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: 0-1668
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
June 30, December 31,
Assets 1995 1994
Property and equipment:
Land $ 8,379,434 $ 8,379,434
Building and improvements 41,319,882 40,944,262
---------- ----------
49,699,316 49,323,696
Less accumulated depreciation (11,387,498) (10,527,620)
---------- ----------
38,311,818 38,796,076
Restricted cash 617,854 289,853
Cash and cash equivalents 994,881 1,250,842
Accounts receivable 38,086 40,580
Prepaid expenses, net of accumulated
amortization of $173,304 in 1995 and
$139,590 in 1994 220,429 321,156
Other assets, net of accumulated
amortization of $208,022 in 1995 and
$192,984 in 1994 92,733 107,771
Deferred rent receivable 463,029 490,304
---------- ----------
Total Assets $ 40,738,830 $ 41,296,582
========== ==========
Liabilities and Partners' Capital (Deficit)
Liabilities:
Accounts payable and accrued expenses $ 151,838 $ 215,024
Due to affiliates 362,235 351,446
Security deposits payable 171,713 179,800
Secured note payable 14,253,409 14,361,692
---------- ----------
Total Liabilities 14,939,195 15,107,962
---------- ----------
Partners' Capital (Deficit):
General Partner (206,331) (206,331)
Limited Partners 26,005,966 26,394,951
---------- ----------
Total Partners' Capital 25,799,635 26,188,620
---------- ----------
Total Liabilities and
Partners' Capital $ 40,738,830 $ 41,296,582
========== ==========
See accompanying notes to the financial statements.
Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1995
Limited General
Partners Partner Total
Balance at December 31, 1994 $ 26,394,951 $ (206,331) $ 26,188,620
Net loss (388,985) -- (388,985)
---------- ------- ----------
Balance at June 30, 1995 $ 26,005,966 $ (206,331) $ 25,799,635
========== ======= ==========
See accompanying notes to the financial statements.
Statements of Operations
Three months ended Six months ended
June 30, June 30,
Income 1995 1994 1995 1994
Rental $ 984,940 $ 947,806 $ 1,964,241 $ 1,940,356
Interest 23,386 11,359 47,938 21,535
Other 73,134 1,313 73,134 4,115
--------- ------- --------- ---------
Total Income 1,081,460 960,478 2,085,313 1,966,006
--------- ------- --------- ---------
Expenses
Property operating 485,126 478,429 919,541 910,137
Depreciation and amortization 452,530 430,752 908,630 899,004
Interest 276,867 280,931 554,780 562,831
General and administrative 57,554 56,326 91,347 111,688
Bad debt -- 5,406 -- 9,430
--------- --------- --------- ---------
Total Expenses 1,272,077 1,251,844 2,474,298 2,493,090
Net Loss $ (190,617) $ (291,366) $ (388,985) $ (527,084)
========= ========= ========= =========
Net Loss Allocated:
To the General Partner $ -- $ -- $ -- $ --
To the Limited Partners (190,617) (291,366) (388,985) (527,084)
--------- --------- --------- ---------
$ (190,617) $ (291,366) $ (388,985) $ (527,084)
========= ========= ========= =========
Per limited partnership unit
(5,540,000 outstanding) $ (.03) $ (.05) $ (.07) $ (.10)
========= ========= ========= =========
See accompanying notes to the financial statements.
Statements of Cash Flows
For the six months ended June 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net loss $ (388,985) $ (527,084)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 908,630 899,004
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Restricted cash - operating (328,001) 4,306
Accounts receivable 2,494 (8,048)
Prepaid expenses 67,013 54,803
Deferred rent receivable 27,275 (32,111)
Accounts payable and accrued expenses (63,186) 17,865
Due to affiliates 10,789 38,763
Security deposits payable (8,087) (621)
------- -------
Net cash provided by operating activities 227,942 446,877
------- -------
Cash Flows from Investing Activities:
Additions to real estate assets (375,620) (100,241)
------- -------
Net cash used for investing activities (375,620) (100,241)
------- -------
Cash Flows from Financing Activities:
Payments of principal on note payable (108,283) (100,234)
------- -------
Net cash used for investing activities (108,283) (100,234)
------- -------
Net increase (decrease) in cash and cash equivalents (255,961) 246,402
Cash and cash equivalents at beginning of period 1,250,842 1,078,390
--------- ---------
Cash and cash equivalents at end of period $ 994,881 $ 1,324,792
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 554,780 $ 562,831
========= =========
See accomapnying notes to the financial statements.
