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, 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 000-16757
CONCORD MILESTONE PLUS, L.P.
(Exact Name of Registrant as Specified in its Charter)
Delaware 52-1494615
- ------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
5200 TOWN CENTER CIRCLE
4TH FLOOR
BOCA RATON, FLORIDA 33486
- --------------------------------------- ---------
(Address of Principal Executive Offices) (Zip Code)
(561) 394-9260
Registrant's Telephone Number, Including Area Code
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 for the
past 90 days. Yes X No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
BALANCE SHEETS
JUNE 30, 1997 (Unaudited) AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
ASSETS
June 30, 1997 December 31, 1996
<S> <C> <C>
Property, at cost
Building and improvements ............................................... $ 15,392,473 $ 15,359,462
Less: accumulated depreciation .......................................... 5,120,022 4,829,534
------------ ------------
Building and improvements, net .......................................... 10,272,451 10,529,928
Land .................................................................... 10,987,034 10,987,034
------------ ------------
Total property .......................................................... 21,259,485 21,516,962
Cash and cash equivalents ................................................... 320,376 326,120
Accounts receivable ......................................................... 177,234 200,975
Prepaid expenses ............................................................ 11,314 22,864
Other assets, net ........................................................... 56,691 19,854
------------ ------------
Total assets .......................................................... $ 21,825,100 $ 22,086,775
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Bonds payable, net .......................................................... $ 16,460,578 $ 16,473,060
Accrued interest ............................................................ 137,100 137,100
Accrued expenses and other liabilities ...................................... 275,065 255,137
Due to affiliates ........................................................... 0 11,985
------------ ------------
Total liabilities ....................................................... 16,872,743 16,877,282
------------ ------------
Commitments and Contingencies
Partners' capital:
General partner ......................................................... (73,042) (70,470)
Limited partners:
Class A Interests, 1,518,800 ........................................ 5,025,399 5,279,963
------------ ------------
Total partners' capital ................................................. 4,952,357 5,209,493
------------ ------------
Total liabilities and partners' capital ................................. $ 21,825,100 $ 22,086,775
============ ============
</TABLE>
See Accompanying Notes to Financial Statements
-2-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF REVENUES AND EXPENSES
(Unaudited)
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
June 30,1997 June 30, 1996
<S> <C> <C>
Revenues:
Rent .............................................. $ 576,105 $ 683,408
Reimbursed expenses ............................... 123,990 109,896
Interest and other income ......................... 9,332 5,007
--------- ---------
Total revenues ................................ 709,427 798,311
--------- ---------
Expenses:
Interest expense .................................. 411,300 390,735
Depreciation and amortization ..................... 142,444 159,680
Management and property expenses .................. 185,233 218,324
Administrative and management fees to related party 24,895 41,146
Professional fees and other expenses .............. 109,957 42,551
--------- ---------
Total expenses ................................ 873,829 852,436
--------- ---------
Net loss .......................................... $(164,402) $ (54,125)
========= =========
Net loss attributable to:
Limited partners .............................. $(162,758) $ (53,584)
General partners .............................. (1,644) (541)
--------- ---------
Net loss .......................................... $(164,402) $ (54,125)
========= =========
Loss per weighted average
Limited Partnership 100 Class A
Interests outstanding ............................. $ (10.72) $ (3.52)
========= =========
Weighted average number of
interests outstanding ............................. 15,188 15,188
========= =========
</TABLE>
See Accompanying Notes to Financial Statements
-3-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF REVENUE AND EXPENSES
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
June 30,1997 June 30, 1996
<S> <C> <C>
Revenues:
Rent .............................................. $ 1,268,973 $ 1,319,652
Reimbursed expenses ............................... 239,231 195,448
Interest and other income ......................... 15,472 8,371
----------- -----------
Total revenues ................................ 1,523,676 1,523,471
