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, 1999
{ } 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, 1999 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
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 9
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,
1999 1998
Assets
<S> <C> <C>
Investment in real estate $13,950,734 $ 14,367,392
Cash and cash equivalents 628,709 668,208
Other assets
Accounts receivable, net 81,258 88,339
Prepaid expenses 16,981 15,748
Escrow for real estate taxes 141,274 258,691
Loan fees, less accumulated amortization
of $39,205 and $31,009, respectively 64,157 72,353
Total other assets 303,670 435,131
Total assets $14,883,113 $ 15,470,731
Liabilities and Partners' Capital
Liabilities
Accounts payable and accrued expenses $ 504,847 $ 614,607
Tenant security deposits 143,445 138,299
Due to affiliates 10,968 5,444
Mortgage loans payable 14,067,711 14,177,678
Total liabilities 14,726,971 14,936,028
Partners' Capital
General Partners (210,481) (202,910)
Assignor Limited Partner
Assignment of Limited Partnership
Interests - $25 stated value per
unit, 500,000 units outstanding 451,407 822,367
Limited Partnership Interests -
$25 stated value per unit,
40 units outstanding (84,884) (84,854)
Subordinated Limited Partners 100 100
Total partners' capital 156,142 534,703
Total liabilities and partners' capital $14,883,113 $ 15,470,731
</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,
1999 1998 1999 1998
Revenues
<S> <C> <C> <C> <C>
Rental income $ 998,792 $974,114 $1,982,903 $1,927,563
Interest income 3,781 7,549 7,731 14,938
1,002,573 981,663 1,990,634 1,942,501
Expenses
Compensation and benefits 119,524 83,211 214,243 176,586
Utilities 66,967 68,353 145,470 146,024
Property taxes 92,589 92,361 185,178 184,722
Maintenance and repairs 114,391 86,881 183,310 131,631
Property management fee 45,151 43,866 89,192 86,802
Advertising 11,925 9,319 23,842 17,661
Insurance 9,000 8,205 18,002 16,410
Other 14,880 11,518 25,218 22,504
Administrative & professional fees 16,640 17,175 33,971 35,860
Interest expense 271,742 275,624 544,315 552,228
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
1,024,694 958,398 1,986,511 1,894,198
Net income (loss) $ (22,121) $ 23,265 $ 4,123 $ 48,303
Net income(loss) per unit of assignee
limited partnership interest - basic $ (0.04) $ 0.05 $ 0.01 $ 0.09
</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, 1999 and 1998
(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, 1998 $ (202,910) $ 822,367 $ (84,854) $ 100 $ 534,703
Net income 83 4,040 - - 4,123
Distributions to partners (7,654) (375,000) (30) - (382,684)
Balance at June 30, 1999 $ (210,481) $ 451,407 $ (84,884) $ 100 $ 156,142
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) $ 1,204,572 $ (84,823) $ 100 $ 924,740
</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>
1999 1998
Cash flows from operating activities
<S> <C> <C>
Net income $ 4,123 $ 48,303
Adjustments to reconcile net income
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 7,081 1,008
(Increase)decrease in prepaid expenses (1,233) 11,620
Decrease in escrow for real estate taxes 117,417 65,897
Decrease in accounts payable and accrued expenses (109,759) (37,597)
Increase in due to affiliates 5,524 156
Increase in tenant security deposits 5,146 5,757
Net cash provided by operating activities 552,069 618,914
Cash flows from investing activities-
additions to investment in real estate (98,917) (87,292)
Cash flows from financing activities
Distributions to partners (382,684) (382,669)
Mortgage loan principal reduction (109,967) (102,055)
Net cash used in financing activities (492,651) (484,724)
Net (decrease)increase in cash and cash equivalents (39,499) 46,898
Cash and cash equivalents
Beginning of period 668,208 910,435
End of period $ 628,709 $ 957,333
</TABLE>
See accompanying notes to financial statements
-4-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
June 30, 1999
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 1998 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, 1999 December 31, 1998
<S> <C> <C>
Land $ 1,257,000 $ 1,257,000
Buildings 21,416,568 21,413,355
Furniture, fixtures
and equipment 2,381,739 2,286,036
25,055,307 24,956,391
Less: accumulated depreciation 11,104,573 10,588,999
Total $13,950,734 $14,367,392
</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, 1999 and December 31,
1998.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Administrative General Partner earned $10,968 and $11,048 during the
quarters ended June 30, 1999 and 1998, 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 $45,151 and
$43,866 during the quarters ended June 30, 1999 and 1998, respectively.
NOTE 5 - MORTGAGE LOANS PAYABLE
The mortgage loan terms 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 loan maturity in June 2002.
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
June 30, 1999
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, 1999 and 1998.
