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, 1995
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
Attention: Andre Anderson 10285-2900
(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,
1995 1994
Assets
Real estate, at cost:
Land $ 5,304,011 $ 5,304,011
Building 61,060,584 60,029,923
Improvements 3,608,632 3,181,448
---------- ----------
69,973,227 68,515,382
Less accumulated depreciation
and amortization (13,120,089) (12,170,608)
---------- ----------
56,853,138 56,344,774
Cash 11,511,790 10,431,820
Accounts receivable, net of allowance
of $271,430 in 1995 and $131,759 in 1994 440,523 528,845
Deferred rent receivable 387,745 309,478
Deferred charges, net of accumulated
amortization of $245,923 in 1995 and
$218,353 in 1994 144,336 142,322
Prepaid expenses 30,575 530,446
---------- ----------
Total Assets $ 69,368,107 $ 68,287,685
========== ==========
Liabilities, Minority Interest
and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 148,363 $ 179,794
Zero coupon first mortgage note payable 50,924,690 48,456,864
Second mortgage note payable 2,000,000 2,000,000
Second mortgage note accrued
interest payable 19,167 19,167
Due to affiliates 10,769 9,891
Security deposits payable 14,633 14,633
Deferred income 702,886 766,727
Distributions payable 588,384 588,384
---------- ----------
Total Liabilities 54,408,892 52,035,460
Minority interest (550,629) (526,787)
Partners' Capital:
General Partner 931,752 944,444
Limited Partners (4,660,000 limited
partnership units authorized, issued
and outstanding) 14,578,092 15,834,568
---------- ----------
Total Partners' Capital 15,509,844 16,779,012
---------- ----------
Total Liabilities, Minority Interest
and Partners' Capital $ 69,368,107 $ 68,287,685
========== ==========
Consolidated Statement of Partners' Capital
For the six months ended June 30, 1995
Limited General
Partners Partner Total
Balance at December 31, 1994 $ 15,834,568 $ 944,444 $ 16,779,012
Net loss (91,476) (924) (92,400)
Distributions (1,165,000) (11,768) (1,176,768)
---------- ------- ----------
Balance at June 30, 1995 $ 14,578,092 $ 931,752 $ 15,509,844
========== ======= ==========
Consolidated Statements of Operations
Three months ended Six months ended
June 30, June 30,
1995 1994 1995 1994
Income
Rental income $ 1,431,158 $ 1,308,585 $ 2,843,517 $ 2,642,661
Escalation income 1,277,327 1,197,970 2,636,801 2,509,618
Miscellaneous income 120,265 54,261 174,884 132,467
Interest income 144,467 49,617 278,323 101,597
--------- --------- --------- ---------
Total Income 2,973,217 2,610,433 5,933,525 5,386,343
--------- --------- --------- ---------
Expenses
Interest expense 1,315,387 1,196,270 2,582,826 2,349,133
Property operating
expenses 931,237 968,288 1,847,061 1,837,393
Depreciation and
amortization 494,133 465,821 977,051 932,435
Real estate taxes 255,983 261,344 511,967 522,688
General and administrative 67,325 56,006 106,846 96,027
--------- --------- --------- ---------
Total Expenses 3,064,065 2,947,729 6,025,751 5,737,676
--------- --------- --------- ---------
Loss before minority
interest (90,848) (337,296) (92,226) (351,333)
Minority interest 531 3,068 (174) 2,570
--------- --------- --------- ---------
Net Loss $ (90,317) $ (334,228) $ (92,400) $ (348,763)
========= ========= ========= =========
Net Loss Allocated:
To the General Partner $ (903) $ (3,342) $ (924) $ (3,488)
To the Limited Partners (89,414) (330,886) (91,476) (345,275)
--------- --------- --------- ---------
$ (90,317) $ (334,228) $ (92,400) $ (348,763)
========= ========= ========= =========
Per limited partnership
unit (4,660,000 outstanding) $(.02) $(.07) $(.02) $(.07)
Consolidated Statements of Cash Flows
For the six months ended June 30, 1995 and 1994
1995 1994
Cash Flows from Operating Activities:
Net loss $ (92,400) $ (348,763)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Minority interest 174 (2,570)
Depreciation and amortization 977,051 932,435
Increase in interest on zero coupon first
mortgage note payable 2,467,826 2,234,133
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Accounts receivable 88,322 147,454
Deferred rent receivable (78,267) (94,241)
Deferred charges (29,584) (17,082)
Prepaid expenses 499,871 527,922
Accounts payable and accrued expenses (31,431) (158,483)
Due to affiliates 878 (2,700)
Deferred income (63,841) (67,650)
--------- ---------
Net cash provided by operating activities 3,738,599 3,150,455
--------- ---------
Cash Flows from Investing Activities:
Additions to real estate (1,457,845) (51,343)
--------- ---------
Net cash used for investing activities (1,457,845) (51,343)
--------- ---------
Cash Flows from Financing Activities:
Cash distributions to partners (1,176,768) (1,176,768)
Cash distributions - Minority interest (24,016) (24,016)
--------- ---------
Net cash used for financing activities (1,200,784) (1,200,784)
--------- ---------
Net increase in cash 1,079,970 1,898,328
Cash at beginning of period 10,431,820 7,685,010
---------- ---------
Cash at end of period $11,511,790 $ 9,583,338
========== =========
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 1994 consolidated financial
statements within Form 10-K.
