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, 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
State or Other Jurisdiction of
Incorporation or Organization I.R.S. Employer 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 At September 30, At December 31,
1996 1995
Assets
Real Estate:
Land $ 8,379,434 $ 8,379,434
Building, building improvements and equipment 41,903,303 41,623,252
50,282,737 50,002,686
Less accumulated depreciation (13,628,588) (12,281,843)
---------- ----------
36,654,149 37,720,843
---------- ----------
Cash and cash equivalents 1,574,455 1,026,560
Restricted cash 513,176 468,992
Accounts and other receivables 88,910 363,192
Leasing commissions and prepaid expense,
net of accumulated amortization of
$258,161 in 1996 and $206,634 in 1995 341,644 265,438
Other assets, net of accumulated amortization of
$245,616 in 1996 and $223,060 in 1995 55,139 77,695
Deferred rent receivable 417,293 479,913
---------- ----------
Total Assets $39,644,766 $40,402,633
=========== ===========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 235,926 $ 204,852
Due to affiliates 416,549 369,326
Security deposits payable 181,316 168,836
Secured note payable 13,963,674 14,140,861
----------- -----------
Total Liabilities 14,797,465 14,883,875
----------- -----------
Partners' Capital (Deficit):
General Partner (206,331) (206,331)
Limited Partners (5,540,000 units outstanding) 25,053,632 25,725,089
----------- -----------
Total Partners' Capital 24,847,301 25,518,758
----------- -----------
Total Liabilities and Partners' Capital $39,644,766 $40,402,633
=========== ===========
Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1996
General Limited
Partner Partners Total
Balance at December 31, 1995 $(206,331) $25,725,089 $25,518,758
Net loss - (671,457) (671,457)
--------- ----------- -----------
Balance at September 30, 1996 $(206,331) $25,053,632 $24,847,301
========== =========== ===========
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
Income
Rental $1,000,954 $ 996,200 $2,978,665 $2,960,441
Interest 25,026 24,771 72,208 72,709
Other 6,674 9,847 16,758 82,981
---------- ---------- ---------- ----------
Total Income 1,032,654 1,030,818 3,067,631 3,116,131
---------- ---------- ---------- ----------
Expenses
Depreciation and amortization 475,824 454,965 1,420,828 1,363,595
Property operating 436,494 555,183 1,319,389 1,474,724
Interest 271,326 277,191 817,409 831,971
General and administrative 48,182 45,752 143,962 112,099
Asset management fee 12,500 12,500 37,500 37,500
---------- ---------- ---------- ----------
Total Expenses 1,244,326 1,345,591 3,739,088 3,819,889
---------- ---------- ---------- ----------
Net Loss $ (211,672) $ (314,773) $ (671,457) $ (703,758)
========== ========== ========== ==========
Net Loss Allocated:
To the General Partner $ - $ - $ - $ -
To the Limited Partners (211,672) (314,773) (671,457) (703,758)
---------- ---------- ---------- ----------
$ (211,672) $ (314,773) $ (671,457) $ (703,758)
========== ========== ========== ==========
Per limited partnership unit
(5,540,000 outstanding) $(.04) $(.06) $(.12) $(.13)
Statements of Cash Flows
For the nine months ended September 30, 1996 1995
Cash Flows From Operating Activities:
Net loss $ (671,457) $ (703,758)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,420,828 1,363,595
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Restricted cash (44,184) (164,136)
Accounts and other receivables 274,282 (8,795)
Prepaid expenses (127,733) (45,577)
Deferred rent receivable 62,620 6,185
Accounts payable and accrued expenses 31,074 175,707
Due to affiliates 47,223 44,880
Security deposits payable 12,480 (10,145)
---------- ----------
Net cash provided by operating activities 1,005,133 657,956
---------- ----------
Cash Flows From Investing Activities:
Additions to real estate (259,343) (530,910)
Accounts payable - real estate (20,708) (52,949)
---------- ----------
Net cash used for investing activities (280,051) (583,859)
---------- ----------
Cash Flows From Financing Activities:
Payments of principal on note payable (177,187) (162,624)
---------- ----------
Net cash used for financing activities (177,187) (162,624)
---------- ----------
Net increase (decrease) in cash and cash equivalents 547,895 (88,527)
Cash and cash equivalents, beginning of period 1,026,560 1,250,842
---------- ----------
Cash and cash equivalents, end of period $1,574,455 $1,162,315
========== ==========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $817,409 $831,971
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 September 30, 1996 and the results of operations for the three
and nine-month periods ended September 30, 1996 and 1995 and cash flows for
the nine-month period ended September 30, 1996 and 1995 and the statement of
partners' capital (deficit) for the nine-month period ended September 30,
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 September 30, 1996, the Partnership had cash and cash equivalents of
$1,574,455, as 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.
