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, 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 I.R.S. Employer Identification No.
of 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 March 31, At December 31,
1998 1997
Assets ----------- -------------
Real estate assets held for disposition $59,587,123 $59,532,125
Cash and cash equivalents 4,367,742 3,960,408
Restricted cash 1,073,555 1,213,209
Accounts receivable 164,987 65,764
Deferred charges, net of accumulated amortization
of $18,095 in 1998 and $12,667 in 1997 133,908 139,336
Prepaid expenses 154,371 24,211
---------- ----------
Total Assets $65,481,686 $64,935,053
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 723,786 $ 1,903,249
Interest payable 116,364 116,775
Due to affiliates 57,500 80,110
Revolving loan payable 18,300,891 18,365,631
---------- ----------
Total Liabilities 19,198,541 20,465,765
Partners' Capital (Deficit):
General Partner (255,153) (273,292)
Limited Partners (7,826,300 units outstanding) 46,538,298 44,742,580
---------- ----------
Total Partners' Capital 46,283,145 44,469,288
---------- ----------
Total Liabilities and Partners' Capital $65,481,686 $64,935,053
========== ==========
Statement of Partners' Capital (Deficit)
For the three months ended March 31, 1998
General Limited
Partner Partners Total
-------- ---------- ----------
Balance at December 31, 1997 $(273,292) $44,742,580 $44,469,288
Net income 18,139 1,795,718 1,813,857
-------- ---------- ----------
Balance at March 31, 1998 $(255,153) $46,538,298 $46,283,145
======== ========== ==========
Statements of Operations
For the three months ended March 31,
Income 1998 1997
- ----------- --------- ---------
Rental $1,392,834 $1,248,859
Interest 43,723 61,946
Real estate tax abatement 1,109,340 --
Other 326,740 125,770
Total income 2,872,637 1,436,575
Expenses
- -----------
Property operating 558,881 684,591
Depreciation and amortization 5,428 533,360
Interest 349,503 402,241
Professional fees 96,910 40,393
Partnership service fees 39,825 63,353
General and administrative 8,233 26,432
Total expenses 1,058,780 1,750,370
--------- ---------
Net Income (Loss) $1,813,857 $ (313,795)
========= =========
Net Income (Loss) Allocated:
To the General Partner $ 18,139 $ (3,138)
To the Limited Partners 1,795,718 (310,657)
--------- ---------
$1,813,857 $ (313,795)
========= =========
Per limited partnership unit (7,826,300 outstanding) $.23 $(.04)
========= =========
Statements of Cash Flows
For the three months ended March 31, 1998 1997
Cash Flows From Operating Activities:
Net income (loss) $1,813,857 $(313,795)
Adjustments to reconcile net loss to net cash
used for operating activities:
Depreciation and amortization 5,428 533,360
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Restricted cash 139,654 (151,669)
Accounts receivable (99,223) 26,741
Deferred rent receivable -- (19,442)
Prepaid expenses (130,160) (223,545)
Accounts payable and accrued (1,179,463) 104,515
Interest payable (411) --
Due to affiliates (22,610) 21,659
--------- --------
Net cash provided by (used for) operating activities 527,072 (22,176)
Cash Flows From Investing Activities:
Additions to real estate (54,998) (382,437)
Net cash used for investing activities (54,998) (382,437)
Cash Flows From Financing Activities:
Principal payments under the revolving loan payable (64,740) --
Net cash used for financing activities (64,740) --
--------- ---------
Net increase (decrease) in cash and cash equivalents 407,334 (404,613)
--------- ---------
Cash and cash equivalents, beginning of period 3,960,408 5,668,459
--------- ---------
Cash and cash equivalents, end of period $4,367,742 $5,263,846
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 349,914 $ 402,241
Supplemental Disclosure of Non-Cash Investing Activities:
Write-off of fully depreciated
furniture, fixtures and equipment $ -- $ 61,910
Write-off of fully depreciated tenant improvements -- 76,285
Building improvements funded through accounts payable -- 44,893
Tenant improvements funded through accounts payable -- 49,985
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 March 31, 1998 and the results of
operations and cash flows for the three-month period ended March 31, 1998 and
1997 and the statement of partners' capital (deficit) for the three-month
period ended March 31, 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 March 17, 1998, the Partnership entered into an agreement to sell its
property, Stamford Towers (the "Purchase Agreement") to Reckson Operating
Partnership, L.P. (the "Buyer"), a Delaware limited partnership unaffiliated
with the Partnership. Pursuant to the terms of the Purchase Agreement, the
Buyer agreed to acquire Stamford Towers for consideration in the amount of
$61,315,000 in cash (the "Purchase Price"), subject to adjustments in respect
of certain closing costs (the "Sale").
The proposed Sale is subject to the satisfaction of certain conditions.
Pursuant to the terms of the Partnership Agreement, Limited Partners holding a
majority of limited partnership interests will have the right to disapprove of
the Sale. On May 1, 1998, an information statement was mailed to the Limited
Partners detailing information concerning the proposed Sale and subsequent
distribution by the Partnership.
There can be no assurance that the Sale will be completed. Upon completion of
the Sale, the General Partner intends to dissolve the Partnership and will make
one or more liquidating distributions in accordance with the terms of the
Partnership Agreement. It is anticipated, however, that certain reserves will
need to be maintained for a period of time following the Sale for certain
contingent liabilities of the Partnership.
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
- -------------------------------
On March 17, 1998, the Partnership entered into an agreement to sell the
Project (the "Purchase Agreement") to Reckson Operating Partnership, L.P. (the
"Buyer"), a Delaware limited partnership unaffiliated with the Partnership.
