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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, 1996
/ / 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 1-9524
BURNHAM PACIFIC PROPERTIES, INC.
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(Exact name of Registrant as specified in its Charter)
California 33-0204162
- ---------------------------------------------- ---------------------------------
(State of other jurisdiction of incorporation) (IRS Employer Identification No.)
610 West Ash Street, San Diego, California 92101
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(Address of principal executive offices) (Zip Code)
(619) 652-4700
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Registrant's telephone number, including area code
NA
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Former name, former address and former fiscal year if changed since last report.
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 _____
Number of shares of the Registrant's common stock outstanding at May 14, 1996:
17,081,452
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PART 1 FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BURNHAM PACIFIC PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
ASSETS March 31, 1996 December 31, 1995
-------------- -----------------
Real Estate $376,163 $367,088
Less Accumulated Depreciation (56,408) (54,388)
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Real Estate-Net 319,755 312,700
Cash and Cash Equivalents 2,033 1,543
Receivables-Net 6,494 5,647
Other Assets 7,699 7,880
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Total $335,981 $327,770
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts Payable and Other Liabilities 3,428 3,458
Accrued Interest on Convertible Debentures 397 943
Tenant Security Deposits 1,021 969
Notes Payable 91,706 92,173
Convertible Debentures 25,700 25,700
Line of Credit Advances 35,183 24,933
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Total Liabilities 157,435 148,176
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Minority Interest 434 434
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Stockholders' Equity:
Preferred Stock, 5,000,000 Shares
Authorized; No Shares Issued or Outstanding
Common Stock, No Par Value,
40,000,000 Shares Authorized;
17,081,452 and 17,081,670 Shares
Outstanding at March 31, 1996, and
December 31, 1995, Respectively 262,151 262,130
Notes Receivable-Stock Purchase Plan -0- (197)
Dividends Paid in Excess of Net Income (84,039) (82,773)
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Total Stockholders' Equity 178,112 179,160
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Total $335,981 $327,770
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See the Accompanying Notes
2
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BURNHAM PACIFIC PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
REVENUES THREE MONTHS ENDED
March 31, 1996 March 31, 1995
-------------- --------------
Rents $ 12,134 $ 12,452
Interest 111 100
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Total Revenues 12,245 12,552
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COSTS AND EXPENSES
Interest 2,868 2,938
Rental Operating 3,124 2,928
Provision for Bad Debt 102 17
General and Administrative 487 497
Depreciation and Amortization 2,620 3,011
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Total Costs and Expenses 9,201 9,391
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Net Income $ 3,044 $ 3,161
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---------- ----------
Net Income Per Share $ 0.18 $ 0.19
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---------- ----------
Dividends Paid Per Share $ 0.25 $ 0.36
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Weighted Average Number of Shares 17,081,506 16,906,298
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See the Accompanying Notes
3
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BURNHAM PACIFIC PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
March 31, March 31,
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 3,044 $ 3,161
Adjustments to Reconcile Net Income to
Net Cash Provided By Operating Activities:
Depreciation and Amortization 2,620 3,011
Provision for Bad Debt 102 17
Changes in Other Assets and Liabilities:
Receivables and Other Assets (1,127) (533)
Accounts Payable and Other (576) (407)
Tenant Security Deposits 52 16
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Net Cash Provided By Operating Activities 4,115 5,265
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CASH FLOWS FROM INVESTING ACTIVITIES
Payments for Acquisitions of Property and
Capital Improvements (9,374) (1,573)
Principal Payments on Notes Receivable 40 179
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Net Cash Used For Investing Activities (9,334) (1,394)
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CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings Under Line of Credit Agreements 11,850 7,875
Repayments Under Line of Credit Agreements (1,600) (7,482)
Principal Payments of Notes Payable (467) (429)
Payment of Notes Receivable-Stock Purchase Plan 197
Dividends Paid (4,271) (6,086)
Dividend Reinvestment -0- 674
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Net Cash Provided by (Used for) Financing Activities 5,709 (5,448)
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Net Increase (Decrease) in Cash and Cash Equivalents 490 (1,577)
Cash and Cash Equivalents at Beginning Of Period 1,543 1,664
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Cash and Cash Equivalents at End Of Period $ 2,033 $ 87
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SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash Paid During Three Months For Interest $ 3,407 $ 3,499
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See the Accompanying Notes
4
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BURNHAM PACIFIC PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996, DECEMBER 31, 1995, AND MARCH 31, 1995
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements are unaudited but, in the opinion of
management, reflect all normal recurring adjustments necessary for a fair
presentation of operating results. These financial statements should be
read in conjunction with the audited financial statements of Burnham
Pacific Properties, Inc. for the year ended December 31, 1995. Certain of
the 1995 amounts have been reclassified to conform to 1996 presentation.
