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 March 31, 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 March 31, 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>
March 31, December 31,
1999 1998
Assets
<S> <C> <C>
Investment in real estate $14,145,990 $ 14,367,392
Cash and cash equivalents 630,022 668,208
Other assets
Accounts receivable, net 93,587 88,339
Prepaid expenses 14,809 15,748
Escrow for real estate taxes 306,580 258,691
Loan fees, less accumulated amortization
of $35,107 and $31,009, respectively 68,255 72,353
Total other assets 483,231 435,131
Total assets $15,259,243 $ 15,470,731
Liabilities and Partners' Capital
Liabilities
Accounts payable and accrued expenses $ 617,656 $ 614,607
Tenant security deposits 139,663 138,299
Due to affiliates 9,208 5,444
Mortgage loans payable 14,123,110 14,177,678
Total liabilities 14,889,637 14,936,028
Partners' Capital
General Partners (206,212) (202,910)
Assignor Limited Partner
Assignment of Limited Partnership
Interests - $25 stated value per
unit, 500,000 units outstanding 660,585 822,367
Limited Partnership Interests -
$25 stated value per unit,
40 units outstanding (84,867) (84,854)
Subordinated Limited Partners 100 100
Total partners' capital 369,606 534,703
Total liabilities and partners' capital $15,259,243 $ 15,470,731
</TABLE>
See accompanying notes to financial statements
-1-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Consolidated Statements of Operations For the three months ended March 31,
(Unaudited) <TABLE> <CAPTION>
1999 1998
Revenues
<S> <C> <C>
Rental income $984,111 $953,449
Interest income 3,950 7,389
988,061 960,838
Expenses
Compensation and benefits 94,719 93,375
Utilities 78,503 77,671
Property taxes 92,589 92,361
Maintenance and repairs 68,918 44,750
Property management fee 44,040 42,936
Advertising 11,917 8,342
Insurance 9,002 8,205
Other 10,338 10,986
Administrative & professional fees 17,333 18,687
Interest expense 272,572 276,603
Depreciation of property and equipment 257,787 257,787
Amortization of loan fees 4,098 4,098
961,816 935,801
Net income $ 26,245 $ 25,037
Net income per unit of assignee limited
partnership interest - basic $ 0.05 $ 0.05
</TABLE>
See accompanying notes to financial statements
-2-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Consolidated Statements of Partners' Capital
For the Three Months Ended March 31, 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 525 25,718 2 - 26,245
Distributions to partners (3,827) (187,500) (15) - (191,342)
Balance at March 31, 1999 $ (206,212) $ 660,585 $ (84,867) $ 100 $ 369,606
Balance at December 31, 1997 $ (188,422) $ 1,532,225 $ (84,797) $ 100 $1,259,106
Net income 501 24,534 2 - 25,037
Distributions to partners (3,827) (187,485) (15) - (191,327)
Balance at March 31, 1998 $ (191,748) $ 1,369,274 $ (84,810) $ 100 $1,092,816
</TABLE>
See accompanying notes to financial statements
-3-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows
For the Three Months Ended March 31,
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
Cash flows from operating activities
<S> <C> <C>
Net income $ 26,245 $ 25,037
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation of property and equipment 257,787 257,787
Amortization of loan fees 4,098 4,098
Changes in assets and liabilities
(Increase) decrease in accounts receivable (5,248) 3,414
Decrease in prepaid expenses 939 10,674
(Increase)decrease in escrow for real estate taxes (47,889) 94,390
Increase (decrease) in accounts payable and accrued expense 3,049 (102,011)
Increase(decrease) in due to affiliates 3,764 (28)
Increase in tenant security deposits 1,364 3,107
Net cash provided by operating activities 244,109 296,468
Cash flows from investing activities-
additions to investment in real estate (36,385) (39,325)
Cash flows from financing activities
Distributions to partners (191,342) (191,327)
Mortgage loan principal reduction (54,568) (50,538)
Net cash used in financing activities (245,910) (241,865)
Net (decrease)increase in cash and cash equivalents (38,186) 15,278
Cash and cash equivalents
Beginning of period 668,208 910,435
End of period $ 630,022 $ 925,713
</TABLE>
See accompanying notes to financial statements
-4-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
March 31, 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>
March 31, 1999 December 31, 1998
<S> <C> <C>
Land $ 1,257,000 $ 1,257,000
Buildings 21,413,355 21,413,355
Furniture, fixtures
and equipment 2,322,420 2,286,036
24,992,775 24,956,391
Less: accumulated depreciation 10,846,785 10,588,999
Total $14,145,990 $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 March 31, 1999 and December
31, 1998.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Administrative General Partner earned $9,208 and $10,864 during the quarters
ended March 31, 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 $44,040 and
$42,936 during the quarters ended March 31, 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 five year term of
the loans.
-5-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
March 31, 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 quarters ended March 31, 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 May 13, 1999, 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 March and the budget for the remainder
of the year, operating cash flow during 1999 is expected to fully 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
Through the first quarter of 1999, rental revenues increased by $30,662 (3.2%)
when compared to revenues received during the first quarter of 1998. This
increase was due to higher revenues received at the Oakbrook and Deerfield
properties. The gross rent potential for the three communities increased $28,138
(2.7%), from $1,031,712 to $1,059,850. In addition, the aggregate average
occupancy level for the first quarter of 1999 increased from 92% during the
first quarter of 1998 to 94% during the first quarter of 1999. Management's goal
is to increase and stabilize occupancy levels at 95% at each of the three
properties.
