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, 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
SEPTEMBER 30, 1998 (Unaudited) AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
ASSETS
September 30, 1998 December 31, 1997
Property, at cost
<S> <C> <C>
Building and improvements .......................................................$ 15,519,996 $ 15,453,945
Less: accumulated depreciation .................................................. 5,871,806 5,413,087
-------------- --------------
Building and improvements, net .................................................. 9,648,190 10,040,858
Land ............................................................................ 10,987,034 10,987,034
-------------- --------------
Total property .................................................................. 20,635,224 21,027,892
Cash and cash equivalents ........................................................... 389,623 257,905
Accounts receivable ................................................................. 197,198 123,152
Restricted cash ..................................................................... 320,510 269,895
Prepaid expenses and other assets, net .............................................. 96,182 67,516
Debt financing costs, net ........................................................... 282,003 305,504
-------------- --------------
Total assets ..................................................................$ 21,920,740 $ 22,051,864
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loans payable ..............................................................$ 16,557,283 $ 16,683,574
Accrued interest .................................................................... 112,669 117,308
Accrued expenses and other liabilities .............................................. 359,358 341,263
Accrued expenses payable to affiliates .............................................. 22,759 73,935
-------------- --------------
Total liabilities ............................................................... 17,052,069 17,216,080
-------------- --------------
Partners' capital:
General partner ..................................................................... (73,878) (74,207)
Limited partners:
Class A Interests, 1,518,800 .................................................... 4,942,549 4,909,991
-------------- --------------
Total partners' capital ......................................................... 4,868,671 4,835,784
-------------- --------------
Total liabilities and partners' capital .........................................$ 21,920,740 $ 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 SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
September 30, 1998 September 30, 1997
Revenues:
<S> <C> <C>
Rent ...............................................................................$ 657,883 $ 661,118
Reimbursed expenses ................................................................ 140,716 129,401
Interest and other income .......................................................... 1,802 7,835
--------------- ---------------
Total revenues ................................................................. 800,401 798,354
Expenses:
Interest expense ................................................................... 345,777 430,341
Depreciation and amortization ...................................................... 158,370 141,063
Management and property expenses ................................................... 199,035 221,148
Administrative and management fees
to related party ............................................................... 32,087 28,195
Professional fees and other expenses ............................................... 25,795 29,035
--------------- ---------------
Total expenses ................................................................. 761,064 849,782
--------------- ---------------
Net income (loss) ..................................................................$ 39,337 $ (51,428)
=============== ===============
Net income (loss) attributable to:
Limited partners ...............................................................$ 38,944 $ (50,914)
General partner ................................................................ 393 (514)
--------------- ---------------
Net income (loss) ..................................................................$ 39,337 $ (51,428)
=============== ===============
Income (loss) per weighted average
Limited Partnership 100 Class A
Interests outstanding ..............................................................$ 2.59 $ (3.39)
=============== ===============
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 NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
September 30, 1998 September 30, 1997
Revenues:
<S> <C> <C>
Rent ...............................................................................$ 1,960,276 $ 1,930,091
Reimbursed expenses ................................................................ 346,137 368,632
Interest and other income .......................................................... 7,941 23,307
--------------- ---------------
Total revenues ................................................................. 2,314,354 2,322,030
--------------- ---------------
Expenses:
Interest expense ................................................................... 1,028,029 1,252,941
Depreciation and amortization ...................................................... 490,609 426,113
Management and property expenses ................................................... 589,560 598,139
Administrative and management fees
to related party ............................................................... 100,853 100,447
Professional fees and other expenses ............................................... 72,416 150,887
--------------- ---------------
Total expenses ................................................................. 2,281,467 2,528,527
--------------- ---------------
Net income (loss) ..................................................................$ 32,887 $ (206,497)
=============== ===============
Net income (loss) attributable to:
Limited partners ...............................................................$ 32,558 $ (204,432)
General partner ................................................................ 329 (2,065)
--------------- ---------------
Net income (loss) ..................................................................$ 32,887 $ (206,497)
=============== ===============
Income (loss) per weighted average
Limited Partnership 100 Class A
Interests outstanding ..............................................................$ 2.17 $ (13.60)
=============== ===============
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 NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
General Class A
