UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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 33-15427
Retail Equity Partners Limited Partnership
(Exact name of registrant as specified in its charter)
North Carolina 56-1590235
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3710 One First Union Center, Charlotte, NC 28202-6032
(Address of principal executive offices)
(Zip Code)
704/333-1367
(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 ___
<PAGE>
TABLE OF CONTENTS
Item No. Page No.
PART I - Financial Information
1 Financial Statements 1
2 Management's Discussion and
Analysis of Financial Condition and 6
Results of Operations
PART II - Other Information
1 Legal Proceedings 8
3 Defaults Upon Senior Securities 8
6 Exhibits and Reports on Form 8-K 8
<PAGE>
PART I
Item 1. Financial Statements
RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited)
<S> <C> <C>
Assets
Investments in shopping centers:
Land $ 3,554,079 $ 3,554,079
Buildings and improvements 12,788,527 12,788,527
Personal property 65,315 65,315
16,407,921 16,407,921
Less accumulated depreciation (2,962,378) (2,766,086)
13,445,543 13,641,835
Cash and cash equivalents 65,452 149,639
Restricted cash - tenant security deposits 29,221 27,153
Accounts receivable, less allowance for doubtful accounts
of $8,900 in 1995 and $55,200 in 1994 60,085 123,435
Prepaids and other assets 96,281 62,770
Deferred costs, less amortization of $159,600 in 1995 and
$144,000 in 1994 95,878 111,822
Total assets $13,792,460 $14,116,654
Liabilities and Partners' Equity
Mortgage notes payable $12,905,441 $13,060,575
Trade accounts payable and accrued expenses 88,422 52,861
Accrued interest payable 98,435 148,768
Escrowed security deposits and deferred revenue 28,399 37,644
Total liabilities 13,120,697 13,299,848
Partners' equity (deficit):
Limited partners 730,769 874,362
General partner (59,006) (57,556)
Total partners' equity 671,763 816,806
Total liabilities and partners' equity $13,792,460 $14,116,654
</TABLE>
RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue
Rental revenue $401,095 $490,248 $795,841 $ 968,374
Interest and other income 3,250 1,081 88,126 2,196
404,345 491,329 883,967 970,570
Expenses
Property operations 42,915 55,121 98,339 100,573
General and administrative expense 20,968 20,040 47,033 26,029
Property taxes and insurance 41,373 46,298 82,008 90,029
Property management fees 12,968 14,648 27,775 31,659
Depreciation 97,978 98,225 196,292 196,627
Amortization 7,972 7,973 15,944 15,982
Interest 275,833 289,586 561,619 580,386
500,007 531,891 1,029,010 1,041,285
Net loss $(95,662) $(40,562) $(145,043) $ (70,715)
Net loss allocated to
limited partners (99%) $(94,706) $(40,156) $(143,593) $ (70,008)
Net loss allocated to
general partner (1%) $ (956) $ (406) $ (1,450) $ (707)
Net loss per limited
partnership unit $ (0.28) $ (0.12) $ (0.43) $ (0.21)
</TABLE>
<PAGE>
RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities
Net loss $(145,043) $ (70,715)
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation and amortization 212,236 212,609
Changes in operating assets and liabilities:
Rent and other receivables 63,350 51,782
Prepaid expenses and other assets (33,511) (80,610)
Accounts payable and accrued expenses (14,772) 51,608
Escrowed security deposits and deferred revenue (11,313) (660)
Net cash provided by operating activities 70,947 164,014
Cash flows from financing activities
Principal payments on notes payable (155,134) (115,360)
Increase (decrease) in cash and cash equivalents (84,187) 48,654
Cash and cash equivalents at beginning of period 149,639 89,334
Cash and cash equivalents at end of period $ 65,452 $ 137,988
</TABLE>
RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
Consolidated Statements of Changes in Partner's Equity
For the Six Months ended June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
<S> <C> <C> <C>
Balance at December 31, 1994 $874,362 $(57,556) $816,806
Net loss, 1st quarter (48,887) (494) (49,381)
Net loss, 2nd quarter (94,706) (956) (95,662)
Balance at June 30, 1995 $730,769 $(59,006) $671,763
</TABLE>
<PAGE>
RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
Notes to Financial Statements
June 30, 1995
(Unaudited)
Note 1. Interim financial statements
The accompanying financial statements of Retail Equity Partners Limited
Partnership (the Partnership) have not been audited by independent
accountants, except for the balance sheet at December 31, 1994. In the
opinion of the Partnership's management, all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of the
financial position and results of operations for the periods presented
have been included.
