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: 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 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 (unaudited)
At June 30, At December 31,
1998 1997
Assets
Cash and cash equivalents $4,218,652 $4,430,503
Due from affiliates, net _ 141,345
Prepaid expenses _ 13,530
Total Assets $4,218,652 $4,585,378
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $287,639 $113,313
Total Liabilities 287,639 113,313
Partners' Capital:
General Partner 39,311 44,722
Limited Partners
(10,700,000 securities outstanding) 3,891,702 4,427,343
Total Partners' Capital 3,931,013 4,472,065
Total Liabilities and Partners' Capital $4,218,652 $4,585,378
Statement of Partners' Capital (unaudited)
For the six months ended June 30, 1998
General Limited
Partner Partners Total
Balance at December 31, 1997 $44,722 $4,427,343 $4,472,065
Net loss (5,411) (535,641) (541,052)
Balance at June 30, 1998 $39,311 $3,891,702 $3,931,013
Statements of Operations
Three months ended June 30, Six months ended June 30,
(unaudited) 1998 1997 1998 1997
Income
Interest $ 14,072 $ 37,103 $ 40,462 $ 73,926
Total Income 14,072 37,103 40,462 73,926
Expenses
General and administrative 61,930 41,045 116,691 115,429
Professional fees 214,921 79,343 464,823 236,509
Total Expenses 276,851 120,388 581,514 351,938
Net Loss $(262,779) $(83,285) $(541,052) $(278,012)
Net Loss Allocated:
To the General Partner $(2,628) $ (833) $ (5,411) $( 2,780)
To the Limited Partners (260,151) (82,452) (535,641) (275,232)
$(262,779) $(83,285) $(541,052) $(278,012)
Per limited partnership unit
(10,700,000 securities outstanding)
$(.02) $(.01) $(.05) $(.03)
Statements of Cash Flows (unaudited)
For the six months ended June 30, 1998 1997
Cash Flows From Operating Activities:
Net loss $(541,052) $(278,012)
Adjustments to reconcile net loss to net cash
used for operating activities:
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Due from affiliates, net 141,345 (61)
Prepaid expenses 13,530 _
Accounts payable and accrued expenses 174,326 (260,099)
Net cash used for operating activities (211,851) (538,172)
Net decrease in cash and cash equivalents (211,851) (538,172)
Cash and cash equivalents, beginning of period 4,430,503 5,812,917
Cash and cash equivalents, end of period $4,218,652 $5,274,745
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 interim financial statements include all
adjustments consisting of only normal recurring accruals 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 for the three and six months ended June 30,
1998 and 1997, cash flows for the six months ended June 30, 1998
and 1997 and the statement of partners' capital for the six
months ended June 30, 1998. 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
1997, and no material contingencies exists which require
disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
Part I, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
In October 1997, the Partnership entered into a stipulation and
agreement of settlement (the "Settlement") of the class action
litigation originally brought against it and other parties in
1994. The General Partner decided to settle the actions solely
to avoid further expense and the burden of continued litigation,
and continues to deny the allegations asserted against it in the
complaint. Pursuant to the Settlement, which resolves all
matters among the parties, the Partnership contributed $500,000
toward a fund for the payment of all plaintiffs' claims. On
February 20, 1998, the Bankruptcy Court (the "Court") issued and
executed an order approving the Settlement which included a full
and final release of the Unitholder claims against the
Partnership, the General Partner and the other defendants.
The Partnership pursued a property tax assessment appeal with
respect to Brookdale Center for a portion of the time that the
Partnership owned it. A settlement was negotiated with Hennepin
County, Minnesota (the "Tax Settlement"), and at a hearing on
July 16, 1998, the Tax Settlement was approved by the Court.
However, the allocation and distribution of the refunded taxes,
which total approximately $5.2 million, has been challenged by
certain former tenants of Brookdale Center and the Partnership's
former mortgage lender. Accordingly, the Partnership's portion
of the Tax Settlement will be reduced by an amount the Court
determines is owed to the former tenants, and remains uncertain
at this time. In addition, such recovery by the Partnership, if
any, remains open to challenge by the former mortgage lender.
On July 28, 1998, after receiving approval from the Court, the
Partnership paid a cash distribution in the amount of $0.2825 per
Limited Partnership Unit. This amount represents the
Partnership's cash, less reserves for current and contingent
liabilities, which was paid out following the Settlement.
Upon Court approval of the allocation of the tax refund to
current and former tenants and settlement of the claim made by
the former mortgage lender, which is anticipated to occur in
September of this year, the General Partner intends to distribute
the Partnership's share of the rebated taxes along with the
Partnership's remaining cash reserves (after payment of, or
provision for, the Partnership's liabilities and expenses) and
proceed with the dissolution of the Partnership.
At June 30, 1998, the Partnership had cash and cash equivalents
totaling $4,218,652 compared with $4,430,503 at
December 31, 1997. The decrease is primarily due to the payment
of Partnership administrative and professional fees.
Accounts payable and accrued expenses totaled $287,639 at June
30, 1998, compared with $113,313 at December 31, 1997. The
increase is primarily attributable to legal expenses incurred
related to the Partnership's bankruptcy filing and tax appeal
regarding Brookdale Center.
Results of Operations
Net cash used for operating activities totaled $211,851 for the
six months ended June 30, 1998 compared to $538,172 for the
corresponding period in 1997. The reduced cash flow deficit is
primarily due to differences in the timing of payments of
professional fees between the two periods.
The Partnership reported net losses for the three and six months
ended June 30, 1998 totaling $262,779 and $541,052, respectively,
compared to net losses of $83,285 and $278,012 for the
corresponding periods in 1997. The higher net losses in the 1998
periods are primarily attributable to increases in professional
fees, particularly legal expenses related to the Partnership's
bankruptcy and tax appeal regarding Brookdale Center, and a
decrease in interest income. The decrease in interest income is
due to the Partnership's lower cash balance in the 1998 periods
and a reduction in interest rates.
General and administrative expenses totaled $61,930 and $116,691
for the three and six months ended June 30, 1998, compared with
$41,045 and $115,429 for the corresponding periods in 1997. The
decrease in the three-month period reflects a reduction in
certain administrative expenses associated with the Partnership's
bankruptcy filing.
Part II Other Information
Item 1 Legal Proceedings
On July 16, 1998, the Court heard a motion filed by
the Partnership to: (i) secure the Court's approval of
the Brookdale Center property tax appeal settlement,
and (ii) set the record date for the payment of
distributions to Unitholders. The Court approved the
Brookdale Center property tax appeal settlement,
however, the allocation and distribution of the
refunded taxes, which total approximately $5.2
million, has been challenged by certain former tenants
of Brookdale Center and the Partnership's former
mortgage lender. Accordingly, the Partnership's
portion of the Tax Settlement will be reduced by an
amount the Court determines is owed to the former
tenants or the former mortgage lender, and remains
uncertain at this time. The Court also approved
certain technical modifications to the Partnership's
Plan of Reorganization facilitating interim payment of
distributions to Unitholders, and a cash distribution
in the amount of $0.2825 per Unit was paid to the
Limited Partners on July 28, 1998.
Items 2-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the three months
ended June 30, 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.
MIDWEST REAL ESTATE SHOPPING CENTER L.P.
BY: MIDWEST CENTERS INC.
General Partner
Date: August 13, 1998 BY: /s/ Robert J. Hellman
President, Director and
Chairman of the Board
Date: August 13, 1998 BY: /s/ Joan Berkowitz
Vice President and
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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