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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
[] TRANSITION REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________to___________
Commission File Number 0-17602
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ChrisKen Partners Cash Income Fund L.P.
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(Exact name of small business issuer as Specified in its
certificate of Limited partnership)
Delaware 36-3521124
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
345 North Canal Street, Chicago, Illinois 60606
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(Address of principal executive offices) (Zip Code)
(312) 454-1626
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(Issuer's telephone number)
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(Former name, former address and formal fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 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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ChrisKen PARTNERS CASH INCOME FUND L.P.
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (UNAUDITED)
Condensed Consolidated Balance Sheet at
June 30, 2000 2
Condensed Consolidated Statements of Income
for the Three and Six Months Ended
June 30, 2000 and 1999 3
Condensed Consolidated Statement of Partners'
Capital for the Six Months Ended
June 30, 2000 4
Condensed Consolidated Statements of Cash Flows for
the Six Months Ended June 30, 2000
and 1999 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis or
Plan of Operation 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submissions of Matters to a Vote of
Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURE 12
</TABLE>
1
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Chrisken Partners Cash Income Fund L.P.
(A DELAWARE LIMITED PARTNERSHIP)
Condensed Consolidated Balance Sheet
June 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Cash and cash equivalents $ 401,375
Restricted cash 377,320
Accounts receivable 50,912
Prepaid expenses 20,669
-------------------
850,276
Investment in real estate, at cost:
Land 2,253,734
Buildings and improvements 10,903,215
Personal property 417,080
-------------------
13,574,029
Accumulated depreciation (2,841,511)
-------------------
10,732,518
-------------------
Total assets $11,582,794
===================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 50,984
Tenants' security deposits 99,763
Deferred income and prepaid rent 114,943
Accrued real estate taxes 213,247
-------------------
Total liabilities 478,937
Partners' capital, 35,977 limited partnership units issued and outstanding
11,103,857
-------------------
Total liabilities and partners' capital $11,582,794
===================
</TABLE>
SEE ACCOMPANYING NOTES.
2
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Chrisken Partners Cash Income Fund L.P.
(A DELAWARE LIMITED PARTNERSHIP)
Condensed Consolidated Statements of Income
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
2000 1999 2000 1999
-----------------------------------------------------------------
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 689,981 $ 691,994 $1,392,832 $1,369,748
Interest 8,338 10,220 20,155 22,162
Other 31,712 31,662 67,583 65,588
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Total revenue 730,031 733,876 1,480,570 1,457,498
EXPENSES
Property operations 136,506 127,220 265,069 264,834
Depreciation 132,443 132,443 264,886 264,886
General and administrative 194,578 171,898 406,470 375,247
Management fees - Affiliate 36,272 39,097 76,892 77,237
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Total expenses 499,799 470,658 1,013,317 982,204
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Net income $ 230,232 $ 263,218 $ 467,253 $ 475,294
=================================================================
Net income allocated to general partners $ 23,023 $ 26,366 $ 46,725 $ 47,529
=================================================================
Net income allocated to limited partners $ 207,209 $ 236,852 $ 420,528 $ 427,765
=================================================================
Net income allocated to limited partners per
limited partnership unit outstanding $ 5.76 $ 6.41 $ 11.69 $ 11.58
=================================================================
Limited partnership units outstanding 35,977 36,948 35,977 36,948
=================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
3
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Chrisken Partners Cash Income Fund L.P.
(A DELAWARE LIMITED PARTNERSHIP)
Condensed Consolidated Statement of Partners' Capital
Six months ended June 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
PARTNERS' CAPITAL ACCOUNTS
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GENERAL LIMITED
PARTNERS PARTNERS TOTAL
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<S> <C> <C> <C>
Balance at January 1, 2000 $523,989 $10,961,939 $11,485,928
Distributions (A) (139,865) (709,459) (849,324)
Net income 46,725 420,528 467,253
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Balance at June 30, 2000 $430,849 $10,673,008 $11,103,857
======================================================
</TABLE>
(A) Summary of 2000 quarterly cash distributions paid per limited partnership
unit:
<TABLE>
<S> <C>
First quarter $11.93
Second quarter $ 7.79
</TABLE>
SEE ACCOMPANYING NOTES.
