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 March 31, 1996
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 ___
Total number of pages: 9
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item No. Page No.
<S> <C> <C>
PART I - Financial Information
1 Financial Statements 3
2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II - Other Information
6 Exhibits and Reports on Form 8-K 8
</TABLE>
2
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PART I
Item 1. Financial Statements
RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---------------- ----------------
(Unaudited)
<S> <C> <C>
Assets
Investments in shopping centers:
Land $ 2,094,634 $ 2,094,634
Buildings and improvements 5,769,651 5,769,651
Personal property 32,181 32,181
---------------- ----------------
7,896,466 7,896,466
Less accumulated depreciation (1,564,620) (1,520,349)
---------------- ----------------
6,331,846 6,376,117
New Market Square Shopping Center - 6,363,530
Cash and cash equivalents 432,967 16,467
Restricted cash - tenant security deposits 24,596 32,695
Accounts receivable, net 42,760 113,140
Prepaids and other assets 53,070 47,507
Deferred financing costs, net 43,385 79,938
---------------- ----------------
Total assets $ 6,928,624 $ 13,029,394
================ ================
Liabilities and Partners' Equity
Mortgage notes payable $ 6,917,658 $ 6,931,348
Mortgage loan and accrued interest payable - New Market
Square Shopping Center - 5,909,756
Trade accounts payable and accrued expenses 29,013 31,905
Accrued interest payable 53,429 53,429
Escrowed security deposits and deferred revenue 23,455 33,852
Advances and accrued interest due to affiliates - 80,846
---------------- ----------------
Total liabilities 7,023,555 13,041,136
---------------- ----------------
Partners' deficit:
Limited partners (28,258) 54,099
General partner (66,673) (65,841)
---------------- ----------------
Total partners' deficit (94,931) (11,742)
---------------- ----------------
Total liabilities and partners' deficit $ 6,928,624 $ 13,029,394
================ ================
</TABLE>
3
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RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months
ended March 31,
1996 1995
---------------- ----------------
<S> <C> <C>
Revenue
Rental revenue $ 317,294 $ 394,746
Interest and other income 1,877 84,876
---------------- ----------------
319,171 479,622
---------------- ----------------
Expenses
Property operations 53,371 55,424
General and administrative expense 17,146 26,065
Property taxes and insurance 32,051 40,635
Property management fees 12,418 14,807
Depreciation 44,271 98,314
Amortization 6,391 7,972
Interest 218,005 285,786
Provision for estimated loss on sale of New Market Square 18,707 -
---------------- ----------------
402,360 529,003
---------------- ----------------
Net loss $ (83,189) $ (49,381)
================ ================
Net loss allocated to
limited partners (99%) $ (82,357) $ (48,887)
================ ================
Net loss allocated to
general partner (1%) $ (832) $ (494)
================ ================
Net loss per limited
partnership unit $ (0.25) $ (0.15)
================ ================
Weighted average number of limited partnership units outstanding 333,577 333,577
================ ================
</TABLE>
4
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RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three months
ended March 31,
1996 1995
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (83,189) $ (49,381)
Adjustments to reconcile net loss to
net cash provided by operations:
Depreciation and amortization 50,662 106,286
Write-off of deferred costs at sale of New Market Square 18,576 -
Changes in operating assets and liabilities:
Rent and other receivables 70,380 81,598
Prepaid expenses and other assets (16,977) (28,029)
Amounts held in special escrow - (82,049)
Accounts payable and accrued expenses 20,108 35,330
Accrued interest payable (43,993) 41,127
Escrowed security deposits and deferred revenue (2,298) 18,483
---------------- ----------------
Net cash provided by operating activities 13,269 123,365
---------------- ----------------
Cash flows from investing activities
---------------- ----------------
Proceeds of sale of New Market Square Shopping Center 6,363,530 -
---------------- ----------------
Cash flows from financing activities
Repayment of advances from general partner (80,846) -
Principal payments on notes payable (5,879,453) (51,293)
---------------- ----------------
Net cash used in financing activities (5,960,299) (51,293)
---------------- ----------------
Increase in cash and cash equivalents 416,500 72,072
Cash and cash equivalents at beginning of period 16,467 149,639
---------------- ----------------
Cash and cash equivalents at end of period $ 432,967 $ 221,711
================ ================
</TABLE>
5
<PAGE>
RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
Notes to Financial Statements - March 31, 1996
(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, 1995. 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 1995 Annual Report on Form 10-K and Current Report on Form 8-K
dated February 8, 1996.
The results for the first quarter of 1996 are not necessarily indicative of
future financial results.
