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, 1996
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
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State or Other Jurisdiction of I.R.S. Employer Identification No.
Incorporation or Organization
3 World Financial Center, 29th Floor,
New York, NY Attn.: Andre Anderson 10285
- ------------------------------------- --------
Address of Principal Executive Offices Zip Code
(212) 526-3237
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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 At March 31, At December 31,
1996 1995
Assets
Property:
Land $ 8,379,434 $ 8,379,434
Building, building improvements and equipment 41,700,064 41,623,252
50,079,498 50,002,686
Less accumulated depreciation (12,731,248) (12,281,843)
37,348,250 37,720,843
Cash and cash equivalents 1,432,920 1,026,560
Restricted cash 596,809 468,992
Accounts and other receivables 90,437 363,192
Leasing commissions and prepaid expenses,
net of accumulated amortization
of $222,667 in 1996 and $206,634 in 1995 211,993 265,438
Other assets, net of accumulated amortization
of $230,579 in 1996 and $223,060 in 1995 70,176 77,695
Deferred rent receivable 464,782 479,913
---------- ----------
Total Assets $40,215,367 $40,402,633
========== ==========
Liabilities and Partners' Capital (Deficit)
Liabilities:
Accounts payable and accrued expenses $ 276,499 $ 204,852
Due to affiliates 386,818 369,326
Security deposits payable 168,836 168,836
Secured note payable 14,082,936 14,140,861
---------- ----------
Total Liabilities 14,915,089 14,883,875
Partners' Capital (Deficit):
General Partner (206,331) (206,331)
Limited Partners (5,540,000 units outstanding) 25,506,609 25,725,089
---------- ----------
Total Partners' Capital 25,300,278 25,518,758
---------- ----------
Total Liabilities and Partners' Capital $40,215,367 $40,402,633
========== ==========
Statement of Partners' Capital (Deficit)
For the three months ended March 31, 1996
General Limited
Partner Partners Total
Balance at December 31, 1995 $(206,331) $25,725,089 $25,518,758
Net loss -- (218,480) (218,480)
-------- ---------- ----------
Balance at March 31, 1996 $(206,331) $25,506,609 $25,300,278
======== ========== ==========
Statements of Operations
For the three months ended March 31,
Income 1996 1995
- ---------- --------- ---------
Rental $ 992,321 $ 979,301
Interest 22,038 24,552
Other 6,968 --
--------- ---------
Total Income 1,021,327 1,003,853
Expenses
- ----------
Depreciation and amortization 472,957 456,101
Property operating 436,122 434,415
Interest 273,606 277,913
General and administrative 44,622 21,292
Asset management fees 12,500 12,500
--------- ---------
Total Expenses 1,239,807 1,202,221
--------- ---------
Net Loss $ (218,480) $ (198,368)
========= =========
Net Loss Allocated:
To the General Partner $ -- $ --
To the Limited Partners (218,480) (198,368)
--------- ---------
$ (218,480) $ (198,368)
========= =========
Per limited partnership unit
(5,540,000 outstanding) $(.04) $(.04)
==== ====
Statements of Cash Flows
For the three months ended March 31,
Cash Flows From Operating Activities 1996 1995
Net loss $(218,480) $(198,368)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 472,957 456,101
Increase (decrease) in cash arising from changes
in operating assets and liabilities
Restricted cash (127,817) (249,767)
Accounts and other receivables 272,755 (991)
Leasing commissions and prepaid expenses 37,412 22,214
Deferred rent receivable 15,131 11,789
Accounts payable and accrued expenses 71,647 146,165
Due to affiliates 17,492 (13,411)
Security deposits payable -- 2,457
-------- --------
Net cash provided by operating activities 541,097 176,189
Cash Flows From Investing Activities
Additions to real estate (85,295) (315,909)
Accounts payable - real estate 8,483 61,583
-------- --------
Net cash used for investing activities (76,812) (254,326)
Cash Flows From Financing Activities
Payments of principal on note payable (57,925) (53,619)
-------- --------
Net cash used for financing activities (57,925) (53,619)
-------- --------
Net increase (decrease) in cash and cash equivalents 406,360 (131,756)
Cash and cash equivalents, beginning of period 1,026,560 1,250,842
Cash and cash equivalents, end of period $1,432,920 $1,119,086
========= =========
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ 273,606 $ 277,913
========= =========
Notes to the Financial Statements
The unaudited financial statements should be read in conjunction with the
Partnership's annual 1995 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 March 31, 1996 and the results of operations and cash flows for
the three months ended March 31, 1996 and 1995 and the statement of changes in
partners' capital (deficit) for the three months ended March 31, 1996. 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 1995, 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 March 31, 1996, the Partnership had cash and cash equivalents of $1,432,920
compared with $1,026,560 at December 31, 1995. The increase is attributable to
net cash provided by operating activities exceeding cash used for real estate
additions and mortgage principal payments. Net cash provided by operating
activities increased as a result of the receipt of real estate tax abatements
related to prior years.
