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, 1997
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: 1-9331
MIDWEST REAL ESTATE SHOPPING CENTER, L.P.
Exact Name of Registrant as Specified in its Charter
Delaware 13-3384643
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 March 31, At December 31,
1997 1996
Assets
Cash and cash equivalents $ 5,404,201 $ 5,812,917
Due from affiliates, net 141,345 141,284
Total Assets $ 5,545,546 $ 5,954,201
Liabilities and Partners' Capital
Liabilities:
Accounts payable and
accrued expenses $ 430,223 $ 644,151
Total Liabilities 430,223 644,151
Partners' Capital:
General Partner 51,154 53,101
Limited Partners (10,700,000
securities outstanding) 5,064,169 5,256,949
Total Partners' Capital 5,115,323 5,310,050
Total Liabilities and
Partners' Capital $ 5,545,546 $ 5,954,201
Statement of Partners' Capital
For the three months ended March 31, 1997
General Limited
Partner Partners Total
Balance at December 31, 1996 $ 53,101 $ 5,256,949 $ 5,310,050
Net loss (1,947) (192,780) (194,727)
Balance at March 31, 1997 $ 51,154 $ 5,064,169 $ 5,115,323
Statements of Operations
For the three months ended March 31, 1997 1996
Income
Rental income $ -- $ 1,126,903
Escalation income -- 1,223,013
Interest income 36,823 100,318
Miscellaneous income -- 73,474
Total Income 36,823 2,523,708
Expenses
Property operating expenses -- 674,596
Real estate taxes -- 617,700
Interest expense -- 1,806,358
Management fee -- 53,785
General and administrative 74,384 58,318
Professional fees 157,166 163,717
Total Expenses 231,550 3,374,474
Net Loss $ (194,727) $ (850,766)
Net Loss Allocated:
To the General Partner $ (1,947) $ (8,508)
To the Limited Partners (192,780) (842,258)
$ (194,727) $ (850,766)
Per limited partnership unit
(10,700,000 outstanding) $ (.02) $ (.08)
Statements of Cash Flows
For the three months ended March 31, 1997 1996
Cash Flows From Operating Activities:
Net loss $ (194,727) $ (850,766)
Adjustments to reconcile net loss
to net cash used for operating
activities:
Increase in interest on
zero coupon mortgage note payable -- 981,358
Increase (decrease) in cash arising
from changes in operating assets
and liabilities:
Restricted cash -- (807,283)
Accounts receivable -- 71,722
Deferred rent receivable -- (10,162)
Due from affiliates, net (61) (2,208)
Prepaid assets -- 55,564
Accounts payable and accrued expenses (213,928) 447,838
Net cash used for operating activities (408,716) (113,937)
Net decrease in cash and cash equivalents (408,716) (113,937)
Cash and cash equivalents,
beginning of period 5,812,917 5,971,023
Cash and cash equivalents,
end of period $ 5,404,201 $ 5,857,086
Supplemental Disclosure of Cash
Flow Information:
Cash paid during the period for interest $ -- $ 825,000
Notes to the Financial Statements
The unaudited financial statements should be read in conjunction with the
Partnership's annual 1996 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, 1997 and the results of
operations and cash flows for the three months ended March 31, 1997 and 1996
and the statement of partner's capital for the three months ended March 31,
1997. Results of operations for the periods 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.
No significant events have occurred subsequent to fiscal year 1996, and no
material contingencies exist, which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Part 1, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
The General Partner was unable to consummate a sale of its property, Brookdale
Center ("Brookdale") and repay the mortgage (the "Brookdale Note") held by The
Equitable Life Assurance Society of the United States ("Equitable") prior to
June 30, 1995, the maturity date of the Brookdale Note. As a result, on July
5, 1995, Equitable issued a notice of default to the Partnership and commenced
advertising Brookdale for a public nonjudicial foreclosure sale to be held on
September 12, 1995. Such date was subsequently postponed on several occasions.
