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: March 31, 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
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
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
MARCH 31, 1999 (Unaudited) AND DECEMBER 31, 1998
ASSETS
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
Property, at cost
<S> <C> <C>
Building and improvements $15,651,998 $15,630,448
Less: accumulated depreciation 6,172,498 6,017,284
----------- -----------
Building and improvements, net 9,479,500 9,613,164
Land 10,987,034 10,987,034
---------- ----------
Total property 20,466,534 20,600,198
Cash and cash equivalents 427,876 436,256
Accounts receivable 204,761 224,272
Restricted cash 320,059 231,930
Debt financing costs, net 266,336 274,170
Prepaid expenses and other assets, net 59,072 74,779
------------- -------------
Total assets $21,744,638 $21,841,605
========== ==========
Liabilities:
Mortgage loans payable $16,463,577 $16,513,054
Accrued interest 115,762 116,110
Accrued expenses and other liabilities 331,097 299,746
Accrued expenses payable to affiliates 15,841 45,641
------------- -------------
Total liabilities 16,926,277 16,974,551
---------- ----------
Commitments and Contingencies
Partners' capital
General partner (74,381) (73,894)
Limited partners:
Class A Interests, 1,518,800 4,892,742 4,940,948
Class B Interests, 2,111,072 - -
------------------ ------------------
Total partners' capital 4,818,361 4,867,054
----------- -----------
Total liabilities and partners' capital $21,744,638 $21,841,605
========== ==========
</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 MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
March 31,1999 March 31, 1998
Revenues:
<S> <C> <C>
Rent $648,090 $628,805
Reimbursed expenses 118,466 109,695
Interest and other income 3,633 2,662
------------ -----------
Total revenues 770,189 741,162
---------- ---------
Expenses:
Interest expense 336,495 339,387
Depreciation and amortization 165,844 171,801
Management and property expenses 210,175 177,139
Administrative and management fees to related party 38,774 33,181
Professional fees and other expenses 17,593 18,105
---------- ----------
Total expenses 768,881 739,613
--------- ---------
Net income $ 1,308 $ 1,549
========== ==========
Net income attributable to:
Limited partners $1,295 $1,534
General partner 13 15
----------- ------------
Net income $ 1,308 $ 1,549
======== =========
Income per weighted average
Limited Partnership 100 Class A
Interests outstanding $ .09 $ .10
========== ===========
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 CHANGES IN PARTNERS' CAPITAL
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
General Class A
Total Partner Interests
PARTNERS' CAPITAL (DEFICIT)
<S> <C> <C> <C> <C>
January 1, 1999 $4,867,054 $(73,894) $4,940,948
Distributions (50,001) (500) (49,501)
Net Income 1,308 13 1,295
------------ ---------- ------------
PARTNERS' CAPITAL (DEFICIT)
March 31, 1999 $4,818,361 $(74,381) $4,892,742
========= ======= =========
</TABLE>
See Accompanying Notes to Financial Statements
-4-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
March 31,1999 March 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $1,308 $1,549
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 165,844 171,801
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable 19,511 (25,993)
Decrease (increase) in prepaid expenses and
other assets, net 12,911 (17,244)
Decrease in accrued interest (348) (323)
Increase (decrease) in accrued expenses
and other liabilities 31,351 (4,762)
Decrease in due to affiliate (29,800) (59,333)
--------- --------
Net cash provided by operating activities 200,777 65,695
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property improvements (21,550) (15,741)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in restricted cash (88,129) (37,110)
Principal repayments on mortgage loans payable (49,477) (46,610)
Cash distributions to partners (50,001) 0
--------- -------------
Net cash used in financing activities (187,607) (83,720)
NET DECREASE CASH AND CASH EQUIVALENTS (8,380) (33,766)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 436,256 257,905
-------- --------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 427,876 $ 224,139
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for interest $ 336,843 $ 339,710
========= ========
</TABLE>
See Accompanying Notes to Financial Statements
-5-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 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 March 31, 1999 and 1998 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 1998 has been reclassified to conform to the 1999 presentation. These
financial statements should be read in conjunction with the financial statements
and footnotes included thereto 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.
-6-
<PAGE>
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.
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 is expected to
be achieved either by modifying present systems using existing internal and
external programming resources or by installing new system hardware and
software, and by monitoring supplier, customer and other third party readiness.
Such modifications are expected to be completed by MPMI by September 1999. There
have been no costs charged to the Partnership for the Year 2000 program being
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 MPMI or 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 systems will
be successful or that 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.
