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 September 30, 1999
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or
Transition Report Pursuant to Section 13 or 15(d) of
- ---------- the Securities Exchange Act of 1934
For the Transition period from to
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Commission File Number: 1-9331
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MIDWEST REAL ESTATE SHOPPING CENTER L.P.
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Exact Name of Registrant as Specified in its Charter
Delaware 13-3384643
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State or Other Jurisdiction of I.R.S. Employer
Incorporation or Organization 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
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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
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2
MIDWEST REAL ESTATE SHOPPING CENTER L.P.
<TABLE>
<CAPTION>
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BALANCE SHEETS
At September 30, At December 31,
1999 1998
(unaudited) (audited)
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<S> <C> <C>
Assets
Cash and cash equivalents $2,189,345 $2,409,947
Due from affiliates, net 16,000 4,216
Other assets 5,435 --
- ---------------------------------------------------------------------------------------
Total Assets $2,210,780 $2,414,163
=======================================================================================
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 147,718 $ 237,954
Other payable 1,149,389 --
Deferred credit -- 1,132,223
----------------------------
Total Liabilities 1,297,107 1,370,177
----------------------------
Partners' Capital:
General Partner 9,138 10,441
Limited Partners (10,700,000 securities outstanding) 904,535 1,033,545
----------------------------
Total Partners' Capital 913,673 1,043,986
- ---------------------------------------------------------------------------------------
Total Liabilities and Partners' Capital $2,210,780 $2,414,163
=======================================================================================
</TABLE>
<TABLE>
<CAPTION>
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STATEMENT OF PARTNERS' CAPITAL (UNAUDITED)
For the nine months ended September 30, 1999
General Limited
Partner Partners Total
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1998 $10,441 $1,033,545 $1,043,986
Net loss (1,303) (129,010) (130,313)
- ---------------------------------------------------------------------------------------
Balance at September 30, 1999 $ 9,138 $ 904,535 $ 913,673
=======================================================================================
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
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MIDWEST REAL ESTATE SHOPPING CENTER L.P.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended September 30, Nine months ended September 30,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Income
Interest $ 10,547 $ 47,898 $ 33,383 $ 88,360
Other income 11,784 4,252,352 11,784 4,252,352
--------------------------------------------------------
Total Income 22,331 4,300,250 45,167 4,340,712
- ------------------------------------------------------------------------------------------------
Expenses
General and administrative 14,781 69,775 44,929 186,466
Professional fees 21,116 24,835 130,551 489,658
Refunds due to former tenants -- 3,994,133 -- 3,994,133
--------------------------------------------------------
Total Expenses 35,897 4,088,743 175,480 4,670,257
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Net Income (Loss) $(13,566) $ 211,507 $(130,313) $ (329,545)
================================================================================================
Net Income (Loss) Allocated:
To the General Partner $ (136) $ 2,115 $ (1,303) $ (3,296)
To the Limited Partners (13,430) 209,392 (129,010) (326,249)
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$(13,566) $ 211,507 $(130,313) $ (329,545)
================================================================================================
Per limited partnership unit
(10,700,000 securities outstanding) $ .00 $ 0.02 $ (.01) $ (0.03)
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</TABLE>
<TABLE>
<CAPTION>
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STATEMENTS OF CASH FLOWS (UNAUDITED)
For the nine months ended September 30,
1999 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss $ (130,313) $ (329,545)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Due from affiliates, net (11,784) 141,345
Prepaid expenses (5,435) 13,530
Accounts payable and accrued expenses (90,236) 188,077
Refunds due to former tenants -- 3,994,133
Deferred credit (1,132,223) 1,132,223
Other payable 1,149,389 --
--------------------------
Net cash provided by (used for) operating activities (220,602) 5,139,763
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Cash Flows From Financing Activities:
Cash distributions -- (3,053,283)
--------------------------
Net cash used for financing activities -- (3,053,283)
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Net increase (decrease) in cash and cash equivalents (220,602) 2,086,480
Cash and cash equivalents, beginning of period 2,409,947 4,430,503
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Cash and cash equivalents, end of period $ 2,189,345 $ 6,516,983
================================================================================================
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
4
MIDWEST REAL ESTATE SHOPPING CENTER L.P.
NOTES TO THE FINANCIAL STATEMENTS
The unaudited financial statements should be read in conjunction with the
Partnership's annual 1998 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 September 30,
1999 and the results of operations for the three and nine months ended September
30, 1999 and 1998, cash flows for the nine months ended September 30, 1999 and
1998 and the statement of partners' capital for the nine months ended September
30, 1999. Results of operations for the periods are not necessarily indicative
of the results to be expected for the full year.