Certain notes and other information have been condensed or omitted from
the interim financial statements presented in this Quarterly Report on
Form 10-Q. Therefore, these financial statements should be read in
conjunction with the Partnership's 1994 Annual Report on Form 10-K.
The results for the first two quarters of 1995 are not necessarily
indicative of future financial results.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
Retail Equity Partners Limited Partnership ("the Partnership") is a
North Carolina limited partnership formed to acquire, hold, operate and
manage three neighborhood shopping centers. In October, 1991 the
ownership of one of the shopping centers was transferred to a newly
formed partnership, New Market Square Limited Partnership ("NMSLP").
The Partnership is the sole general partner and holds a 99.99 percent
interest in NMSLP.
The following discussion should be read in conjunction with the
financial statements and notes thereto included in this Quarterly Report
on Form 10-Q and with the Partnership's audited financial statements and
notes thereto included in the Partnership's 1994 Annual Report on Form
10-K.
Results of Operations
Revenues. Rental revenue totaled $401,000 in second quarter and
$796,000 through six months of 1995, decreasing 18 percent from the same
periods in 1994, attributable primarily to vacancy of anchor tenant
space at New Market Square shopping center ("NMS") since August, 1994.
(On August 1, 1994 Rose's Stores, Inc. renounced its lease as part of
its Chapter 11 bankruptcy filing and vacated its space at NMS.) 1995
interest and other income includes $82,049 proceeds of the sale of a
claim against Rose's in March, 1995.
At June 30, 1995 Plaza West was 100 percent leased, Cape Henry Plaza was
94 percent leased, and NMS was 55 percent leased, compared to 97
percent, 100 percent, and 100 percent, respectively at June 30, 1994.
Expenses. Property operations expense totaled $43,000 in second
quarter, 1995 (decreased $12,000 from second quarter, 1994); however, is
consistent with prior year through six months, reflecting the timing of
grounds maintenance costs. General and administrative costs have
increased significantly ($47,000 compared to $26,000 through six months)
due to legal fees associated with the Rose's lease. Decreases in
property tax and insurance expense of approximately 10 percent for the
quarter and six month periods compared to 1994 reflect lower provisions
based on prior years' experience. Property management fees (based on
cash receipts) have decreased approximately 12 percent as a direct
result of decreased revenue. Depreciation and amortization are
consistent with prior year for the quarter and six month periods.
Decreases in interest expense for the quarter and year to date reflect
the effect of amortization of principal amounts of mortgages on the
Partnership's three shopping centers.
Summary results of operations. The Partnership experienced net losses
of $96,000 and $145,000 for second quarter and the first six months of
1995, respectively, compared to losses of $41,000 and $71,000 for the
same periods in 1994. Depreciation and amortization of approximately
$210,000 through six months in both years are significant non-cash
expenses which have a significant impact on reported results. The
decline in operating results in 1995 compared to 1994 is generally
attributable to vacancy at NMS, offset in part by proceeds of a claim
against a former tenant.
Liquidity and Capital Resources
The Partnership has long term financing on all three shopping centers.
These first mortgage loans all mature in 1998 and require monthly
principal reduction. The Partnership made principal payments of
$104,000 and $155,000 during the second quarter and six months year to
date in 1995, including payment made in June, 1995 to bring the NMS loan
current. At June 30, 1995 the Partnership is current on its obligations
under first mortgage loans for all shopping centers.
If not for the Rose's bankruptcy and resulting vacancy at NMS since
August, 1994, the Partnership would be operating reasonably well. Two
of the shopping centers continue to generate positive cash flow from
operations.
<PAGE>
Following the Rose's departure, the NMSLP has not generated sufficient
cash flow to pay the full payments required under its loan for NMS. The
lender and the Partnership entered into a forbearance agreement under
which NMSLP remitted to the lender net cash flow after payment of
operating expenses monthly. In June, 1995 the forbearance agreement was
terminated and the NMS loan was brought current by using substantially
all of the Partnership's cash reserves. Boddie Investment Company, the
general partner, is currently advancing the partnership sufficient funds
to cover any operating deficits.
