<PAGE> 1
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
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 0-16285
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
---------------------------------------------------------
(Exact name of registrant as specified in its partnership
agreement)
MARYLAND 52-1490861
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(State or other jurisdiction (I.R.S. Employer
of the organization) Identification No.)
111 South Calvert Street - Baltimore, MD 21203-1476
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(Address of principal executive offices) (Zip Code)
(410) 539-0000
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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 Sections 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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<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS:
Investment in real estate held for lease, at cost:
Land $ 9,124,577 $ 9,124,457
Buildings and improvements 44,058,269 43,934,858
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53,182,846 53,059,315
Less accumulated depreciation (13,625,245) (13,271,409)
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39,557,601 39,787,906
Cash and cash equivalents 1,686,273 1,664,994
Tenant accounts receivable, net of allowance
for doubtful accounts ($290,401 in 1996 and
$326,673 in 1995) 761,979 791,031
Prepaid expenses, mortgage escrows and other assets 1,065,685 1,098,187
Intangible assets, net of accumulated amortization
($961,083 in 1996 and $935,235 in 1995) 211,531 222,427
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Total assets $43,283,069 $43,564,545
=========== ===========
LIABILITIES AND PARTNERS' EQUITY:
Long-term debt, including current maturities $28,967,206 $29,130,611
Accounts payable and accrued expenses 203,769 211,208
Cash flow protector loans 789,203 789,203
Interest payable 786,050 683,682
Prepaid rents and security deposits 183,722 203,141
Due to related parties 92,517 90,903
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Total liabilities 31,022,467 31,108,748
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General partners and assignor limited partner 499,647 501,599
Assignee limited partners (1,200,000 units
authorized, issued and outstanding) 11,760,955 11,954,198
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Total partners' equity 12,260,602 12,455,797
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Total liabilities and partners' equity $43,283,069 $43,564,545
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
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MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the quarters ended
March 31,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Income:
Rental income $1,306,466 $1,602,536
Tenant reimbursement income 259,733 312,811
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Total income 1,566,199 1,915,347
---------- ---------
Operating expenses:
Interest expense 713,471 802,458
Depreciation 353,836 406,884
Repairs and maintenance 251,749 229,727
Taxes and insurance 190,916 210,532
Management and leasing to
related parties 89,100 109,030
Amortization 25,848 20,333
Other expenses 155,032 301,356
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Total operating expenses 1,779,952 2,080,320
--------- ---------
Loss from rental operations (213,753) (164,973)
Other income:
Interest income 18,558 4,161
--------- ---------
Net loss $(195,195) $(160,812)
========= =========
Net loss allocated to general partners $ (1,952) $ (1,608)
========= =========
Net loss allocated to
assignee limited partners $(193,243) $(159,204)
========= =========
Net loss allocated to assignee limited
partners per unit (1,200,000 units
issued and outstanding) $ (0.16) $ (0.13)
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 4
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
March 31,
--------------------------
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (195,195) $ (160,812)
---------- ----------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 379,684 427,217
Changes in operating assets and liabilities:
Decrease in tenant accounts receivable, net 29,052 131,942
Increase in prepaid expenses and other assets (34,994) (65,567)
(Decrease) increase in accounts payable and
accrued expenses (26,858) 36,143
Increase (decrease) in accrued interest payable 102,368 (8,016)
Increase (decrease) in due to related parties 1,614 (19,248)
---------- ----------
Total adjustments 450,866 502,471
Net cash provided by operating activities ---------- ----------
255,671 341,659
---------- ----------
Cash flows from investing activities:
Improvements of real estate (57,835) (84,917)
---------- ----------
Net cash used in investing activities (57,835) (84,917)
---------- ----------
Cash flows from financing activities:
Principal payments on long-term debt (163,405) (256,333)
Financing fees (13,152) -
---------- ----------
Net cash used in financing activities (176,557) (256,333)
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Net increase in cash and cash equivalents 21,279 409
Cash and cash equivalents at beginning of period 1,664,994 384,181
---------- ----------
Cash and cash equivalents at end of period $1,686,273 $ 384,590
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 611,103 $ 810,474
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 5
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
Notes to Financial Statements
March 31, 1996
--------------
NOTE A - BASIS OF PRESENTATION POLICIES:
The accompanying unaudited financial statements have been prepared
in accordance with generally accepted accounting principles for
interim financial reporting and the instructions to Form 10-Q.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments necessary for a fair presentation have been included.
