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 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)
150 EAST PALMETTO PARK ROAD
4TH FLOOR
BOCA RATON, FLORIDA 33432
(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, 1998 (Unaudited) AND DECEMBER 31, 1997
ASSETS
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
Property, at cost
<S> <C> <C>
Building and improvements .............................................................. $ 15,491,964 $ 15,453,945
Less: accumulated depreciation ......................................................... 5,724,066 5,413,087
------------ ------------
Building and improvements, net ......................................................... 9,767,898 10,040,858
Land ................................................................................... 10,987,034 10,987,034
------------ ------------
Total property ......................................................................... 20,754,932 21,027,892
Cash and cash equivalents .................................................................. 262,733 257,905
Accounts receivable ........................................................................ 197,452 123,152
Restricted cash ............................................................................ 236,855 269,895
Prepaid expenses and other assets, net ..................................................... 65,172 67,516
Debt financing costs, net .................................................................. 289,837 305,504
------------ ------------
Total assets ......................................................................... $ 21,806,981 $ 22,051,864
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loans payable ..................................................................... $ 16,597,551 $ 16,683,574
Accrued interest ........................................................................... 112,943 117,308
Accrued expenses and other liabilities ..................................................... 244,945 341,263
Accrued expenses payable to affiliates ..................................................... 22,208 73,935
------------ ------------
Total liabilities ...................................................................... 16,977,647 17,216,080
------------ ------------
Partners' capital:
General partner ............................................................................ (74,272) (74,207)
Limited partners:
Class A Interests, 1,518,800 ........................................................... 4,903,606 4,909,991
------------ ------------
Total partners' capital ................................................................ 4,829,334 4,835,784
------------ ------------
Total liabilities and partners' capital ................................................ $ 21,806,981 $ 22,051,864
============ ============
</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, 1998 AND 1997
<TABLE>
<CAPTION>
June 30,1998 June 30, 1997
Revenues:
<S> <C> <C>
Rent ................................................................................................. $ 673,588 $ 576,105
Reimbursed expenses .................................................................................. 95,726 123,990
Interest and other income ............................................................................ 3,477 9,332
--------- ---------
Total revenues ................................................................................... 772,791 709,427
--------- ---------
Expenses:
Interest expense ..................................................................................... 342,865 411,300
Depreciation and amortization ........................................................................ 160,438 142,444
Management and property expenses ..................................................................... 213,386 185,233
Administrative and management fees to related party .................................................. 35,585 31,145
Professional fees and other expenses ................................................................. 28,516 103,707
--------- ---------
Total expenses ................................................................................... 780,790 873,829
--------- ---------
Net loss ............................................................................................. $ (7,999) $(164,402)
========= =========
Net loss attributable to:
Limited partners ................................................................................. $ (7,919) $(162,758)
General partner .................................................................................. (80) (1,644)
--------- ---------
Net loss ............................................................................................. $ (7,999) $(164,402)
========= =========
Loss per weighted average
Limited Partnership 100 Class A
Interests outstanding ................................................................................ $ (.52) $ (10.72)
========= =========
Weighted average number of 100
Class A 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 REVENUES AND EXPENSES
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
June 30,1998 June 30, 1997
Revenues:
<S> <C> <C>
Rent ................................................................................................. $ 1,302,393 $ 1,268,973
Reimbursed expenses .................................................................................. 205,421 239,231
Interest and other income ............................................................................ 6,139 15,472
----------- -----------
Total revenues ................................................................................... 1,513,953 1,523,676
----------- -----------
Expenses:
Interest expense ..................................................................................... 682,252 822,600
Depreciation and amortization ........................................................................ 332,239 285,050
Management and property expenses ..................................................................... 390,525 376,991
Administrative and management fees to related party .................................................. 68,766 66,003
Professional fees and other expenses ................................................................. 46,621 128,102
----------- -----------
Total expenses ................................................................................... 1,520,403 1,678,746
----------- -----------
Net loss ............................................................................................. $ (6,450) $ (155,070)
=========== ===========
Net loss attributable to:
Limited partners ................................................................................. $ (6,385) $ (153,519)
General partner .................................................................................. (65) (1,551)
----------- -----------
Net loss ............................................................................................. $ (6,450) $ (155,070)
=========== ===========
Loss per weighted average
Limited Partnership 100 Class A
Interests outstanding ................................................................................ $ (.42) $ (10.11)
=========== ===========
Weighted average number of 100
Class A 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, 1998
<TABLE>
<CAPTION>
General Class A
Total Partner Interests
PARTNERS' CAPITAL (DEFICIT)
<S> <C> <C> <C> <C>
January 1, 1998 .......................................................... $ 4,835,784 $ (74,207) $ 4,909,991
Distributions .................................................................. -- -- --
Net loss ....................................................................... (6,450) (65) (6,385)
