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
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EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-16717
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OUTLET CENTRE PARTNERS
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(Exact name of registrant as specified in its charter)
Illinois 36-3498737
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Balcor
2355 Waukegan Rd., Bannockburn, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
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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
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<PAGE>
OUTLET CENTRE PARTNERS
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(UNAUDITED)
ASSETS
1996 1995
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Cash and cash equivalents $ 2,369,921 $ 2,406,064
Accounts and accrued interest receivable 149,468 40,445
Escrow deposits 769,650 961,250
Prepaid expenses 84,250 33,798
Deferred expenses, net of accumulated
amortization of $166,250 in 1996 and
$124,688 in 1995 249,375 290,937
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3,622,664 3,732,494
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Investment in real estate:
Land 2,871,183 2,871,183
Buildings and improvements 27,565,202 27,565,202
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30,436,385 30,436,385
Less accumulated depreciation 11,208,609 10,548,272
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Investment in real estate, net of
accumulated depreciation 19,227,776 19,888,113
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$ 22,850,440 $ 23,620,607
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 124,150 $ 137,181
Due to affiliates 21,403 13,933
Accrued liabilities - principally
real estate taxes 557,878 618,892
Security deposits 47,419 48,119
Mortgage note payable 12,501,519 12,568,420
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Total liabilities 13,252,369 13,386,545
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Limited Partners' capital (30,000
Interests issued and outstanding) 10,756,222 11,389,169
General Partner's deficit (1,158,151) (1,155,107)
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Total partners' capital 9,598,071 10,234,062
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$ 22,850,440 $ 23,620,607
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The accompanying notes are an integral part of the financial statements.
<PAGE>
OUTLET CENTRE PARTNERS
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1996 and 1995
(UNAUDITED)
1996 1995
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Income:
Rental $ 1,590,786 $ 1,569,925
Service 910,899 1,074,630
Interest on short-term investments 57,992 55,107
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Total income 2,559,677 2,699,662
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Expenses:
Interest on mortgage note payable 635,819 642,245
Depreciation 660,337 615,080
Amortization 41,562 41,562
Property operating 1,039,897 1,108,972
Real estate taxes 281,975 279,172
Property management fees 115,555 131,528
Administrative 88,903 114,681
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Total expenses 2,864,048 2,933,240
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Net loss $ (304,371) $ (233,578)
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Net loss allocated to General Partner $ (3,044) $ (2,336)
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Net loss allocated to Limited Partners $ (301,327) $ (231,242)
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Net loss per Limited Partnership Interest
(30,000 issued and outstanding) $ (10.04) $ (7.71)
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Distributions to Limited Partners $ 331,620 None
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Distributions per Limited Partnership
Interest $ 11.054 None
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The accompanying notes are an integral part of the financial statements.
<PAGE>
OUTLET CENTRE PARTNERS
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1996 and 1995
(UNAUDITED)
1996 1995
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Income:
Rental $ 749,073 $ 828,270
Service 387,566 536,299
Interest on short-term investments 28,737 24,810
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Total income 1,165,376 1,389,379
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Expenses:
Interest on mortgage note payable 317,487 320,741
Depreciation 330,169 295,077
Amortization 20,781 20,781
Property operating 367,080 451,245
Real estate taxes 140,988 142,712
Property management fees 51,193 66,396
Administrative 51,553 70,874
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Total expenses 1,279,251 1,367,826
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Net (loss) income $ (113,875) $ 21,553
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Net (loss) income allocated to General Partner $ (1,139) $ 215
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Net (loss) income allocated to Limited Partners$ (112,736) $ 21,338
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Net (loss) income per Limited Partnership
Interest (30,000 issued and outstanding) $ (3.75) $ 0.71
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Distribution to Limited Partners $ 165,810 None
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Distribution per Limited Partnership
Interest $ 5.527 None
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The accompanying notes are an integral part of the financial statements.
<PAGE>
OUTLET CENTRE PARTNERS
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1996 and 1995
(UNAUDITED)
1996 1995
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Operating activities:
Net loss $ (304,371) $ (233,578)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation of property 660,337 615,080
Amortization of deferred expenses 41,562 41,562
Net change in:
Accounts and accrued interest
receivable (109,023) (26,052)
Escrow deposits (27,726)
Prepaid expenses (50,452) (81,086)
Accounts payable (13,031) (36,514)
Due to affiliates 7,470 (42,110)
Accrued liabilities (61,014)
Security deposits (700) 700
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Net cash provided by operating activities 170,778 210,276
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Financing activities:
Distributions to Limited Partners (331,620)
Principal payments on mortgage note payable (66,901) (60,475)
Release of capital improvement escrow 191,600
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Net cash used in financing activities (206,921) (60,475)
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Net change in cash and cash equivalents (36,143) 149,801
Cash and cash equivalents at beginning of year 2,406,064 1,819,294
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Cash and cash equivalents at end of period $ 2,369,921 $ 1,969,095
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The accompanying notes are an integral part of the financial statements.
<PAGE>
OUTLET CENTRE PARTNERS
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the six months and quarter
ended June 30, 1996, and all such adjustments are of a normal and recurring
nature.