Total Partner Interests
PARTNERS' CAPITAL (DEFICIT)
<S> <C> <C> <C>
January 1, 1998 $4,835,784 $(74,207) $4,909,991
Distributions ----- ----- -----
Net income 32,887 329 32,558
----------- --------- -----------
PARTNERS' CAPITAL (DEFICIT)
September 30, 1998 $4,868,671 $(73,878) $4,942,549
========= ======= =========
</TABLE>
See Accompanying Notes to Financial Statements
-5-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
September 30, 1998 September 30, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) ..................................................................$ 32,887 $ (206,497)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization .............................................. 490,609 426,113
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable ................................. (74,046) 29,451
Increase in prepaid expenses and other assets, net ......................... (37,056) (68,626)
Decrease in accrued interest ............................................... (4,639) (137,100)
Increase in accrued expenses and other liabilities ......................... 18,095 301,842
(Decrease) increase in accrued expenses payable
to affiliate .......................................................... (51,176) 68,015
--------------- ---------------
Net cash provided by operating activities .......................................... 374,674 413,198
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property improvements ...................................................... (66,050) (90,621)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption on bonds payable ................................................ 0 (16,452,000)
Proceeds from mortgages payable ............................................ 0 16,710,000
Debt financing costs ....................................................... 0 (308,228)
Increase in restricted cash ................................................ (50,615) (401,835)
Principal repayments on mortgage loans payable ............................. (126,291) 0
Cash distributions to partners ............................................. 0 (101,740)
--------------- ---------------
Net cash used in financing activities .............................................. (176,906) (553,803)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS ................................................................ 131,718 (231,226)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD ........................................................ 257,905 326,120
--------------- ---------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD ..............................................................$ 389,623 $ 94,894
=============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for interest ...........................................$ 1,032,668 $ 1,386,252
=============== ===============
</TABLE>
See Accompanying Notes to Financial Statements
-6-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 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 September 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;
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 consisted 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. The Bonds were redeemed during September 1997.
Recent Developments
On October 28, 1998, the Partnership dismissed the accounting firm of
Deloitte & Touche LLP as the Partnership's independent auditor to audit the
Partnership's financial statements. The dismissal of Deloitte & Touche LLP was
not the result of any disagreements between the Partnership and Deloitte &
Touche on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure. On November 2, 1998, the Partnership
retained the accounting firm of Ahearn, Jasco + Company, P.A. as its new
independent auditor to audit the Partnership's financial statements for the
fiscal year ending December 31, 1998. The decision to change accounting firms as
the Partnership's independent auditor to audit the Partnership's financial
statements was approved by the Audit Committee of the Board of Directors of CM
Plus Corporation, General Partner of the Partnership, and reported on the
Partnership's Form 8-K dated October 28, 1998.
Year 2000 Issues
Year 2000 compliance programs and information systems modifications were
initiated by the Partnership in early 1998 in an attempt to ensure that these
systems and key processes will remain functional. This objective is expected to
be achieved either by modifying present systems using existing internal and
external programming resources or by installing new systems, and by monitoring
supplier and other third-party interfaces. Review of the systems affecting the
Partnership and its properties is progressing. The costs of Year 2000 program to
date have not been material, and the Partnership does not anticipate that the
costs of any required modifications to its information technology or embedded
technology systems will have a material effect on its financial position,
results of operations or liquidity.
-8-
<PAGE>
In the event that the Partnership or material third parties fail to
complete their Year 2000 compliance programs successfully and on time, the
Partnership's ability to operate its properties or to bill or collect its
revenues in a timely manner could be adversely affected. Management does not
expect that any such failure would have a material adverse effect on the
financial position, results of operations or liquidity of the Partnership. The
Partnership has day-to-day operational contingency plans, and management is in
the process of updating these plans for possible Year 2000 specific operational
requirements.
Results of Operations
Comparison of Three Months Ended September 30, 1998 to Three Months Ended
September 30, 1997
The Partnership recognized a net income of $39,337 for the three months
ended September 30, 1998 as compared to a net loss of $51,428 for the same
period in 1997 due to the following factors.
Revenues increased by $2,047, or 0.3%, to $800,401 for the three months
ended September 30, 1998 as compared to $798,354 for the three months ended
September 30, 1997 primarily due to an increase in reimbursed expenses resulting
from an increase in billable property expenses.
Interest expense decreased by $84,564, or 19.7%, to $345,777 for the
three months ended September 30, 1998 as compared to $430,341 for the three
months ended September 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 $17,307, or 12.3%, to
$158,370 for the three months ended September 30, 1998 as compared to $141,063
for the three months ended September 30, 1997 primarily due to: (1) an increase
in depreciation expense caused by property improvement expenditures throughout
1997 and 1998, and (2) an increase in amortization expense due to debt financing
costs associated with the 1997 bond refinancing.