The Partnership had restricted cash of $513,176 at September 30, 1996, as
compared with $468,992 at December 31, 1995. The increase is primarily due to
escrow contributions in excess of payments for insurance premiums and real
estate taxes.
Accounts and other receivables were $88,910 at September 30, 1996, as compared
to $363,192 at December 31, 1995. The decrease was primarily caused by the
receipt of real estate tax abatement refunds relating to the 1993-94 and 1994-
95 tax years.
Leasing commissions and prepaid expenses, net of accumulated amortization,
increased from $265,438 at December 31, 1995 to $341,644 at September 30,
1996, primarily due to the payment of insurance premiums, which was partially
offset by the amortization of prepaid insurance.
Accounts payable and accrued expenses increased from $204,852 at December 31,
1995 to $235,926 at September 30, 1996. The increase is primarily the result
of the timing of payments and required accruals for real estate taxes and
audit fees.
The Property was 72% leased at September 30, 1996, representing an increase
from 69.6% at December 31, 1995. During the third quarter of 1996, the
Partnership renewed three leases totaling 2,131 square feet. Two leases
which total 3,552 square feet, representing 2.2% of the Property's net
leasable area, are scheduled to expire during the fourth quarter of 1996.
Although the General Partner will attempt to renew these leases, there can be
no assurance of success in view of 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 market
conditions, 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.
In January 1989, the City of West Hollywood adopted Ordinance No. 214 which
required the installation of sprinklers and other fire/life-safety hardware
in all existing high-rise buildings by January 1992. In April 1992, the City
of West Hollywood extended the deadline for completing the sprinkler retrofit
of tenant areas to February 3, 1997. In response, the General Partner
retained a building code consultant to analyze the fire/life- safety
requirements applicable to the Property and to develop a plan to complete the
sprinkler retrofit. The General Partner's initial plan, which was approved
by the City of West Hollywood, involves performing the remaining retrofit
during the course of remodeling tenant suites in connection with new leasing
and renewals. Under this plan, approximately 36% of the tenant areas and
100% of all common areas have been brought into compliance. As previously
reported, the General Partner approached the City of West Hollywood to
request an extension of the deadline for completion of the required sprinkler
retrofit project. On November 1, 1996, the City of West Hollywood granted
such an extension and has advised that the Partnership has until December 8,
1998 to complete the retrofit of the Property.
Results of Operations
For the three- and nine-month periods ended September 30, 1996, Partnership
operations resulted in net losses of $211,672, and $671,457, respectively, as
compared with net losses of $314,773 and $703,758, for the corresponding
periods in 1995. The decrease in net loss for the three- and nine-month
periods ended September 30, 1996 is primarily due to lower property operating
expenses which was partially offset by higher depreciation and amortization
and general and administrative expenses, and a decrease in other income.
Rental income was largely unchanged and totaled $1,000,954 and $2,978,665,
respectively, for the three- and nine-month periods ended September 30, 1996,
as compared with $996,200 and $2,960,441 for the corresponding periods in
1995. Other income totaled $6,674 and $16,758, respectively, for the three-
and ninemonth periods ended September 30, 1996, as compared with $9,847 and
$82,981, respectively, for the corresponding periods in 1995. The decrease in
other income for the nine-month period in 1996 is primarily attributable to
real estate tax abatement refunds related to prior years recognized in 1995.
For the three- and nine-month periods ended September 30, 1996, property
operating expenses were $436,494 and $1,319,389, respectively, as compared to
$555,183 and $1,474,724 for the corresponding periods in 1995. The decrease
for both periods is mainly due to a reduction in real estate taxes, insurance
expense and utilities.
General and administrative expenses totaled $48,182 and $143,962, respectively,
for the three- and nine-month periods ended September 30, 1996, as compared
with $45,752 and $112,099 for the corresponding periods in 1995. The increase
in general and administrative expenses for the first nine months of 1996 is
primarily due to increases in fees for accounting and investor communications
services and a timing difference for the accounting of such fees.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(a) Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended September 30, 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.
BY: Medical Office Properties Inc.
General Partner
Date: November 13, 1996 BY: /s/ Rocco F. Andriola
President
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Sep-30-1996
<CASH> 1,586,935
<SECURITIES> 000
<RECEIVABLES> 88,910
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 50,282,737
<DEPRECIATION> (13,628,588)
<TOTAL-ASSETS> 39,644,766
<CURRENT-LIABILITIES> 235,926
<BONDS> 13,963,674
<COMMON> 000
000
000
<OTHER-SE> 000
<TOTAL-LIABILITY-AND-EQUITY> 24,847,301
<SALES> 2,978,665
<TOTAL-REVENUES> 3,067,631
<CGS> 000
<TOTAL-COSTS> 1,319,389
<OTHER-EXPENSES> 1,602,290
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 817,409
<INCOME-PRETAX> (671,457)
<INCOME-TAX> 000
<INCOME-CONTINUING> (671,457)
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (671,457)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
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