First quarter operating expenses excluding interest charges, depreciation and
amortization costs, increased $30,046 (7.6%) versus similar expenses incurred
during the first quarter of 1998. Of this increased expense, 80% was due to
higher maintenance and repair costs while 12% was the result of higher
advertising expenses. Partially offsetting these overages were savings in
administrative expenses, which were $10,219 (13%) under budget for the first
quarter of the year.
Occupancy levels at Woodhills, in Dayton, Ohio, averaged 91% during the first
quarter of 1999, unchanged when compared to the first quarter of 1998. As a
result, rental revenues received during the first quarter of the year were flat
when compared to the first quarter of 1998. Since the end of the first quarter
however, occupancy levels have steadily increased and currently the property is
95% occupied. While rental rates at Woodhills have increased 2.3% since the
first quarter of 1998, no significant rate increases are expected until
occupancy levels are sustained at 95% or higher. Capital improvements to the
property during the first quarter consisted primarily of carpet and vinyl
replacements and new appliances. Improvements planned for the second quarter
include new fencing, curb repairs, new pool furniture and appliance and
compressor replacements.
At Deerfield, in Cincinnati, Ohio, the average occupancy level during the first
quarter was 94%, the same as the first quarter of 1998. However, because of
higher rental rates, first quarter revenues at Deerfield increased $9,220 (2.4%)
when compared to revenues earned during the first quarter of 1998. The average
rental rate in March was $620 per unit per month, representing an increase of
$20 or 3.3% from the average rate in March of 1998. Occupancy levels have
declined slightly to 92% since the end of the first quarter. The primary reasons
listed by residents for moving is to buy a home or due to a job transfer. In
order to offset this increased turnover, management has begun to market a
limited number of short term rentals (3 to 6 month leases), where monthly
premiums of $25 to $75 will be charged to individuals who are new to the area
and may need an apartments for a limited amount of time. Capital improvements
during the first quarter included carpet and vinyl replacement, clubhouse
upgrades and new signage.
-7-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations (continued)
At Oakbrook in Columbus, Ohio, occupancy levels averaged 97% during the first
quarter of 1999 representing an increase of 6% from the first quarter, 1998
average of 91%. In addition, the average rental rate increased 2.4% from $574
per unit per month in March 1998 to $588 per unit per month in March 1999. Due
to increased occupancy levels and higher rental rates, revenues received at
Oakbrook during the first quarter of 1999 increased $21,417 (7.4%) when compared
to the first quarter of 1998. Occupancy levels have remained stable at 97% since
the end of the first quarter. Operating expenses were under budget by $5,852
(4.4%) and no significant variances are expected in the upcoming quarter.
Capital improvements during the first quarter included carpet and vinyl
replacements, clubhouse upgrades and appliance replacements. Improvements
planned for the second quarter include new fencing, landscaping, new signage and
pool furniture. Management expects the positive trends experienced at Oakbrook
to continue throughout the year.
Management is committed to increasing and stabilizing the aggregate occupancy
level at or above 95% for the three apartment communities. Strides were made
during the first quarter at each of the properties and we remain optimistic this
goal will be reached during the year.
Year 2000
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Partnership's
computer programs that have time-sensitive hardware and software may recognize a
date using (00) as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculations causing disruptions of operations, including
among other things, a temporary inability to process transactions, collect
rents, or engage in similar normal business activities.
Management has completed its assessments of its information technology systems
(IT) and non-IT systems to assess their Year 2000 readiness. Critical systems
include, but are not limited to, accounts receivable and rent collections, fixed
assets, and security systems. In order for these systems to function properly
with respect to the Year 2000 and thereafter, the Partnership may need to modify
or replace portions of its software. The partnership will utilize both internal
and external resources to modify or replace software. The total cost of the Year
2000 project is estimated to be $5,000, $3,000 of which has been incurred to
date. Management anticipates that the aforementioned modifications which are
currently in process and expected to be completed by September 30, 1999, will
remediate any Year 2000 problems.
Various third-party vendors have been queried on their Year 2000 readiness. To
date, Management is not aware of any significant suppliers or vendors with a
Year 2000 issue that could materially impact the Partnership. However, lack of
readiness by utilities, financial institutions or governmental agencies could
pose significant impediments to the Partnership's ability to carry on normal
operations. There can be no assurances that the systems of other companies on
which the Partnership's systems rely, will be timely converted and would not
have an adverse effect on the Partnership's systems.
Management believes it has an effective program in place to resolve the Year
2000 issue in a timely manner. Contingency plans involve system enhancement,
manual workarounds, and adjusting staffing strategies. Nevertheless, management
believes that it could continue its normal business operations if compliance is
delayed. The Partnership does not believe that the Year 2000 issue will material
impact its results of operations, liquidity, or capital resources.
-8-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
PART I. FINANCIAL INFORMATION
Item 3. Quantitative and Qualitative Disclosures About Market Risks
There is no material impact to the Partnerships financial position.
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: 5/13/99 By: /s/ John M. Prugh
John M. Prugh
President and Director
Brown-Benchmark AGP, Inc.
Administrative General Partner
DATE: 5/13/99 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 PROPERTIES
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 630,022
<SECURITIES> 0
<RECEIVABLES> 93,587
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,044,998
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,259,243
<CURRENT-LIABILITIES> 766,527
<BONDS> 14,123,110
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,259,243
<SALES> 0
<TOTAL-REVENUES> 988,061
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 689,244
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 272,572
<INCOME-PRETAX> 26,245
<INCOME-TAX> 0
<INCOME-CONTINUING> 26,245
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,245
<EPS-PRIMARY> 0.050
<EPS-DILUTED> 0.000
</TABLE>
