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 June 30, 1998
{ } 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 June 30, 1998 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>
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>
June 30, December 31,
1998 1997
Assets
<S> <C> <C>
Investment in real estate $14,648,019 $ 15,076,301
Cash and cash equivalents 957,333 910,435
Other assets
Accounts receivable, net 72,188 73,196
Prepaid expenses 17,416 29,036
Escrow for real estate taxes 157,875 223,772
Loan fees, less accumulated amortization
of $18,532 and $10,336, respectively 84,830 93,026
Total other assets 332,309 419,030
Total assets $15,937,661 $ 16,405,766
Liabilities and Partners' Capital
Liabilities
Accounts payable and accrued expenses $ 572,959 $ 610,557
Tenant security deposits 145,186 139,429
Due to affiliates 11,048 10,892
Mortgage loans payable 14,283,727 14,385,782
Total liabilities 15,012,920 15,146,660
Partners' Capital
General Partners (195,109) (188,422)
Assignor Limited Partner
Assignment of Limited Partnership
Interests - $25 stated value per
unit, 500,000 units outstanding 1,204,573 1,532,225
Limited Partnership Interests -
$25 stated value per unit,
40 units outstanding (84,823) (84,797)
Subordinated Limited Partners 100 100
Total partners' capital 924,741 1,259,106
Total liabilities and partners' capital $15,937,661 $ 16,405,766
</TABLE>
See accompanying notes to financial statements
-1-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
Revenues
<S> <C> <C> <C> <C>
Rental income $974,114 $ 958,288 $1,927,563 $1,912,779
Interest income 7,549 8,049 14,938 10,857
981,663 966,337 1,942,501 1,923,636
Expenses
Compensation and benefits 83,211 103,048 176,586 192,089
Utilities 68,353 72,192 146,024 149,166
Property taxes 92,361 88,311 184,722 176,622
Maintenance and repairs 86,881 83,412 131,631 124,585
Property management fee 43,866 43,157 86,802 85,962
Advertising 9,319 7,588 17,661 14,555
Insurance 8,205 8,001 16,410 16,002
Other 11,518 10,595 22,504 19,226
Administrative & professional fees 17,175 28,293 35,860 50,677
Interest expense 275,624 310,542 552,228 625,111
Depreciation of property and
equipment 257,787 257,787 515,574 515,574
Amortization of loan fees 4,098 4,098 8,196 8,196
958,398 1,017,024 1,894,198 1,977,765
Net income (loss) $ 23,265 $ (50,687) $ 48,303 $ (54,129)
Net income(loss) per unit of assignee
limited partnership interest $ 0.05 $ (0.10) $ 0.09 $ (0.11)
</TABLE>
See accompanying notes to financial statements
-2-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Consolidated Statements of Partners' Capital
For the Six Months Ended June 30, 1998 and 1997
(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, 1997 $ (188,422) $ 1,532,225 $ (84,797) $ 100 $1,259,106
Net income 966 47,333 4 - 48,303
Distributions to partners (7,653) (374,986) (30) - (382,669)
Balance at June 30, 1998 $ (195,109) $ 1,204,573 $ (84,823) $ 100 $ 924,741
Balance at December 31, 1996 $ (175,806) $ 2,150,367 $ (84,748) $ 100 $1,889,913
Net loss (1,083) (53,042) (4) - (54,129)
Distributions to partners (5,102) (249,999) (20) - (255,121)
Balance at June 30, 1997 $ (181,991) $ 1,847,326 $ (84,772) $ 100 $1,580,663
</TABLE>
See accompanying notes to financial statements
-3-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows
For the Six Months Ended June 30,
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
Cash flows from operating activities
<S> <C> <C>
Net income (loss) $ 48,303 $ (54,129)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities
Depreciation of property and equipment 515,574 515,574
Amortization of loan fees 8,196 8,196
Changes in assets and liabilities
Decrease in accounts receivable 1,008 532
Decrease(increase) in prepaid expenses 11,620 (9,637)
Decrease in escrow for real estate taxes 65,897 16,796
(Decrease)increase in accounts payable and accrued expenses (37,597) 95,365
Increase(decrease) in due to affiliates 156 (8,039)
Increase(decrease) in tenant security deposits 5,757 (2,321)
Net cash provided by operating activities 618,914 562,337
Cash flows from investing activities-
additions to investment in real estate (87,292) (39,990)
Cash flows from financing activities
Financing costs -- (23,612)
Distributions to partners (382,669) (255,121)
Mortgage loan principal reduction (102,055) (14,218,275)
Proceeds from issuance of mortgage loans payable -- 14,500,000
Net cash (used in) provided by financing activities (484,724) 2,992
Net increase in cash and cash equivalents 46,898 525,339
Cash and cash equivalents
Beginning of period 910,435 402,707
End of period $ 957,333 $ 928,046
</TABLE>
See accompanying notes to financial statements
- -4-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
March 31, 1998
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 1997 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>
June 30, 1998 December 31, 1997
<S> <C> <C>
Land $ 1,257,000 $ 1,257,000
Buildings 21,352,973 21,307,273
Furniture, fixtures
and equipment 2,132,568 2,090,976
24,742,541 24,655,249
Less: accumulated depreciation 10,094,522 9,578,948
Total $14,648,019 $15,076,301
</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 June 30, 1998 and December 31,
1997.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Administrative General Partner earned $11,048 and $14,200 during the
quarters ended June30, 1998 and 1997, 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 $43,866 and
$43,157 during the quarters ended June 30, 1998 and 1997, respectively.
NOTE 5 - MORTGAGE LOANS PAYABLE
The Partnership 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 are being amortized over the new term of the
loans.
-5-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
March 31, 1998
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 quarter ended June 30, 1998 and 1997.
