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, 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: 33-12791
BEVERLY HILLS MEDICAL OFFICE PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 95-4098476
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
3 World Financial Center, 29th Floor, New York, NY
ATTN: Andre Anderson 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
Balance Sheets
September 30, December 31,
Assets 1995 1994
Property and equipment:
Land $8,379,434 $8,379,434
Building and improvements 41,528,121 40,944,262
49,907,555 49,323,696
Less accumulated depreciation (11,818,112) (10,527,620)
38,089,443 38,796,076
Restricted cash 453,989 289,853
Cash and cash equivalents 1,162,315 1,250,842
Accounts receivable 49,375 40,580
Prepaid expenses, net of accumulated amortization
of $190,136 in 1995 and $139,590 in 1994 316,187 321,156
Other assets, net of accumulated amortization of
$215,541 in 1995 and $192,984 in 1994 85,214 107,771
Deferred rent receivable 484,119 490,304
Total Assets $40,640,642 $41,296,582
Liabilities and Partners' Capital (Deficit)
Liabilities:
Accounts payable and accrued expenses $390,731 $215,024
Due to affiliates 396,326 351,446
Security deposits payable 169,655 179,800
Secured note payable 14,199,068 14,361,692
Total Liabilities 15,155,780 15,107,962
Partners' Capital (Deficit):
General Partner (206,331) (206,331)
Limited Partners (5,540,000 units outstanding) 25,691,193 26,394,951
Total Partners' Capital 25,484,862 26,188,620
Total Liabilities and Partners' Capital $40,640,642 $41,296,582
Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1995
General Limited
Partner Partners Total
Balance at December 31, 1994 $(206,331) $26,394,951 $26,188,620
Net loss - (703,758) (703,758)
Balance at September 30, 1995 $(206,331) $25,691,193 $25,484,862
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
Income 1995 1994 1995 1994
Rental $996,200 $969,617 $2,960,441 $2,909,973
Interest 24,771 13,071 72,709 34,606
Other 9,847 18,834 82,981 22,949
Total Income 1,030,818 1,001,522 3,116,131 2,967,528
Expenses
Property operating 555,183 487,141 1,474,724 1,397,278
Depreciation and amortization 454,965 435,301 1,363,595 1,334,305
Interest 277,191 279,944 831,971 842,775
General and administrative 58,252 60,353 149,599 172,041
Bad debt - - - 9,430
Total Expenses 1,345,591 1,262,739 3,819,889 3,755,829
Net Loss $(314,773) $(261,217) $(703,758) $(788,301)
Net Loss Allocated:
To the General Partner $- $- $- $-
To the Limited Partners (314,773) (261,217) (703,758) (788,301)
$(314,773) $(261,217) $(703,758) $(788,301)
Per limited partnership unit
(5,540,000 outstanding) $(.06) $(.05) $(.13) $(.14)
Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net loss $(703,758) $(788,301)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,363,595 1,334,305
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Restricted cash - operating (164,136) (122,567)
Accounts receivable (8,795) (56,593)
Prepaid expenses (45,577) 30,617
Deferred rent receivable 6,185 (68,173)
Accounts payable and accrued expenses 175,707 163,266
Due to affiliates 44,880 60,934
Security deposits payable (10,145) 8,397
Net cash provided by operating activities 657,956 561,885
Cash Flows from Investing Activities:
Additions to real estate assets (530,910) (199,115)
Accounts payable - real estate assets (52,949) 61,713
Net cash used for investing activities (583,859) (137,402)
Cash Flows from Financing Activities:
Payments of principal on note payable (162,624) (151,822)
Net cash used for investing activities (162,624) (151,822)
Net increase (decrease) in cash and cash equivalents (88,527) 272,661
Cash and cash equivalents at beginning of period 1,250,842 1,078,390
Cash and cash equivalents at end of period $1,162,315 $1,351,051
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $831,971 $842,775
Supplemental Schedule of Non-Cash Investing Activity:
Write-off of fully depreciated tenant improvements $- $246,816
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of September 30, 1995, the results of operations for the three and
nine-month periods ended September 30, 1995 and 1994, the statements of cash
flows for the nine-month periods ended September 30, 1995 and 1994, and the
statement of partners' capital (deficit) for the nine-month period ended
September 30, 1995. 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 1994 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 September 30, 1995, the Partnership had cash and cash equivalents of
$1,162,315 compared with $1,250,842 at December 31, 1994. The decrease is
attributable to expenditures for building and tenant improvements and principal
payments on the note payable exceeding net cash from operations. At September
30, 1995, the Partnership had restricted cash reserves, comprised of security
deposits and real estate tax and insurance escrows, of $453,989 compared with
$289,853 at December 31, 1994. Escrow balances vary throughout the year based
on the timing of real estate tax and insurance payments.
