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, 1994
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: 1-9419
SHOPCO LAUREL CENTRE, L.P. AND CONSOLIDATED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 13-3392074
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
3 World Financial Center, 29th Floor, New York, NY 10285
(Address of principal executive offices) (Zip code)
(212) 526-3237
(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
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1994 1993
Assets
Real estate, at cost:
Land $ 5,304,011 $ 5,304,011
Building 59,985,674 59,983,624
Improvements 2,865,613 2,818,627
---------- ----------
68,155,298 68,106,262
Less accumulated depreciation
and amortization (11,253,815) (10,346,073)
---------- ----------
56,901,483 57,760,189
Cash 9,583,338 7,685,010
Accounts receivable, net of allowance
of $204,944 in 1994 and $121,721 in 1993 527,194 580,407
Deferred charges and organization costs, net of
accumulated amortization of $375,454 in 1994
and $353,068 in 1993 129,997 135,301
Prepaid expenses and other assets 0 527,922
---------- ----------
Total Assets $ 67,142,012 $ 66,688,829
========== ==========
Liabilities, Minority Interest and
Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 125,078 $ 283,561
Zero coupon first mortgage note payable 46,102,339 43,868,206
Second mortgage note payable 2,000,000 2,000,000
Second mortgage note accrued interest payable 19,167 19,167
Due to affiliates 7,125 9,825
Security deposits payable 12,133 12,133
Deferred income 721,116 788,766
Distributions payable 588,384 588,384
---------- ----------
Total Liabilities 49,575,342 47,570,042
Minority interest (497,692) (471,106)
Partners' Capital:
General Partner 957,297 972,553
Limited Partners
(4,660,000 limited partnership units
authorized, issued and outstanding) 17,107,065 18,617,340
---------- ----------
Total Partners' Capital 18,064,362 19,589,893
---------- ----------
Total Liabilities, Minority Interest
and Partners' Capital $ 67,142,012 $ 66,688,829
========== ==========
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Six months ended
June 30, June 30,
1994 1993 1994 1993
Income
Rental income $ 1,308,585 $ 1,295,464 $ 2,642,661 $ 2,501,594
Escalation income 1,197,970 1,259,833 2,509,618 2,405,886
Miscellaneous income 54,261 87,548 132,467 152,513
Interest income 49,617 37,500 101,597 67,774
--------- --------- --------- ---------
Total Income 2,610,433 2,680,345 5,386,343 5,127,767
Expenses
Interest expense 1,196,270 1,088,433 2,349,133 2,137,569
Property operating expenses 968,288 811,586 1,837,393 1,541,378
Depreciation and amortization 465,821 457,749 932,435 914,686
Real estate taxes 261,344 264,002 522,688 528,003
General and administrative 56,006 41,249 96,027 90,443
--------- --------- --------- ---------
Total Expenses 2,947,729 2,663,019 5,737,676 5,212,079
Income (loss) before minority
interest (337,296) 17,326 (351,333) (84,312)
Minority interest 3,068 (601) 2,570 (64)
------- ------ ------- ------
Net Income (Loss) $ (334,228) $ 16,725 $ (348,763) $ (84,376)
======= ====== ======= ======
Net Income (Loss) Allocated:
To the General Partner $ (3,342) $ 167 $ (3,488) $ (844)
To the Limited Partners (330,886) 16,558 (345,275) (83,532)
------- ------ ------- ------
$ (334,228) $ 16,725 $ (348,763) $ (84,376)
======= ====== ======= ======
Per limited partnership unit
(4,660,000 outstanding) $(.07) $(.00) $(.07) $(.02)
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
For the six months ended June 30, 1994
Limited General Total
Partners' Partner's Partners'
Capital Capital Capital
Balance at December 31, 1993 $ 18,617,340 $ 972,553 $ 19,589,893
Net loss (345,275) (3,488) (348,763)
Distributions (1,165,000) (11,768) (1,176,768)
--------- ------ ---------
Balance at June 30, 1994 $ 17,107,065 $ 957,297 $ 18,064,362
========== ======= ==========
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1994 and 1993
1994 1993
Cash Flows from Operating Activities:
Net loss $ (348,763) $ (84,376)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 932,435 914,686
Increase in interest on zero coupon