-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 August 12, 1998, the Partnership made a cash distribution to its partners
totaling $191,342, representing an annualized return of 6% on invested capital.
Based upon the operating results through June and the budget for the remainder
of the year, operating cash flow during 1998 is expected to fully fund a
distribution rate of 6% through 1998.
Revised estimates of planned improvements to the three apartment properties
anticipate the Partnership will utilize approximately $125,000 of reserves in
1998 to enhance the curb appeal and marketability of the properties. The funds
will primarily be used for roof repairs and brick re-pointing at the Deerfield
property ($45,500), blacktop sealant and curbing repairs on the parking lots at
the Deerfield and Woodhills properties ($53,000) and refurbishing the
clubhouse/office at the Deerfield property ($10,000). The parking lot was
re-surfaced at the Oakbrook property in the fourth quarter of 1997 and the
clubhouse at the Woodhills property was refurbished in 1997. The
clubhouse/office at the Oakbrook property will be refurbished in 1999.
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
Second quarter revenues increased by $15,326 (1.6%) when compared to revenues
received during the second quarter of 1997. Through the first half of 1998,
revenues were essentially flat when compared to those received during the first
half of 1997, increasing less than 1%. While revenues generated at the
Cincinnati property are above budget, revenues from the Dayton and Columbus
properties remain below budget due to decreased occupancy levels and higher
rental concessions. The average aggregate occupancy level of the properties
decreased from 94% during the first half of 1997 to 92% during the first half of
1998.
Second quarter operating expenses excluding interest charges, depreciation and
amortization costs, decreased $23,708 or approximately 5% versus similar
expenses incurred during the second quarter of 1997. Through the first half of
the year, similar expenses decreased $10,684, or 1.3%, versus 1997. Through the
first half of the year, operating expenses are under budget with no significant
variances.
The modest increase in revenues, coupled with a decrease in expenses (excluding
interest charges, depreciation and amortization costs) resulted in an increase
in the net operating income of the property of $29,549 or approximately 3%
through the first half of 1998 as compared to 1997.
The interest expense on the Partnership's mortgage loans decreased $72,883, or
12%, when compared to 1997, due to the refinancing of the loans in February,
1997. While the loan amounts increased, the lower interest rate obtained will
result in annual debt service savings of approximately $164,000 when compared to
1997.
Occupancy levels at Woodhills, in Dayton, Ohio, averaged 88% during the second
quarter, down from the 91% level experienced during the first quarter of the
year. As a result of the decrease in occupancy, rental revenues remain below
budget. Revenues received at the property through the first half of the year are
approximately $8,000 less than those received during the first half of 1997. The
Dayton apartment rental market has become very competitive due to the completion
of the construction of approximately 1,000 new apartments. The average occupancy
in the Dayton apartment market decreased from 93% in September 1997 to 90% in
June 1998. In response to the competitive rental market,
-7-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations (continued)
management has implemented a program to upgrade available units to include: new
carpet and vinyl, lighting fixtures, faucets, mirrors and fresh paint. We expect
to see improved leasing and occupancy trends during the second half of the year.
Operating expenses remain under budget and are approximately $5,000 less than
similar expenses through the first half of 1997.
The rental market in Cincinnati continues to be strong. The average occupancy
level at the Deerfield property was 97% during the second quarter, up from the
first quarter 1998 average of 94%. As a result of this strong market the average
rental rates have increased from $586 in the second quarter of 1997 to $606 in
the second quarter of 1998. Due to both rate increases and occupancy gains,
rental revenues received during the second quarter increased $18,825 when
compared to the first quarter of the year. Through the first half of 1998,
revenues received at the property increased $36,278 or 5% when compared to
collections during the first half of 1997. Operating expenses are under budget
and are approximately 1% higher when compared to 1997.
At Oakbrook in Columbus, Ohio, occupancy levels increased from 91% during the
first quarter of the year to 95% during the second quarter. As a result of this
increase, rental revenues received during the second quarter increased $5,752
when compared to the first quarter of the year. Revenues generated through the
first half of the year remain approximately 2% below first half 1997 revenues
due to lower first quarter 1998 occupancy levels. The average rental rate has
increased from $562 in the second quarter of 1997 to $574 in the second quarter
of 1998. Management's 1998 goals for Oakbrook are to achieve a 2% rent increase
and to increase and stabilize occupancy at 95%. Operating expenses are on budget
for the first half of the year and reflect an increase of less than 2.5% when
compared to similar expenses in 1997.
While occupancy levels at Deerfield and Oakbrook have improved management
remains committed to improving occupancy levels at Woodhills so the aggregate
occupancy level of the three properties reaches the 93% to 95% range by
year-end.
-8-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Inapplicable
Item 2. Changes in Securities and Use of Proceeds
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: 8/10/98 By: /s/ John M. Prugh
John M. Prugh
President and Director
Brown-Benchmark AGP, Inc.
Administrative General Partner
DATE: 8/10/98 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Treasurer
Brown-Benchmark AGP, Inc.
Administrative General Partner
-10-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with legend, if applicable)
</LEGEND>
<CIK> 0000818084
<NAME> BROWN-BENCHMARK PROPERTIE
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 957,333
<SECURITIES> 0
<RECEIVABLES> 72,188
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,204,812
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,937,661
<CURRENT-LIABILITIES> 718,145
<BONDS> 14,283,727
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,937,661
<SALES> 0
<TOTAL-REVENUES> 1,942,501
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,341,970
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 552,228
<INCOME-PRETAX> 48,303
<INCOME-TAX> 0
<INCOME-CONTINUING> 48,303
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48,303
<EPS-PRIMARY> 0.000
<EPS-DILUTED> 0.000
</TABLE>