4
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Chrisken Partners Cash Income Fund L.P.
(A DELAWARE LIMITED PARTNERSHIP)
Condensed Consolidated Statements of Cash Flows
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
2000 1999
--------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $467,253 $475,294
Adjustments to reconcile net income to net cash flows provided by
operating activities:
Depreciation 264,886 264,886
Net changes in operating assets and liabilities:
Increase in accounts receivable (7,023) (28,542)
Increase in other assets (731) (1,194)
Decrease in accounts payable and accrued expenses (83,786) (154,696)
Decrease in deferred income and prepaid rent (6,436) (11,185)
Increase (decrease) in tenants' security deposits 6,552 (64)
--------------------------------
Net cash flows provided by operating activities 640,715 544,499
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to investment in real estate (98,632) (55,393)
--------------------------------
Cash flows used in investing activities (98,632) (55,393)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (849,324) (512,653)
--------------------------------
Cash flows used in financing activities (849,324) (512,653)
--------------------------------
Net decrease in cash and cash equivalents (307,241) (23,547)
Cash and cash equivalents, beginning of period 708,616 792,816
--------------------------------
Cash and cash equivalents, end of period $401,375 $769,269
================================
</TABLE>
SEE ACCOMPANYING NOTES.
5
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Chrisken Partners Cash Income Fund L.P.
(A DELAWARE LIMITED PARTNERSHIP)
Notes to Condensed Consolidated Financial Statements
(UNAUDITED)
1. INTERIM ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and 310(b) of
Regulations of S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The consolidated financial statements are the
representation of the General Partners and reflect all adjustments which are, in
the opinion of the General Partners, necessary for a fair presentation of the
financial position and results of operations of the Partnership. The General
Partners believe that all such adjustments are normal and recurring. For further
information, refer to the consolidated financial statements and notes thereto
included in the Chrisken Partners Cash Income Fund L.P.'s (the "Partnership")
Annual Report on Form 10-KSB for the year ended December 31, 1999.
2. SEGMENT INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, 2000 JUNE 30, 1999
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RESIDENTIAL SELF RESIDENTIAL SELF
APARTMENT STORAGE APARTMENT STORAGE
COMPLEX FACILITY COMPLEX FACILITY
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<S> <C> <C> <C> <C>
Property operating revenues $ 412,336 $ 310,632 $ 422,901 $ 302,806
Operating income 127,000 112,151 161,323 109,474
Total assets 6,391,812 4,843,393 1,578,431 4,809,332
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000 JUNE 30, 1999
--------------------------------------------------------------
RESIDENTIAL SELF RESIDENTIAL SELF
APARTMENT STORAGE APARTMENT STORAGE
COMPLEX FACILITY COMPLEX FACILITY
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Property operating revenues $ 833,725 $ 630,821 $ 845,569 $ 597,199
Net income 287,042 225,807 316,068 186,716
</TABLE>
6
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Chrisken Partners Cash Income Fund L.P.
