UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 10-Q
(mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1999
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
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
BALANCE SHEETS
SEPTEMBER 30, 1999 (Unaudited) AND DECEMBER 31, 1998
ASSETS
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
Property:
<S> <C> <C>
Building and improvements, at cost $15,730,591 $ 15,630,448
Less: accumulated depreciation 6,459,439 6,017,284
----------- -----------
Building and improvements, net 9,271,152 9,613,164
Land, at cost 10,987,034 10,987,034
---------- ----------
Property, net 20,258,186 20,600,198
Cash and cash equivalents 486,710 436,256
Accounts receivable 231,853 224,272
Restricted cash 304,244 231,930
Debt financing costs, net 250,670 274,170
Prepaid expenses and other assets, net 83,514 74,779
------------- -------------
Total assets $21,615,177 $21,841,605
========== ==========
Liabilities:
Mortgage loans payable $16,376,513 $16,513,054
Accrued interest 111,436 116,110
Accrued expenses and other liabilities 320,515 299,746
Accrued expenses payable to affiliates 54,880 45,641
------------- -------------
Total liabilities 16,863,344 16,974,551
---------- ----------
Partners' capital:
General partner (75,046) (73,894)
Limited partners:
Class A Interests, 1,518,800 4,826,879 4,940,948
Class B Interests, 2,111,072 - -
----------------- ------------------
Total partners' capital 4,751,833 4,867,054
----------- -----------
Total liabilities and partners' capital $21,615,177 $21,841,605
========== ==========
See Accompanying Notes to Financial Statements
</TABLE>
-2-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF REVENUES AND EXPENSES
(Unaudited)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
September 30, 1999 September 30, 1998
Revenues:
<S> <C> <C>
Rent $604,559 $657,883
Reimbursed expenses 152,689 140,716
Interest and other income 4,896 1,802
--------- ----------
Total revenues 762,144 800,401
------- --------
Expenses:
Interest expense 342,022 345,777
Depreciation and amortization 159,181 158,370
Management and property expenses 211,894 199,035
Administrative and management fees to related party 29,987 32,087
Professional fees and other expenses 36,459 25,795
-------- ---------
Total expenses 779,543 761,064
------- --------
Net (loss) income $(17,399) $ 39,337
======= ========
Net (loss) income attributable to:
Limited partners $(17,225) $38,944
General partner (174) 393
--------- ---------
Net (loss) income $(17,399) $ 39,337
======= =======
Loss (income) per weighted average
100 Class A
Interests outstanding $ (1.14) $ 2.59
======== ========
Weighted average number of 100
Class A interests outstanding 15,188 15,188
====== ======
See Accompanying Notes to Financial Statements
</TABLE>
-3-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF REVENUES AND EXPENSES
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
September 30, 1999 September 30, 1998
Revenues:
<S> <C> <C>
Rent $1,924,426 $1,960,276
Reimbursed expenses 362,734 346,137
Interest and other income 12,276 7,941
----------- ------------
Total revenues 2,299,436 2,314,354
--------- ---------
Expenses:
Interest expense 1,017,743 1,028,029
Depreciation and amortization 474,047 490,609
Management and property expenses 620,507 589,560
Administrative and management fees to related party 107,516 100,853
Professional fees and other expenses 74,840 72,416
---------- -----------
Total expenses 2,294,653 2,281,467
--------- ---------
Net income $ 4,783 $ 32,887
========== ==========
Net income attributable to:
Limited partners $ 4,735 $32,558
General partner 48 329
----------- ------------
Net income $ 4,783 $ 32,887
========== =========
Income per weighted average
100 Class A
Interests outstanding $ 0.31 $ 2.17
=========== ==========
Weighted average number of 100
Class A interests outstanding 15,188 15,188
======== =======
See Accompanying Notes to Financial Statements
</TABLE>
-4-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
General Class A
Total Partner Interests
PARTNERS' CAPITAL (DEFICIT)
<S> <C> <C> <C>
January 1, 1999 $4,867,054 $(73,894) $4,940,948
Distributions (120,004) (1,200) (118,804)
Net income 4,783 48 4,735
----------- ---------- -----------
PARTNERS' CAPITAL (DEFICIT)
September 30, 1999 $4,751,833 $(75,046) $4,826,879
========= ======= =========
See Accompanying Notes to Financial Statements
</TABLE>
-5-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
September 30, 1999 September 30, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 4,783 $ 32,887
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 474,047 490,609
Change in operating assets and liabilities:
Increase in accounts receivable (7,581) (74,046)
Increase in prepaid expenses and
other assets, net (17,127) (37,056)
Decrease in accrued interest 6,279 (4,639)
Increase in accrued expenses
and other liabilities 9,816 18,095
Increase (decrease) in due to affiliate 9,239 (51,176)
---------- ---------
Net cash provided by operating activities 479,456 374,674
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property improvements (100,143) (66,050)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in restricted cash (72,314) (50,615)
Principal repayments on mortgage loans payable (136,541) (126,291)
Cash distributions to partners (120,004) 0
-------- -------------
Net cash used in financing activities (328,859) (176,906)
-------- --------
NET INCREASE CASH AND CASH EQUIVALENTS 50,454 131,718
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 436,256 257,905
------- --------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $486,710 $ 389,623
======= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for interest $1,024,022 $1,032,668
========= =========
See Accompanying Notes to Financial Statements
</TABLE>
-6-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
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, 1999 and 1998
are unaudited. The results of operations for the interim periods shown in this
report are not necessarily indicative of the results of operations to be
expected for the fiscal year. Certain information for 1998 has been reclassified
to conform to the 1999 presentation. These interim financial statements should
be read in conjunction with the annual financial statements and footnotes
included in the Partnership's financial statements filed on Form 10-K for the
year ended December 31, 1998.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
This Form 10-Q and documents incorporated herein by reference, if any,
contain forward-looking statements that have been made within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking statements are
based on current expectations, estimates and projections about the Partnership's
(as defined below) industry, management beliefs, and certain assumptions made by
the Partnership's management and involve known and unknown risks, uncertainties
and other factors. 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;
risks of real estate development and acquisition; governmental actions and
initiatives; and environmental and safety requirements. These statements are not
guarantees of future performance and are subject to certain risks, uncertainties
and assumptions that are difficult to predict; therefore, actual results may
differ materially from those expressed or forecasted in any such forward-looking
statements.