Dividends Per Share - Dividends of 25 cents per share were paid on March
29, 1996 to shareholders of record on March 20, 1996.
2. NET INCOME PER SHARE
Net income per share is computed by dividing net income for the respective
periods by the weighted average number of shares outstanding during the
applicable period.
3. REGISTRATION STATEMENT
During September 1993, the Corporation filed with the Securities and
Exchange Commission a $200 million shelf registration statement on Form S-
3. As of March 31, 1996, no such issuances have occurred.
4. REAL ESTATE
Real Estate is summarized as follows (in thousands):
March 31, 1996 December 31, 1995
-------------- -----------------
Retail Centers $261,191 $261,045
Office/Industrial Buildings 102,211 102,149
Retail Centers Under Development 11,453 2,691
Other 1,308 1,203
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Total Real Estate 376,163 367,088
Accumulated Depreciation (56,408) (54,388)
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Real Estate-Net $319,755 $312,700
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-------- --------
5
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
MATERIAL CHANGES IN FINANCIAL CONDITION
March 31, 1996 compared to December 31, 1995:
The Corporation experienced no material changes in financial condition during
the three months ended March 31, 1996.
On January 31, 1996, the Company exercised its option to purchase the land for
the development of its Richmond Hilltop project for approximately $8,600,000.
As of March 31, 1996, and 1995 approximately $3,304,000 and $3,653,000,
respectively, of straight-lined rent is included in other assets.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Three Months Ended March 31, 1996 and 1995:
During the three months ended March 31, 1996, net income decreased $117,000 or
4%, to $3,044,000 ($0.18 per share) compared to $3,161,000 ($0.19 per share) for
the same period in 1995. The principal reasons for this decrease are discussed
in the following paragraphs.
Revenues decreased $307,000 to $12,245,000 in 1996 from $12,552,000 in 1995.
This decrease is primarily due to the sales of A-Storage Place and Beverly
Garland's Holiday Inn Hotel during the second half of 1995, and from lower rents
received on the Anacomp Building following the renegotiation of the Anacomp
lease during the first quarter of 1996. These decreases were partially offset
by the fourth quarter 1995 acquisition of the Richmond Shopping Center.
Rental operating expenses increased by $196,000 to $3,124,000 in 1996 from
$2,928,000 in 1995, reflecting generally higher property level costs, the
acquisition of the Richmond Shopping Center, and the renegotiation of the
Anacomp lease.
The provision for bad debt increased $85,000 from $17,000 in 1995 to $102,000 in
1996. This increase is the result of credit problems with two tenants.
Depreciation and amortization expense decreased $391,000 from $3,011,000 in 1995
to $2,620,000 in 1996. The decrease reflects discontinued depreciation on the
real estate held for disposition.
The Company considers Funds From Operations (FFO) to be a relevant supplemental
measure of the performance of an equity REIT since such measure does not
recognize depreciation and certain amortization expenses as operating expenses.
Management believes that reductions for these charges are not meaningful in
evaluating income-producing real estate, which historically
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has not depreciated. FFO does not represent cash generated from operating
activities in accordance with generally accepted accounting principles and is
not necessarily indicative of cash available to fund cash needs and should not
be considered as an alternative to net income as an indicator of the Company's
operating performance or as an alternative to cash flow as a measure of
liquidity.
FFO decreased $513,000 to $5,493,000 in 1996 from $6,006,000 in 1995. The
principal reasons for this decrease include the sales of A-Storage Place and
Beverly Garland's Holiday Inn, the renegotiation of the Anacomp lease, and the
increases in rental operating expenses and the provision for bad debt.