At March 31, 1996, the Partnership had restricted cash, which is comprised of
security deposits and real estate tax and insurance escrows, of $596,809,
compared with $468,992 at December 31, 1995. The increase is attributable to
escrow contributions and interest income for the three months ended March 31,
1996.
At March 31, 1996, accounts receivable were $90,437 compared to $363,192 at
December 31, 1995. The decrease pertains to the receipt of real estate tax
abatements for the 1993-94 and 1994-95 tax years.
Leasing commissions and prepaid expenses, net of accumulated amortization,
decreased from $265,438 at December 31, 1995 to $211,993 at March 31, 1996. The
decrease is primarily attributable to lower prepaid insurance for the three
months ended March 31, 1996.
Accounts payable and accrued expenses increased from $204,852 at December 31,
1995 to $276,499 at March 31, 1996. The increase is mainly attributable to the
accrual of three months of real estate taxes.
The Property was 69.8% leased at March 31, 1996, up from 69.6% at December 31,
1995. In the first quarter of 1996, the Partnership executed two lease
renewals totaling 5,512 square feet. One tenant also renewed its lease and
expanded its space, taking an additional 359 square feet during the first
quarter. An additional five leases totaling 7,593 square feet are scheduled to
expire during 1996. Although the General Partner will make every effort to
renew these leases, there can be no assurance of success given the competitive
market conditions and uncertainty surrounding changes in the health care
industry.
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 is uncertain at this time and depends 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.
Results of Operations
- ---------------------
For the three months ended March 31, 1996, Partnership operations resulted in a
net loss of $218,480, compared with a net loss of $198,368 for the
corresponding period in 1995. The increase in net loss is mainly due to
increased depreciation and amortization and general and administrative expenses
which were partially offset by an increase in rental income.
Rental income was largely unchanged at $992,321 for the three months ended
March 31, 1996, compared with $979,301 for the corresponding period in 1995.
Other income totaled $6,968 for the three months ended March 31, 1996, compared
with $0 for the corresponding period in 1995. The increase in other income can
be primarily attributed to interest accrued on real estate tax abatements
related to prior years.
Property operating expenses were $436,122 for the three months ended March 31,
1996, compared to $434,415 for the corresponding period in 1995, as increases
in utilities, repairs and maintenance, and professional fees were offset by
decreases in real estate and other taxes and advertising costs.
General and administrative expenses totaled $44,622 for the three months ended
March 31, 1996, compared with $21,292 for the corresponding period in 1995.
General and administrative expenses were lower in the first quarter of 1995 due
to a one-time accounting adjustment to correct an overaccrual in 1994.
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.
On February 14, 1996, based upon, among other things, the
advice of Partnership counsel, Skadden, Arps, Slate, Meagher &
Flom, the General Partner adopted a resolution that states,
among other things, if a Change of Control (as defined below)
occurs, the General Partner may distribute the Partnership's
cash balances not required for its ordinary course day-to-day
operations. "Change of Control" means any purchase or offer to
purchase more than 10% of the Units that is not approved in
advance by the General Partner. In determining the amount of
the distribution, the General Partner may take into account all
material factors. In addition, the Partnership will not be
obligated to make any distribution to any partner, and no
partner will be entitled to receive any distribution, until the
General Partner has declared the distribution and established a
record date and distribution date. The Partnership filed a
Form 8-K disclosing this resolution on February 29, 1996.
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.
BEVERLY HILLS MEDICAL OFFICE PARTNERS, L.P.
Medical Office Properties Inc.
General Partner
Date: May 10, 1996 BY: /s/ Rocco F. Andriola
President
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<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Mar-31-1996
<CASH> 1,432,920
<SECURITIES> 0
<RECEIVABLES> 90,437
<ALLOWANCES> 0
<INVENTORY> 0
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<OTHER-SE> 39,938,868
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<SALES> 992,321
<TOTAL-REVENUES> 1,021,327
<CGS> 0
<TOTAL-COSTS> 436,122
<OTHER-EXPENSES> 530,079
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 273,606
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (218,480)
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<CHANGES> 0
<NET-INCOME> (218,480)
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