----------- -----------
Expenses:
Interest expense .................................. 822,600 781,470
Depreciation and amortization ..................... 285,050 318,902
Management and property expenses .................. 376,991 407,696
Administrative and management fees to related party 53,503 54,559
Professional fees and other expenses .............. 140,602 71,315
----------- -----------
Total expenses ................................ 1,678,746 1,633,942
----------- -----------
Net loss .......................................... $ (155,070) $ (110,471)
=========== ===========
Net loss attributable to:
Limited partners .............................. $ (153,519) $ (109,366)
General partners .............................. (1,551) (1,105)
----------- -----------
Net loss .......................................... $ (155,070) $ (110,471)
=========== ===========
Loss per weighted average
Limited Partnership 100 Class A
Interests outstanding ............................. $ (10.11) $ (7.20)
=========== ===========
Weighted average number of
interests outstanding ............................. 15,188 15,188
=========== ===========
</TABLE>
See Accompanying Notes to Financial Statements
-4-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
General Class A
Total Partner Interests
----------- ----------- -----------
<S> <C> <C> <C>
PARTNERS' CAPITAL (DEFICIT)
January 1, 1997 ................................................ $ 5,209,493 $ (70,470) $ 5,279,963
Distributions ........................................................ (102,066) (1,021) (101,045)
Net Loss ............................................................. (155,070) (1,551) (153,519)
----------- ----------- -----------
PARTNERS' CAPITAL (DEFICIT)
June 30, 1997 .................................................. $ 4,952,357 $ (73,042) $ 5,025,399
=========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements
-5-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
June 30,1997 June 30, 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .......................................... $(155,070) $(110,471)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization ............. 285,050 318,902
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable 23,741 (13,290)
Decrease in prepaid expenses .............. 11,550 30,675
Increase in other assets, net ............. (43,881) (1,397)
Decrease in due from affiliates, net ...... 0 562
Increase (decrease) in accrued expenses and
other liabilities .................... 19,928 (61,042)
Decrease in due to affiliate .............. (11,985) 0
--------- ---------
Net cash provided by operating activities ......... 129,333 163,939
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITY:
Property improvements ..................... (33,011) (11,455)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITY:
Cash distributions to partners ............ (102,066) (99,852)
--------- ---------
NET (DECREASE) INCREASE
IN CASH AND CASH EQUIVALENTS ...................... (5,744) 52,632
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ... 326,120 218,872
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD ......... $ 320,376 $ 271,504
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for interest .......... $ 822,600 $ 781,470
========= =========
</TABLE>
See Accompanying Notes to Financial Statements
-6-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the provisions of Rule 10-01 of Regulation S-X and the
instructions to Form 10-Q. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included.
Certain reclassifications were made to the accompanying 1996 financial
statements to conform to the 1997 presentation.
1. Bonds Payable
The Bonds mature on November 30, 1997, at which time the outstanding principal
balance of $16,452,000 will be due. The Partnership has not yet obtained any
commitments for refinancing and has not entered into any agreements to sell any
of the Properties. [See footnote 3. Commitments and Contingencies. for further
discussion.]
The Partnership is currently seeking to refinance the Properties and
Tri-Stone Mortgage Company ("Tri-Stone"), an affiliate of the General Partner,
is assisting the Partnership, without compensation, in obtaining suitable
refinancing. In the event that a refinancing sufficient to satisfy the Bonds
appears unlikely, the General Partner will attempt to sell one or more of the
Properties. The General Partner believes that the Partnership will be able to
obtain adequate proceeds from a refinancing or sale of the Properties, or a
combination of the two, to enable the Partnership to satisfy the Bonds on or
prior to their maturity. Nevertheless, there can be no assurance the Partnership
will be able to raise sufficient proceeds through a refinancing or sale prior to
the Bond maturity date, or that the terms of any such refinancing or sale will
be attractive to the Partnership. In the event that the Partnership is unable to
raise adequate funds to satisfy the Bonds at maturity, there is a risk of
foreclosure under the Bond Mortgages.
