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, 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 June 30, At December 31,
1996 1995
Assets
Property:
Land $ 8,379,434 $ 8,379,434
Building, building improvements and equipment 41,836,204 1,623,252
50,215,638 50,002,686
Less accumulated depreciation (13,178,538) (12,281,843)
37,037,100 37,720,843
Cash and cash equivalents 1,389,232 1,026,560
Restricted cash 361,334 468,992
Accounts and other receivables 125,243 363,192
Leasing commissions and prepaid expense,
net of accumulated amortization of
$239,906 in 1996 and $206,634 in 1995 400,494 265,438
Other assets, net of accumulated amortization of
$238,097 in 1996 and $223,060 in 1995 62,658 77,695
Deferred rent receivable 443,765 479,913
Total Assets $ 39,819,826 $ 40,402,633
Liabilities and Partners' Capital (Deficit)
Liabilities:
Accounts payable and accrued expenses $ 177,529 $ 204,852
Due to affiliates 382,136 369,326
Security deposits payable 177,307 168,836
Secured note payable 14,023,881 14,140,861
Total Liabilities 14,760,853 14,883,875
Partners' Capital (Deficit):
General Partner (206,331) (206,331)
Limited Partners (5,540,000 units outstanding) 25,265,304 25,725,089
Total Partners' Capital 25,058,973 25,518,758
Total Liabilities and Partners' Capital $ 39,819,826 $ 40,402,633
Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1996
General Limited
Partner Partners Total
Balance at December 31, 1995 $(206,331) $25,725,089 $25,518,758
Net loss 0 (459,785) (459,785)
Balance at June 30, 1996 $(206,331) $25,265,304 $25,058,973
Statements of Operations
Three months Six months
ended June 30, ended June 30,
1996 1995 1996 1995
Income
Rental $ 985,390 $ 984,940 $1,977,711 $1,964,241
Interest 25,144 23,386 47,182 47,938
Other 3,116 73,134 10,084 73,134
Total Income 1,013,650 1,081,460 2,034,977 2,085,313
Expenses
Depreciation and amortization 472,047 452,530 945,004 908,630
Property operating 446,773 485,126 882,895 919,541
Interest 272,477 276,867 546,083 554,780
General and administrative 51,158 45,054 95,780 66,347
Asset management fee 12,500 12,500 25,000 25,000
Total Expenses 1,254,955 1,272,077 2,494,762 2,474,298
Net Loss $ (241,305) $ (190,617) $(459,785) $(388,985)
Net Loss Allocated:
To the General Partner $ 0 $ 0 $ 0 $ 0
To the Limited Partners (241,305) (190,617) (459,785) (388,985)
$ (241,305) $ (190,617) $(459,785) $(388,985)
Per limited partnership unit
(5,540,000 outstanding) $(.04) $(.03) $(.08) $(.07)
Statements of Cash Flows
For the six months ended June 30, 1996 1995
Cash Flows From Operating Activities
Net loss $ (459,785) $ (388,985)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 945,004 908,630
Increase (decrease) in cash arising from changes
in operating assets and liabilities
Restricted cash 107,658 (328,001)
Accounts receivable 237,949 2,494
Prepaid expenses (168,328) 67,013
Deferred rent receivable 36,148 27,275
Accounts payable and accrued expenses (27,323) (63,186)
Due to affiliates 12,810 10,789
Security deposits payable 8,471 (8,087)
Net cash provided by operating activities 692,604 227,942
Cash Flows From Investing Activities
Additions to real estate (240,541) (355,471)
Accounts payable - real estate 27,589 (20,149)
Net cash used for investing activities (212,952) (375,620)
Cash Flows From Financing Activities
Payments of principal on note payable (116,980) (108,283)
Net cash used for financing activities (116,980) (108,283)
Net increase (decrease) in cash and cash equivalents 362,672 (255,961)
Cash and cash equivalents, beginning of period 1,026,560 1,250,842
Cash and cash equivalents, end of period $1,389,232 $ 994,881
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ 546,083 $ 554,780
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 June 30, 1996 and the
results of operations for the three- and six-month periods ended
June 30, 1996 and 1995; and cash flows for the six-month period
ended June 30, 1996 and 1995 and the statement of changes in
partner's capital (deficit) for the six-month period ended June
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 June 30, 1996, the Partnership had cash and cash equivalents
of $1,389,232 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 $361,334 at June 30, 1996,
compared with $468,992 at December 31, 1995. The decrease is
primarily due to the payment of insurance premiums and real
estate taxes.