mortgage payable 2,234,133 2,022,569
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Accounts receivable 53,213 (31,314)
Deferred charges (17,082) (4,125)
Prepaid expenses and other assets 527,922 529,988
Accounts payable and accrued expenses (158,483) (107,245)
Due to affiliates (2,700) 1,800
Security deposits payable 0 2,500
Deferred income (67,650) (83,096)
Minority interest (26,586) (28,033)
--------- ---------
Net cash provided by operating activities 3,126,439 3,133,354
Cash Flows from Investing Activities:
Real estate additions and improvements (51,343) (167,401)
Cash held in escrow 0 67,347
------ -------
Net cash used for investing activities (51,343) (100,054)
Cash Flows from Financing Activities:
Cash distributions (1,176,768) (1,176,768)
--------- ---------
Net cash used for financing activities (1,176,768) (1,176,768)
Net increase in cash 1,898,328 1,856,532
Cash at beginning of period 7,685,010 4,761,412
--------- ---------
Cash at end of period $ 9,583,338 $ 6,617,944
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 115,000 $ 115,000
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1993 audited financial statements
within Form 10-K.
The unaudited consolidated financial statements include all adjustments
consisting of only normal recurring accruals which are, in the opinion of
management, necessary to present a fair statement of financial position as of
June 30, 1994 and the results of operations, changes in partners' capital, and
cash flows for the six months then ended. Results of operations for the period
are not necessarily indicative of the results to be expected for the full year.
No significant events have occurred subsequent to fiscal year 1993, and no
material contingencies exist which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Part l, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
- - -------------------------------
At June 30, 1994, the Partnership had cash totalling $9,583,338 which
represents a $1,898,328 increase from the December 31, 1993 balance of
$7,685,010. The increase is primarily a result of cash provided by operating
activities which exceeded cash distributions to limited partners and
expenditures for property improvements. On or about August 15, 1994, the
Partnership will pay a second quarter cash distribution of $.125 per Unit.
Based upon the General Partner's current assessment of the Partnership's needs
in the near term, the General Partner expects to continue to build cash
reserves; however, cash distribution levels are reviewed by the General Partner
on a quarterly basis.
Due to the current limited availability of financing for real estate projects
and substantially more stringent underwriting criteria being applied when
financing is available, a primary focus of the Partnership is its efforts to
address current and future capital requirements. The Partnership's two
mortgage loans mature on October 15, 1996, at which time the Partnership will
be obligated to pay the lenders approximately $59.9 million, including interest
on its zero coupon first mortgage note. During 1993, Kemper sold its
participating interest in the loans to CBA Conduit, Inc., which placed the
loans into a pool of mortgages to be held by a real estate mortgage investment
conduit. Although the terms of these loans have not changed, this sale may
adversely affect the Partnership's ability to refinance the loans at maturity.
The ability of the Partnership to obtain refinancing of its current mortgages
in whole or in part, or, as an alternative, to find a purchaser for the Mall,
may a lso be affected by general economic conditions.
Additionally, the General Partner will focus on strategies intended to maintain
the long-term viability of the center's anchor tenant mix. While the center's
anchor tenant stores continue to register respectable sales performances, their
operating covenants begin to expire in 1994, although their lease agreements do
not begin to expire until 2009. Thereafter, the Partnership's ability to
retain these tenants at the center may depend upon continued efforts to upgrade
the Mall to ensure that anchor tenant sales levels do not diminish.