-7-
<PAGE>
2. Commitments and Contingencies
A prospective lender from whom the Partnership has sought a refinancing
commitment engaged an independent environmental and geotechnical consulting firm
to perform environmental due diligence on the Properties. After various tests,
that consultant identified chemical contamination in the soil at a site at the
Old Orchard Shopping Center in Valencia, California which it believes is
attributable to improper handling of dry cleaning solvent by a tenant. Based on
the results of soil sampling and testing and the condition of the site, the
environmental consultant has concluded that the contaminated area is an
excellent candidate for receipt of regulatory closure of environmental issues
through the use of a health-risk assessment process which, if accepted by the
California Environmental Protection Agency, would obviate the need for active
remediation by the Partnership. The consultant has estimated that pursuing a
"risk- based closure" for the site would require a minimum of three to four
months and will cost between $28,000 and $100,000 assuming that the Partnership
applies for and receives regulatory agency acceptance of the risk-based closure
for the site without active remediation.
The Partnership currently intends to pursue the course of action
recommended by the environmental consultant. There can be no assurance, however,
that the Partnership will be granted a health-risk-basis-closure and will not be
responsible for active remediation of the affected site, the cost of which could
be substantial.
3. Recently Issued Accounting Pronouncement
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128, "Earnings per Share" in February, 1997. This
pronouncement establishes standards for computing and presenting earnings per
share, and is effective for the Partnership's 1997 year-end financial
statements. The General Partner has determined that this standard will not have
a significant impact on the Partnership's computation or presentation of net
income per limited partner interest.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Organization and Capitalization
Concord Milestone Plus, L.P., a Delaware limited partnership (the
"Partnership"), was formed on December 12, 1986, for the purpose of investing in
existing income-producing commercial and industrial real estate. The Partnership
began operations on August 20, 1987, and currently owns and operates three
shopping centers located in Searcy, Arkansas; Valencia, California; and Green
Valley, Arizona.
-8-
<PAGE>
The Partnership commenced a public offering on April 8, 1987 in order to
fund the Partnership's real property acquisitions. The Partnership terminated
its public offering on April 2, 1988 and was fully subscribed to with a total of
16,452 Bond Units and 15,188 Equity Units issued. Each Bond Unit consists of
$1,000 principal amount of Bonds and 36 Class B Interests. Each Equity Unit
consists of 100 Class A Interests and 100 Class B Interests. Capital
contributions to the Partnership consisted of $15,187,840 from the sale of the
Equity Units and $592,272 which represent the Class B Interests from the sale of
the Bond Units.
Results of Operations
Comparison of Quarter Ended June 30, 1997 to Quarter Ended June 30, 1996
The Partnership recognized a net loss of $164,402 for the quarter ended
June 30, 1997 as compared to a loss of $54,125 for the same period in 1996 due
to the following factors:
A decrease in revenues of $88,884, or 11.1% to $709,427 for the quarter
ended June 30, 1997 as compared to $798,311 for the quarter ended June 30, 1996
is primarily due to the net effect of the following: (1) rents received in
advance totalling $42,000 during the first quarter of 1997 which related to the
second quarter were recorded as revenue in the three months ended March 31,
1997; (2) percentage rent collections decreased in the quarter ended June 30,
1997 primarily due to Thrifty Drugs at Old Orchard Shopping Center located in
Valencia, California which recorded a decrease of $15,000 in percentage rent
revenues due to adjustments of prior quarter accruals through current quarter
revenue; (3) rent abatements for two tenants at Green Valley Mall of
approximately $4,000 occurred during the quarter ended June 30, 1997; and (4) a
decrease in minor tenant occupancy at the Old Orchard Shopping Center also
contributed to the decrease in revenues.
Management and property expenses decreased $33,091, or 15.2%, to
$185,233 for the quarter ended June 30, 1997 as compared to $218,324 for the
quarter ended June 30, 1996 primarily due to a decrease in common area expenses
and insurance expense. Common area expenses decreased as a result of cost
savings efforts by management and insurance expense decreased due to a lower
premium in 1997. Real estate tax expense also decreased due to successful
appeals of the tax assessments.
An increase in interest expense of $20,565, or 5.3%, to $411,300 for the
quarter ended June 30, 1997 as compared to $390,735 for the quarter ended June
30, 1996 due to the scheduled increase in the interest rate on the Partnership's
Bonds from 9.50% in 1996 to 10.0% in 1997.