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.
-7-
<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 consisted of
$1,000 principal amount of Bonds and 36 Class B Interests. The Partnership
redeemed all of the outstanding Bonds as of September 30, 1997 with the proceeds
of three new fixed rate mortgage loans. 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.
Impact of Year 2000
Year 2000 compliance programs and information systems modifications were
initiated by the Partnership's affiliated management company, Milestone Property
Management, Inc. ("MPMI"), in early 1998, in an attempt to ensure that these
systems and key processes will remain functional. This objective was achieved by
modifying present systems using existing internal and external programming
resources and by installing new system hardware and software, and by monitoring
supplier, customer and other third party readiness. Such modifications were
completed by MPMI by September 1999. There have been no costs charged to the
Partnership for the Year 2000 program completed by MPMI. The Partnership does
not anticipate that the costs of any required modifications by MPMI to its
information technology or embedded technology systems will have a material
adverse effect on its financial position, results of operations or liquidity,
although there can be no assurances that this will be the case.
MPMI has contacted many of the Partnership's major customers, suppliers
and vendors to inquire about their Year 2000 compliance programs. MPMI has not
received responses from all those contacted, but those who have responded do not
indicate any problems at this time. In the event that material third parties
fail to complete their Year 2000 compliance programs successfully and on time,
the Partnership's ability to operate its business, service tenants, bill or
collect its revenue in a timely manner could be adversely affected. Although
there can be no assurance that the conversion of the Partnership's key
third-party relationships will have successful conversion programs, the General
Partner 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, although there can be no assurances that this will be the case. The
Partnership has day-to-day operational contingency plans, and the General
Partner 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, 1999 to Three Months Ended
September 30, 1998
The Partnership recognized net loss of $17,399 for three months ended
September 30, 1999 as compared to net income of $39,337 for the same period in
1998 due to the following factors:
A decrease in revenues of $38,257, or 4.8%, to $762,144 for the three
months ended September 30, 1999 as compared to $800,401 for the three months
ended September 30, 1998 primarily due to the net effect of the following: (1) a
decrease in base rent revenue primarily due to Abco, the principal anchor tenant
at the Green Valley Property, vacating during the second quarter of 1999; (2) a
decrease in recording of percentage rent due from Abco due to its vacating the
premises; (3) rent abatements for two tenants at the Green Valley Mall of
approximately $6,500 and one tenant at the Old Orchard Shopping Center of
approximately $3,000; (4) a decrease in minor tenant occupancy at the Old
Orchard Shopping Center; and (5) an increase in tenant reimbursements due to an
increase in management and property expenses.
-8-
<PAGE>
An increase in management and property expenses of $12,859, or 6.5%, to
$211,894 for the three months ended September 30, 1999 as compared to $199,035
for the three months ended September 30, 1998 primarily due to common area
expenses increasing as a result of increased minor repair and maintenance
procedures at all three properties.
A decrease in administrative and management fees to related party of
$2,100, or 6.5%, to $29,987 for the three months ended September 30, 1999 as
compared to $32,087 for the three months ended September 30, 1998 due to
management fees being properly calculated in accordance with the management
agreement based on a percentage of gross revenues rather than a percentage of
base rents and percentage rents as had been calculated prior to the fourth
quarter of 1998.
Professional fees and other expenses increased by $10,664, or 41.3%, to $36,459
for the three months ended September 30, 1999 as compared to $25,795 for the
three months ended September 30, 1998 primarily due to an increase in costs and
processing of the Federal and California Partnership tax return.
Comparison of Nine Months Ended September 30, 1999 to Nine Months Ended
September 30, 1998
The Partnership recognized net income of $4,783 for the nine months
ended September 30, 1999 as compared to net income of $32,887 for the same
period in 1998 due to the following factors:
Revenues decreased by $14,918, or 0.6%, to $2,299,436 for the nine
months ended September 30, 1999 as compared to $2,314,354 for the nine months
ended September 30, 1998 primarily due to the net effect of the following: (1) a
decrease in base rent revenue primarily due to Abco vacating during the second
quarter of 1999; (2) a decrease in recording of percentage rent due from Abco
due to its vacating of the premises and (3) an increase in reimbursed expenses
due to an increase in management and property expenses.
