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 March 31, 1997
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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.)
2355 Waukegan Road
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
March 31, 1997 and December 31, 1996
(UNAUDITED)
ASSETS
1997 1996
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Cash and cash equivalents $ 1,946,870 $ 2,110,693
Accounts and accrued interest receivable 379,135 329,346
Escrow deposits 786,741 786,741
Prepaid expenses 11,136 37,666
Deferred expenses, net of accumulated
amortization of $228,594 in 1997 and
$207,813 in 1996 187,031 207,812
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3,310,913 3,472,258
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Investment in real estate:
Land 2,871,183 2,871,183
Buildings and improvements 27,565,202 27,565,202
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30,436,385 30,436,385
Less accumulated depreciation 12,207,999 11,868,945
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Investment in real estate, net of
accumulated depreciation 18,228,386 18,567,440
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$ 21,539,299 $ 22,039,698
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 126,382 $ 133,424
Due to affiliates 34,412 34,615
Accrued liabilities - principally
real estate taxes 419,517 567,357
Security deposits 46,576 47,323
Mortgage note payable 12,394,617 12,431,154
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Total liabilities 13,021,504 13,213,873
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Contingencies and Commitments
Limited Partners' capital (30,000
Interests issued and outstanding) 9,681,773 9,988,382
General Partner's deficit (1,163,978) (1,162,557)
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Total partners' capital 8,517,795 8,825,825
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$ 21,539,299 $ 22,039,698
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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 March 31, 1997 and 1996
(UNAUDITED)
1997 1996
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Income:
Rental $ 809,616 $ 841,713
Service 607,370 523,333
Interest on short-term investments 29,392 29,255
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Total income 1,446,378 1,394,301
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Expenses:
Interest on mortgage note payable 314,823 318,332
Depreciation 339,054 330,168
Amortization 20,781 20,781
Property operating 671,454 672,817
Real estate taxes 142,065 140,987
Property management fees 58,632 64,362
Administrative 41,699 37,350
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Total expenses 1,588,508 1,584,797
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Net loss $ (142,130) $ (190,496)
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Net loss allocated to General Partner $ (1,421) $ (1,905)
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Net loss allocated to Limited Partners $ (140,709) $ (188,591)
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Net loss per Limited Partnership Interest
(30,000 issued and outstanding) $ (4.69) $ (6.29)
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Distribution to Limited Partners $ 165,900 165,810
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Distribution per Limited Partnership
Interest $ 5.530 5.527
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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 quarters ended March 31, 1997 and 1996
(UNAUDITED)
1997 1996
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Operating activities:
Net loss $ (142,130) $ (190,496)
Adjustments to reconcile net loss to net
cash provided by or used in operating
activities:
Depreciation of property 339,054 330,168
Amortization of deferred expenses 20,781 20,781
Net change in:
Accounts and accrued interest
receivable (49,789) (62,596)
Prepaid expenses 26,530 25,689
Accounts payable (7,042) (11,113)
Due to affiliates (203) 6,942
Accrued liabilities (147,840) (202,001)
Security deposits (747) (700)
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Net cash provided by or used in
operating activities 38,614 (83,326)
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Financing activities:
Distribution to Limited Partners (165,900) (165,810)
Principal payments on mortgage note
payable (36,537) (33,028)
Release of capital improvement escrow 127,750
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Net cash used in financing activities (202,437) (71,088)
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Net change in cash and cash equivalents (163,823) (154,414)
Cash and cash equivalents at beginning
of year 2,110,693 2,406,064
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Cash and cash equivalents at end of period $ 1,946,870 $ 2,251,650
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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 quarter ended March 31,
1997, and all such adjustments are of a normal and recurring nature.
2. Partnership Termination:
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. The Partnership is currently marketing the Centre for sale. If the
property is sold, the timing of the termination of the Partnership and final
distribution of cash will depend upon the nature and extent of liabilities and
contingencies which exist or may arise. Such contingencies may include legal
and other fees stemming from litigation involving the Partnership including,
but not limited to, the lawsuit discussed in Note 5 of Notes to the Financial
Statements. In the absence of any contingency, the reserves will be paid within
twelve months of the property being sold. In the event of a contingency,
reserves may be held by the Partnership for a longer period of time.