Prepaid expenses and other assets decreased from $527,922 at December 31, 1993
to $0 at June 30, 1994 due to the recognition of real estate tax expense for
the period ended June 30, 1994 which was prepaid at December 31, 1993.
Accounts payable and accrued expenses decreased from $283,561 at December 31,
1993 to $125,078 at June 30, 1994. The decrease primarily reflects the payment
of legal and utility expenses which were accrued as of year-end 1993. The
decrease also reflects differences in the accrual of certain partnership annual
expenses between 1994 and 1993.
The zero coupon first mortgage note payable increased $2,234,133 from December
31, 1993 to $46,102,339 at June 30, 1994, due to the accrual of interest on the
Zero Coupon Loan.
Results of Operations
- - ---------------------
Net cash flow from operating activities totaled $3,126,439 for the six months
ended June 30, 1994, largely unchanged from $3,133,354 for the comparable
period in 1993.
For the three and six months ended June 30, 1994, the Partnership reported a
net loss of $334,228 and $348,763, respectively, compared with net income of
$16,725 and net loss of $84,376 for the three and six months ended June 30,
1993. The increased net loss in 1994 is primarily the result of increases in
interest and property operating expenses.
Rental income totalled $1,308,585 and $2,642,661, respectively, for the three
and six months ended June 30, 1994 as compared to $1,295,464 and $2,501,594,
respectively, for the three and six months ended June 30, 1993. The increases
are primarily attributable to an increase in base rents due to a change in
tenant mix and the absence of free rent concessions which existed for certain
tenants in 1993. Escalation income for the three and six months ended June 30,
1994 totalled $1,197,970 and $2,509,618 respectively, as compared with
$1,259,833 and $2,405,886 for the comparable periods in 1993. Escalation
income represents billings to tenants for their proportional share of common
area maintenance, operating and real estate tax expenses. The increase for the
six month period is primarily due to an increase in property operating costs
and temporary tenant HVAC income.
Total expenses for the three and six months ended June 30, 1994 were $2,947,729
and $5,737,676, respectively, as compared to $2,663,019 and $5,212,079 for the
corresponding periods in 1993. The increase is primarily due to higher
interest and property operating expense. Interest expense increased for both
the three and six month periods, reflecting the compounding of interest on the
Zero Coupon Loan. Property operating expense also increased for both the three
and six month periods due primarily to increases in snow removal costs,
association and professional fees and reserves for receivables from three
former tenants deemed uncollectible.
Mall tenant sales (exclusive of anchor tenants) for the five months ended May
31, 1994 were $21,396,000, largely unchanged from $21,561,000 in the comparable
period in 1993. Sales for mature tenants (exclusive of anchor tenants) who
operated at the Mall for each of the last two years were $19,830,000, down 2%
from 1993 levels. The General Partner attributes the decrease to a decline in
occupancy at the Mall and a nationwide decline in consumer spending on
softgoods, particularly apparel,a trend experienced by retailers across the
country. At June 30, 1994 and 1993, the Mall was 95.2% and 94.1% occupied,
respectively, exclusive of anchor tenants.
PART II OTHER INFORMATION
Items 1-4 Not applicable
Item 5 Other Information
Effective May 20, 1994, American Express Company ("American
Express") distributed to holders of record of American Express,
shares of Lehman Brothers Holdings Inc. ("Lehman Brothers")
common stock. As a result of this transaction, the
Partnership's General Partner is no longer an affiliate of
American Express. This change is not expected to have any
impact on the Partnership.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter ended June 30, 1994.
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.
SHOPCO LAUREL CENTRE, L.P.
BY: LAUREL CENTRE INC.
General Partner
Date: August 12, 1994
BY: /S/ Paul L. Abbott
-------------------------
Name: Paul L. Abbott
Title: Director, President, and
Chief Executive Officer
Date: August 12, 1994
BY: /S/ Robert J. Hellman
-------------------------
Name: Robert J. Hellman
Title: Director, Vice President and
Chief Financial Officer