(A DELAWARE LIMITED PARTNERSHIP)
Notes to Condensed Consolidated Financial Statements
(UNAUDITED)
2. SEGMENT INFORMATION (CONTINUED)
A reconciliation of combined operating income for the residential apartment
complex segment and the self storage facility segment to net income is as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
----------------------------- ---------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total operating income for reportable segments $239,151 $270,797 $512,849 $502,784
General and administrative expense (15,982) (15,748) (61,619) (42,220)
Interest income 7,063 8,169 16,023 14,730
----------------------------- ---------------------------
Net income $230,232 $263,218 $467,253 $475,294
============================= ===========================
</TABLE>
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
ChrisKen Partners Cash Income Fund L.P. ("CPCIF" or the "Partnership")
is a Delaware limited partnership organized on May 4, 1987, with ChrisKen Income
Properties, Inc. ("Managing General Partner") and ChrisKen Limited Partnership I
as General Partners. Pursuant to a public offering (the "Offering"), CPCIF sold
37,732 limited partnership units. CPCIF has 99.99% ownership interests in
Springdale Associates Limited Partnership and Chicago I Self-Storage Limited
Partnership. Springdale Associates Limited Partnership owns a 199-unit
residential complex located in Waukesha, Wisconsin ("Springdale Apartments"),
and Chicago I Self-Storage Limited Partnership owns a 155,997 square foot
self-storage facility located in Chicago, Illinois ("Gold Coast Storage").
LIQUIDITY AND CAPITAL RESOURCES
The Partnership had cash and cash equivalents of $401,375 and $708,616
as of June 30, 2000, and December 31, 1999, respectively. The reduction in cash
and cash equivalents is primarily due to additions to investment in real estate,
reductions in accrued real estate taxes and accrued liabilities, an increase in
accounts receivable and distributions in excess of net cash provided by
operating activities, partially offset by an increase in accounts payable.
Restricted cash represents operating and contingency reserves (the "Reserve")
equal to approximately 2% of the gross proceeds of the Offering ($377,320 at
June 30, 2000, and December 31, 1999) as required by the Limited Partnership
Agreement. The Reserve is available for unanticipated contingencies and repairs
at Springdale Apartments and Gold Coast Storage (collectively the "Specified
Properties"). The General Partners believe the current amount of the Reserve is
adequate to satisfy cash requirement needs. The Partnership holds the Specified
Properties described above on an unencumbered or all cash basis.
On March 31, 2000, a number of affiliates of MacKenzie Patterson, Inc.,
which are not affiliated with the Partnership or its General Partners, submitted
an unsolicited tender offer to the Partnership's Limited Partners to purchase up
to 5,542, or approximately 15%, of the outstanding Limited Partnership Units of
the Partnership at $285 per Unit. The MacKenzie Patterson, Inc. offer, which was
to expire on May 5, 2000, was extended to May 15,2000, and the offer price was
increased to $301. On April 11, 2000, the General Partners filed a neutral
position response to the MacKenzie Patterson, Inc. offer. The Partnership's
records indicate that as of August 5, 2000, 493.97 Units were sold by Limited
Partners to the MacKenzie Patterson, Inc. affiliates.
On April 4, 2000, Bond Purchase, L.L.C., which is not affiliated with the
Partnership or its General Partners, submitted an unsolicited offer to the
Partnership's Limited Partners to purchase up to 1,000, or approximately 2.8%,
of the outstanding Limited Partnership Units of the Partnership at $301 per
Unit. The Bond Purchase, L.L.C. offer expired on May 15, 2000. The Partnership's
records indicate that as of August 5, 2000, 387.14 Units were sold by Limited
Partners to the Bond Purchase, L.L.C.
Management believes that the Unit sales to Bond Purchase, L.L.C., or
the MacKenzie Patterson, Inc. affiliates, if any, will not adversely affect the
management or the liquidity of the Partnership.
For Springdale Apartments, management has budgeted the following major
repairs or improvements to the property to be completed during 2000: new
playground equipment ($7,000), landscaping enhancements ($15,000), new
sidewalks, stoops and curbs for one building ($15,000), resurfacing one of four
parking lots ($45,000), apartment entry door replacement ($36,900), replacing
parking lot lighting ($10,000) and continued carpet ($67,500) and appliance
replacement ($29,600) as needed due to obsolescence. For Gold Coast Storage,
management has budgeted the following major repairs or improvements to the
property to be completed during 2000: new fencing around the entire perimeter of
the property ($65,500), landscaping enhancements ($30,000), and a roof top door
replacement ($8,500).