----------- ----------- -----------
PARTNERS' CAPITAL (DEFICIT)
June 30, 1998 ............................................................ $ 4,829,334 $ (74,272) $ 4,903,606
=========== =========== ===========
</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, 1998 AND 1997
<TABLE>
<CAPTION>
June 30,1998 June 30, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss ............................................................................................. $ (6,450) $(155,070)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization ................................................................ 332,239 285,050
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable ................................................... (74,300) 23,741
(Increase) decrease in prepaid expenses and
other assets, net ....................................................................... (3,250) 11,550
Decrease in accrued interest ................................................................. (4,365) (43,881)
(Decrease) increase in accrued expenses and
other liabilities ....................................................................... (96,318) 19,928
Decrease in due to affiliate ................................................................. (51,727) (11,985)
--------- ---------
Net cash provided by operating activities ............................................................ 95,829 129,333
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property improvements ........................................................................ (38,018) (33,011)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in restricted cash .................................................................. 33,040 0
Principal repayments on mortgage loans payable ............................................... (86,023) 0
Cash distributions to partners ............................................................... 0 (102,066)
--------- ---------
Net cash used in financing activities ................................................................ (52,983) (102,066)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS .................................................................................. 4,828 (5,744)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD .......................................................................... 257,905 326,120
--------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD ................................................................................ $ 262,733 $ 320,376
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for interest ............................................................. $ 686,617 $ 822,600
========= =========
</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, 1998
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
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 (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. The
financial statements as of and for the period ended June 30, 1998 and 1997 are
unaudited. The results of operations for the interim periods are not necessarily
indicative of the results of operations for the fiscal year. Certain information
for 1997 has been reclassified to conform to the 1998 presentation. These
financial statements should be read in conjunction with the financial statements
and footnotes included thereto in the Concord Milestone Plus, L.P. (the
"Partnership") financial statements filed on form 10-K for the year ended
December 31, 1997.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
Certain statements made in this report constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act") and Section 21E of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Such forward-looking statements include
statements regarding the intent, belief or current expectations of the
Partnership and its management and involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things, the
following: general economic and business conditions, which will, among other
things, affect the demand for retail space or retail goods, availability and
creditworthiness of prospective tenants, lease rents and the terms and
availability of financing; adverse changes in the real estate markets including,
among other things, competition with other retail commercial landlords; risks of
real estate development and acquisition; governmental actions and initiatives;
and environment/safety requirements.
-7-
<PAGE>
Organization and Capitalization
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.
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 Three Months Ended June 30, 1998 to Three Months Ended June 30,
1997
The Partnership recognized a net loss of $7,999 for the three months
ended June 30, 1998 as compared to a net loss of $164,402 for the same period in
1997 due to the following factors.
Revenues increased by $63,364, or 8.9%, to $772,791 for the three months
ended June 30, 1998 as compared to $709,427 for the three months ended June 30,
1997 primarily due to: (1) an increase in base rent revenue from two new tenants
at the Green Valley Mall and (2) an increase in percentage rent revenue for one
major tenant at the Green Valley Mall.
Interest expense decreased by $68,435, or 16.6%, to $342,865 for the
three months ended June 30, 1998 as compared to $411,300 for the three months
ended June 30, 1997 due to a decrease of approximately 2% in the interest rate
on the Partnership's mortgage loans in 1998 compared to the interest rate on the
bonds payable in 1997. The Partnership consummated three new fixed rate first
mortgage loans in September 1997, the proceeds of which were used to redeem all
of the then outstanding bonds payable.
Depreciation and amortization expense increased by $17,994, or 12.6%, to
$160,438 for the three months ended June 30, 1998 as compared to $142,444 for
the three months ended June 30, 1997 primarily due to: (1) an increase of
$10,983 in depreciation expense caused by property improvement expenditures
throughout 1997, and (2) an increase of $7,833 in amortization expense due to
debt financing costs associated with the 1997 bond refinancing.
-8-
<PAGE>
Management and property expenses increased by $28,153, or 15.2%, to
$213,386 for the three months ended June 30, 1998 as compared to $185,233 for
the three months ended June 30, 1997 primarily due to an increase in real estate
tax expense resulting from a significant increase in the assessed value at the
Green Valley Mall in Green Valley, Arizona.
Professional fees and other expenses decreased by $75,191, or 72.5%, to
$28,516 for the three months ended June 30, 1998 as compared to $103,707 for the
three months ended June 30, 1997 due to: (1) environmental expenses incurred
during the second quarter of 1997 for a risk-based closure at a site at the Old
Orchard Shopping Center, in Valencia, California, and (2) the termination of
trustee fees of approximately $7,500 relating to the bonds which were refinanced
during September 1997.
Results of Operations
Comparison of Six Months Ended June 30, 1998 to Six Months Ended June 30, 1997
The Partnership recognized net loss of $6,450 for the six months ended
June 30, 1998 as compared to a net loss of $155,070 for the same period in 1997
due to the following factors.
Revenues decreased by $9,723, or 0.6%, to $1,513,953 for the six months
ended June 30, 1998 as compared to $1,523,676 for the six months ended June 30,
1997 due to the net effect of the following: (1) an increase in base rent
revenue from two new tenants, and an increase in percentage rent revenue for one
major tenant, both at the Green Valley Mall and (2) a decrease in reimbursed
expenses due to a decrease in billable in property expenses.
