<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM to
COMMISSION FILE NUMBER: 33-9075-LA
MISSION BAY SUPER 8 LTD., A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of small business issuer as specified in its charter)
CALIFORNIA 33-0202890
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3145 Sports Arena Blvd.
San Diego, CA 92110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(619) 226-1212
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Exchange Act during the preceding 12 months (or for such shorter
period that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days.
Yes X No
----- -----
State the number of limited partnership interests outstanding as
of the latest practicable date: 6,600
<PAGE>
PART I. -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Incorporated herein is the following unaudited financial
information:
Balance Sheet as of September 30, 1995 and December 31,
1994.
Statement of Operations for the three- and six-month periods
ended September 30, 1995 and September 30, 1994.
Statement of Cash Flows for the three- six-month periods
ended September 30, 1995 and September 30, 1994.
Notes to Financial Statements.
2
<PAGE>
MISSION BAY SUPER 8 LTD.
A California Limited Partnership
Balance Sheet
September 30, 1995 and December 31, 1994
(Unaudited)
(Part 1)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 201,713 $ 43,260
Accounts receivable 18,854 15,428
Operating supplies 19,340 19,204
Prepaid expenses 46,009 9,884
Due from affiliates (Note 4) 0 27,431
---------- ----------
Total Current Assets $ 285,916 $ 115,207
---------- ----------
Investment property, at cost:
Land 1,212,000 1,212,000
Building and improvements (Note 5) 2,024,033 2,024,033
Furniture, fixtures and equipment 719,695 702,412
---------- ----------
3,955,728 3,938,445
Less accumulated depreciation 1,190,533 1,128,445
---------- ----------
Investment property, net of
accumulated depreciation 2,765,195 2,810,000
Deferred organization costs and
franchise fee, net (Note 3) 12,079 12,829
Construction in Progress 0 0
---------- ----------
$3,063,190 $2,938,036
---------- ----------
---------- ----------
</TABLE>
3
<PAGE>
MISSION BAY SUPER 8 LTD.
A California Limited Partnership
Balance Sheet
September 30, 1995 and December 31, 1994
(Unaudited)
(Part 2)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
LIABILITIES AND
PARTNER'S CAPITAL ACCOUNTS
Current liabilities:
Accounts payable $ 15,037 $ 20,782
Accrued expenses 13,254 11,264
Due to affiliates (Note 5) 2,495 0
---------- ----------
Total current liabilities 30,786 32,046
---------- ----------
Partners' capital accounts (deficit):
General Partners:
Cumulative net earnings 30,594 7,953
Cumulative cash distributions (296,197) (286,197)
---------- ----------
(265,603) (278,244)
Limited partners:
Capital contributions,
net of offering costs 5,761,115 5,761,115
Cumulative net earnings 275,338 71,565
Cumulative cash distributions (2,738,446) (2,648,446)
---------- ----------
3,298,007 3,184,234
---------- ----------
Total partners' capital accounts 3,032,404 2,905,990
---------- ----------
$3,063,190 $2,938,036
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
MISSION BAY SUPER 8 LTD.,
A California Limited Partnership
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- -----------------------------
1995 1994 1995 1994
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Room revenues $ 395,068 $ 368,331 $ 873,478 $ 799,045
Phone revenues 10,783 12,605 27,379 31,592
Interest income 579 470 761 671
Other income 14,908 10,990 28,779 17,794
---------- ---------- ---------- ----------
421,338 392,396 930,397 849,102
---------- ---------- ---------- ----------
Expenses:
Property operating expenses 129,616 122,638 310,203 295,099
Depreciation 19,986 18,554 62,088 55,663
General and Administrative 33,232 29,615 106,072 100,187
Amortization 250 250 750 750
Management fees 25,245 23,516 55,699 50,906
Royalties 15,802 14,749 34,923 31,984
Repairs and Maintenance 13,440 15,352 39,424 42,866
Real estate taxes 9,153 12,147 31,879 37,491
Marketing 17,694 18,805 45,359 48,490
Property and liability insurance 5,919 5,834 17,586 18,405
---------- ---------- ---------- ----------
270,337 261,460 703,983 681,841
---------- ---------- ---------- ----------
Net earnings $ 151,001 $ 130,936 $ 226,414 $ 167,261
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net earnings per limited
partnership interest $ 20.59 $ 17.85 $ 30.87 $ 22.81
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
MISSION BAY SUPER 8 LTD.,
A California Limited Partnership
Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 151,001 $ 130,936 $ 226,414 $ 167,261
Adjustments to reconcile net earnings to cash:
Depreciation and amortization 20,236 18,804 62,840 56,413
Changes in assets and liabilities:
(Increase) in other assets: (11,900) 17,052 (39,687) 10,144
Increase in liabilities:
Accounts payable and accrued expenses 3,028) (621) (3,755) 4,811
---------- ---------- ---------- ----------
Net cash provided by operating activities 162,365 166,171 245,812 238,629
---------- ---------- ---------- ----------
Cash flows used in or provided
from investing activities:
Acquisition and construction costs
of investment property (484) (3,472) (17,283) (18,813)
Depletion of investment property (note 5) 0 0 0 25,702
---------- ---------- ---------- ----------
Net cash provided from investing activities (484) (3,472) (17,283) 6,889
---------- ---------- ---------- ----------
Cash flows from financing activities:
Increase (decrease) in due to affiliates 33,857 8,412 29,924 (17,597)
Cash distributions (100,000) (50,000) (100,000) (50,000)
---------- ---------- ---------- ----------
Net cash (used in) financing activities (66,143) (41,588) (70,076) (67,597)
---------- ---------- ---------- ----------
Net increase (decrease) in cash 95,738 121,111 158,453 177,921
Cash and cash equivalents at beginning of period 105,975 66,311 43,260 9,501
---------- ---------- ---------- ----------
Cash and cash equivalents at end of period $ 201,713 $ 187,422 $ 201,713 $ 187,422
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
Notes to Financial Statements
September 30, 1995
(Unaudited)
Readers of this quarterly report should refer to the partnership
audited financial statements and annual report Form 10-KSB (File
No. 33-9075-LA) for the period ended December 31, 1994, as
certain footnote disclosures which would substantially duplicate
those contained in such financial reports have been omitted from
this report.