On April 12, 1996, the Partnership and Equitable executed a letter of intent
that outlined the principal terms, as described below, of a plan of
reorganization (the "Plan") for the Partnership under Chapter 11 of the
Bankruptcy Code that would be supported by Equitable. On June 21, 1996, the
Partnership filed for bankruptcy protection under Chapter 11 of the Bankruptcy
Code in the United States Bankruptcy Court for the Southern District of New
York in order to prevent the foreclosure sale of Brookdale, which was scheduled
for June 21, 1996. The Partnership undertook the bankruptcy filing after
extended negotiations with Equitable. As a result of the bankruptcy filing,
among other reasons, trading of the Partnership's Units on the New York Stock
Exchange was suspended as of June 24, 1996.
Under the Plan, which was filed on October 16, 1996 and subsequently approved
by the holders of Limited Partnership Units (the "Unitholders"), its creditors
and the bankruptcy court, the Brookdale Note remained in default and the
Partnership was to market Brookdale to a third-party buyer. In the event no
acceptable third-party offer was received by November 15, 1996, or a third
party failed to close the acquisition by December 1, 1996, both the Partnership
and Equitable had the right to transfer ownership of Brookdale to Equitable and
Equitable's participant, EML Associates ("EML"), for a $500,000 cash purchase
price. Equitable and EML were also granted certain limited rights of first
refusal to acquire Brookdale. Pending a sale of Brookdale, all available cash
flow from Brookdale (after payment of property expenses and administrative
costs associated with the bankruptcy) was paid to Equitable. Equitable was
required to fund necessary capital and leasing costs pursuant to a
super-priority, non-recourse, debtor-in-possession loan by Equitable payable
upon the disposition of Brookdale.
All parties holding claims on or interests in the Partnership were sent on
October 18, 1996 a copy of the Plan and Disclosure Statement, together with
a ballot which was due on November 15, 1996. The Plan was subsequently
approved by the Unitholders and the Partnership's creditors. A confirmation
hearing to approve the Plan took place on November 25, 1996 and the Plan
was confirmed by the bankruptcy court.
Despite intensive marketing efforts, the Partnership was unable to secure an
acceptable third-party buyer for Brookdale by November 15, 1996. Consequently,
on December 16, 1996, the Partnership transferred ownership of Brookdale, in
accordance with the terms of the Plan, to Equitable and EML for the
aforementioned purchase price of $500,000. In accordance with the disposition
of Brookdale, the Partnership was relieved of its mortgage obligation on
Brookdale. Once all of the conditions of the Plan are met, which is expected
to occur later in 1997, the General Partner intends to move towards the
dissolution of the Partnership. However, while the Partnership remains
involved in litigation currently pending against it, the Partnership cannot be
dissolved, and its remaining assets, if any, will not be distributed to
Unitholders until such litigation is resolved.
At March 31, 1997, the Partnership had cash and cash equivalents totaling
$5,404,201 compared to $5,812,917 at December 31, 1996. The decrease is due to
expenditures for Partnership operations and professional fees.
Accounts payable and accrued expenses decreased from $644,151 at December 31,
1996 to $430,223 at March 31, 1997 reflecting the payment of legal fees
associated with the Partnership's bankruptcy proceeding and the disposition of
Brookdale.
Results of Operations
Net cash used for operating activities totaled $408,716 for the three months
ended March 31, 1997 compared to $113,937 for the same period in 1996. The
reduced cash flow is primarily due to the payment of general and administrative
expenses and to the absence of any other source of cash other than interest
income.
As a result of the disposition of Brookdale as discussed above, the following
categories decreased from their respective balances for the period ended March
31, 1996 to $0 at March 31, 1997: rental income; escalation income;
miscellaneous income; property operating expenses; real estate taxes; interest
expense; and management fees.
Interest income decreased from $100,318 for the period ended March 31, 1996 to
$36,823 for the same period in 1997 reflecting lower average cash balances and
a reduction in interest rates in 1997 compared to 1996.
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, 1997.
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.
MIDWEST REAL ESTATE SHOPPING CENTER, L.P.
BY: MIDWEST CENTERS INC.
General Partner
Date: May 14, 1997 BY: /s/ Paul L. Abbott
Director, President and
Chairman of the Board
Date: May 14, 1997 BY: /s/ Robert J. Hellman
Director, Vice President and
Chief Financial Officer
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