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, 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
<PAGE>
PART I
Item 1. Financial Statements
RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, 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 (1,608,879) (1,520,349)
---------------- ----------------
6,287,587 6,376,117
New Market Square Shopping Center - 6,363,530
Cash and cash equivalents 152,487 16,467
Restricted cash - tenant security deposits 25,149 32,695
Accounts receivable, net 34,788 113,140
Prepaids and other assets 46,284 47,507
Deferred financing costs, net 38,582 79,938
---------------- ----------------
Total assets $ 6,584,877 $ 13,029,394
================ ================
Liabilities and Partners' Equity
Mortgage notes payable $ 6,903,649 $ 6,931,348
Mortgage loan and accrued interest payable - New Market
Square Shopping Center - 5,909,756
Trade accounts payable and accrued expenses 35,674 31,905
Accrued interest payable 53,429 53,429
Escrowed security deposits and deferred revenue 25,547 33,852
Advances and accrued interest due to affiliates - 80,846
---------------- ----------------
Total liabilities 7,018,299 13,041,136
---------------- ----------------
Partners' deficit:
Limited partners (366,344) 54,099
General partner (67,078) (65,841)
---------------- ----------------
Total partners' deficit (433,422) (11,742)
---------------- ----------------
Total liabilities and partners' deficit $ 6,584,877 $ 13,029,394
================ ================
</TABLE>
3
<PAGE>
RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six months
ended June 30, ended June 30,
1996 1995 1996 1995
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenue
Rental revenue $ 253,358 $ 401,095 $ 570,652 $ 795,841
Interest and other income 5,275 3,250 7,152 88,126
---------------- ---------------- ---------------- ----------------
258,633 404,345 577,804 883,967
---------------- ---------------- ---------------- ----------------
Expenses
Property operations 40,407 42,915 93,778 98,339
General and administrative expense 18,007 20,968 35,153 47,033
Property taxes and insurance 24,277 41,373 56,328 82,008
Property management fees 7,523 12,968 19,941 27,775
Depreciation 44,259 97,978 88,530 196,292
Amortization 4,803 7,972 11,194 15,944
Interest 159,863 275,833 377,868 561,619
Provision for loss on sale of
New Market Square - - 18,707 -
---------------- ---------------- ---------------- ----------------
299,139 500,007 701,499 1,029,010
---------------- ---------------- ---------------- ----------------
Net loss $ (40,506) $ (95,662) $(123,695) $ (145,043)
================ ================ ================ ================
Net loss allocated to
limited partners (99%) $ (40,101) $ (94,706) $ 122,458) $ (143,593)
================ ================ ================ ================
Net loss allocated to
general partner (1%) $ (405) $ (956) $ (1,237) $ (1,450)
================ ================ ================ ================
Net loss per limited
partnership unit $ (0.12) $ (0.28) $ (0.37) $ (0.43)
================ ================ ================ ================
Weighted average number of limited
partnership units outstanding 333,577 333,577 333,577 333,577
================ ================ ================ ================
</TABLE>
4
<PAGE>
RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months
ended June 30,
1996 1995
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (123,695) $ (145,043)
Adjustments to reconcile net loss to
net cash provided by operations:
Depreciation and amortization 99,724 212,236
Write-off of deferred costs at sale of New Market Square 30,162 -
Changes in operating assets and liabilities:
Rent and other receivables 78,352 63,350
Prepaid expenses and other assets 1,223 (33,511)
Accounts payable and accrued expenses 3,769 (14,772)
Accrued interest payable (43,993) -
Escrowed security deposits and deferred revenue (759) (11,313)
---------------- ----------------
Net cash provided by operating activities 44,783 70,947
---------------- ----------------
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 (5,893,462) (155,134)
Distribution to limited partners (297,985) -
---------------- ----------------
Net cash used in financing activities (6,272,293) (155,134)
---------------- ----------------
Increase (decrease) in cash and cash equivalents 136,020 (84,187)
Cash and cash equivalents at beginning of period 16,467 149,639
---------------- ----------------
Cash and cash equivalents at end of period $ 152,487 $ 65,452
================ ================
</TABLE>
5
<PAGE>
RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