-9-
<PAGE>
A decrease in depreciation and amortization expense of $17,236, or
10.8%, to $142,444 for the quarter ended June 30, 1997 as compared to $159,680
for the quarter ended June 30, 1996 primarily due to a decrease in amortization
of the net bond premium and discount in 1997.
An increase in professional fees and other expenses of $67,406, or
158.4%, to $109,957 for the quarter ended June 30, 1997 as compared to $42,551
for the quarter ended June 30, 1996 due to payment of application fees in an
attempt to refinance the properties and an estimate of environmental and
geotechnical fees of $28,000 for a risk-based closure at the Old Orchard
Shopping Center, in Valencia, California.
Comparison of the Six Months Ended June 30, 1997 to the Six Months Ended June
30, 1996
Revenues of the Partnership remained consistent increasing only $205, to
$1,523,676 for the six months ended June 30, 1997 as compared to $1,523,471 for
the six months ended June 30, 1996 primarily due to the net effect of an
increase in reimbursed expenses of $43,783 and a decrease in rent revenue of
$50,679. Reimbursed expenses increased due to increased recovery percentages on
both common area expenses and real estate taxes. Additionally, refunds given to
tenants in 1996 due to an incorrect billing in a prior year was charged to
revenue in 1996. Rents decreased primarily due to decreased occupancy of minor
tenants at Old Orchard Shopping Center located in Valencia, California. Rent
abatements also occurred at Green Valley Mall during the six months ended June
30, 1997.
Management and property expenses decreased $30,705, or 7.5%, to $376,991
for the six months ended June 30, 1997 as compared to $407,696 for the six
months ended June 30, 1996 primarily due to a decrease in common area expenses
and insurance expense. Common area expenses decreased as a result of cost
savings efforts by management and insurance expense decreased due to a lower
premium in 1997. Real estate tax expense also decreased due to successful
appeals of the tax assessments.
Interest expense increased $41,130, or 5.3%, to $822,600 for the six
months ended June 30, 1997 as compared to $781,470 for the six months ended June
30, 1996 due to the scheduled increase in the interest rate on the Partnership's
Bonds from 9.50% in 1996 to 10% in 1997.
Depreciation and amortization expense decreased $33,852, or 10.6%, to
$285,050 for the six months ended June 30, 1997 as compared to $318,902 for the
six months ended June 30, 1996 due to a decrease in the amortization of the net
bond premium and discount in 1997.
-10-
<PAGE>
Professional fees and other expenses increased $69,287, or 97.2% to
$140,602 for the six months ended June 30, 1997 as compared to $71,315 for the
six months ended June 30, 1996 due to payment of application fees in an attempt
to refinance the properties and an estimate of environmental and geotechnical
fees of $28,000 for risk-based closure at the Old Orchard Shopping Center, in
Valencia, California.
Liquidity and Capital Resources
The Bonds mature on November 30, 1997, at which time the outstanding
principal balance of $16,452,000 will be due. The Partnership has not yet
obtained any commitments for refinancing and has not entered into any written
agreements to sell any of the Properties.
A prospective lender from whom the Partnership has sought a refinancing
commitment engaged an independent environmental and geotechnical consulting firm
to perform environmental due diligence on the Properties. After various tests,
that consultant identified chemical contamination in the soil at a site at the
Old Orchard Shopping Center in Valencia, California which it believes is
attributable to improper handling of dry cleaning solvent by a tenant. Based on
the results of soil sampling and testing and the condition of the site, the
environmental consultant has concluded that the contaminated area is an
excellent candidate for receipt of regulatory closure of environmental issues
through the use of a health-risk assessment process which, if accepted by the
California Environmental Protection Agency, would obviate the need for active
remediation by the Partnership. The consultant has estimated that pursuing a
"risk- based closure" for the site would require a minimum of three to four
months and will cost between $28,000 and $100,000 assuming that the Partnership
applies for and receives regulatory agency acceptance of the risk-based closure
for the site without active remediation.
The Partnership currently intends to pursue the course of action
recommended by the environmental consultant. There can be no assurance, however,
that the Partnership will be granted a health-risk-based-closure and will not be
responsible for active remediation of the affected site, the cost of which could
be substantial. In addition, there is no assurance that the Partnership will
receive the necessary regulatory clearance in time to complete a refinancing
prior to the maturity of the Bonds.
