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, 1997
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,
1997 1996
Assets
Real estate, at cost:
Land $8,379,434 $8,379,434
Building, building improvements and equipment 42,054,472 41,921,813
50,433,906 50,301,247
Less accumulated depreciation (14,916,302) (14,031,118)
35,517,604 36,270,129
Cash and cash equivalents 1,617,103 1,648,513
Restricted cash 437,181 498,257
Accounts and other receivables 57,253 105,552
Leasing commissions and prepaid expense,
net of accumulated amortization of
$246,844 in 1997 and $212,762 in 1996 369,688 292,542
Other assets, net of accumulated amortization of
$268,173 in 1997 and $253,135 in 1996 32,582 47,620
Deferred rent receivable 382,706 388,464
Total Assets $38,414,117 $39,251,077
Liabilities and Partners' Capital (Deficit)
Liabilities:
Accounts payable and accrued expenses $ 160,814 $ 213,517
Due to affiliates -- 337,765
Security deposits payable 185,140 179,725
Secured note payable 13,775,917 13,902,293
Total Liabilities 14,121,871 14,633,300
Partners' Capital (Deficit):
General Partner (206,331) (206,331)
Limited Partners (5,540,000 units outstanding) 24,498,577 24,824,108
Total Partners' Capital 24,292,246 24,617,777
Total Liabilities and Partners' Capital $38,414,117 $39,251,077
Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1997
General Limited
Partner Partners Total
Balance at December 31, 1996 $(206,331) $24,824,108 $24,617,777
Net loss -- (325,531) (325,531)
Balance at June 30, 1997 $(206,331) $24,498,577 $24,292,246
Statements of Operations
Three months Six months
ended June 30, ended June 30,
1997 1996 1997 1996
Income
Rental $ 980,339 $ 985,390 $2,026,400 $1,977,711
Interest 29,044 25,144 59,169 47,182
Other 20,698 3,116 24,475 10,084
Total Income 1,030,081 1,013,650 2,110,044 2,034,977
Expenses
Depreciation and amortization 453,846 472,047 934,304 945,004
Property operating 440,571 446,773 853,411 882,895
Interest 267,734 272,477 536,689 546,083
General and administrative 42,819 51,158 86,171 95,780
Asset management fee 12,500 12,500 25,000 25,000
Total Expenses 1,217,470 1,254,955 2,435,575 2,494,762
Net Loss $ (187,389) $ (241,305) $ (325,531) $ (459,785)
Net Loss Allocated:
To the General Partner $ -- $ -- $ -- $ --
To the Limited Partners (187,389) (241,305) (325,531) (459,785)
$ (187,389) $ (241,305) $ (325,531) $ (459,785)
Per limited partnership unit
(5,540,000 outstanding) $(.03) $(.04) $(.06) $(.08)
Statements of Cash Flows
For the six months ended June 30, 1997 1996
Cash Flows From Operating Activities
Net loss $ (325,531) $ (459,785)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 934,304 945,004
Increase (decrease) in cash arising from changes
in operating assets and liabilities
Restricted cash 61,076 107,658
Accounts and other receivables 48,299 237,949
Prepaid expenses (111,228) (168,328)
Deferred rent receivable 5,758 36,148
Accounts payable and accrued expenses (52,703) (39,513)
Due to affiliates (337,765) 25,000
Security deposits payable 5,415 8,471
Net cash provided by operating activities 227,625 692,604
Cash Flows From Investing Activities
Additions to real estate (143,526) (240,541)
Accounts payable - real estate 10,867 27,589
Net cash used for investing activities (132,659) (212,952)
Cash Flows From Financing Activities
Payments of principal on secured note payable (126,376) (116,980)
Net cash used for financing activities (126,376) (116,980)
Net increase (decrease) in cash and cash equivalents (31,410) 362,672
Cash and cash equivalents, beginning of period 1,648,513 1,026,560
Cash and cash equivalents, end of period $1,617,103 $1,389,232
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ 536,689 $ 546,083
Notes to the Financial Statements
The unaudited financial statements should be read in conjunction
with the Partnership's annual 1996 audited financial statements
within Form 10-K.
The unaudited financial statements include all normal and
recurring adjustments which are, in the opinion of management,
necessary to present a fair statement of financial position as of
June 30, 1997 and the results of operations for the three- and
six-month periods ended June 30, 1997 and 1996 and cash flows for
the six-month periods ended June 30, 1997 and 1996 and the
statement of partners' capital (deficit) for the six-month
periods ended June 30, 1997. Results of operations for the
period are not necessarily indicative of the results to be
expected for the full year.
Certain prior year amounts have been reclassified to conform to
the current year's presentation.
No significant events have occurred subsequent to fiscal year
1996, 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, 1997, the Partnership had cash and cash equivalents
of $1,617,103, compared with $1,648,513 at December 31, 1996.