1. THE PARTNERSHIP AND A SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Mission Bay Super 8 Ltd., A California Limited Partnership (the
Partnership), (formerly Motels of America Series IX), a
California Limited Partnership, was formed on February 5, 1987
pursuant to the California Revised Uniform Limited Partnership
Act. The purpose of the Partnership is to construct, own, and
operate a 117-room "economy" motel under a Super 8 Franchise.
The motel was opened in November 1987.
The following is a summary of the Partnership's significant
accounting policies:
CASH AND CASH EQUIVALENTS
The Partnership considers all highly liquid instruments purchased
with an original maturity of three months or less to be cash
equivalents.
INVESTMENT PROPERTY
Investment property is recorded at cost. Depreciation is
computed using the straight-line method based on estimated useful
lives of 5 to 35 years. Maintenance and repair costs are
expensed as incurred, while significant improvements,
replacements, and major renovation are capitalized.
FRANCHISE FEES
Franchise fees are amortized over the 20-year life of the
franchise agreement.
INCOME TAXES
No provision for income taxes has been made as any liability for
such taxes would be that of the partners rather than the
Partnership.
(Continued)
7
<PAGE>
MISSION BAY SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements, Continued
NET INCOME PER INTEREST
Net income per interest is based upon the 90% allocated to
limited partners divided by 6,600 limited partner interests
outstanding throughout the year.
2. PARTNERSHIP AGREEMENT
Net income or loss and cash distributions from operations of the
Partnership are allocated 90% to the limited partners and 10% to
the general partner. Profits from the sale or other disposition
of Partnership property are to be allocated to the general
partner until its capital account equals zero; thereafter, to the
limited partners until their capital accounts equal their capital
contributions reduced by prior distributions of cash from sale or
refinancing plus an amount equal to a cumulative but not
compounded annual 8% return thereon which cumulative return shall
be reduced (but not below zero) by the aggregate amount of prior
distributions of cash available for distribution; thereafter,
gain shall be allocated 15% to the general partner and 85% to the
limited partners. Loss from sale shall be allocated 1% to the
general partner and 99% to the limited partners.
3. FRANCHISE AGREEMENT
The Partnership has entered into a twenty-year franchise
agreement with Super 8 Motels, Inc. to provide the Partnership
with consultation in the areas of design, construction and
operation of the motel. The agreement required the payment of an
initial fee of $20,000 and ongoing royalties equal to 4% of gross
room revenues and a chain-affiliated advertising fee equal to 2%
of gross room revenues.
4. RELATED PARTY TRANSACTIONS
The motel is operated pursuant to a management agreement with
GHG. The agreement provides for the payment of monthly
management fees of 6% of gross revenues.
The Partnership has agreed to reimburse GHG for certain expenses
related to services performed in maintaining the books and
administering the affairs of the Partnership.
GHG and an affiliate, GMS Management Services, Inc. (GMS),
allocate to the Partnership certain marketing, accounting, and
maintenance salaries and certain other expenses directly related
to the operation of the Partnership.
(Continued)
8
<PAGE>
MISSION BAY SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements, Continued
4. RELATED PARTY TRANSACTIONS (Continued)
Fees and reimbursements for partnership administration expenses
paid to GHG and GMS for the three months ended September 30, 1995
and September 30, 1994 and for the nine months ended September
30, 1995 and September 30, 1994 are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ ------------------
9/30/95 9/30/94 9/30/95 9/30/94
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees $25,245 $23,516 $55,699 $50,906
Reimbursement for
partnership admini-
stration expenses $10,107 $10,620 $30,317 $31,860
</TABLE>
In addition, all motel employees are paid by GMS. The
Partnership reimbursed GMS $61,231 for the wages of these
employees plus a one percent processing fee.
At September 30, 1995, $2,495 was due to GHG and GMS relating to
reimbursement for these operating expenses.
