FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Mark One)
{ X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended September 30, 1997 Commission file number 000-16698
Brown-Benchmark Properties Limited Partnership
(Exact Name of Registrant as Specified in its Charter)
Delaware 31-1209608
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
225 East Redwood Street, Baltimore, Maryland 21202
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (410) 727-4083
N/A
(Former Name, Former Address, and Former Fiscal Year,
if Changed Since Last Report.)
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>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets 1
Statements of Operations 2
Statements of Partners' Capital 3
Statements of Cash Flows 4
Notes to Financial Statements 5-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
Part II. Other Information
Item 1. through Item 6. 9
Signatures 10
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
Assets
<S> <C> <C>
Investment in real estate $ 15,208,906 $ 15,918,923
Cash and cash equivalents 989,933 402,707
Other assets
Accounts receivable, net 74,948 74,999
Prepaid expenses 12,602 15,084
Escrow for real estate taxes 139,690 234,714
Loan fees, less accumulated amortization
of $84,778 and $72,484, respectively 100,574 89,256
Total other assets 327,814 414,053
Total assets $ 16,526,653 $ 16,735,683
Liabilities and Partners' Capital
Liabilities
Accounts payable and accrued expenses $ 478,335 $ 493,855
Due to affiliates 10,540 8,039
Tenant security deposits 143,089 141,606
Mortgage loans payable 14,435,359 14,202,270
Total liabilities 15,067,323 14,845,770
Partners' Capital
General Partners (184,418) (175,806)
Assignor Limited Partner
Assignment of Limited Partnership
Interests - $25 stated value per
unit, 500,000 units outstanding 1,728,430 2,150,367
Limited Partnership Interests -
$25 stated value per unit
40 units outstanding (84,782) (84,748)
Subordinated Limited Partners 100 100
Total partners' capital 1,459,330 1,889,913
Total liabilities and partners' capital $ 16,526,653 $ 16,735,683
</TABLE>
See accompanying notes to financial statements
-1-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
Revenues
<S> <C> <C> <C> <C>
Rental income $ 969,512 $ 948,490 $ 2,882,290 $ 2,743,373
Interest income 8,158 2,781 19,015 8,222
977,670 951,271 2,901,305 2,751,595
Expenses
Compensation and benefits 95,983 75,683 288,071 246,364
Utilities 76,822 71,526 225,987 229,363
Property taxes 88,311 88,941 264,933 266,823
Maintenance and repairs 79,733 92,089 204,318 250,066
Property management fee 43,662 42,598 129,624 123,283
Advertising 8,606 7,923 23,161 22,397
Insurance 8,001 7,974 24,003 23,922
Other 11,102 10,355 30,328 30,853
Administrative & professional fees 18,831 14,102 69,508 43,382
Interest expense 278,506 326,241 903,617 971,996
Depreciation of property and
equipment 257,787 259,506 773,361 778,518
Amortization of loan fees 4,098 4,098 12,294 12,294
971,442 1,001,036 2,949,205 2,999,261
Net income (loss) $ 6,228 $ (49,765) $ (47,900) $ (247,666)
Net income(loss) per unit of assignee
limited partnership interest $ 0.01 $ (0.10) $ (0.09) $ (0.49)
</TABLE>
See accompanying notes to financial statements
-2-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Consolidated Statements of Partners' Capital
For the Nine Months Ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Assignor Limited Partner
Assignment
of Limited Limited Subordinated
General Partnership Partnership Limited
Partners Interest Interest Partners Total
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $ (175,806) $ 2,150,367 $ (84,748) $ 100 $1,889,913
Net loss (958) (46,938) (4) - (47,900)
Distributions to partners (7,654) (374,998) (30) - (382,682)
Balance at September 30, 1997 $ (184,418) $ 1,728,430 $ (84,782) $ 100 $1,459,331
Balance at December 31, 1995 $ (161,521) $ 2,850,280 $ (84,692) $ 100 $2,604,167
Net loss (4,953) (242,693) (19) - (247,665)
Distributions to partners (7,654) (374,998) (30) - (382,682)
Balance at September 30, 1996 $ (174,128) $ 2,232,589 $ (84,741) $ 100 $1,973,820
</TABLE>
See accompanying notes to financial statements
-3-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30,
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
Cash flows from operating activities
<S> <C> <C>
Net loss $ (47,900) $ (247,666)
Adjustments to reconcile net loss
to net cash provided by operating activities
Depreciation of property and equipment 773,361 778,518
Amortization of loan fees 12,294 12,294
Change in assets and liabilities
Decrease in accounts receivable 51 25,712
Decrease(increase) in prepaid expenses 2,482 (9,953)
Decrease in escrow for real estate taxes 95,024 81,611
(Decrease)increase in accounts payable and accrued expenses (15,521) 41,313
Increase in due to affiliates 2,501 1,971
Increase in tenant security deposits 1,483 8,305
Net cash provided by operating activities 823,775 692,105
Cash flows from investing activities-
additions to investment in real estate (63,344) (50,794)
Cash flows from financing activities
Financing costs (23,612) -
Distributions to partners (382,682) (382,682)
Mortgage loan principal reduction (14,266,911) (137,358)
Proceeds from issuance of mortgage loans payable 14,500,000 -
Net cash used in financing activities (173,205) (520,040)
Net increase in cash and cash equivalents 587,226 121,271
Cash and cash equivalents
Beginning of period 402,707 342,171
End of period $ 989,933 $ 463,442
</TABLE>
See accompanying notes to financial statements
- -4-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Notes to the Financial Statements
September 30, 1997
(Unaudited)
NOTE 1 - THE FUND AND BASIS OF PREPARATION
The accompanying financial statements of Brown-Benchmark Properties Limited
Partnership (the "Partnership") do not include all of the information and note
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles. The unaudited interim
consolidated financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results for the
interim periods presented. All such adjustments are of a normal recurring
nature. The unaudited interim financial information should be read in
conjunction with the financial statements contained in the 1996 Annual Report.