-7-
<PAGE>
Results of Operations
Comparison of Three Months Ended March 31, 1999 to Three Months Ended
March 31, 1998
The Partnership recognized net income of $1,308 for the three months
ended March 31, 1999 as compared to income of $1,549 for the same period in 1998
due to the following factors:
An increase in revenues of $29,027, or 3.9%, to $770,189 for the three
months ended March 31, 1999 as compared to $741,162 for the three months ended
March 31, 1998 primarily due to the following: (1) an increase in base rent
revenue at the Valencia Property due to one new tenant, and at the Green Valley
Property due to a net gain of three new tenants, and (2) an increase in
reimbursed expenses due to an increase in management and property expenses.
An increase in management and property expenses of $33,036, or 18.6%, to
$210,175 for the three months ended March 31, 1999 as compared to $177,139 for
the three months ended March 31, 1998 primarily due to the following: (1) common
area expenses increasing as a result of increased minor repair and maintenance
procedures at all three properties (2) an increase in insurance expense due to
an additional policy required at the Valencia Property for earthquake coverage
and (3) an increase in real estate taxes at the Green Valley Property.
A decrease in depreciation and amortization expense of $5,957, or 3.5%,
to $165,844 for the three months ended March 31, 1999 as compared to $171,801
for the three months ended March 31,1998 primarily due to certain assets
reaching the end of their depreciable lives.
An increase in administrative and management fees to related party of
$5,593, or 16.9%, to $38,774 for the three months ended March 31, 1999 as
compared to $33,181 for the three months ended March 31, 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. The Partnership is currently in the process of
completing several property improvements including parking lot repair, HVAC
upgrades and a tenant buildout at the Searcy Property. The total cost is
approximately $55,000 which will be paid during the second quarter of 1999.
-8-
<PAGE>
The Partnership resumed making distributions commencing with the fourth
quarter of 1998. A distribution of $50,001 was paid during February 1999. A
distribution subsequent to the first quarter of 1999 of $50,000 will be paid
during May 1999. The Partnership had 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 did not resume distributions until
unrestricted working capital levels were deemed adequate.
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. No
replacement tenant has yet been identified, however, the Partnership has
retained a large regional real estate brokerage firm to help market the space.
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 and 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 forthcoming Abco vacancy.
The cash on hand at March 31, 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 (b) quarterly
distributions to the partners depending on distributable cash flows and certain
other conditions, and (c) other general Partnership purposes.
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 $200,777 for the three
months ended March 31, 1999 included (i) net income of $1,308, (ii) non-cash
adjustments of $165,844 for depreciation and amortization expense and (iii) a
net change in operating assets and liabilities of $33,625.
Net cash provided by operating activities of $65,695 for the three
months ended March 31, 1998 included (i) a net income of $1,549 (ii) non-cash
adjustments of $171,801 for depreciation and amortization expense and (iii) a
net change in operating assets and liabilities of $107,655.
Net cash used in investing activities of $21,550 for the three months
ended March 31, 1999 was for capital expenditures for property improvements.
Net cash used in investing activities of $15,741 for the three months
ended March 31, 1998 was for capital expenditures for property improvements.
-9-
<PAGE>
Net cash used in financing activities of $187,607 for the three months
ended March 31, 1999 include (i) principal repayments on mortgage loans payable
of $49,477, (ii) an increase in restricted cash of $88,129, and (iii) cash
distributions to partners of $50,001.
Net cash used in financing activities of $83,720 for the three months
ended March 31, 1998 included (i) principal repayments on mortgage loans payable
of $46,610 and (ii) an increase in restricted cash of $37,110.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Partnership is not subject to any material market risk from
fluctuations on interest rates, foreign currency exchange rates, commodity
prices or equity prices, and does not engage in any hedging transactions with
respect to such risks.
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.
-10-
<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: May 13, 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
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 427,876
<SECURITIES> 0
<RECEIVABLES> 204,761
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 26,639,032
<DEPRECIATION> 6,172,498
<TOTAL-ASSETS> 21,744,638
<CURRENT-LIABILITIES> 0
<BONDS> 16,463,577
0
0
<COMMON> 0
<OTHER-SE> 4,818,361
<TOTAL-LIABILITY-AND-EQUITY> 21,744,638
<SALES> 0
<TOTAL-REVENUES> 770,189
<CGS> 0
<TOTAL-COSTS> 432,386
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 336,495
<INCOME-PRETAX> 1,308
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,308
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0
</TABLE>