Pursuant to the terms of the Purchase Agreement, the Buyer agreed to acquire
the Project for consideration in the amount of $61,315,000 in cash (the
"Purchase Price"), subject to adjustments in respect of certain closing costs
(the "Sale").
The proposed Sale is subject to the satisfaction of certain conditions.
Pursuant to the terms of the Partnership Agreement, Limited Partners holding a
majority of limited partnership interests will have the right to disapprove of
the Sale. On May 1, 1998, an information statement was mailed to the Limited
Partners detailing information concerning the proposed Sale and subsequent
distribution by the Partnership.
Unless disapproved by Limited Partners as described above, it is likely that
the Sale will be completed. Following a sale of the Project, the General
Partner intends to dissolve the Partnership and will make one or more
liquidating distributions in accordance with the terms of the Partnership
Agreement. It is anticipated, however, that certain reserves will need to be
maintained for a period of time following the Sale for certain contingent
liabilities of the Partnership.
In light of the Partnership's marketing efforts, 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 $4,367,742 at March 31, 1998 compared to
$3,960,408 at December 31, 1997. The increase was primarily due to the
increase in rental revenue at the Property.
Restricted cash at March 31, 1998 totaled $1,073,555, 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 decrease is
primarily the result of disbursements from the real estate tax escrow pursuant
to the terms of the first mortgage, offset by security deposits received from
new tenants by the Partnership.
The General Partner has appealed the Property's assessed value for real estate
tax purposes for the years 1993 through 1997. On February 24, 1998, the City
of Stamford agreed to abate 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 of Stamford primarily representing the
excess amount of real estate taxes which had been overpaid 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 of Stamford for fees in
lieu of parking, and second, approximately $267,000 due the City of Stamford
for real estate taxes for the six months ended June 30, 1998. The remaining
balance of the credit will be applied to the real estate tax payment due in
July 1998. The remaining balance, totalling $11,021, and the portion of the
real estate tax payment attributable for the second quarter of 1998, totalling
$133,665, are included in Prepaid expenses, which totaled $154,371 at March 31,
1998, compared to $24,211 at December 31, 1997.
Accounts payable and accrued expenses totaled $723,786 at March 31, 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 $57,500 at March 31, 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 82% at March 31, 1998, compared to 72% at
March 31, 1997 and 79% at December 31, 1997. In April 1998, the Partnership
executed a lease for two floors of the South Tower, bringing overall occupancy
to 91% as of May 1, 1998.
Results of Operations
- ---------------------
The Partnership reported net income of $1,813,857 for the three months ended
March 31, 1998 compared to a net loss of $313,795 for the three-months ended
March 31, 1997. The change from net loss to net income is primarily the result
of an increase in rental income, due to increased occupancy in the North and
South Towers, a credit received from the City of Stamford due to the settlement
of a real estate tax appeal, and suspension of depreciation and amortization of
real estate assets commencing October 1, 1997.
Rental income totaled $1,392,834 for the three months ended March 31, 1998
compared to $1,248,859 for the corresponding period in 1997. The increase is
primarily the result of increased occupancy in the North and South Towers.
For the three months ended March 31, 1998 and 1997, interest income was $43,723
and $61,946, respectively. The decrease is primarily due to lower average cash
balances maintained in 1998.
Real estate tax abatement was $1,109,340 and $0 for the three months ending
March 31, 1998 and 1997, respectively. 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 was reached on
February 24, 1998.
Other income was $326,740 and $125,770 for the three months ended March 31,
1998 and 1997, respectively. The increase is the result of higher tenant
reimbursements attributable to the increase in occupancy during the 1998 period
and higher miscellaneous income received by the Partnership as a result of
participating in an energy rebate program.
Property operating expenses decreased to $558,881 for the three months ended
March 31, 1998 from $684,591 for the three months ended March 31, 1997,
primarily due to a decrease in repairs and maintenance expense and a decrease
in real estate taxes due to the lower assessed value of the Property.
Professional fees totaled $96,910 for the three months ended March 31, 1998
compared to $40,393 for the comparable 1997 period. The increase is primarily
attributable to an increase in legal fees associated with the proposed Sale of
the Property and recent leasing activity.
For the three months ended March 31, 1998 and 1997, Partnership servicing fees
were $39,825 and $63,353 respectively. The decrease reflects an adjustment in
the 1998 period to compensate for an over-accrual in a prior period. General
and administrative expenses were $8,233 for the three months ended March 31,
1998 compared to $26,432 for the three months ended March 31, 1997. The
decrease is primarily the result of lower printing and mailing 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 March 31, 1998.
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: May 15, 1998 BY: /s/Jeffrey C. Carter
Name: Jeffrey C. Carter
Title: Director, President and Chief
Financial Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Mar-31-1998
<CASH> 5,441,297
<SECURITIES> 000
<RECEIVABLES> 164,987
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 5,894,563
<PP&E> 59,587,123
<DEPRECIATION> 000
<TOTAL-ASSETS> 65,481,686
<CURRENT-LIABILITIES> 897,650
<BONDS> 18,300,891
<COMMON> 000
000
000
<OTHER-SE> 46,283,145
<TOTAL-LIABILITY-AND-EQUITY> 65,481,686
<SALES> 1,392,834
<TOTAL-REVENUES> 2,872,637
<CGS> 000
<TOTAL-COSTS> 558,881
<OTHER-EXPENSES> 150,397
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 349,503
<INCOME-PRETAX> 1,813,857
<INCOME-TAX> 000
<INCOME-CONTINUING> 1,813,857
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 1,813,857
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<EPS-DILUTED> 0.23
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