Notes to Financial Statements - June 30, 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 two quarters 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 and six months ended
June 30, 1996 and 1995, include the operations of New Market Square Limited
Partnership and its shopping center, New Market Square, which was sold effective
February 8, 1996. Results of operations of New Market Square Limited Partnership
for these periods were as follows:
<TABLE>
<CAPTION>
Three months Six months
ended June 30, ended June 30,
1996 1995 1996 1995
---------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C>
Rental Revenue $ 1,578 $ 149,891 $ 61,180 $ 311,136
Interest and other income 3,227 1,487 4,322 84,760
---------------- --------------- --------------- ---------------
Total revenue 4,805 151,378 65,502 395,896
---------------- --------------- --------------- ---------------
Property operations, taxes and insurance (874) 37,445 25,726 80,901
General and administrative expense - 13,845 1,625 22,153
Property management fees - 6,192 3,831 12,648
Depreciation - 53,620 - 107,420
Amortization - 3,175 1,588 6,350
Interest - 114,737 57,822 239,134
Provision for loss on sale of shopping center - - 18,707 -
---------------- --------------- --------------- ---------------
Total expenses (874) 229,014 109,299 468,606
---------------- --------------- --------------- ---------------
Net income (loss) $ 5,679 $ (77,636) $ (43,797) $ (72,710)
================ =============== =============== ===============
</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. NMSLP is currently winding up liquidation of its assets
and liabilities.
The consolidated statements of operations for the three months ended June 30,
1996 include the operations of NMSLP. Decreases in revenues and expenses in
second quarter of 1996 compared to 1995 generally reflect the effect the 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 Six months
ended June 30, ended June 30,
1996 1995 1996 1995
-------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenues $ 253,828 $ 252,967 $ 512,302 $ 488,071
-------------- ----------------- ---------------- ----------------
Expenses:
Property operations 73,081 53,619 140,490 114,573
General and administrative expense 18,007 7,123 33,528 24,880
Depreciation and amortization 49,062 49,155 98,136 98,466
Interest 159,863 161,096 320,046 322,485
-------------- ----------------- ---------------- ----------------
300,013 270,993 592,200 560,404
============== ================= ================ ================
Net loss $ (46,185) $ (18,026) $ (79,898) $ (72,333)
============== ================= ================ ================
</TABLE>
Both Plaza West and Cape Henry Plaza shopping centers were 100 percent occupied
throughout second quarter 1996, compared to 100 percent and approximately 94
percent, respectively, in second quarter 1995. The increase in property
operations expense is primarily attributable to resurfacing of the parking lot
at Plaza West. The increase in general and administrative costs is primarily
attributable to partnership administration fees (retroactive to January 1, 1996)
recorded in second quarter 1996.
The Partnership experienced a net loss of $41,000 in second quarter 1996
compared to $96,000 for the same period in 1995. The decrease is primarily
attributable to the sale of NMS, which generated significant operating losses in
1995. (See notes to financial statements included in this report.)
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.
7
<PAGE>
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 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 during the second quarter of 1996.
During second quarter 1996, the Partnership made a distribution in the amount of
$297,985 to the limited partners from net proceeds of the sale of NMS. 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:
None
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 13, 1996 /s/ Philip S. Payne
------------------------
Philip S. Payne
(Duly authorized agent)
8
<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, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 152,487
<SECURITIES> 0
<RECEIVABLES> 34,788
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 258,708
<PP&E> 7,896,466
<DEPRECIATION> (1,608,876)
<TOTAL-ASSETS> 6,584,877
<CURRENT-LIABILITIES> 114,650
<BONDS> 6,903,649
<COMMON> 0
0
0
<OTHER-SE> (433,422)
<TOTAL-LIABILITY-AND-EQUITY> 6,584,877
<SALES> 0
<TOTAL-REVENUES> 577,804
<CGS> 0
<TOTAL-COSTS> 258,577
<OTHER-EXPENSES> 65,054
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 377,868
<INCOME-PRETAX> (123,695)
<INCOME-TAX> 0
<INCOME-CONTINUING> (123,695)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (123,695)
<EPS-PRIMARY> (0.37)
<EPS-DILUTED> 0
</TABLE>