Note 2. New Market Square Shopping Center
The New Market Square Shopping Center property was sold to an unrelated third
party on February 8, 1996, for a contract price of $6,558,000. Estimated direct
costs of the sale total approximately $214,000. Carrying value of these assets
at December 31, 1995, was as follows:
<TABLE>
<S> <C>
Land $1,459,445
Buildings and improvements 7,018,876
Personal property 33,134
-----------
8,511,455
Less - Accumulated depreciation (1,637,925)
Reserve for writedown to net
realizable value (510,000)
-----------
$6,363,530
===========
</TABLE>
The consolidated statements of operations for the three months ended March 31,
1996 and 1995, include the operations of New Market Square through February 7,
1996. Results of operations of New Market Square for these periods were as
follows:
<TABLE>
<CAPTION>
Three months ended March 31,
1996 1995
---- ----
<S> <C> <C>
Rental revenue $ 59,602 $161,245
Interest and other income 1,095 83,273
----------- ----------
Total revenue 60,697 244,518
----------- ----------
Property operations 18,548 25,612
General and administrative expense 1,625 8,308
Property taxes and insurance 8,052 17,844
Property management fees 3,831 6,456
Depreciation - 53,800
Amortization 1,588 3,175
Interest 57,822 124,397
Provision for estimated loss on sale of shopping center 18,707 -
----------- ----------
Total expenses 110,173 239,592
----------- ----------
Net income (loss) $ (49,476) $ 4,926
=========== ==========
</TABLE>
6
<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. In February 1996 New Market
Square Shopping Center was sold to an unaffiliated party.
The following discussion should be read in conjunction with the financial
statements and notes thereto included in this Quarterly Report on Form 10-Q, the
Partnership's Current Report on Form 8-K dated February 8, 1996, and the
Partnership's audited financial statements and notes thereto included in the
Partnership's 1995 Annual Report on Form 10-K.
Results of Operations
Effective February 8, 1996, the Partnership sold New Market Square Shopping
Center ("NMS") to an unaffiliated party for a contract price of $6,558,000. At
December 31, 1995, the Partnership had recorded a reserve of $510,000 for
writedown of NMS to estimated net realizable value. During first quarter of 1996
the Partnership recorded an additional provision for loss on the sale of
approximately $19,000.
The consolidated statements of operations for the three months ended March 31,
1996 include the operations of New Market Square through February 7, 1996.
Decreases in revenues and expenses in first quarter of 1996 compared to 1995
generally reflect the effect of sale of NMS in early February. Summary operating
results of Cape Henry Plaza and Plaza West shopping centers are as follows:
<TABLE>
<CAPTION>
Three months ended March 31,
1996 1995
---- ----
<S> <C> <C>
Revenues $258,474 $235,104
Expenses:
Property expenses 67,409 60,954
General and administrative 15,521 17,757
Depreciation and amortization 49,074 49,311
Interest 160,183 161,389
--------- ---------
292,187 289,411
--------- ---------
Net loss $ (33,713) $ (54,307)
========= =========
</TABLE>
Both Plaza West and Cape Henry Shopping Center were 100 percent occupied
throughout first quarter 1996, compared to 100 percent and approximately 95
percent, respectively, in first quarter 1995. Improved operating results in
first quarter of 1996 are primarily attributable to increased occupancy and
rental increases.
The Partnership experienced a net loss of $83,000 in first quarter 1996 compared
to $49,000 for the same period in 1995. (The first quarter 1996 loss includes
$19,000 provision for estimated loss on sale of NMS, while first quarter 1995
results include $82,000 proceeds of a claim against a former tenant of NMS).
Liquidity and Capital Resources. The Partnership has long-term financing on both
remaining shopping centers. These first mortgage loans mature in 1998 and
require monthly principal reduction.
The two remaining shopping centers continue to generate positive cash flow from
operations. 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
7
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in the consumer price index or percentage rents based on total sales. The
Partnership should have sufficient cash flow to meet its capital needs.
The Partnership made no capital expenditures or distributions during the first
quarter of 1996. The Partnership expects to make some distribution to partners
with net proceeds of sale of NMS in 1996; however, other distributions have been
suspended until property operations allow.
PART II
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
Exhibit 27 Financial data schedule (electronic filing)
b) Reports on Form 8-K:
The Partnership filed a Current Report on Form 8-K dated February 8, 1996,
for the sale of New Market Square Shopping Center.
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
May 14, 1996 /s/ Philip S. Payne
------------------------
Philip S. Payne
(Duly authorized agent)
<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 THREE MONTHS
ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 432,967
<SECURITIES> 0
<RECEIVABLES> 42,760
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 120,426
<PP&E> 7,896,466
<DEPRECIATION> (1,564,620)
<TOTAL-ASSETS> 6,928,624
<CURRENT-LIABILITIES> 105,897
<BONDS> 6,917,658
<COMMON> 0
0
0
<OTHER-SE> (94,931)
<TOTAL-LIABILITY-AND-EQUITY> 6,928,624
<SALES> 0
<TOTAL-REVENUES> 319,171
<CGS> 0
<TOTAL-COSTS> 142,111
<OTHER-EXPENSES> 42,244
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 218,005
<INCOME-PRETAX> (83,189)
<INCOME-TAX> 0
<INCOME-CONTINUING> (83,189)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (83,189)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> 0
</TABLE>