-11-
<PAGE>
In the event that a refinancing sufficient to satisfy the Bonds appears
unlikely, the General Partner will attempt to sell one or more of the
Properties. The General Partner believes that the Partnership should be able to
obtain adequate proceeds from a refinancing or sale of the Properties, or a
combination of the two, to enable the Partnership to satisfy the Bonds on or
prior to their maturity; however, if the Partnership must engage in active
remediation of the contaminated soil at the Valencia property, the value and
marketability of such property could be significantly impaired. There can be no
assurance the Partnership will be able to raise sufficient proceeds through a
refinancing or sale prior to the Bond maturity date, or that the terms of any
such refinancing or sale will be attractive to the Partnership. In the event
that the Partnership is unable to raise adequate funds to satisfy the Bonds at
maturity, there is a risk of foreclosure under the Bond Mortgages.
In order to fund the cost of addressing the environmental issues
identified at the Old Orchard Shopping Center, the Partnership has determined to
suspend making distributions until the Partnership's cash needs can be
determined with greater certainty.
Assuming that the Partnership is able to raise sufficient funds to
satisfy the Bonds on or before November 30, 1997, the General Partner believes
that the Partnership will have sufficient working capital to meet its operating
requirements through the next 12 months provided that the costs of the
addressing environmental issues at the Old Orchard Shopping Center are not
significantly greater than the current $28,000 to $100,000 estimate.
Nevertheless, because the cash revenues and expenses of the Partnership will
depend on future facts and circumstances relating to the Properties, as well as
market and other conditions beyond the control of the Partnership, the
possibility exists that cash flow deficiencies may occur. There are currently no
material commitments for capital expenditures.
Management is not aware of any other trends, events, commitments or
uncertainties, that will or are likely to materially impact the Partnership's
liquidity.
Cash Flows
Net cash provided by operating activities of $129,333 for the six months
ended June 30, 1997 included (i) a net loss of $155,070, (ii) non-cash
adjustments of $285,050 for depreciation and amortization expense and (iii) a
net change in operating assets and liabilities of $647.
Net cash provided by operating activities of $163,939 for the six months
ended June 30, 1996 included (i) a net loss of $110,471, (ii) non-cash
adjustments of $318,902 for depreciation and amortization expense and (iii) a
net change in operating assets and liabilities of $44,492.
-12-
<PAGE>
Net cash used in investing activities of $33,011 and $11,455 for the six
months ended June 30, 1997 and June 30, 1996 respectively, was for capital
expenditures for property improvements.
Net cash used in financing activities of $102,066 and $99,852 for the
six months ended June 30, 1997 and June 30, 1996 respectively, was for cash
distributions to partners.
PART II - OTHER INFORMATION
Item 6. Reports on Form 8-K
(b) No reports on form 8-K were filed during the quarter covered by this
Report.
-13-
<PAGE>
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.
DATE: August 11,1997 CONCORD MILESTONE PLUS, L.P.
(Registrant)
BY: CM PLUS CORPORATION
General Partner
By: /S/ Robert Mandor
--------------------------
Robert Mandor
Director and Vice President
By: /S/ Joan LeVine
--------------------------
Joan LeVine
Secretary and Treasurer
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 320,376
<SECURITIES> 0
<RECEIVABLES> 177,234
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 26,379,507
<DEPRECIATION> 5,120,022
<TOTAL-ASSETS> 21,825,100
<CURRENT-LIABILITIES> 0
<BONDS> 16,460,578
0
0
<COMMON> 0
<OTHER-SE> 4,952,357
<TOTAL-LIABILITY-AND-EQUITY> 21,825,100
<SALES> 0
<TOTAL-REVENUES> 1,523,676
<CGS> 0
<TOTAL-COSTS> 856,146
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 822,600
<INCOME-PRETAX> (155,070)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (155,070)
<EPS-PRIMARY> (10.11)<F1>
<EPS-DILUTED> 0
<FN>
<F1>
Income per weighted average limited Partnership Class A interests outstanding.
</FN>
</TABLE>