3. Interest Expense:
During the three months ended March 31, 1997 and 1996, the Partnership incurred
and paid interest expense on the mortgage note payable of $314,823 and
$318,332, respectively.
4. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 1997 are:
Paid Payable
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Reimbursement of expenses to
the General Partner, at cost $ 8,890 $ 34,412
5. Contingency:
The Partnership is currently involved in a lawsuit whereby the Partnership and
certain affiliates have been named as defendants alleging certain federal
securities law violations with regard to the adequacy and accuracy of
disclosures of information concerning, as well as the marketing efforts related
to, the offering of the Limited Partnership Interests of the Partnership. The
defendants continue to vigorously contest this action. A plaintiff class has
not yet been certified, and no determination of the merits have been made. It
is not determinable at this time whether or not an unfavorable decision in this
action would have a material adverse impact on the financial position,
operations and liquidity of the Partnership. The Partnership believes it has
meritorious defenses to contest the claims.
<PAGE>
6. Subsequent Event:
In April 1997, the Partnership paid $165,900 to Limited Partners representing
the regular quarterly distribution of available Net Cash Receipts of $5.53 per
Interest for the first quarter of 1997.
<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 1996 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
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Higher service income, which was partially offset by a decrease in rental
income, resulted in a decrease in the Partnership's net loss during the three
months ended March 31, 1997 as compared to the same period in 1996. Further
discussion of the operations of the Partnership is summarized below.
1997 Compared to 1996
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Discussions of fluctuations between 1997 and 1996 refer to the quarters ended
March 31, 1997 and 1996.
Rental income decreased approximately $73,000 during 1997 when compared to 1996
primarily due to lower occupancy. This decrease in rental income was partially
offset by additional income of $41,000 related to the early termination of a
lease at the Centre.
The Partnership bills tenants on a monthly basis for common area maintenance
based on estimates. Adjustments are periodically made to these billings once
the Partnership has determined the actual amounts due. Service income increased
during 1997 when compared to 1996 due to higher billings related to common area
maintenance.
As a result of higher accounting and other professional fees incurred by the
Partnership, administrative expenses increased during 1997 when compared to
1996.
<PAGE>
Liquidity and Capital Resources
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The cash position of the Partnership decreased by approximately $164,000 as of
March 31, 1997 when compared to December 31, 1996. The Partnership generated
cash flow of approximately $39,000 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. The
Partnership used cash to fund its financing activities of approximately
$202,000 which consisted of the payment of a distribution totaling
approximately $166,000 to Limited Partners and the payment of principal on the
mortgage note payable of approximately $36,000.
As of March 31, 1997, the occupancy rate at the Centre was 79%. During each of
1997 and 1996, 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. The Partnership is currently marketing the
Centre for sale. If the property is sold, the timing of the termination of the
Partnership and final distribution of cash will depend upon the nature and
extent of liabilities and contingencies which exist or may arise. Such
contingencies may include legal and other fees stemming from litigation
involving the Partnership including, but not limited to, the lawsuit discussed
in Note 5 of Notes to Financial Statements. In the absence of any contingency,
the reserves will be paid within twelve months of the property being sold. In
the event of a contingency, reserves may be held by the Partnership for a
longer period of time. In light of results to date and current market
conditions, the General Partner does not anticipate that investors will recover
all of their original investment.
In April 1997, the Partnership paid a distribution of Net Cash Receipts of
$165,900 ($5.53 per Interest) to the holders of Limited Partnership Interests
for the first quarter of 1997. This distribution is consistent with the amount
distributed for the fourth quarter of 1996. Including the April 1997
distribution, Limited Partners have received distributions of Net Cash Receipts
of $305.01 and Net Cash Proceeds of $263.08, totaling $568.09 per $1,000
Interest. The Partnership expects to continue making quarterly distributions
from cash flow from property operations. 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 September 30, 1992 (Commission File
No. 0-16717) are incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the three month period
ending March 31, 1997 is attached hereto.
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter
ended March 31, 1997.
<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/ Jayne A. Kosik
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Jayne A. Kosik
Managing Director and Chief Financial
Officer (Principal Accounting Officer) of
Balcor Partners-XXII, the General Partner
Date: May 8, 1997
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<PAGE>
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