The slight decrease is attributable to cash used for real estate
additions and mortgage principal payments exceeding net cash
provided by operating activities. Net cash provided by operating
activities decreased primarily as a result of the payment of
certain accrued expenses and asset management fees in the second
quarter.
At June 30, 1997, the Partnership had restricted cash, which is
comprised of security deposits and real estate tax and insurance
escrows, of $437,181, compared with $498,257 at December 31, 1996.
The decrease is primarily due to the payment of insurance premiums
and real estate taxes.
Accounts and other receivables were $57,253 at June 30, 1997,
compared to $105,552 at December 31, 1996. The decrease is
primarily due to the receipt of real estate tax abatements for the
1994-95 tax year in 1997 and the timing of rental receipts.
Leasing commissions and prepaid expenses, net of accumulated
amortization, increased from $292,542 at December 31, 1996, to
$369,688 at June 30, 1997. The increase primarily represents the
prepayment of the Property's annual insurance expenses.
At June 30, 1997, other assets were $32,582 compared to $47,620 at
year-end 1996. The decrease is due to the amortization of prepaid
interest and intangible assets for the period ended June 30, 1997.
Accounts payable and accrued expenses decreased from $213,517 at
December 31, 1996 to $160,814 at June 30, 1997. The decrease is
primarily the result of the timing of invoice payments.
Due to affiliates was zero at June 30, 1997, compared to $337,765
at year-end 1996. The reduction is the result of the payment of
accrued management fees.
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 the Partnership
cash reserves, to the extent possible.
The General Partner has commenced marketing the Beverly Sunset
Medical Building (the "Property") for sale and has engaged Ramsey-
Shilling Commercial Real Estate Services, Inc. to assist with the
Partnership's marketing efforts. The Partnership has already
received unsolicited bids to purchase the Property, and the
General Partner believes it is likely that the Property will be
sold in 1997. However, there can be no assurance that the
Partnership's marketing efforts will result in a sale of the
Property within this time frame or that any sale, if completed,
will result in a particular price.
The Property's occupancy level declined to 71.5% at
June 30, 1997, compared to 72% at June 30, 1996. Despite the
decline in occupancy at June 30, 1997, the average occupancy for
the first six months of 1997 was 72%, compared to 71% for the
first six months of 1996.
Results of Operations
For the three- and six-month periods ended June 30, 1997,
Partnership operations resulted in net losses of $187,389, and
$325,531, respectively, compared with net losses of $241,305, and
$459,785, for the corresponding periods in 1996. The decrease in
net losses are mainly due to higher total income and lower
property operating expenses, general and administrative expenses,
and depreciation and amortization.
Rental income totaled $980,339 and $2,026,400 for the three- and
six-month periods ended June 30, 1997, respectively, compared
with $985,390 and $1,977,711 for the corresponding periods in
1996. The slight increase for the six month period is the result
of the increase in average occupancy for the six months ended
June 30, 1997 compared to the same period in 1996. Interest
income was $29,044 and $59,169 for the three- and six- month
periods ended June 30, 1997, compared to $25,144 and $47,182,
respectively, for the 1996 periods as the result of the
Partnership maintaining a higher cash balance in 1997. Other
income totaled $20,698 and $24,475 for the three and six months
ended June 30, 1997, compared with $3,116 and $10,084,
respectively, for the 1996 periods. The increases are primarily
attributable to a tenant reimbursement combined with the receipt
of real estate tax abatements for the 1994-1995 tax year.
For the three- and six-month periods ended June 30, 1997,
property operating expenses were $440,571 and $853,411,
respectively, compared to $446,773 and $882,895 for the
corresponding periods in 1996. The decreases are mainly due to a
reduction in miscellaneous building operating expenses, real
estate tax expenses, payroll and advertising expense.
General and administrative expenses totaled $42,819 and $86,171,
for the three- and six-month periods ended June 30, 1997,
respectively, compared with $51,158 and $95,780 for the
corresponding periods in 1996. General and administrative
expenses were lower in 1997 due to lower partnership servicing
fees and travel related expenditures.
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 June 30, 1997.
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 13, 1997 BY: /s/ Mark Marcucci
Name: Mark Marcucci
Title: Director and President
Date: August 13, 1997 BY: /s/ Timothy Needham
Name: Timothy Needham
Title: Vice President and Chief Financial Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Jun-30-1997
<CASH> 2,054,284
<SECURITIES> 0
<RECEIVABLES> 57,253
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 50,433,906
<DEPRECIATION> 14,916,302
<TOTAL-ASSETS> 38,414,117
<CURRENT-LIABILITIES> 345,954
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 24,292,246
<TOTAL-LIABILITY-AND-EQUITY> 38,414,117
<SALES> 2,026,400
<TOTAL-REVENUES> 2,110,044
<CGS> 0
<TOTAL-COSTS> 853,411
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 536,689
<INCOME-PRETAX> (325,531)
<INCOME-TAX> 0
<INCOME-CONTINUING> (325,531)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (325,531)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
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