2. Interest Expense:
During the six months ended June 30, 1996 and 1995, the Partnership incurred
and paid interest expense on the mortgage note payable of $635,819 and
$642,245, respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
six months and quarter ended June 30, 1996 are:
Paid
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Six Months Quarter Payable
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Reimbursement of expenses to
the General Partner, at cost $ 26,566 $ 19,205 $ 21,403
4. Subsequent Event:
In July 1996, the Partnership paid $165,810 ($5.527 per Interest) to the
holders of Limited Partnership Interests representing a regular quarterly
distribution of available Net Cash Receipts for the second quarter of 1996.
<PAGE>
OUTLET CENTRE PARTNERS
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Outlet Centre Partners (the "Partnership") was formed in 1987 and owns and
operates the Factory Outlet Centre (the "Centre") in Bristol, Wisconsin. The
Partnership raised $30,000,000 through the sale of Limited Partnership
Interests and utilized these proceeds to acquire the Centre.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1995 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
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Decreased real estate tax reimbursements from tenants at the Centre was the
primary reason the Partnership's net loss increased during the six months ended
June 30, 1996 when compared to the same period in 1995 and the Partnership
recognized net income during the quarter ended June 30, 1996 as compared to a
net loss during the same period in 1995. Further discussion of the
Partnership's operations is summarized below.
1996 Compared to 1995
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Unless otherwise noted, discussions of fluctuations between 1996 and 1995 refer
to both the six months and quarters ended June 30, 1996 and 1995.
The Partnership bills tenants on a monthly basis for common area maintenance,
real estate taxes and other operating expenses of the Centre based on
estimates. Adjustments are periodically made to these billings once the
Partnership has determined the actual amounts due. The periodic adjustment of
billings for real estate taxes resulted in decreased reimbursements from
tenants due to a prior year reduction in the assessed value of the Centre
levied by the local taxing authority and was the primary reason service income
and, consequently, property management fees decreased during 1996 when compared
to 1995.
Capitalized improvements during 1995 at the Centre resulted in an increase in
depreciation expense during 1996 when compared to 1995.
Higher tenant related expenditures were incurred in 1995 resulting from leasing
activity in late 1994. This resulted in a decrease in property operating
expense during 1996 when compared to 1995.
As a result of lower accounting fees incurred by the Partnership,
administrative expenses decreased during 1996 when compared to 1995.
<PAGE>
Liquidity and Capital Resources
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The cash position of the Partnership decreased by approximately $36,000 as of
June 30, 1996 when compared to December 31, 1995. The Partnership generated
cash flow of approximately $171,000 from its operating activities. The
operating activities reflect the operations of the Centre, interest income
earned on short-term investments, and the payment of administrative expenses of
the Partnership. The Partnership used cash to fund its financing activities of
approximately $207,000 which consisted of the payment of distributions totaling
approximately $332,000 to Limited Partners and the payment of principal on the
mortgage note payable of approximately $67,000, net of the release of
approximately $192,000 from the Partnership's capital improvement escrow.
As of June 30, 1996, the occupancy rate at the Centre was 82%, and during each
of 1996 and 1995, the Centre generated positive cash flow, which is defined as
an amount equal to the property's revenue receipts less property related
expenses, which include debt service payments. Although the General Partner has
no current plans to sell the property, the receipt of an attractive unsolicited
offer or changing market conditions could change this strategy.
In July 1996, the Partnership paid $165,810 ($5.527 per Interest) to the
holders of Limited Partnership Interests representing a regular quarterly
distribution of available Net Cash Receipts for the second quarter of 1996. The
level of the regular quarterly distribution is consistent with the amount
distributed for the first quarter of 1996. Including the July 1996
distribution, investors have received distributions of Net Cash Receipts of
$288.42 and Net Cash Proceeds of $263.08, totaling $551.50 per $1,000 Interest.
The Partnership expects that cash flow from property operations will allow the
Partnership to continue making quarterly distributions. However, the level of
future distributions will be dependent on the cash flow generated by the
Centre. The General Partner believes it has retained, on behalf of the
Partnership, an appropriate amount of working capital to meet cash or liquidity
requirements which may occur.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
<PAGE>
OUTLET CENTRE PARTNERS
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
(4) Form of Subscription Agreement previously filed as Exhibit No. 4.1 to
Amendment No. 1 to the Registrant's Registration Statement on Form S-11 dated
April 2, 1987 (Registration No. 33-13097) and Form of Confirmation regarding
Interests in the Partnership set forth as Exhibit 4.2 to the Registrant's
Report on Form 10-Q for the quarter ended June 30, 1992 (Commission File No.
0-16717) are incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the six month period ending
June 30, 1996 is attached hereto.
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter
ended June 30, 1996.
<PAGE>
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.
OUTLET CENTRE PARTNERS
By: /s/Thomas E. Meador
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Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Partners-XXII, the General Partner
By: /s/Brian D. Parker
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Brian D. Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Partners-XXII, the
General Partner
Date: August 13, 1996
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<PAGE>
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