NOTE 2 - INVESTMENT IN REAL ESTATE
Investment in real estate is stated at cost, net of accumulated depreciation,
and is summarized as follows:
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
<S> <C> <C>
Land $ 1,257,000 $ 1,257,000
Buildings 21,182,163 21,174,948
Furniture, fixtures
and equipment 2,069,644 2,013,514
24,508,807 24,445,462
Less: accumulated depreciation 9,299,901 8,526,539
Total $15,208,906 $15,918,923
</TABLE>
NOTE 3 - CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist solely of cash and money market accounts,
stated at cost, which approximate market value at September 30, 1997 and
December 31, 1996.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Administrative General Partner earned $10,540 and $9,580 during the quarters
ended September 30, 1997 and 1996, respectively, for reimbursement of costs
associated with administering the Partnership, including clerical services,
investor communication services, and reports and filings made to regulatory
authorities.
Benchmark Properties, Inc., an affiliate of the Development General Partner, the
managing agent for the properties, earned a management fee of $43,662 and
$42,598 during the quarters ended September 30, 1997 and 1996, respectively.
NOTE 5 - MORTGAGE LOANS PAYABLE
The Partnership has closed its mortgage loan refinancing with The Canada Life
Assurance Company for loans totaling $14,500,000 on February 28, 1997. The
renewal terms became effective on June 1, 1997 and provide for a term of five
years at an interest rate of 7.70%. Monthly payments are based on a 25-year
amortization schedule with a balloon payment due at the end of the 5-year term.
Prior to the effective date of the new loan terms on June 1, 1997, the mortgage
loan terms provide for interest only at 9%.
The Partnership incurred financing fees totaling $103,362. These costs were
capitalized as financing fees and will be amortized over the new term of the
loans commencing in 1997.
-5-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Notes to the Financial Statements
September 30, 1997
(Unaudited)
NOTE 6 - NET LOSS PER UNIT OF ASSIGNED LIMITED PARTNERSHIP INTEREST
Net loss per Unit of assigned limited partnership interest is disclosed on the
Statement of Operations and is based upon average units outstanding of 500,000
during the quarters ended September 30, 1997 and 1996.
-6-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
The Partnership's liquidity is largely dependent on its ability to
maintain reasonably high occupancy levels, achieve rental rate increases as the
respective markets allow and to control operating expenses. The Partnership
currently has sufficient liquid assets from its rental revenues to satisfy its
anticipated operating expenditures and debt service obligations.
On November 12, 1997, the Partnership made a cash distribution to its
partners totaling $191,327, representing an annualized return of 6% on invested
capital. Based upon the operating results through September and the budget for
the remainder of the year, operating cash flow during 1997 is expected to yield
approximately 6% on invested capital.
After a 4% distribution rate in the first and second quarters, the Partnership
increased the distribution rate to 6% in the third quarter and anticipates
maintaining the 6% distribution rate in the fourth quarter.
On February 28, 1997, the Partnership closed its mortgage loan
refinancing with its existing lender, The Canada Life Assurance Company. The new
loans totaling $14,500,000 were sufficient to retire the existing debt, pay the
costs and fees associated with the refinancing and establish a capital
improvement reserve of approximately $285,000. The renewal term for the new
loans became effective on June 1, 1997 and provide for a term of 5 years with an
interest rate of 7.70% with monthly payments based on a 25 year amortization
schedule. Until the effective date of June 1, 1997, the mortgage loan terms
provided for interest only at 9%. Although the loan amounts have increased, the
annual debt service payments will decrease by approximately $164,000 due to the
lower interest rate on the new loans.
The Partnership has finalized a capital improvement plan that will
utilize all of the $285,000 reserve established from excess refinancing
proceeds. The funds will primarily be used for replacing roofs, re-surfacing
parking lots and enhancing the curb appeal throughout all three properties in
1997 and 1998.
The Partnership does not anticipate an outlay for any other significant
capital improvements or repair costs that might adversely impact its liquidity.