Accounts payable and accrued expenses increased from $215,024 at December 31,
1994 to $390,731 at September 30, 1995. The increase is primarily due to the
timing and payment of invoices and payments made for building and tenant
improvements. The higher balance was partially offset by lower audit fees,
professional fees and prepaid rent.
The Property was 68.4% leased at September 30, 1995, slightly down from 69.0%
in the prior quarter. The Partnership renewed one lease representing 1,308
square feet in the third quarter of 1995 and anticipates the execution of an
additional renewal in late November 1995 for 1,157 square feet. One tenant,
who occupied 872 square feet, vacated the property after the expiration of his
lease. Two more leases totaling 2,548 square feet are scheduled to expire
during the remainder of 1995. Although the General Partner has begun
negotiating with such tenants, there is no guarantee that these leases will be
renewed.
In order to remain competitive, the Partnership must pay leasing commissions
and tenant improvement costs associated with new and renewal leases. The
amount of such costs remains uncertain at this time and will depend upon the
amount of space leased and the extent of required tenant improvements. The
General Partner intends to fund such costs from net cash flow from operations
and Partnership cash reserves, to the extent possible. If necessary, the
General Partner will seek additional borrowings.
Results of Operations
For the three and nine-month periods ended September 30, 1995, Partnership
operations resulted in net losses of $314,773 and $703,758, respectively,
compared with net losses of $261,217 and $788,301 for the respective periods in
1994. The increase in net loss for the three-month period is primarily due to
higher property operating expenses and depreciation and amortization expenses.
The decrease in net loss for the nine-month period is attributable to an
increase in rental income, interest income and other income. Rental income
increased because of higher average occupancy during the current period and
other income increased due to a $71,000 real estate tax refund from the County
of Los Angeles recorded in the first quarter of 1995. These increases in
income were partially offset by an increase in operating expenses.
Rental income for the three and nine-month periods ended September 30, 1995
totaled $996,200 and $2,960,441, respectively, compared with $969,617 and
$2,909,973 for the comparable periods in 1994. Rental income increased mainly
due to higher average occupancy and lower free rent concessions on leases
renewed during the current periods. Interest income totaled $24,771 and
$72,709 for the three and nine-month periods ended September 30, 1995,
respectively, compared with $13,071 and $34,606 for the corresponding periods
in 1994. The increase is attributable to higher rates of interest earned on
the Partnership's cash balance in the first nine months of 1995. Other income
totaled $9,847 and $82,981 for the three and nine-month periods ended September
30, 1995, compared with $18,834 and $22,949 for the three and nine-month
periods ended September 30, 1994. The increase for the nine-month period is
due to the real estate tax abatement discussed above.
Property operating expenses were $555,183 and $1,474,724 for the three and
nine-month periods ended September 30, 1995, respectively, up from $487,141 and
$1,397,278 for the corresponding periods in 1994. The increases in 1995 are
primarily due to an increase in insurance costs associated with the Property's
earthquake coverage, advertising and payroll expenses. In addition,
depreciation and amortization expenses increased as a result of general
building improvements made over the past few years. These increases were
partially offset by an 8% decrease in expenditures for utilities.
General and administrative expense totaled $58,252 and $149,599 for the three
and nine-month periods ended September 30, 1995, respectively, compared with
$60,353 and $172,041 for the respective periods in 1994. The decrease for the
nine-month period primarily resulted from lower partnership servicing fees
(i.e., accounting, investor reporting and tax preparation) and lower legal and
other professional costs.
PART II OTHER INFORMATION
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter ended September 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnership has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BEVERLY HILLS MEDICAL OFFICE PARTNERS, L.P.
BY: MEDICAL OFFICE PROPERTIES INC.
General Partner
Date: November 14, 1995 BY: /s/Rocco Andriola
Director, President and
Chief Financial Officer
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