A decrease in depreciation and amortization expense of $16,562, or 3.4%,
to $474,047 for the nine months ended September 30, 1999 as compared to $490,609
for the nine months ended September 30, 1998 primarily due to certain assets
reaching the end of their depreciable lives.
An increase in management and property expenses of $30,947, or 5.2%, to
$620,507 for the nine months ended September 30, 1999 as compared to $589,560
for the nine months ended September 30, 1998 primarily due to: (1) common area
expenses increasing as a result of increased minor repair and maintenance
procedures at all three properties during the first three quarters of 1999 and
(2) an increase in leasing commissions at the Searcy Property.
An increase in administrative and management fees to related party of
$6,663, or 6.6%, to $107,516 for the nine months ended September 30, 1999 as
compared to $100,853 for the nine months ended September 30, 1998 due to
management fees being properly calculated in accordance with the management
agreement based on a percentage of gross revenues rather than a percentage of
base rents and percentage rents as had been calculated prior to the fourth
quarter of 1998.
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 remainder of the year. 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.
-9-
<PAGE>
During February 1999, the Partnership received notice from Abco, the
principal anchor tenant at the Green Valley Property, that Abco would not be
renewing its lease at the expiration of its current term on July 31, 1999. Abco
vacated its space in May, 1999. No replacement tenant has yet been identified,
however, the Partnership has retained a large regional real estate brokerage
firm to help market the space. The brokerage firm has shown the space to several
qualified prospective tenants. Many of the tenants at the Green Valley Property
have short term leases. It is not possible to determine the long-term effects of
the failure of Abco to renew its lease. In the short term, however, the vacancy
of the Abco space could have a material adverse effect on the results of
operations at the Green Valley Property by impairing the Partnership's ability
to retain other tenants or to renew their leases on favorable terms, by reducing
traffic at the Property and negatively affecting percentage rents. In addition,
the Partnership will incur expenses in leasing the space vacated by Abco to a
new tenant, and the Partnership cannot predict how soon such space will be
leased and the terms of such new lease. Currently, approximately $150,000 of the
Partnership's working capital is being held in escrow in connection with the
refinancing by the holder of the first mortgage on the Green Valley Property
(the "Lender") pending the resolution of the Abco vacancy.
The Partnership periodically makes distributions to its owners. A 1998
fourth quarter distribution of $50,001 was paid during February 1999. Also, a
first quarter distribution of $50,001 was paid during May 1999 and a second
quarter distribution of $20,002 was paid during August 1999. The Partnership
will evaluate the amount of future distributions, if any, on a quarter by
quarter basis. No assurances can be given as to the timing or amount of any
future distributions by the Partnership.
The cash on hand at September 30, 1999 may be used to fund (a) costs
associated with releasing the Abco space should the costs of releasing exceed
the $150,000 already held in escrow by the Lender for this purpose and (b) other
general Partnership purposes.
Management is not aware of any other trends, events, commitments or
uncertainties that are likely to materially impact the Partnership's liquidity.
Net cash provided by operating activities of $479,456 for the nine
months ended September 30, 1999 included (i) net income of $4,783, (ii) non-cash
adjustments of $474,047 for depreciation and amortization expense and (iii) a
net change in operating assets and liabilities of $626.
Net cash provided by operating activities of $374,674 for the nine
months ended September 30, 1998 included (i) 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 used in investing activities of $100,143 for the nine months
ended September 30, 1999 was for capital expenditures for property improvements.
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 financing activities of $328,859 for the nine months
ended September 30, 1999 include (i) principal repayments on mortgage loans
payable of $136,541, (ii) an increase in restricted cash of $72,314, and (iii)
cash distributions to partners of $120,004.
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) a decrease in restricted cash of $50,615.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Partnership is not subject to any material market risk from
fluctuations in interest rates, foreign currency exchange rates, commodity
prices or equity prices, and does not engage in any hedging transactions with
respect to such risks.
-10-
<PAGE>
PART II - OTHER INFORMATION
Item 6. Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule is included.
(b) No reports on form 8-K were filed during the quarter covered by this
Report.
-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: November 10, 1999 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
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 486,710
<SECURITIES> 0
<RECEIVABLES> 231,853
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 26,717,625
<DEPRECIATION> 6,459,439
<TOTAL-ASSETS> 21,615,177
<CURRENT-LIABILITIES> 0
<BONDS> 16,376,513
0
0
<COMMON> 0
<OTHER-SE> 4,751,833
<TOTAL-LIABILITY-AND-EQUITY> 21,615,177
<SALES> 0
<TOTAL-REVENUES> 2,299,436
<CGS> 0
<TOTAL-COSTS> 1,276,910
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,017,743
<INCOME-PRETAX> 4,783
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,783
<EPS-BASIC> 0.13
<EPS-DILUTED> 0
</TABLE>