Results of Operations
Third quarter revenues generated from the operation of the three
apartment communities increased 2.78% when compared to revenues collected during
the third quarter of 1996. Through the first three quarters of 1997, operating
revenues increased 5.44% when compared to revenues received during the same
period in 1996. The gross rent potential for the three communities increased
$55,345 or approximately 2%, from $2,968,391 to $3,023,736 and the average
aggregate occupancy level of the properties increased from 92% through the third
quarter of 1996 to 94% through the third quarter of 1997. We anticipate these
improved operating trends to be sustained for the remainder of 1997.
Third quarter operating expenses excluding interest charges,
depreciation and amortization costs, increased $19,860 versus expenses incurred
during the third quarter of 1996. Through the third quarter of the year,
expenses increased approximately $23,480, or less than 2%, versus 1996. Through
the first three quarters of 1997 operating costs are essentially on budget and
we expect operating costs to remain on budget in the fourth quarter.
Due to the increase in revenues, coupled with stable expenses
(excluding interest charges, depreciation and amortization costs) through the
third quarter of 1997 as compared to 1996, the net operating income of the
property increased $126,230 or approximately 8%.
Occupancy levels at Woodhills, in Dayton, Ohio, have been consistent
through 1997 and have averaged 94% during the second and third quarter of 1997
up slightly from the 93% average in the first quarter. Occupancy during the
third quarter of 1996 averaged 92%. As a result of this consistent high
occupancy, the third quarter rental revenues increased $8,096 when compared to
revenues collected during the third quarter of 1996. Rental revenues received
through the third quarter of 1997 increased $33,054, or 3.9%, when compared to
the same period in 1996. The average rental rates increased from $553 in the
third quarter of 1996 to $563 in the third quarter of 1997. Management's focus
-7-
1
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations (continued)
during the fourth quarter will be on maintaining its occupancy at or above 94%,
while increasing its gross rent potential by increasing rents on selected units
and through moderate increases on lease renewals. Operating expenses are stable
and slightly over budget due to higher than anticipated painting costs.
At Deerfield, in Cincinnati, Ohio, the average occupancy level after
averaging 94% during the first two quarters increased to 97% during the third
quarter. Occupancy during the third quarter of 1996 averaged 93%. As a result of
this stable and strong occupancy, rental revenues through the third quarter of
1997 increased $75,082, or 7.2% when compared to revenues collected during the
same period in 1996. The third quarter rental revenues increased $18,945 when
compared to revenues collected during the third quarter of 1996. The average
rental rates increased from $577 in the third quarter of 1996 to $590 in the
third quarter of 1997. Operating expenses are under budget by approximately
$1,000. Management remains committed to its goal of achieving a 3% rent increase
in 1997 while maintaining occupancy high occupancy.
At Oakbrook in Columbus, Ohio, occupancy levels after averaging 96%
during the first two quarters of 1997 decreased to 94% in the third quarter.
Also, occupancy in the third quarter of 1996 averaged 96%. The third quarter
rental revenues decreased by $6,020 when compared to third quarter of 1996.
Rental revenues through the first three quarters of 1997 increased by $30,781 or
3.6% when compared to the same period in 1996. The average rental rates
increased from $555 in the third quarter of 1996 to $567 in the third quarter of
1997. Management's focus during the fourth quarter will be to ensure that all
units are market ready and continue to make resident retention a priority.
Operating expenses are stable and remain on budget.
Management is committed to sustaining the positive trends in occupancy
levels and increasing rental rates experienced at each of the properties. We are
optimistic that these improved operating results will continue through 1997.
These trends combined with the decrease in debt service payments in the second
half of the year has enabled the Partnership to increase its distribution rate
to 6%.
-8-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Inapplicable
Item 2. Changes in Securities
Inapplicable
Item 3. Defaults upon Senior Securities
Inapplicable
Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable
Item 5. Other Information
Inapplicable
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits: None.
b) Reports on Form 8-K: None.
-9-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
BROWN-BENCHMARK PROPERTIES
LIMITED PARTNERSHIP
DATE: 8/7/97 By: /s/ John M. Prugh
John M. Prugh
President and Director
Brown-Benchmark AGP, Inc.
Administrative General Partner
DATE: 8/7/97 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Treasurer
Brown-Benchmark AGP, Inc.
Administrative General Partner
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with legend, if applicable)
</LEGEND>
<CIK> 0000818084
<NAME> BROWN-BENCHMARK PROPERTIES LIMITED PAR
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 989,933
<SECURITIES> 0
<RECEIVABLES> 74,948
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,217,173
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,526,653
<CURRENT-LIABILITIES> 478,335
<BONDS> 14,435,359
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 16,526,653
<SALES> 0
<TOTAL-REVENUES> 2,901,305
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,045,588
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 903,617
<INCOME-PRETAX> (47,900)
<INCOME-TAX> 0
<INCOME-CONTINUING> (47,900)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (47,900)
<EPS-PRIMARY> 0.000
<EPS-DILUTED> 0.000
</TABLE>
