments.
Accounts receivable totaled $91,057 at June 30, 1998 compared to
$65,764 at December 31, 1997. The increase is primarily due to
the timing of rental receipts. Accounts payable and accrued
expenses totaled $770,928 at June 30, 1998 compared to $1,903,249
at December 31, 1997. The decrease is primarily attributable to
the satisfaction of amounts due the City of Stamford, as
discussed above, as well as the payment of costs associated with
real estate asset additions to the Property.
Due to affiliates totaled $47,604 at June 30, 1998 compared to
$80,110 at December 31, 1997. The decrease is primarily due to
the payment of fees and compensation in connection with the
organization, syndication and acquisition services rendered at
the inception of the Partnership which had been deferred.
The Property's overall occupancy was 94% at June 30, 1998,
compared to 82% at March 31, 1998 and 79% at December 31, 1997.
Results of Operations
The Partnership reported net income of $842,373 and $2,656,230,
respectively for the three and six months ended June 30, 1998,
compared with net losses of $296,172 and $609,967, respectively,
for the corresponding periods in 1997. The changes from net loss
to net income are primarily the result of increases in rental
income, due to increased occupancy in the North and South Towers,
and suspension of depreciation and amortization of real estate
assets commencing October 1, 1997. The change for the six-month
period is also due to a credit in the amount of $1,109,340
received from the City due to the settlement of a real estate tax
appeal.
Rental income totaled $1,809,652 and $3,202,486, respectively,
for the three and six months ended June 30, 1998, compared with
$1,192,468 and $2,441,327, respectively, for the corresponding
periods in 1997. The increases are primarily the result of
increased occupancy in the North and South Towers.
Interest income was $56,272 and $99,995, respectively, for the
three and six months ended June 30, 1998, compared with $63,763
and $125,709, respectively, for the corresponding periods in
1997. The decreases are primarily due to lower average cash
balances maintained in 1998.
Real estate tax abatement was $1,109,340 for the six months
ending June 30, 1998, compared with $0 for the corresponding
period in 1997. As discussed above, the General Partner
successfully appealed the Property's assessed value for real
estate tax purposes for the years 1993 through 1997 and a
settlement with the City was reached on February 24, 1998.
For the three and six months ended June 30, 1998, other income
was $135,420 and $462,160, respectively, compared to $90,497 and
$216,267 for the corresponding periods in 1997. The increases
are primarily the result of higher tenant reimbursements
attributable to the increase in occupancy during the 1998 periods
and higher miscellaneous income received by the Partnership as a
result of participating in an energy rebate program.
Property operating expenses were $702,709 for the three months
ended June 30, 1998, compared with $600,170 for the corresponding
period in 1997. The increase is primarily due to an increase in
utilities expenses. Property operating expenses for the six
months ended June 30, 1998 were $1,261,590, largely unchanged
from $1,284,761 for the corresponding period in 1997.
Professional fees totaled $27,879 and $124,789 for the three and
six months ended June 30, 1998, compared with $17,235 and $57,628
for the corresponding periods in 1997. The increases are
primarily attributable to increases in legal fees associated with
the Sale of the Property.
For the three and six months ended June 30, 1998, Partnership
service fees were $38,005 and $77,830, respectively, compared to
$61,917 and $125,270, respectively, for the corresponding periods
in 1997. The decreases primarily reflect an adjustment in the
1998 period to compensate for an over-accrual in a prior period.
General and administrative expenses were $36,697 and $44,930 for
the three and six months ended June 30, 1998, respectively,
compared to $26,930 and $53,362 for the corresponding periods in
1997. The increase for the three-month period is primarily due
to higher postage costs associated with the mailing of an
information statement on the Sale to Unitholders. The decrease
for the six-month period is primarily due to lower printing
costs, partially offset by higher postage costs.
Part II Other Information
Items 1-5 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, 1998.
On July 10, 1998, the Partnership filed a Form 8-K
reporting the consummation of the sale on July 1,
1998 of its property, Stamford Towers, to Reckson
Operating Partnership, L.P., a Delaware limited
partnership unaffiliated with the Partnership.
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
STAMFORD TOWERS DEPOSITARY CORP.
BY: STAMFORD TOWERS, INC.
General Partner
Date: August 14, 1998 BY: /s/Michael T. Marron
Name: Michael T. Marron
Title: Director, President and Chief
Financial Officer
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<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Jun-30-1998
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<SECURITIES> 000
<RECEIVABLES> 91,057
<ALLOWANCES> 000
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<CURRENT-ASSETS> 5,618,456
<PP&E> 60,676,448
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<BONDS> 18,234,910
<COMMON> 000
000
000
<OTHER-SE> 47,125,518
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<SALES> 3,202,486
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<CGS> 000
<TOTAL-COSTS> 1,261,590
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<EXTRAORDINARY> 000
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