The unaudited consolidated financial statements include all adjustments which
are, in the opinion of management, necessary to present a fair statement of
financial position as of June 30, 1995 and the results of operations and cash
flows for the six months ended June 30, 1995 and 1994 and the statement of
changes in partners' capital for the six months ended June 30, 1995. Results
of operations for the periods are not necessarily indicative of the results to
be expected for the full year.
Certain prior year amounts have been reclassified in order to conform to the
current year's presentation.
No significant events have occurred subsequent to fiscal year 1994 and no
material contingencies exist, which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
- -------------------------------
At June 30, 1995, the Partnership had cash totalling $11,511,790, up $1,079,970
from December 31, 1994. The increase is primarily the result of net cash
provided by operating activities exceeding cash distributions and expenditures
for property improvements. On or about August 15, 1995, 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. The
level of future cash distributions will be reviewed by the General Partner on a
quarterly basis.
Currently, the Partnership is renovating the HVAC system at Laurel Centre. The
total costs of the renovation are estimated to be approximately $1.3 million
and work is expected to be completed during the third quarter of 1995. As of
June 30, 1995, the Partnership has paid $1,030,661 from cash reserves towards
the renovation.
A primary focus of the Partnership will be its efforts to address its 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 Associates, 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 affect the
Partnership's ability to refinance or restructure the loans with CBA
Associates, Inc. at maturity in the event that refinancing is not available
elsewhere and the Mall is not sold and the mortgage loans repaid. 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 also be
affected by general economic conditions, and factors such as: (i) increased
competition in the area; (ii) the status of the anchor tenants' operating
covenants; and (iii) the need for capital improvements.
At June 30, 1995, the accounts receivable balance, net of allowance for
doubtful accounts, was $440,523 as compared to $528,845 at December 31, 1994.
The decrease reflects an increase in the allowance for doubtful accounts to
reserve for several tenants who vacated their space. The decrease is also due
to the timing of payments received from tenants for percentage rent.
Deferred rent receivable increased from $309,478 at December 31, 1994 to
$387,745 at June 30, 1995 as a result of accruing rents on a straight-line
basis over the lease terms, and the addition of new tenants over the past year.
Prepaid expenses decreased from $530,446 at December 31, 1994 to $30,575 at
June 30, 1995 due to the recognition of real estate taxes for the first two
quarters of 1995.
The zero coupon first mortgage note payable increased $2,467,826 from December
31, 1994 to $50,924,690 at June 30, 1995, due to the accrual of interest on the
zero coupon note.
Results of Operations
- ---------------------
Net cash flow from operating activities totalled $3,738,599 for the six months
ended June 30, 1995 compared to $3,150,455 for the six months ended June 30,
1994. The increase is primarily due to a lower net loss in the 1995 period,
discussed below.
For the three and six months ended June 30, 1995, the Partnership reported net
losses of $90,317 and $92,400, respectively, compared to net losses of $334,228
and $348,763 for the respective periods in 1994. The lower net losses in 1995
are primarily the result of increases in all income categories, offset partly
by increased interest expense.
Rental income totalled $1,431,158 and $2,843,517 for the three and six months
ended June 30, 1995, respectively, compared with $1,308,585 and $2,642,661 for
the respective periods in 1994. The increases are primarily attributable to
higher lease rates for new tenants and an increase in temporary tenant income.
Escalation income for the three and six months ended June 30, 1995 totalled
$1,277,327 and $2,636,801, respectively, compared with $1,197,970 and
$2,509,618 for the comparable periods in 1994. Escalation income represents
billings to tenants for their proportional share of common area maintenance,
operating and real estate tax expenses. The increase in escalation income is
primarily due to an increase in reimbursable property operating costs.
Miscellaneous income increased for both the three and six months ended June 30,
1995, reflecting higher promotional expense billed back to tenants. Interest
income also increased for both the three and six-month periods, due to the
Partnership's increased cash balance and higher interest rates in the 1995
periods.
Total expenses for the three and six months ended June 30, 1995 were $3,064,065
and $6,025,751, respectively, compared with $2,947,729 and $5,737,676 for the
corresponding periods in 1994. The increases are primarily due to higher
interest expense, which increased for both the three- and six-month periods,
due to the compounding of interest on the Partnership's zero coupon loan.
Other major expense categories remained in line with prior year levels.
Mall tenant sales (exclusive of anchor tenants) for the five months ended May
31, 1995 and 1994 were $19,822,000 and $21,390,000, respectively. Mature
tenant sales for the five months ended May 31, 1995 and 1994 were $16,764,000
and $17,963,000, respectively. A mature tenant is defined as a tenant that has
operated at the Mall for each of the last two years. The declines in tenant
sales reflect lower occupancy at the property as well as continued weakness in
apparel sales and strong competition from nearby discount stores.
At June 30, 1995 and 1994, the Mall was 90.1% and 95.2% occupied, respectively,
exclusive of anchor tenants.
PART II OTHER INFORMATION
Items 1-5 Not applicable
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, 1995.
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 11, 1995 BY: /s/ Paul L. Abbott
------------------
Name: Paul L. Abbott
Title: Director, President, and
Chief Executive Officer
Date: August 11, 1995 BY: /s/ Robert J. Hellman
---------------------
Name: Robert J. Hellman
Title: Director, Vice President and
Chief Financial Officer
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