5. PROPOSED EXCHANGE OF INVESTMENT PROPERTY AND WRITEDOWN TO
APPRAISED VALUE
Management is presently considering the possibility of exchanging
substantially all of the Partnership's investment property for
common stock in a real estate investment trust (REIT). Under
this proposal, the common stock in the REIT would be distributed
to the limited partners and the Partnership would be dissolved.
The proposed transaction is contingent upon management reaching a
satisfactory agreement with the REIT and is subject to the
approval of the limited partners.
In connection with this proposed transaction, an independent
appraiser valued the Partnership's investment property at
$2,810,000 as of August 1, 1994. Because of the significant
decrease in the market value of investment property, and the
proposed exchange of investment property for common stock in a
REIT, management has elected to writedown the Partnership's
investment property to its appraised value of $2,810,000 as of
December 31, 1994.
(Continued)
9
<PAGE>
MISSION BAY SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements, Continued
6. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) No person or group is known to the Partnership to be the
beneficial owner of more than 5% of the outstanding limited
partnership interests in the Partnership.
(b) The general partner does not directly or indirectly own any
limited partnership interests in the Partnership. The general
partner does not possess a right to acquire beneficial ownership
of limited partnership interests in the Partnership.
(c) There are no arrangements, known to the Partnership, which
may result in a change in control of the Partnership other than
the proposal to exchange the Partnership's investment property
for common stock in a REIT as discussed in Note 5.
7. ADJUSTMENTS
In the opinion of the general partners, all adjustments
(consisting solely of normal recurring adjustments) necessary for
a fair presentation have been made to the accompanying figures as
of and for the nine months ended September 30, 1995.
8. SUBSEQUENT EVENTS
In November 1995, the partnership paid a distribution of
$99,000.00 to the limited partners.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Condition:
On November 19, 1986, the Partnership commenced its public
offering pursuant to its Prospectus. On June 15, 1987, the
Partnership completed the public offering. The Partnership
received $5,761,115 (net of offering costs of $838,885) from the
sale of limited partnership interests. These funds were
available for investment in property, to pay legal fees and other
costs related to the investments, to pay operating expenses, and
for working capital. The majority of the proceeds was used to
acquire and construct the 117-room "economy" motel on
approximately 1.056 acres of land.
The Partnership's liquidity is indicated by net working capital
which was $255,130 at September 30, 1995 and $83,161 at December
31, 1994.
At September 30, 1995, the Partnership had cash and cash
equivalents of approximately $201,713. Such funds will be
utilized to make distributions to partners and for working
capital requirements.
Results of Operations:
For the three months ended September 30, 1995, room revenues were
$395,068, the occupancy rate was 74% and the average daily rate
was $49.59. This compares to the three months ended September
30, 1994 with room revenues of $368,331, occupancy rate of 73.1%
and an average daily rate of $46.81. For the three months ended
September 30, 1995, the hotel experienced a profit of $151,001.
This compares to the three months ended September 30, 1994, which
resulted in a profit of $130,936.
For the nine months ended September 30, 1995, room revenues were
$873,478, the occupancy rate was 61.47% and average daily rate
was $44.49. This compares to September 30, 1994 with room
revenues of $799,045, occupancy rate of 58.58% and an average
daily rate of $42.72.
There is significant competition in the lodging market. The
Partnership is in competition either directly or indirectly with
a large number of hotels and motels of varying quality and sizes,
including other motels which are part of national or regional
chains. The Partnership's motel does not compete directly with
any large budget motel chains, but competes indirectly in the
greater San Diego area with such budget motels as Comfort Inns
and E-Z "8" Motels.
(Continued)
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
The effect of current operations on liquidity was net cash
provided by operating activities of $245,812 for the nine months
ended September 30, 1995 and net cash provided by operating
activities of $238,629 for the nine months ended September 30,
1994.
Seasonality:
The motel business is seasonal with the third quarter being the
strongest due to the tourist business and the last half of the
fourth quarter and the first half of the first quarter being the
weakest.
12
<PAGE>
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.
(REGISTRANT) MISSION BAY SUPER 8 LTD.,
A California Limited Partnership
By: GHG Hospitality, Inc.
Corporate General Partner
BY (SIGNATURE) /s/ J. Mark Grosvenor
(NAME AND TITLE) J. Mark Grosvenor, President and Director
(DATE) November 10, 1995
BY (SIGNATURE) /s/ Sylvia Mellor Clark
(NAME AND TITLE) Controller
(DATE) November 10, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 201,713
<SECURITIES> 0
<RECEIVABLES> 18,854
<ALLOWANCES> 0
<INVENTORY> 19,340
<CURRENT-ASSETS> 285,916
<PP&E> 3,955,728
<DEPRECIATION> 1,190,533
<TOTAL-ASSETS> 3,063,190
<CURRENT-LIABILITIES> 30,786
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,063,190
<SALES> 0
<TOTAL-REVENUES> 930,397
<CGS> 0
<TOTAL-COSTS> 703,983
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 226,414
<INCOME-TAX> 0
<INCOME-CONTINUING> 226,414
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 226,414
<EPS-PRIMARY> 30.87
<EPS-DILUTED> 30.87
</TABLE>