8
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RESULTS OF OPERATIONS
Occupancy at the Springdale Apartments was 95% at June 30, 2000, 97% at
December 31, 1999, and 98% at June 30, 1999. Rental revenue decreased slightly
during the six months ended June 30, 2000, as compared to the same period one
year earlier, due to a 3.3% increase in rental rates offset by a significant
increase in vacancy loss. The General Partners believe that occupancy at
Springdale Apartments will remain between 92 - 96% for the remainder of 2000.
Occupancy at Gold Coast Storage was 90% at June 30, 2000, 87% at
December 31, 1999, and 86% at June 30, 1999. Rental revenue increased during the
six months ended June 30, 2000, as compared to the same period one year earlier,
primarily due to a 6.6% net effective increase in rental rates. The General
Partners believe that, due to increased competition, occupancy at Gold Coast
will remain between 88 - 93% for the remainder of 2000.
Management continues to aggressively market both apartment units at
Springdale Apartments and space at Gold Coast Storage in order to improve
occupancy percentages and increase rental rates at both locations. Management
anticipates that occupancy at both Properties will remain at present levels
during the remainder of 2000.
Rental and other revenue of $833,725 for Springdale Apartments for the
six months ended June 30, 2000, decreased slightly from rental revenue of
$845,569 for the six months ended June 30, 1999. The decrease in rental revenue
primarily resulted from a 3.3% increase in rental rates offset by a significant
increase in vacancy loss in 2000. Rental and other revenue at Gold Coast Storage
increased by approximately 5.6% from $597,199 for the six months ended June 30,
1999, to $630,821 for the six months ended June 30, 2000, due to a net increase
in rental rates of approximately 6.6% and a 12.8% increase in sundry income. The
General Partners believe that rental revenue at Gold Coast Storage will remain
relatively stable over the next few years. Overall rental and other revenue for
the six months ended June 30, 2000, of $1,464,546 increased by 1.5% from the six
months ended June 30, 1999, from $1,442,768 due to the factors detailed above
affecting the Specified Properties.
Expenses for the six months ended June 30, 2000, attributable to
Springdale Apartments of $546,683 were approximately 3.2% higher than expenses
for the six months ended June 30, 1999, of $529,501, due to due to higher
property operating and maintenance, partially offset by lower general and
administrative expenses. Property operating expenses increased due to higher
water and sewer, grounds maintenance and supplies, electricity, electrical
supplies, painting and decorating, and carpet expenses, partially offset by
decreased janitorial, gas and fuel, rubbish removal, and structural repair
expenses. General and administrative expenses are lower due to decreased
telephone and answering service, real estate tax and insurance expense,
partially offset increased legal and eviction fees, payroll administration, and
bad debt expense. Administrative salaries are higher due to increased salary
levels. Management fee expense in 2000 is comparable to 1999 expense.
Expenses attributable to Gold Coast Storage for the six months ended
June 30, 2000, of $405,014 are 1.3% lower compared to expenses for the six
months ended June 30, 1999, of $410,483. Property operating and maintenance
expenses are lower in 2000, as compared to the first quarter of 1999, due to
lower electricity, gas and fuel, water and sewer, heating, ventilation and air
conditioning, and security expense, structural repair and elevator maintenance,
partially offset by increased janitorial, grounds, maintenance, carpeting, and
electrical repairs and supplies. Depreciation expense in 2000 is comparable to
1999 expense. General and administrative expenses during 2000 are higher than
1999, with increases in advertising, commission, and bad debt expense partially
offset by lower training, administrative salaries, and legal and
9
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eviction fees. Administrative salaries are lower due to a temporary reduction in
office staff during the first quarter of 2000. Management fees are higher due to
increased revenue.