All adjustments made in the interim period were of a normal
recurring nature. Operating results of any interim period are not
necessarily indicative of the results that may be expected for a
full year.
RENTAL INCOME. Certain leases provide for either abatement of
rents or scheduled rent increases over the life of the leases.
Rental income is recorded on a straight-line basis of equal monthly
payments over the respective terms of the leases. The receivables
related to the recording of rental income on a straight-line basis
totalled $306,531 and $313,259 at March 31, 1996 and December 31,
1995, respectively.
STATEMENTS OF CASH FLOWS. For purposes of the statements of cash
flows, the Partnership considers cash in banks, commercial paper
and repurchase agreements with original maturities of less than
three months to be cash and cash equivalents.
USE OF ESTIMATES. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
NOTE B - RELATED PARTY TRANSACTIONS:
During the quarter ended March 31, 1996, the Partnership paid First
Washington Management, Inc., an affiliate of FW Realty Limited
Partnership, one of the general partners, $84,090 and Legg Mason
Realty Capital, Inc., an affiliate of Realty Capital IV Limited
Partnership, the other general partner, $33,602 for management fees
and reimbursement of operating expenses. At March 31, 1996,
$19,086 was payable to Legg Mason Realty Capital, Inc. for
management fees and reimbursement of operating expenses.
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<PAGE> 6
NOTE B - RELATED PARTY TRANSACTIONS, continued
The general partners agreed to lend to the Partnership, without
interest, up to 50% of the acquisition fees actually paid to them
at the time the loan was made in the event the annual cumulative
non-compounded return to assignee limited partners fell below 7%
of the allocable invested capital for the period from February 1,
1989 through January 31, 1992. In 1990, the general partners
fulfilled their obligation under these cash flow protector loan
provisions. As of March 31, 1996, cash flow protector loans
totalling $789,203 were outstanding ($599,794 to FW Realty Limited
Partnership and $189,409 to Realty Capital IV Limited Partnership).
The loans are non-interest bearing and are required to be repaid from
distributable cash flow or sale or refinancing proceeds after the
payment of a preferred return to assignee limited partners equal
to a 10% annual cumulative non-compounded return on invested
capital.
In addition, acquisition fees totalling $73,431 were payable as of
March 31, 1996 to FW Realty Limited Partnership in the amount of
$55,808 and to Realty Capital IV Limited Partnership in the amount
of $17,623.
NOTE C - PARTNERSHIP ALLOCATIONS AND DISTRIBUTIONS:
Distributable cash flow is payable quarterly as follows:
1. 99% to the assignee limited partners and 1% to the general
partners until each assignee limited partner has received
an annual cumulative return equal to 10% of invested
capital; and
2. the balance is distributable 98% to the assignee limited
partners and 2% to the general partners.
Income and loss from operations for each fiscal year is allocated
as follows:
1. If there has been a distribution of distributable cash flow
during such fiscal year, net income from operations shall
be allocated to the assignee limited partners and general
partners in proportion to such distribution of
distributable cash flow.
2. If there has been no distribution of distributable cash flow
during such fiscal year, net income from operations shall be
allocated 99% to the assignee limited partners and 1% to the
general partners.
3. Net loss from operations for each fiscal year shall be
allocated 99% to the assignee limited partners and 1% to
the general partners.
Sale or refinancing proceeds are distributed first to meet debts
and obligations of the Partnership and to fund reserves for
contingent liabilities to the extent deemed reasonable by the
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<PAGE> 7
NOTE C - PARTNERSHIP ALLOCATIONS AND DISTRIBUTIONS, continued:
general partners and then to the assignee limited partners and
general partners in the order described in Section 4.4 of the
Partnership Agreement.
Any gain from a sale or refinancing is allocated as follows:
1. To the assignee limited partners and general partners having
negative balances in their capital accounts, prior to
distribution of sale or refinancing proceeds, an amount of
such gain sufficient to increase their negative balances
to zero;
2. To each assignee limited partner and general partner who has
received or will receive a distribution out of the sale or
refinancing proceeds, the amount of and in proportion to
the excess of such distribution over the positive balance
in his capital account, determined after any allocation of
gain from a sale or refinancing pursuant to (1) above,
and
3. The balance, 75% to the assignee limited partners and 25% to
the general partners.
Any loss from a sale or refinancing shall be allocated 99% to the
assignee limited partners and 1% to the general partners.
