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, 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 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
March 31, December 31,
Assets 1995 1994
Real estate, at cost:
Land $ 5,304,011 $ 5,304,011
Building 60,415,789 60,029,923
Improvements 3,492,758 3,181,448
69,212,558 68,515,382
Less accumulated depreciation
and amortization (12,639,829) (12,170,608)
56,572,729 56,344,774
Cash 11,038,928 10,431,820
Accounts receivable, net of allowance
of $216,118 in 1995 and $131,759 in 1994 420,788 528,845
Deferred rent receivable 351,458 309,478
Deferred charges, net of accumulated
amortization of $232,050 in 1995 and
$218,353 in 1994 153,297 142,322
Prepaid expenses 276,155 530,446
Total Assets $ 68,813,355 $ 68,287,685
Liabilities, Minority Interest
and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 118,353 $ 179,794
Zero coupon first mortgage note payable 49,666,803 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 8,841 9,891
Security deposits payable 14,633 14,633
Deferred income 746,718 766,727
Distributions payable 588,384 588,384
Total Liabilities 53,162,899 52,035,460
Minority interest (538,089) (526,787)
Partners' Capital:
General Partner 938,539 944,444
Limited Partners
(4,660,000 limited partnership units
authorized, issued and outstanding) 15,250,006 15,834,568
Total Partners' Capital 16,188,545 16,779,012
Total Liabilities, Minority Interest
and Partners' Capital $ 68,813,355 $ 68,287,685
See accompanying notes to the consolidated financial statements
Consolidated Statement of Partners' Capital
For the three months ended March 31, 1995
Limited General
Partners Partner Total
Balance at December 31, 1994 $ 15,834,568 $ 944,444 $ 16,779,012
Net loss (2,062) (21) (2,083)
Distributions (582,500) (5,884) (588,384)
Balance at March 31, 1995 $ 15,250,006 $ 938,539 $ 16,188,545
See accompanying notes to the consolidated financial statements
Consolidated Statements of Operations
For the three months ended March 31, 1995 and 1994
Income 1995 1994
Rental income $ 1,412,359 $ 1,334,076
Escalation income 1,359,474 1,311,648
Miscellaneous income 54,619 78,206
Interest income 133,856 51,980
Total Income 2,960,308 2,775,910
Expenses
Interest expense 1,267,439 1,152,863
Property operating expenses 915,824 869,105
Depreciation and amortization 482,918 466,614
Real estate taxes 255,984 261,344
General and administrative 39,521 40,021
Total Expenses 2,961,686 2,789,947
Loss before minority interest (1,378) (14,037)
Minority interest (705) (498)
Net Loss $ (2,083) $ (14,535)
Net Loss Allocated:
To the General Partner $ (21) $ (145)
To the Limited Partners (2,062) (14,390)
$ (2,083) $ (14,535)
Per limited partnership unit
(4,660,000 outstanding) $ (.00) $ (.01)
See accompanying notes to the consolidated financial statements
Consolidated Statements of Cash Flows
For the three months ended March 31, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net loss $ (2,083) $ (14,535)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Minority interest 705 498
Depreciation and amortization 482,918 466,614
Increase in interest on zero coupon
first mortgage note payable 1,209,939 1,095,363
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Accounts receivable 108,057 3,592
Deferred rent receivable (41,980) (63,823)
Deferred charges (24,672) (15,922)
Prepaid expenses 254,291 259,430
Accounts payable and accrued expenses (61,441) (88,556)
Due to affiliates (1,050) (1,600)
Deferred income (20,009) (41,179)
Net cash provided by operating activities 1,904,675 1,599,882
Cash Flows from Investing Activities:
Additions to real estate (697,176) (54,439)
Net cash used for investing activities (697,176) (54,439)
Cash Flows from Financing Activities:
Cash distributions to partners (588,384) (588,384)
Cash distributions - Minority interest (12,007) (12,008)
Net cash used for financing activities (600,391) (600,392)
Net increase in cash 607,108 945,051
Cash at beginning of period 10,431,820 7,685,010
Cash at end of period $ 11,038,928 $ 8,630,061
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 57,500 $ 57,500
See accompanying notes to the consolidated financial statements
Notes to the Consolidated Financial Statements
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1994 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 March 31, 1995 and the results of operations and cash
flows for the three months ended March 31, 1995 and 1994 and the statement of
changes in partners' capital for the three months ended March 31, 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, which
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 March 31, 1995, the Partnership had cash totalling $11,038,928 which
represents a $607,108 increase from the December 31, 1994 balance of
$10,431,820. The increase is primarily the result of net cash provided by
operating activities exceeding cash distributions and expenditures for property
improvements. On or about May 15, 1995, the Partnership will pay a first
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 estimated costs of the renovation are estimated to be approximately $1.3
million and is expected to be completed during the second quarter of 1995. As
of March 31, 1995, the Partnership paid approximately $360,000 from cash
reserves towards the renovation.