Overall expenses incurred by the Specified Properties for the six
months ended June 30, 2000, of $951,697 increased approximately 1.3% from the
six months ended June 30, 1999, of $939,984 primarily as a result of a
combination of the foregoing factors affecting the Specified Properties.
Management anticipates that, in aggregate, expenses in 2000 will be similar to
those experienced in 1999.
Operating income for the six months ended June 30, 2000, of $287,042
from Springdale Apartments decreased from the six months ended June 30, 1999, of
$316,068 due to slightly decreased rental revenue and increased property
operating and maintenance expenses, offset by lower general and administrative
expenses. Operating income for the six months ended June 30, 2000, of $225,807
from Gold Coast Storage increased 20.9% as compared to net income for the six
months ended June 30, 1999, of $186,716 due to increased rental revenue and
decreased property operating and maintenance, partially offset by higher general
and administrative expense.
Interest income earned by the Partnership for the six months ended June
30, 2000, of $16,023 increased 8.8% compared to $14,730 earned for the six
months ended one year earlier. Interest income earned on excess cash held by
Springdale Apartments was $4,132 in 2000, as compared to $7,432 in 1999.
Administrative expenses incurred by the Partnership for the six months ended
June 30, 2000, of $61,619 increased by approximately 46% from the six months
ended one year earlier of $42,220, primarily due to increased accounting and tax
service fees.
Overall net income for the six months ended June 30, 2000, of $467,253
decreased from the six months ended June 30, 1999, of $475,294 due to increased
expenses offsetting slightly increased rental revenue.
Net cash flows provided by operations for the six months ended June 30,
2000, was $640,715 compared to net cash flows provided by operations of $544,499
for the six months ended June 30, 1999. The increase was primarily the result of
an increase in payables, deferred income, and tenant security deposit liability
and a decrease in accounts receivable, offset by a slight decrease in net income
before depreciation and a decrease in accrued real estate taxes. Additions to
investment in real estate at the Specified Properties increased to $98,632 for
the six months ended June, 30, 2000, compared to $55,393 for the same period one
year ago. Additions to investment in real estate during 2000 at Springdale
Apartments for the six months ended June 30, 2000 included continued carpet,
appliance and entry door replacement. There were no significant additions to
investment in real estate at Gold Coast Storage during the first quarter of
2000. Distributions to Limited Partners during the six months ended June 30,
2000, totaled $709,459 compared to distributions of $552,988 during the six
months ended June 30, 1999. Distributions to General Partners during the six
months ended June 30, 2000, totaled $139,865, as a result of 7% noncumulative,
noncompounded preferred return to the Limited Partners for the 1999 fiscal
period. The General Partners anticipate that distributions to Limited Partners
will be an annualized basis 7% for 2000, with minor quarter- to-quarter
fluctuations depending on quarterly operating results. Although the property is
not currently marketed for sale, the General Partners will continue to explore
any opportunity deemed advantageous to the Partnership, including the
liquidation of the asset.
Some statements in this Form 10-QSB are forward looking and actual
results may differ materially from those stated. As discussed herein, among the
factors that may affect actual results are changes in rental rates, occupancy
levels in the market place in which the Springdale Apartments and Gold Coast
Storage compete and/or unanticipated changes in expenses or capital expenditures
10
<PAGE>
PART II
CHRISKEN PARTNERS CASH INCOME FUND L.P.
(A DELAWARE LIMITED PARTNERSHIP)
Items 1 through 5 are omitted because of the absence of conditions
under which they are required.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit 27, Financial Data Schedule
(B) Reports on Form 8 - K.
No Reports on Form 8-K were filed during the quarter
ended June 30, 2000.
11
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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 thereto duly authorized.
ChrisKen Partners Cash Income Fund L.P.
---------------------------------------
(Registrant)
By: ChrisKen Income Properties
Inc., Managing General
Partner
Date: August 10, 2000 By: /s/ John F. Kennedy
-------------------------
John F. Kennedy
Director and President
12