NOTE D - SUBSEQUENT EVENT:
On May 3, 1996, the Partnership sold Holiday Shopping Center to an
unrelated third party for a contract price of $1,200,000. For
financial reporting purposes, the Partnership estimates that a
loss, after transaction expenses, of approximately $80,000 will be
recorded in the second quarter of 1996.
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<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Partnership's financial statements are prepared based on the
accrual method of accounting. The Partnership's rental income from
its shopping center properties consists of base rents from tenants
occupying space in each shopping center. In addition, certain
leases provide for additional rent computed on the basis of a
percentage of gross sales in excess of specified levels. In some
cases, leases provide for rent abatements and scheduled rent
increases over the life of the lease. To the extent a lease
provides for rent abatements or adjustments, the Partnership, in
accordance with generally accepted accounting principles,
recognizes rental income on a straight-line basis of equal monthly
payments over the term of such lease. Market conditions have
dictated offering a wide variety of concessions to prospective
tenants, which most frequently include a combination of free rent
and reduced rental rate.
CASH FLOW
The Partnership recorded a $21,279 net increase in cash and cash
equivalents in the three months ended March 31, 1996, with $255,671
in net cash provided by operating activities offset by $57,835 used
in investing activities for improvements of real estate and
$176,557 used in financing activities primarily for principal
payments on long-term debt. The principal difference between net
loss from operations of $195,195 and net cash provided by operating
activities of $255,671 was the noncash charge of $379,684 for
depreciation and amortization. The Partnership expended an
additional $65,696 from the capital improvement escrow related to
Edgewood Plaza during the quarter. The capital improvement escrow
is included in prepaid expenses, mortgage escrows and other assets
in the Partnership's financial statements.
LIQUIDITY AND CAPITAL RESOURCES
The cash and cash equivalents position of the Partnership at March
31, 1996 increased $21,279 from that at December 31, 1995. The
Partnership's cash and cash equivalents position fluctuates from
quarter to quarter as follows: (i) decreasing with the funding of
lease-up costs and tenant improvements; (ii) decreasing with the
funding of renovation and expansion costs of the shopping centers;
(iii) increasing as borrowing proceeds, net rental income and
interest income are received; (iv) decreasing as expenses
(including debt service requirements) are paid; and (v) decreasing
by any payment of Partnership distributions.
It has been the policy of the Partnership to apply any increase in
cash to increase Partnership working capital reserves, to provide
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<PAGE> 9
for shopping center improvements if and when necessary, and to
repay and refinance debt as required. The General Partners believe
that maintenance of cash reserves is prudent in view of the current
real estate and general economic environments and is consistent
with the Partnership's objective to maintain and increase the value
of its shopping centers. Consequently, there is no assurance as
to the availability of cash flow to make distributions to partners.
The General Partners intend to re-examine the Partnership's
liquidity position at the end of 1996 to determine if it would be
appropriate to reinstate distributions to Unitholders at that time.
In September 1995, the Partnership obtained a loan secured by
Edgewood Plaza. From loan proceeds of $1,400,000, $452,485 was
placed in escrow for the capital improvement plan at Edgewood
Plaza. In 1995 and the first quarter of 1996, the Partnership
expended $162,868 and $65,696, respectively, from the capital
improvement escrow. The Partnership anticipates that the capital
improvement plan will be substantially completed by the end of May
1996. The improvements to Edgewood Plaza include a new facade and
parking lot resurfacing. The Partnership has executed a lease
modification with Santoni's Market, an anchor tenant at Edgewood
Plaza, which requires an annual rent increase of approximately
$25,000 commencing when the improvements are substantially
completed. Other tenants have agreed to annual rent increases
totalling $5,000 also effective at that time.
In the fourth quarter of 1995, the Partnership recorded a charge
of $2,606,156 to reflect the Partnership's current estimate of net
realizable value of Tarrytown Mall based on the decline in the
appraisal value to an amount below the outstanding balance of the
mortgage debt and accrued interest on the property. The $2,606,156
represented the amount required to reduce the Partnership's net
equity in the property for financial reporting purposes to zero.
In the first quarter of 1996, depreciation charges with respect to
Tarrytown Mall were $84,018 and accruals of unpaid interest arising
under the mortgage and described below were $102,368.