The calculation of FFO for the three month periods ended March 31, 1996 and 1995
is as follows (in thousands):
1996 1995
------ ------
Net Income $3,044 $3,161
Adjustments:
Depreciation of Real Estate
and Tenant Improvements 2,271 2,756
Amortization of Leasing Costs 178 89
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Funds from Operations $5,493 $6,006
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LIQUIDITY
The Company anticipates that cash flow from operating activities will continue
to provide adequate capital for all principal payments on notes payable,
recurring tenant improvements, and dividend payments in accordance with REIT
requirements and that cash on hand, available borrowings under credit
facilities, proceeds from sales of non-strategic assets, and the use of project
financing, as well as other debt and equity alternatives, will be adequate to
provide the necessary capital to achieve growth.
CAPITAL RESOURCES
The Company has secured and unsecured credit facilities to provide additional
capacity of $50,000,000. Borrowings under the facilities bear interest at rates
of IBOR (the bank's international reference rate) plus 1.75% or prime per annum
and IBOR plus 2.00% or prime per annum, respectively. As of March 31, 1996,
approximately $14,800,000 was available to be drawn under these facilities.
These facilities in their present form, are scheduled to mature on June 1, 1997.
At March 31, 1996, the Company's capitalization consisted of $152,589,000 of
debt and $187,896,000 of market equity (market equity is defined as shares
outstanding multiplied by the closing price of the common shares on the New York
Stock Exchange at March 31, 1996 of $11.00) resulting in a debt to total market
capitalization rate of .45 to 1.0. At March 31, 1996, the Company's total debt
consisted of $83,197,000 of fixed rate debt, including $25,700,000 of
convertible debentures and $69,392,000 of variable rate debt. The average rate
of interest on the fixed and variable rate debt was 8.7% and 7.3%, respectively,
at March 31, 1996.
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It is management's intention that the Company have access to the capital
resources necessary to expand and develop its business. Accordingly, the
Company may seek to obtain funds through additional equity offerings or debt
financing in a manner consistent with its intention to operate with an
acceptable debt capitalization policy. The Company has on file with the
Securities and Exchange Commission a $200 million shelf registration statement
on Form S-3. This registration statement was filed for the purpose of issuing
either common stock or debentures for the purpose of repaying outstanding debt,
potential future acquisitions of commercial properties and for general corporate
purposes. As of March 31, 1996, no such issuance has occurred.
FORWARD LOOKING STATEMENTS
The preceding comments in this Form 10-Q contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. The Company's actual results could
differ materially from those set forth in the forward-looking statements.
Certain factors that might cause such a difference include those discussed in
the section entitled "Future Effect of Certain Events" in Item 7 of the
Company's Form 10-K for the year ended December 31, 1995.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
The Corporation was not a party to any material legal proceedings during the
period covered by this report or subsequently.
ITEM 2. CHANGES IN SECURITIES:
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES:
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
Not Applicable.
ITEM 5. OTHER INFORMATION:
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
Not Applicable
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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.
BURNHAM PACIFIC PROPERTIES, INC.
Date: //5/14/96// By: //J. DAVID MARTIN//
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J. David Martin, Chief Executive
Officer
Date: //5/14/96// By: //DANIEL B. PLATT//
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Daniel B. Platt, Chief Financial
Officer
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<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 2,033
<SECURITIES> 0
<RECEIVABLES> 8,129
<ALLOWANCES> 1,635
<INVENTORY> 0
<CURRENT-ASSETS> 16,226
<PP&E> 376,163
<DEPRECIATION> 56,408
<TOTAL-ASSETS> 335,981
<CURRENT-LIABILITIES> 4,846
<BONDS> 152,589
0
0
<COMMON> 262,151
<OTHER-SE> (84,039)
<TOTAL-LIABILITY-AND-EQUITY> 335,981
<SALES> 12,134
<TOTAL-REVENUES> 12,245
<CGS> 3,124
<TOTAL-COSTS> 3,124
<OTHER-EXPENSES> 3,107
<LOSS-PROVISION> 102
<INTEREST-EXPENSE> 2,868
<INCOME-PRETAX> 3,044
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,044
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,044
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
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