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 June 30, 1995, the results of operations for the three and six
months ended June 30, 1995 and 1994, the statements of cash flows for the six
months ended June 30, 1995 and 1994, and the statement of partners' capital for
the six months ended June 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 June 30, 1995, the Partnership had cash and cash equivalents of $994,881
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 June 30, 1995, the
Partnership had restricted cash reserves, comprised of security deposits and
real estate tax and insurance escrows, of $617,854 compared with $289,853 at
December 31, 1994. The increase is attributable to the Partnership's monthly
funding of the recently instituted insurance escrow and the timing of real
estate tax payments.
As of June 30, 1995, prepaid expenses declined to $220,429 from $321,156 at
December 31, 1994. The decrease is primarily attributable to the amortization
of prepaid insurance.
Accounts payable and accrued expenses decreased from $215,024 at December 31,
1994 to $151,838 at June 30, 1995. The decrease is primarily due to payments
made for building and tenant improvements and the timing of payments made for
annual audit fees.
Three lease renewals totaling 4,785 square feet were executed at the Beverly
Sunset Medical Building (the "Property") during the 1995 second quarter. The
Property was 69% leased at June 30, 1995, unchanged from the prior quarter.
Five leases representing 5,885 square feet are scheduled to expire during the
remainder of 1995. Given the highly competitive market conditions and
uncertain nature of the health care industry, there can be no assurance that
these lease renewals can be executed. One tenant that signed a lease for 4,106
square feet in late 1994, has yet to take occupancy in the Property and is not
paying rent. The General Partner is currently attempting to rectify this
situation.
In order to lease vacant space at the Property, the Partnership must pay
leasing commissions and tenant improvement costs associated with new 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 six months ended June 30, 1995, Partnership operations
resulted in net losses of $190,617 and $388,985, respectively, compared with
net losses of $291,366 and $527,084 for the respective periods in 1994. The
decrease in net loss is primarily due to increased other income and, to a
lesser extent, to higher rental and interest income and lower general and
administrative expenses.
Rental income for the three and six months ended June 30, 1995 totaled $984,940
and $1,964,241, respectively, compared with $947,806 and $1,940,356 for the
comparable periods in 1994. The increases are primarily attributable to a
reduced level of free-rent concessions in new leases executed in 1995.
Interest income totaled $23,386 and $47,938 for the three and six months ended
June 30, 1995, respectively, compared with $11,359 and $21,535 for the
corresponding periods in 1994. The increase is attributable to higher rates of
interest earned on the Partnership's cash balances in the first half of 1995
compared with the first half of 1994. Other income totaled $73,134 for the
three and six months ended June 30, 1995, compared with $1,313 and $4,115 for
the three and six months ended June 30, 1994. The increase is due to a real
estate tax refund in 1995, received as a result of the Partnership's successful
appeal of its 1993/1994 tax payment.
Property operating expenses were $485,126 and $919,541 for the three and six
months ended June 30, 1995, respectively, largely unchanged from $478,429 and
$910,137 for the corresponding periods in 1994. The slight increase is
primarily due to higher advertising and insurance expenses in 1995, partially
offset by lower repairs and maintenance expense.
General and administrative expense totaled $57,554 and $91,347 for the three
and six months ended June 30, 1995, respectively, compared with $56,326 and
$111,688 for the respective periods in 1994. The decrease for the six-month
period primarily resulted from lower partnership servicing fees for accounting,
investor reporting and tax preparation.
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
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: August 11, 1995 BY: /s/Rocco Andriola
-----------------
Director, President and
Chief Financial Officer
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