At March 31, 1996, Tarrytown Mall was subject to $7,251,938 in
mortgage indebtedness, of which $1,866,940 is represented by a
first trust mortgage and $5,384,998 is represented by a second
trust mortgage. In addition, at March 31, 1996, $16,100 in
interest was accrued with respect to the first mortgage and
$601,909 in interest was accrued with respect to the second
mortgage. Both the first and second mortgages (principal and
interest) are nonrecourse to the Partnership. The first trust
mortgage requires principal payments of $19,000 per month until
June 30, 1996 when required principal payments are scheduled to
increase to $44,000 per month. The first trust lender has verbally
agreed, subject to its internal committee approval, to extend the
current payment schedule of principal payments of $19,000 per month
for an additional year to June 30, 1997. Monthly principal
payments are scheduled to increase again to $49,000 on February 1,
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1997 and to $54,000 on February 1, 1998. Net cash flow from
operations at Tarrytown Mall currently would be insufficient to
meet the scheduled increase in the monthly principal payments under
the first trust mortgage.
The second trust mortgage requires that after payment of first
trust debt service and capital improvements made with respect to
Tarrytown Mall, net cash flow from operations from that center be
applied to second trust mortgage interest and principal
curtailments. To the extent that net cash flow is insufficient to
make second trust debt service payments, unpaid interest on the
second trust loan is accrued rather than paid. The Partnership
accrued $102,368 in unpaid interest in the first quarter of 1996.
Accrued and unpaid interest bears interest at 8% per annum and is
due at the maturity of the loan or earlier to the extent net cash
flow is available. Certain deferred interest payment obligations
to the holder of the second trust were recourse to the Partnership
and were paid in full in April 1996, after payment of $25,000 and
$16,000 in January and April, respectively.
The Partnership continues to solicit potential replacement tenants
for the Tarrytown Mall anchor space. Given competitive conditions
in the marketplace, there is no assurance that a replacement tenant
will be found.
The Partnership executed a lease modification with Food Lion at
Woodlawn Village for an expansion of its store from 25,000 to
32,744 square feet. Upon completion, the expansion would add 4,444
square feet to the center and convert 3,300 square feet of in-line
space to Food Lion use. The Partnership has obtained the necessary
zoning and land use approvals. Food Lion is currently seeking the
required building permits, which it expects to obtain by the end
of May 1996. As part of the lease modification, Food Lion is
funding substantially all of the expansion costs. The expansion
is estimated to be completed in the fourth quarter of 1996 and is
intended to add to the stability of the center.
Subsequent to March 31, 1996, the Partnership is obligated to
expend approximately $79,000 for tenant fit-up costs in connection
with tenant leases which have been signed and other committed
capital expenditures. This amount does not include tenant
improvement expenditures for prospective or future tenants.
The Quality Center mortgage, which had an outstanding principal
balance of $3,830,855 at March 31, 1996, was scheduled to mature
on February 1, 1996. The lender extended the term of this loan for
one year to January 31, 1997 on the same terms and conditions
previously existing under the loan. To obtain this extension, the
Partnership paid the lender a fee of approximately $10,000 in
January 1996 and paid $115,025 to reduce the principal balance of
this loan in April 1996.
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The Lynnwood Place mortgage, which had an outstanding principal
balance of $6,296,422 at March 31, 1996, matures on July 10, 1996.
The Partnership has received a non-binding proposal from the holder
of the Lynnwood Place mortgage for a three year extension. The
Woodlawn Village mortgage, which had an outstanding principal
balance of $1,827,388 at March 31, 1996, matures December 1, 1996.
The Partnership currently anticipates that it will refinance the
Woodlawn Village mortgage at maturity.
In connection with the sale of Orchard Square, the Partnership
retained responsibility for certain environmental issues. In
February 1996, the Partnership's environmental consultants
completed their report to determine the extent of any environmental
liability. The report concluded that no remediation was required
and was submitted to the applicable regulatory agency. Discussions
are underway with that agency which can make its own independent
finding. Consequently, the Partnership may ultimately be held
responsible for some level of remediation. The cost of any such
remediation cannot be ascertained at this time; however, as an
initial matter, the Partnership has accrued a liability of $11,000
to cover limited remediation procedures.
The Partnership has begun to seek opportunities to sell Partnership
properties in markets where the General Partners believe a sale
would be appropriate. Pursuant to that course of action, the
Partnership sold Orchard Square in December 1995 and Holiday in May
1996. In addition, the Partnership entered into a brokerage
agreement in April 1996 to explore the possible sale of
Highlandtown Village.
