UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
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(Title of class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. X
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Item 7. Management's Discussion and Analysis of Financial Condition and
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Results of Operations
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Operations
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Summary of Operations
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Property operations decreased at the Centre during 1996 as compared to 1995 and
during 1995 as compared to 1994. This resulted in an increase in the
Partnership's net loss during 1996 as compared to 1995 and during 1995 as
compared to 1994. Further discussion of the operations of Outlet Centre
Partners (the "Partnership") is summarized below.
1996 Compared to 1995
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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's reduction in the assessed value of the Centre
levied by the local taxing authority and was the primary reason service income
decreased during 1996 when compared to 1995.
As a result of higher average cash balances due to interest earned on capital
improvement escrows, interest income on short-term investments increased during
1996 when compared to 1995.
Increased marketing costs were incurred in order to maintain occupancy. This,
along with air conditioning and ventilation repairs and upgrades and insurance
deductibles paid in relation to an April 1996 storm, resulted in an increase in
property operating expense during 1996 when compared to 1995.
Decreased service income, as mentioned above, resulted in a decrease in
property management fees during 1996 when compared to 1995.
As a result of lower accounting, portfolio management, and legal fees incurred
by the Partnership, administrative expenses decreased during 1996 when compared
to 1995.
1995 Compared to 1994
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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 during 1994, combined with slightly lower occupancy at the Centre
during 1995, have resulted in a decrease in service income during 1995 when
compared to 1994.
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As a result of higher interest rates and higher average cash balances, interest
income on short-term investments increased during 1995 when compared to 1994.
As a result of legal, portfolio management and other professional fees incurred
during 1994 in connection with the June 1994 refinancing, administrative
expenses decreased during 1995 when compared to 1994.
Liquidity and Capital Resources
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The cash position of the Partnership decreased by approximately $295,000 as of
December 31, 1996 when compared to December 31, 1995. The Partnership generated
cash flow of approximately $313,000 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
and expenditures related to the damage caused by a storm during 1996. The
Partnership expects to be reimbursed by its insurance carrier for costs of the
damage, less deductibles. The Partnership used cash to fund its financing
activities of approximately $609,000 which consisted of the payment of
distributions totaling approximately $663,000 to Limited Partners and the
payment of principal on the mortgage note payable of approximately $137,000,
plus the receipt of approximately $192,000 from the Partnership's capital
improvement escrow.
As of December 31, 1996, the occupancy rate at the Centre was 83%, 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. 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 "Item 3. Legal Proceedings." 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.
The Centre experienced a high rate of lease expirations during 1996. However,
through successful leasing strategies and efforts, many tenant leases were
renewed and several significant new tenants were added to the tenant mix. These
leasing strategies and efforts are continuing as additional tenant leases
expire. The Centre also has continued its media and marketing campaign. In
addition, continued repairs and upgrades are required in order for the Centre
to remain attractive to tenants and shoppers. The success of this media
campaign and the leasing and repair programs will impact the level of future
cash flow which may be generated by the Centre, as well as the future sale
price which may be obtained by the Partnership. Lakeside Marketplace, an outlet
strip center located three miles south of the Centre, has announced
construction of their third phase which they anticipate to have completed by
the first quarter of 1997. This 120,000 square foot expansion may impact the
ability to lease the Centre as well as tenant sales.
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The Partnership made distributions totaling $22.11 and $5.53 per Interest in
1996 and 1995, respectively. See Statement of Partners Capital for additional
information. All of these distributions were comprised of Net Cash Receipts. In
January 1994, quarterly distributions to Limited Partners were suspended in
order to provide the working capital necessary to complete the refinancing of
the Centre's mortgage note payable. With the completion of the refinancing in
June 1994 and the subsequent replenishing of cash reserves from operations, the
Partnership resumed quarterly distributions in October 1995. In January 1997,
the Partnership paid $165,810 ($5.527 per Interest) to the holders of Limited
Partnership Interests for the fourth quarter of 1996. Including the January
1997 distribution, Limited Partners have received distributions of Net Cash
Receipts of $299.48 and Net Cash Proceeds of $263.08, totaling $562.56 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.
Certain statements in this Form 10-K constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. These
statements may include projections of revenues, income or losses, capital
expenditures, plans for future operations, financing plans or requirements, and
plans relating to the property of the Partnership, as well as assumptions
relating to the foregoing.
The forward-looking statements made by the Partnership are subject to known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Partnership to differ materially
from any future results, performance or achievements expressed or implied by
the forward-looking statements.
Comparison of Actual Operations and the Financial Forecast
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The Financial Forecast and Supplemental Projections included in the
Partnership's Prospectus forecasted the operations of the Partnership for a ten
year period beginning January 1, 1988 and ending December 31, 1997. The
Partnership incurred a net loss of $744,997 during the year ended December 31,
1996, whereas net income of approximately $1,569,000 was originally forecasted
for this period. The difference was primarily a result of lower than forecasted
rental income and higher expenditures related to the ongoing media and
marketing campaign and various improvements at the Centre. The General Partner
anticipates that the actual operations for 1997 will also be significantly
lower than the forecasted operations for 1997 in the Prospectus due primarily
to lower than originally forecasted rental collections.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of l934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
OUTLET CENTRE PARTNERS
By: /s/ Jayne Kosik
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Jayne A. Kosik
Managing Director and Chief
Financial Officer (Principal
Accounting and Financial
Officer) of Balcor Partners-XXII,
the General Partner
Date: April 4, 1997
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Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
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President and Chief Executive
Officer (Principal Executive
Officer) of Balcor Partners-XXII,
/s/ Thomas E. Meador the General Partner April 4, 1997
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Thomas E. Meador
Managing Director and Chief
Financial Officer (Principal
Accounting and Financial
Officer) of Balcor Partners-XXII,
/s/ Jayne A. Kosik the General Partner April 4, 1997
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Jayne A. Kosik
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