The following significant events have occurred subsequent to fiscal year 1998,
which require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
On September 7, 1999, the Bankruptcy Court issued an Order finding that the real
estate tax refund was not property of the Partnership and directed that the
balance of the real estate tax refund, less the Partnership's legal and
professional fees incurred in and during the property tax refund litigation, be
paid over to a third-party disbursing agent for payment to those former tenants
who were not paid in the initial distribution.
As a result, no portion of the tax refund will be available for distribution to
the Limited Partners. The General Partner will proceed with the termination of
the Partnership as quickly as possible, and any funds in the Partnership's
remaining cash reserves (after payment of, or provision for, the Partnership's
liabilities and expenses) will be distributed to the Limited Partners upon
termination of the Partnership which is expected to occur by year-end 1999.
<PAGE>
5
MIDWEST REAL ESTATE SHOPPING CENTER L.P.
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 $5.4 million, was challenged by certain former tenants
of Brookdale Center and the Partnership's former mortgage lender, the Equitable
Life Assurance Society of the United States ("Equitable"). On September 30, 1998
the Court issued an order approving the distribution of tax refunds to the
former tenants which totaled $3,994,133. The Bankruptcy Court with jurisdiction
over the Partnership's bankruptcy case heard the argument on Equitable's
challenge on September 16, 1998. On September 7, 1999, the Bankruptcy Court
issued an Order finding that the real estate tax refund was not property of the
Partnership and directed that the balance of the real estate tax refund, less
the Partnership's legal and professional fees incurred in and during the
property tax refund litigation, be paid over to a third-party disbursing agent
for payment to those former tenants who were not paid in the initial
distribution. At September 30, 1999, $1,149,389 is classified as other payable
on the Partnership's balance sheet for payment of this amount.
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 distribution of the refunded property taxes, the General Partner intends to
distribute the remaining cash reserves (after payment of, or provision for, the
Partnership's liabilities and expenses) and proceed with the dissolution of the
Partnership which is expected to occur by year-end 1999.
At September 30, 1999, the Partnership had cash and cash equivalents totaling
$2,189,345, compared with $2,409,947 at December 31, 1998. The decrease is
primarily due to payment of Partnership administrative expenses and professional
fees.
Accounts payable and accrued expenses totaled $147,718 at September 30, 1999,
compared with $237,954 at December 31, 1998. The decrease is primarily
attributable to a decrease in general and administrative expenses, and
professional fees.
Other payable at September 30, 1999 represents primarily amounts to be paid to a
third-party disbursing agent for payment of real estate tax refunds to former
tenants of Brookdale Center.
Results of Operations
- ---------------------
Net cash used for operating activities totaled $220,602 for the nine months
ended September 30, 1999, compared to net cash provided by operating activities
of $5,139,763 for the corresponding period in 1998. The change from cash
provided to cash used is primarily due to the Brookdale Center property tax
refunds in 1998.
<PAGE>
6
MIDWEST REAL ESTATE SHOPPING CENTER L.P.
The Partnership reported a net loss for the three and nine months ended
September 30, 1999 of $13,566 and $130,313, compared to a net income for the
three months ended September 30, 1998 of $211,507, and a net loss for the nine
months ended September 30, 1998 of $329,545. The change from net income to net
loss for the three-month period is primarily due to the Brookdale Center
property tax refunds, net of funds allocated to former tenants in 1998. The
decrease in net loss for the nine-month period is primarily due to a reduction
in general and administrative expenses, and professional fees.
General and administrative expenses totaled $14,781 and $44,929 for the three
and nine months ended September 30, 1999, compared with $69,775 and $186,466 for
the corresponding periods in 1998. The decrease reflects lower travel, printing,
postage and administrative expenses.
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 -
On October 15, 1999, the Partnership filed a Form 8-K reporting
that the Bankruptcy Court issued an Order finding that the real
estate tax refund was not property of the Partnership.
<PAGE>
7
MIDWEST REAL ESTATE SHOPPING CENTER L.P.
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: November 12, 1999 BY: /s/Michael T. Marron
-------------------------------------
Name: Michael T. Marron
Title: President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Sep-30-1999
<CASH> 2,189,345
<SECURITIES> 000
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 2,189,345
<PP&E> 000
<DEPRECIATION> 000
<TOTAL-ASSETS> 2,210,780
<CURRENT-LIABILITIES> 1,297,107
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 913,673
<TOTAL-LIABILITY-AND-EQUITY> 2,210,780
<SALES> 000
<TOTAL-REVENUES> 45,167
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 175,480
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> (130,313)
<INCOME-TAX> 000
<INCOME-CONTINUING> (130,313)
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (130,313)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