During late 1993 and into 1994, affiliates of Realty Capital IV
Limited Partnership discussed the possible sale of the
Partnership's shopping centers to a limited partnership, of which
a real estate investment trust ("FWREIT") formed by affiliates of
FW Realty Limited Partnership serves as the sole general partner.
These discussions were discontinued without reaching agreement as
the stock market valuations of real estate investment trusts owning
strip and neighborhood shopping centers fell and the Partnership's
portfolio faced significant issues potentially affecting values at
Tarrytown Mall, Quality Center and Orchard Square.
In the fourth quarter of 1995, discussions between Realty Capital
IV Limited Partnership on behalf of the Partnership and FWREIT were
reopened regarding the possible sale for cash of the Partnership's
shopping centers to an affiliate of FWREIT and those discussions
are continuing as of the date of the filing of this report. If a
sale or disposition of all of the Partnership's properties were to
occur, it would be followed by a distribution of net proceeds to
partners after payment of Partnership debts and obligations and
liquidation of the Partnership.
If an agreement is reached with respect to the basic terms of a
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<PAGE> 12
sale, the consummation of the sale would require negotiation of a
definitive agreement and would be subject to obtaining the prior
consent of the holders of a majority of the Units and approval of
an amendment to the Partnership Agreement to permit the sale of
properties to an affiliate of a general partner. There can be no
assurance that such a transaction will be successfully negotiated,
and, if negotiated, that it would be approved by the requisite
number of Unitholders and thereafter consummated, which would
require satisfaction of various substantive conditions that would
be contained in the agreement.
On May 3, 1996, the Partnership sold Holiday to an unrelated third
party for a contract price of $1,200,000. The estimated proceeds
from the sale transaction, after payoff of the respective mortgage
debt and transaction expenses, are approximately $850,000, which
exceed the $817,000 in appraised net equity of Holiday included in
the appraised value of the Partnership's portfolio at the end of
1995. For financial reporting purposes, the Partnership estimates
that a loss, after transaction expenses, of approximately $80,000
will be recorded in the second quarter of 1996.
The Partnership's operations as well as the financial condition of
many of its tenants have been adversely affected by economic and
competitive conditions. If the Partnership is not able to fund its
cash requirements from operations and cash reserves, the
Partnership may be required to seek additional financing. The
Partnership could be adversely affected by the increased standards
employed by lenders to determine the amount, terms and underwriting
requirements for such financing, all of which have affected the
amount and cost of borrowing. If additional borrowing or
refinancing is not available, the Partnership may be required to
sell one or more of its shopping center properties. There is no
assurance that loans would be available, or that the Partnership
would be able to sell a particular shopping center, or that the
terms of such loans or any sales would be advantageous to the
Partnership. Furthermore, if alternative sources of cash were
needed and not found, the Partnership could default on its
obligations, including obligations to pay debt service and mortgage
interest, which could result in the foreclosure by its mortgage
lenders of one or more shopping centers.
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<PAGE> 13
RESULTS OF OPERATIONS
The results of operations for the quarter ended March 31, 1996
reflect the operations of ten shopping centers. The results of
operations for the comparable quarter in 1995 reflect the
operations of eleven shopping centers. The Partnership sold
Orchard Square Shopping Center on December 29, 1995. The net
income (loss) for each shopping center is as follows:
<TABLE>
<CAPTION>
Net income (loss) for
the three months ended
----------------------
Shopping Centers / Location 3/31/96 3/31/95
---------------------------- -------- --------
<S> <C> <C>
WOODLAWN VILLAGE
Fredericksburg, VA........ $(11,606) $(10,707)
LYNNWOOD PLACE
Jackson, TN............... (20,356) (42,768)
HIGHLANDTOWN VILLAGE
Baltimore, MD............. 4,450 (8,491)
JACKSON HEIGHTS PLAZA
Murfreesboro, TN.......... 52,057 13,674
HOLIDAY
Collinsville, VA.......... 71 8,822
CLOISTER
Ephrata, PA............... 4,230 13,577
ORCHARD SQUARE
Cobb County, GA........... - 36,530
EDGEWOOD PLAZA
Harford County, MD........ 15,498 33,831
TARRYTOWN MALL
Rocky Mount, NC........... (160,405) (54,530)
BERKELEY SQUARE
Goose Creek, SC........... 19,216 (38,058)
QUALITY CENTER
Lancaster, PA............. (71,833) (72,953)
--------- ---------
Shopping center totals (168,678) (121,073)
Other expenses (26,517) (39,739)
--------- ---------
Total $(195,195) $(160,812)
========= =========
</TABLE>
THREE MONTHS ENDED MARCH 31, 1996:
Net loss increased $34,383 to net loss of $195,195 for the first
quarter of 1996 from net loss of $160,812 for the comparable
quarter of 1995. The significant factors contributing to the
increased net loss in the first quarter of 1996 were declines in
rental income and tenant reimbursement income and an increase in
repairs and maintenance expense. These changes were partially
offset by a lower provision for doubtful accounts and decreases in
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<PAGE> 14
interest, legal, depreciation and management and leasing expenses.