Management and property expenses decreased by $22,113, or 10.0%, to
$199,035 for the three months ended September 30, 1998 as compared to $221,148
for the three months ended September 30, 1997 primarily due to: (1) a decrease
in common area expenses due to cost savings efforts by management, and (2) the
effects of real estate tax expense on the three months ended September 30, 1998.
-9-
<PAGE>
Results of Operations
Comparison of Nine Months Ended September 30, 1998 to Nine Months Ended
September 30, 1997
The Partnership recognized net income of $32,887 for the nine months
ended September 30, 1998 as compared to a net loss of $206,497 for the same
period in 1997 due to the following factors.
Revenues decreased by $7,676, or 0.3%, to $2,314,354 for the nine months
ended September 30, 1998 as compared to $2,322,030 for the nine months ended
September 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 management and property expenses in
1998.
Interest expense decreased by $224,912, or 17.9%, to $1,028,029 for the
nine months ended September 30, 1998 as compared to $1,252,941 for the nine
months ended September 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 $64,496, or 15.1%, to
$490,609 for the nine months ended September 30, 1998 as compared to $426,113
for the nine months ended September 30,1997 primarily due to: (1) an increase in
depreciation expense resulting from property improvement expenditures throughout
1997 and 1998, and (2) an increase in amortization expense due to debt financing
costs associated with the 1997 bond refinancing.
Management and property expenses decreased by $8,579, or 1.4%, to
$589,560 for the nine months ended September 30, 1998 as compared to $598,139
for the nine months ended September 30, 1997 primarily due to a decrease in
common area expenses due to cost savings efforts by management.
Professional fees and other expenses decreased by $78,471, or 52.0%, to
$72,416 for the nine months ended September 30, 1998 as compared to $150,887 for
the nine months ended September 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.
-10-
<PAGE>
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 $320,000)
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 is in the process of completing various
property and tenant improvements which are expected to cost approximately
$130,000 and be paid during the 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. Additionally, during 1998, the Partnership is incurring significant
capital costs relating to parking lot repairs, HVAC, tenant improvements and
leasing costs. 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 $374,674 for the nine
months ended September 30, 1998 included (i) a net income of $32,887 (ii)
non-cash adjustments of $490,609 for depreciation and amortization expense and
(iii) a net change in operating assets and liabilities of $148,822.
Net cash provided by operating activities of $413,198 for the nine
months ended September 30, 1997 included (i) net loss of $206,497, (ii) non-cash
adjustments of $426,113 for depreciation and amortization expense and (iii) a
net change in operating assets and liabilities of $193,582.
Net cash used in investing activities of $66,050 for the nine months
ended September 30, 1998 was for capital expenditures for property improvements.
Net cash used in investing activities of $90,621 for the nine months
ended September 30, 1997 was for capital expenditures for property improvements.
-11-
<PAGE>
Net cash used in financing activities of $176,906 for the nine months
ended September 30, 1998 included (i) principal repayments on mortgage loans
payable of $126,291 and (ii) an increase in restricted cash of $50,615.
Net cash used in financing activities of $553,803 for the nine months
ended September 30, 1997 included (i) redemption of Bonds payable of
$16,452,000, (ii) funds held in escrow of $401,835, (iii) debt financing costs
of $308,228, (iv) proceeds from mortgages payable of $16,710,000 and (v) cash
distributions to partners of $101,740.
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 nine
month period ended September 30, 1998, and is qualified in its entirety by
reference to such financial statements.
-12-
<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: November 13, 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
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 389,623
<SECURITIES> 0
<RECEIVABLES> 197,198
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 26,507,030
<DEPRECIATION> 5,871,806
<TOTAL-ASSETS> 21,920,740
<CURRENT-LIABILITIES> 0
<BONDS> 16,557,283
0
0
<COMMON> 0
<OTHER-SE> 4,868,671
<TOTAL-LIABILITY-AND-EQUITY> 21,920,740
<SALES> 0
<TOTAL-REVENUES> 2,314,354
<CGS> 0
<TOTAL-COSTS> 1,253,438
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,028,029
<INCOME-PRETAX> 32,887
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,887
<EPS-PRIMARY> 2.17
<EPS-DILUTED> 0
</TABLE>