Due to the current limited availability of financing for real estate projects,
and the substantially more stringent underwriting criteria being applied when
financing is available, 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; and (iii) the
need for capital improvements.
At March 31, 1995, the accounts receivable balance, net of allowance for
doubtful accounts, was $420,788 as compared to $528,845 at December 31, 1994.
The decrease is primarily due to the timing of payments received from tenants
for percentage rent and common area maintenance. The decrease also reflects an
increase in the allowance for doubtful accounts to reserve for several tenants
who vacated their space.
Deferred rent receivable increased from $309,478 at December 31, 1994 to
$351,458 at March 31, 1995 as a result of accruing rents on a straight-line
basis over the lease terms, and the addition of four new tenants during the
fourth quarter of 1994.
Prepaid expenses decreased $254,291 from $530,446 at December 31, 1994 to
$276,155 at March 31, 1995 due to the recognition of a portion of prepaid real
estate taxes as current expense for the quarter ended March 31, 1995.
At March 31, 1995, accounts payable and accrued expenses totalled $118,353 as
compared to $179,794 at December 31, 1994. The decrease is primarily due to a
decrease in association dues, audit and legal expenses accrued at March 31,
1995.
The zero coupon first mortgage note payable increased $1,209,939 from December
31, 1994 to $49,666,803 at March 31, 1995, due to the accrual of interest on
the zero coupon note.
Results of Operations
Net cash flow from operating activities totalled $1,904,675 for the three
months ended March 31, 1995 compared to $1,599,882 for the three months ended
March 31, 1994. The increase is primarily due to a decrease in accounts
receivable.
For the three months ended March 31, 1995, the Partnership reported a net loss
of $2,083 compared to a net loss of $14,535 for the three months ended March
31, 1994. The lower net loss in 1995 is primarily the result of an increase in
rental income, partially offset by increases in interest and property operating
expenses.
Rental income totalled $1,412,359 for the three months ended March 31, 1995 as
compared to $1,334,076 for the three months ended March 31, 1994. The increase
is primarily attributable to higher lease rates for new tenants and an increase
in temporary tenant income. Escalation income for the three months ended March
31, 1995 totalled $1,359,474, as compared with $1,311,648 for the same period
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.
Total expenses for the three months ended March 31, 1995 were $2,961,686 as
compared to $2,789,947 for the corresponding period in 1994. The increase is
primarily due to higher interest and property operating expenses. Interest
expense for the three months ended March 31, 1995 was $1,267,439, as compared
to $1,152,863 for the three months ended March 31, 1994. The increase is
attributable to the compounding of interest on the zero coupon loan. Property
operating expenses increased to $915,824 for the three months ended March 31,
1995 as compared to $869,105 for the three months ended March 31, 1994
primarily due to increases in bad debt expense, insurance and association dues.
Mall tenant sales (exclusive of anchor tenants) for the two months ended
February 28, 1995 and 1994 were $7,146,000 and $6,797,000, respectively.
Mature tenant sales for the two months ended February 28, 1995 and 1994 were
$6,398,000 and $6,604,000, respectively. A mature tenant is defined as a
tenant that has been open for business and operating out of the same store for
twelve months or more. At March 31, 1995 and 1994, the Mall was 90.2% and
93.3% 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 March 31, 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: May 12, 1995
BY: /s/ Paul L. Abbott
Name: Paul L. Abbott
Title: Director, President, and
Chief Executive Officer
Date: May 12, 1995
BY: /s/ Robert J. Hellman
Name: Robert J. Hellman
Title: Director, Vice President and
Chief Financial Officer
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