A substantial portion of these differences in income and expense
can be attributed to the sale of Orchard Square in December 1995
and the increase in losses at Tarrytown Mall.
The Partnership's total income decreased $349,148 to $1,566,199
in the quarter ended March 31, 1996 from $1,915,347 in the
comparable quarter of 1995. The change in total income consisted
of a decrease in rental income of $296,070 to $1,306,466 for the
first quarter of 1996 from $1,602,536 for the first quarter of
1995.
Four of the Partnership's ten shopping centers had decreases in
rental income, including significant decreases at Tarrytown Mall
of $108,530 and Cloister of $15,263. Rental income at Orchard
Square was $208,413 in the first quarter of 1995. Six of the
shopping centers had decreases in tenant reimbursement income,
including a significant decrease at Tarrytown Mall of $27,754.
Tenant reimbursement income at Orchard Square was $29,910 in the
first quarter of 1995. The declines in rental income and tenant
reimbursement income at Tarrytown Mall were primarily the result
of the loss of income recorded with respect to the Wholesale Depot
lease obligations and a 1% decrease in Tarrytown Mall's leased
percentage. Wholesale Depot terminated its lease at Tarrytown Mall
on October 7, 1994. Total income for the quarter ended March 31,
1995 included approximately $108,700 of rental income and $31,600
of tenant reimbursement income with respect to the Wholesale Depot
lease. No additional income with respect to the Wholesale Depot
lease will be recognized subsequent to the third quarter of 1995.
Tarrytown Mall was approximately 63% leased at March 31, 1996, a
decrease from 64% at March 31, 1995. The decline in rental income
at Cloister was primarily due to a decline in the shopping center's
leased percentage. Cloister was approximately 94% leased at March
31, 1996, which represented a net leasing decline of 6% from March
31, 1995.
Decreases in rental income and tenant reimbursement income were
partially offset by increases in rental income at six shopping
centers and increases in tenant reimbursement income at four
shopping centers, including an increase in tenant reimbursement
income at Highlandtown Village of $15,686. The increase at
Highlandtown Village was primarily due to an increase in the
shopping center's leased percentage. Highlandtown Village was 100%
leased at March 31, 1996, which represented an increase of 2% from
March 31, 1995.
The following changes in leased percentages also contributed to
changes in rental income and tenant reimbursement income. At March
31, 1996, two of the Partnership's remaining shopping centers,
Lynnwood Place and Edgewood Plaza were 100% leased. This
represented a net leasing gain of 3% at Lynnwood Place from March
31, 1995. Edgewood Plaza remained 100% leased from 1995. Berkeley
Square, Quality Center and Holiday also experienced net leasing
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<PAGE> 15
gains from March 31, 1995 to March 31, 1996. Berkeley Square was
approximately 97% leased, which represented an increase from
approximately 85% leased at March 31, 1995. Quality Center was
approximately 68% leased at March 31, 1996, which represented an
increase from approximately 59%. Holiday was approximately 90%
leased, which represented an increase from approximately 84% at
March 31, 1995. Woodlawn Village and Jackson Heights were
approximately 93% and 99% leased, respectively, at March 31, 1996
and 1995. The Partnership's aggregate portfolio was approximately
84% leased at March 31, 1996 and 1995. The Partnership's shopping
center portfolio at March 31, 1996 represented ten centers with
approximately 1,034,000 leasable square feet. The portfolio at
March 31, 1995 represented 11 shopping centers with approximately
1,120,000 square feet.