Accounts receivable were $125,243 at June 30, 1996, compared to
$363,192 at December 31, 1995. The decrease relates 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, increased from $265,438 at December 31, 1995 to
$400,494 at June 30, 1996. The increase represents the payment
of insurance premiums and was partially offset by the
amortization of prepaid insurance.
Accounts payable and accrued expenses decreased from $204,852 at
December 31, 1995 to $177,529 at June 30, 1996. The decrease is
primarily the result of the timing of payments and required
accruals for professional fees, audit fees, printing and postage.
The decrease was partially offset by an increase in accruals for
tenant improvements.
The Property was 72% leased at June 30, 1996, up from 69.8% at
March 31, 1996 and 69.6% at December 31, 1995. In the second
quarter of 1996, the Partnership signed three new leases totaling
3,472 square feet and renewed two leases totaling 4,170 square
feet. Four leases totaling 5,145 square feet, representing 3.2%
of the Property's total leasable space, are scheduled to expire
during the remainder of 1996. Although the General Partner will
attempt 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 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 requires 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.
The General Partner has approached the City of West Hollywood to
request an extension of the deadline for completion of the
required sprinkler retrofit project, and we are currently
awaiting the City's response.
Results of Operations
For the three- and six-month periods ended June 30, 1996,
Partnership operations resulted in net losses of $241,305, and
$459,785, respectively, compared with net losses of $190,617 and
$388,985, for the corresponding periods in 1995. The higher net
loss for the three- and six-month periods ended June 30, 1996 is
mainly due to higher depreciation and amortization and general
and administrative expenses, and a decrease in other income.
Rental income was largely unchanged and totaled $985,390 and
$1,977,711, respectively, for the three- and six-month periods
ended June 30, 1996, compared with $984,940 and $1,964,241 for
the corresponding periods in 1995. Other income totaled $3,116
and $10,084, respectively, for the three- and six-month periods
ended June 30, 1996, compared with $73,134 for both of the
corresponding periods in 1995. The decrease in other income in
both the three- and six-month periods in 1996 can be primarily
attributed to real estate tax abatements related to prior years
recognized in the first half of 1995.
For the three- and six-month periods ended June 30, 1996,
property operating expenses were $446,773 and $882,895,
respectively, compared to $485,126 and $919,541 for the
corresponding periods in 1995. The decrease for both periods is
mainly due to a reduction in real estate tax expenses, repairs
and maintenance, advertising and insurance expense. These
decreases were partially offset by an increase in miscellaneous
building operating expenses, space planning costs and legal fees
associated with the Hamburger Hamlet bankruptcy.
General and administrative expenses totaled $51,158 and $95,780,
respectively, for the three- and six-month periods ended
June 30, 1996, compared with $45,054 and $66,347 for the
corresponding periods in 1995. General and administrative
expenses were lower in the first half 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
(a) Reports on Form 8-K - No reports on Form 8-K
were filed during the quarter ended June 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: August 12, 1996 BY: /s/ Rocco F. Andriola
President
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<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Jun-30-1996
<CASH> 1,389,232
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<RECEIVABLES> 125,243
<ALLOWANCES> 0
<INVENTORY> 0
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<PP&E> 50,215,638
<DEPRECIATION> (13,178,538)
<TOTAL-ASSETS> 39,819,826
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<OTHER-SE> 0
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<TOTAL-REVENUES> 2,034,977
<CGS> 0
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 546,083
<INCOME-PRETAX> (459,785)
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<INCOME-CONTINUING> (459,785)
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