-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, 1999, the Partnership will make 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 1999 is expected to fund a
distribution rate of 6% through 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 $20,910 (2.1%) when compared to revenues
received during the second quarter of 1998. Through the first half of 1999,
revenues increased by $48,133, (2.5%) when compared to those received during the
first half of 1998. While rental revenues at both the Cincinnati and Columbus
properties are on budget, revenues from the Dayton property remain below budget
due primarily to increased rental concessions. The average aggregate occupancy
level of the properties increased from 92% during the first half of 1998 to 94%
during the first half of 1999.
Second quarter operating expenses excluding interest charges, depreciation and
amortization costs, increased $70,178 versus similar expenses incurred during
the second quarter of 1998 as a result of higher maintenance and compensation
expense. Through the first half of the year, similar expenses have increased
$100,226, versus 1998. This increase was primarily due to higher maintenance and
compensation expenses at each of the properties. These expenses have increased
in an effort to improve the curb appeal and marketability of each of the
communities. Second half operating expenses are expected to be in line with
budget and less than those incurred during the first half of the year.
While first half 1999 revenues increased when compared to 1998, the
proportionately larger increase in operating expenses (excluding interest
charges, depreciation and amortization costs) resulted in a decrease in the
properties' net operating income by approximately $52,000 (5%) when compared to
the first half of 1998. The aggregate net operating income of the three
properties is projected to increase by approximately $76,000 during the second
half of 1999 due to both revenue increases and operating expense reductions.
Occupancy levels at Woodhills, in Dayton, Ohio, averaged 94% during the second
quarter, representing an increase of 3% from the first quarter of the year.
Revenues received through the first half of the year are $14,354 higher than
those received in 1998 due to higher occupancy levels and modest rental rate
increases. While the street rents have increased from $577 in the second quarter
of 1998 to $587 in the second quarter of 1999, rental concessions offered to new
residents have offset a significant portion of this gain. Management's immediate
goal is to raise and stabilize the community's occupancy level at 95%. No
significant rental rate increases are expected in the immediate future. The
Dayton apartment rental market remains competitive. Rental specials are
currently offered at every community. Management has continued its program to
upgrade available units at Woodhills to include: new carpet and vinyl, lighting
fixtures, faucets, mirrors and fresh paint. We have repaired fencing, power
washed decks and landscaped to improve the curb appeal of the community. We
believe these efforts have assisted management in improving the occupancy level
of the community and expect second half occupancy and operating trends to be
positive. Woodhill's second half cash flow is projected to increase by $45,000
when compared to the first half of the year due to lower operating expenses
coupled with modest revenue gains.
The rental market in Cincinnati remains strong. The average occupancy level at
the Deerfield property was 95% during the second quarter, up 1% from the first
quarter of the year. The average rental rate at the community has increased from
$606 in the second quarter of 1998 to $623 in the second quarter of 1999. Due to
rate increases, revenues received through the second quarter of 1999 increased
$11,321 (approximately 1.4%) when compared to the first half of 1998. Operating
expenses through the first of 1999 increased by $28,700 when compared to 1998
primarily as result of higher maintenance
-7-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations (continued)
costs and compensation expenses associated with improvements made to the
community. Second half cash flow from Deerfield is projected to increase by
$16,350 when compared to the first half of the year primarily as a result of
higher revenues.
At Oakbrook, in Columbus, Ohio, occupancy levels were sustained at 97% during
the second quarter, unchanged from the first quarter of 1999. The rental market
remains strong although several new communities are currently under construction
which will make the market more competitive. Revenues received at the property
through the first half of the year increased $29,500 (5%) when compared to 1998
due primarily to the higher occupancy levels sustained at the community in 1999.
Management's focus during the second half of the year will be on increasing
rental rates on selected units as the market allows. Second half cash flow
generated from the Oakbrook community is projected to increase approximately
$13,500 from the first half of the year due primarily to lower operating
expenses.
Management is pleased with the occupancy gains achieved at the Woodhills
community while maintaining high occupancy levels at both the Deerfield and
Oakbrook properties. The 94% aggregate occupancy level achieved by the three
properties during the second quarter of 1999 is the highest level achieved in
years. Management is committed to sustaining these occupancy levels and expects
the operating performance of the portfolio to improve as a result. While
operating expenses through the first half of the year have been elevated to
achieve the improvement in the portfolio's occupancy level, second half costs
are projected to decrease and result in higher cash flows from the properties.
-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: 8/10/99 By: /s/ John M. Prugh
John M. Prugh
President and Director
Brown-Benchmark AGP, Inc.
Administrative General Partner
DATE: 8/10/99 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 PROPERTIE
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 628,709
<SECURITIES> 0
<RECEIVABLES> 81,258
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 868,222
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,883,113
<CURRENT-LIABILITIES> 659,260
<BONDS> 14,067,711
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14,883,113
<SALES> 0
<TOTAL-REVENUES> 1,990,634
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,442,196
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 544,315
<INCOME-PRETAX> 4,123
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,123
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,123
<EPS-BASIC> 0.010
<EPS-DILUTED> 0.000
</TABLE>