Total operating expenses decreased $300,368 to $1,779,952 in the
1996 period from $2,080,320 in the 1995 period. Approximately
$196,600 of the decrease was due to the sale of Orchard Square in
December 1995. Interest expense decreased $88,987 to $713,471 for
the first quarter of 1996 from $802,458 for the first quarter of
1995. The net decrease in interest expense is primarily
attributable to the sale of Orchard Square and a decline in
interest expense at Berkeley Square of $18,505 as a result of the
reduction in long-term debt related to that shopping center in the
fourth quarter of 1995. Interest expense at Orchard Square was
$87,384 in the first quarter of 1995. These declines in expenses
were partially offset by interest expense of $30,101 at Edgewood
Plaza in the first quarter of 1996 as a result of the Partnership
obtaining a loan of $1,400,000 in September 1995 secured by this
shopping center. Edgewood Plaza was previously unencumbered.
Depreciation expense decreased $53,048 to $353,836 for the quarter
ended March 31, 1996 from $406,884 for the comparable quarter of
1995 primarily due to the sale of Orchard Square. Depreciation
expense at Orchard Square was $53,350 in the first quarter of 1995.
Repairs and maintenance expense increased $22,022 to $251,749 for
the 1996 quarter from $229,727 for the 1995 quarter. Significant
changes in repairs and maintenance expense included an increase at
Quality Center of $18,487 and a decline at Jackson Heights of
$22,307.
Taxes and insurance expense decreased $19,616 to $190,916 for the
quarter ended March 31, 1996 from $210,532 for the comparable
quarter of 1995. This net decrease was primarily attributable to
the sale of Orchard Square. Taxes and insurance expense at Orchard
Square was $21,103 in the first quarter of 1995. Management and
leasing to related parties decreased $19,930 to $89,100 for the
1996 quarter from $109,030 for the 1995 quarter.
Other expenses decreased $146,324 to $155,032 for the quarter ended
March 31, 1996 from $301,356 for the comparable quarter in 1995.
- 15 -
<PAGE> 16
The decrease can primarily be attributed to decreases in legal
expenses at Tarrytown Mall and Quality Center of $33,857 and
$19,204, respectively, a $15,000 reduction of a reserve for
estimated environmental remediation costs required at Edgewood
Plaza due to a change in estimate, and a decrease in the provision
for doubtful accounts of $89,007. The decrease in legal expense
at Tarrytown Mall was due to expenses incurred in 1995 related to
the bankruptcy of Wholesale Depot and lease negotiations with a
potential tenant for the Wholesale Depot space. The decrease in
legal expense at Quality Center was due to expenses incurred in
1995 related to unsuccessful negotiations with a potential buyer
for that shopping center.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
27.1 Financial Data Schedule for the three months ended
March 31, 1996.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Partnership during
the quarter ended March 31, 1996.
- 16 -
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
By: Realty Capital IV Limited Partnership
General Partner
By: LMRC IV, Inc., General Partner
Date: May 15, 1996 By: /s/ Richard J. Himelfarb
------------------ -----------------------------------
Richard J. Himelfarb, President
By: FW Realty Limited Partnership,
General Partner
By: FW Corporation, General Partner
Date: May 15, 1996 By: /s/ William J. Wolfe
------------------ ---------------------------------
William J. Wolfe, President
- 17 -
EXHIBIT INDEX
Exhibit
Number
27.1 Financial Data Schedule for the nine months
ended March 31, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
BALANCE SHEETS AND STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> $1,686,273
<SECURITIES> $0
<RECEIVABLES> $1,052,380
<ALLOWANCES> $290,401
<INVENTORY> $0
<CURRENT-ASSETS> $0
<PP&E> $53,182,846
<DEPRECIATION> $13,625,245
<TOTAL-ASSETS> $43,283,069
<CURRENT-LIABILITIES> $0
<BONDS> $28,967,206
$0
$0
<COMMON> $0
<OTHER-SE> $12,260,602
<TOTAL-LIABILITY-AND-EQUITY> $43,283,069
<SALES> $0
<TOTAL-REVENUES> $1,566,199
<CGS> $0
<TOTAL-COSTS> $1,056,971
<OTHER-EXPENSES> $0
<LOSS-PROVISION> ($16,338)
<INTEREST-EXPENSE> $713,471
<INCOME-PRETAX> ($195,195)
<INCOME-TAX> $0
<INCOME-CONTINUING> ($195,195)
<DISCONTINUED> $0
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> ($195,195)
<EPS-PRIMARY> ($.16)
<EPS-DILUTED> ($.16)
</TABLE>