On July 19, 1995 the Partnership entered a lease agreement with
Winn-Dixie Stores whereby Winn-Dixie will vacate its current location at
NMS (35,000 square feet) and move to the Rose's space at NMS (54,000
square feet). Management is in final negotiations with several possible
tenants to occupy the space being vacated by Winn-Dixie. If a
replacement tenant cannot be found, the revenue loss associated with the
vacant space would result in substantial negative cash flow and would
bring into question NMSLP's ability to continue in business without
restructuring its mortgage obligations.
The Partnership made no capital expenditures or distributions during the
first six months of 1995. Future distributions have been suspended
until property operations allow.
The leases held by the Partnership are generally long-term, with
substantially all increases in operating expenses, taxes and insurance
passed through to and paid by tenants. Additionally, most leases
include built-in rent increases based on changes in the consumer price
index or percentage rents based on total sales.
The Partnership has retained Lat Purser and Associates to explore the
possible sale of New Market Square Shopping Center. Lat Purser has
begun discussions with several possible buyers, but to date no agreement
has been reached as to the terms of a possible sale.
<PAGE>
PART II
Item 1. Legal Proceedings
Reference is hereby made to the discussion of legal proceedings
with respect to the NMS Rose's vacancy and disposition thereof
during first quarter, 1995, in the Quarterly Report on Form 10-Q
for the period ended March 31, 1995.
Item 3. Defaults Upon Senior Securities
The Partnership is a the sole general partner and holds a 99.99
percent interest in NMSLP, which owns NMS. NMS is held subject
to a first mortgage deed of trust held by Mutual Benefit Life.
The mortgage has an original principal amount of $6,400,000,
carried an interest rate of 8.25 percent through May, 1995, and 9
percent effective June 1, 1995 through maturity in June, 1998,
and has required monthly payments of $58,000 including principal
and interest.
In view of Rose's renunciation of its lease and subsequent
failure to pay its required lease payments (see Liquidity and
Capital Resources discussion above), NMSLP requested from its
lender certain relief from the required monthly payments. The
lender agreed to accept payments equal to operating cash flow of
NMS pending attempts by NMSLP to locate a replacement tenant or
to restructure its debt. NMSLP made such "cash flow payments"
through May, 1995. In June, 1995 the forbearance agreement was
terminated and the NMS loan was brought current.
The NMS mortgage is secured solely by the NMS shopping center and
is not guaranteed by the Partnership. In the event a replacement
tenant cannot be found or the loan cannot be modified, the
lender, at its election, may begin foreclosure proceedings. The
foreclosure of NMS shopping center would not affect the
Partnership's remaining two centers.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
Exhibit 27 Financial data schedule (electronic filing)
b) Reports on Form 8-K: none
<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, hereunto duly authorized.
RETAIL EQUITY PARTNERS
LIMITED PARTNERSHIP
(Registrant)
By: Boddie Investment Company
General Partner
August 14, 1995 /s/ Philip S. Payne
Philip S. Payne
(Duly authorized agent)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains Summary Financial Information extracted from
Retail Equity Partners Limited Partnership Financial Statements as of and
for the six months ended June 30, 1995 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 65,452
<SECURITIES> 0
<RECEIVABLES> 68,945
<ALLOWANCES> (8,860)
<INVENTORY> 0
<CURRENT-ASSETS> 251,039
<PP&E> 16,407,921
<DEPRECIATION> (2,962,378)
<TOTAL-ASSETS> 13,792,460
<CURRENT-LIABILITIES> 212,256
<BONDS> 12,905,441
<COMMON> 0
0
0
<OTHER-SE> 671,763
<TOTAL-LIABILITY-AND-EQUITY> 13,792,460
<SALES> 0
<TOTAL-REVENUES> 890,458
<CGS> 0
<TOTAL-COSTS> 420,358
<OTHER-EXPENSES> 47,033
<LOSS-PROVISION> (6,491)
<INTEREST-EXPENSE> 561,619
<INCOME-PRETAX> (145,043)
<INCOME-TAX> 0
<INCOME-CONTINUING> (145,043)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (145,043)
<EPS-PRIMARY> (0.28)
<EPS-DILUTED> 0
</TABLE>