Interest expense decreased by $140,348, or 17.1%, to $682,252 for the
six months ended June 30, 1998 as compared to $822,600 for the six months ended
June 30, 1997 due to a decrease of approximately 2% in the interest rate on the
mortgage loans in 1998 compared to the interest rate on the bonds payable in
1997 which were retired with the proceeds of the mortgage loans.
Depreciation and amortization expense increased by $47,189, or 16.6%, to
$332,239 for the six months ended June 30, 1998 as compared to $285,050 for the
six months ended June 30,1997 primarily due to: (1) an increase in depreciation
expense resulting from property improvement expenditures throughout 1997, and
(2) an increase in amortization expense due to debt financing costs associated
with the 1997 bond refinancing.
Management and property expenses increased by $13,534, or 3.6%, to
$390,525 for the six months ended June 30, 1998 as compared to $376,991 for the
six months ended June 30, 1997 resulting from an increase in real estate tax
expense caused by a significant increase in the assessment at the Green Valley
Mall.
-9-
<PAGE>
Professional fees and other expenses decreased by $81,481, or 63.6%, to
$46,621 for the six months ended June 30, 1998 as compared to $128,102 for the
six months ended June 30, 1997 due to: (1) environmental expenses incurred
during the second quarter of 1997 for a risk-based closure at a site at the Old
Orchard Shopping Center and (2) the termination of trustee fees in 1998 relating
to the bonds payable which were refinanced during September 1997.
Liquidity and Capital Resources
The General Partner believes that the Partnership's expected revenue and
working capital is sufficient to meet the Partnership's current operating
requirements for the next twelve months. Nevertheless, because the cash revenues
and expenses of the Partnership will depend on future facts and circumstances
relating to the Partnership's properties, as well as market and other conditions
beyond the control of the Partnership, a possibility exists that cash flow
deficiencies may occur. Currently, a significant amount (approximately $237,000)
of the Partnership's working capital is still in the control of the holder of
the first mortgage as funds held in escrow for real estate taxes, and pending
resolution of certain circumstances.
Additionally, the Partnership anticipates paying approximately $150,000
for various property and tenant improvements during the third and fourth quarter
of 1998.
The Partnership suspended making distributions subsequent to the first
quarter of 1997 due to the cost of addressing an environmental issue identified
at the Valencia Property and payment of certain expenses relative to the
refinancing. The Partnership is anticipating resuming distributions as soon as
the Partnership's unrestricted working capital levels are adequate.
Management is not aware of any other trends, events, commitments or
uncertainties that will or are likely to materially impact the Partnership's
liquidity.
Net cash provided by operating activities of $95,829 for the six months
ended June 30, 1998 included (i) a net loss of $6,450 (ii) non-cash adjustments
of $332,239 for depreciation and amortization expense and (iii) a net change in
operating assets and liabilities of $229,960.
Net cash provided by operating activities of $129,333 for the six months
ended June 30, 1997 included (i) 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 used in investing activities of $38,018 for the six months
ended June 30, 1998 was for capital expenditures for property improvements.
-10-
<PAGE>
Net cash used in investing activities of $33,011 for the six months
ended June 30, 1997 was for capital expenditures for property improvements.
Net cash used in financing activities of $52,983 for the six months
ended June 30, 1998 included (i) principal repayments on mortgage loans payable
of $86,023 and (ii) a decrease in restricted cash of $33,040.
Net cash used in financing activities of $102,066 for the six months
ended June 30, 1997 was for cash distributions to partners.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibit is included herein:
Exhibit 27 - Financial Data Schedule Article 5 included for Electronic
Data Gathering, Analysis, and Retrieval (EDGAR) purposes only. This Schedule
contains summary financial information extracted from the balance sheets and
statements of revenues and expenses of the Partnership as of and for the six
month period ended June 30, 1998, and is qualified in its entirety by reference
to such financial statements.
-11-
<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 12, 1998 CONCORD MILESTONE PLUS, L.P.
(Registrant)
BY: CM PLUS CORPORATION
General Partner
By: /S/ Robert Mandor
Robert Mandor
Director and Vice President
By: /S/ Patrick Kirse
Patrick Kirse
Treasurer and Controller
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 262,733
<SECURITIES> 0
<RECEIVABLES> 197,452
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 26,478,998
<DEPRECIATION> 5,724,066
<TOTAL-ASSETS> 21,806,981
<CURRENT-LIABILITIES> 0
<BONDS> 16,597,551
0
0
<COMMON> 0
<OTHER-SE> 4,829,334
<TOTAL-LIABILITY-AND-EQUITY> 21,806,981
<SALES> 0
<TOTAL-REVENUES> 1,513,953
<CGS> 0
<TOTAL-COSTS> 838,151
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 682,252
<INCOME-PRETAX> (6,450)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,450)
<EPS-PRIMARY> (0.42)
<EPS-DILUTED> 0
</TABLE>
