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, 2000
{ } 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, 2000 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
<TABLE>
<CAPTION>
Page No.
Part I. Financial Information
Item 1. Financial Statements
<S> <C>
Balance Sheets 1
Statements of Operations 2
Statements of Partners' Capital (Deficit) 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
Item 3. Quantitative and Qualitative Disclosures About Market Risk 8
Part II. Other Information
Item 1. through Item 6. 8
Signatures 9
</TABLE>
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
(Unaudited)
---------------- ----------------
Assets
<S> <C> <C>
Investment in real estate $ 13,137,979 $ 13,597,059
Cash and cash equivalents 703,632 541,297
Other assets
Accounts receivable, net 55,571 157,015
Prepaid expenses 17,626 15,416
Escrow for real estate taxes 185,023 273,763
Loan fees, less accumulated amortization
of $62,013 and $51,681, respectively 41,349 51,681
---------------- ----------------
Total other assets 299,569 497,875
---------------- ----------------
Total assets $ 14,141,180 $ 14,636,231
================ ================
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable and accrued expenses $ 523,260 $ 599,642
Tenant security deposits 147,387 143,657
Due to affiliates 13,788 7,661
Mortgage loans payable 13,834,869 13,953,098
---------------- ----------------
Total liabilities 14,519,304 14,704,058
---------------- ----------------
Partners' Capital (Deficit)
General Partners (221,166) (214,960)
Assignor Limited Partner:
Assignment of Limited Partnership
Interests - $25 stated value per
unit, 500,000 units outstanding (72,133) 231,934
Limited Partnership Interests -
$25 stated value per unit,
40 units outstanding (84,925) (84,901)
Subordinated Limited Partners 100 100
---------------- ----------------
Total partners' capital (deficit) (378,124) (67,827)
---------------- ----------------
Total liabilities and partners' capital (deficit) $ 14,141,180 $ 14,636,231
================ ================
</TABLE>
See accompanying notes to financial statements.
-1-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
--------------------------------- ---------------------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
---------------- --------------- ---------------- ----------------
Revenues
<S> <C> <C> <C> <C> <C>
Rental income $ 1,036,782 998,792 $ 2,060,065 $ 1,982,903 $
Interest income 7,559 3,781 12,384 7,731
---------------- --------------- ---------------- ----------------
1,044,341 1,002,573 2,072,449 1,990,634
---------------- --------------- ---------------- ----------------
Expenses
Compensation and benefits 117,261 119,524 221,593 214,243
Utilities 78,216 66,967 158,230 145,470
Property taxes 91,326 92,589 182,652 185,178
Maintenance and repairs 118,633 114,391 178,031 183,310
Property management fee 46,680 45,151 92,569 89,192
Advertising 10,953 11,925 20,972 23,842
Insurance 8,625 9,000 17,250 18,002
Other 13,149 14,880 25,127 25,218
Administrative and professional fees 19,866 16,640 41,679 33,971
Interest expense 267,460 271,742 536,053 544,315
Depreciation of property and
equipment 257,787 257,787 515,574 515,574
Amortization of loan fees 5,166 4,098 10,332 8,196
---------------- --------------- ---------------- ----------------
1,035,122 1,024,694 2,000,062 1,986,511
---------------- --------------- ---------------- ----------------
Net income (loss) $ 9,219 (22,121) $ 72,387 $ 4,123 $
================ =============== ================ ================
Net income(loss) per unit of assignee
limited partnership interest - basic $ 0.02 (0.04) $ 0.14 $ 0.01 $
================ =============== ================ ================
</TABLE>
See accompanying notes to financial statements
-2-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Statements of Partners' Capital (Deficit)
For the six months ended June 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Assignor Limited Partner
-----------------------------
Assignment
of Limited Limited Subordinated
General Partnership Partnership Limited
Partners Interests Interests Partners Total
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1999 $ (214,960) $ 231,934 (84,901) $ 100 $ (67,827)
Net income 1,448 70,933 6 - 72,387
Distributions to partners (7,654) (375,000) (30) - (382,684)
-------------- -------------- -------------- -------------- --------------
Balance at June 30, 2000 $ (221,166) $ (72,133) (84,925) $ 100 $ (378,124)
============== ============== ============== ============== ==============
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
============== ============== ============== ============== ==============
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Statements of Cash Flows
For the six months ended June 30,
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---------------- ----------------
Cash flows from operating activities
<S> <C> <C>
Net income $ 72,387 $ 4,123
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 10,332 8,196
Changes in assets and liabilities
Decrease in accounts receivable 101,444 7,081
Increase in prepaid expenses (2,210) (1,233)
Decrease in escrow for real estate taxes 88,740 117,417
Decrease in accounts payable and accrued expenses (76,382) (109,759)
Increase in due to affiliates 6,127 5,524
Increase in tenant security deposits 3,730 5,146
---------------- ----------------
Net cash provided by operating activities 719,742 552,069
---------------- ----------------
Cash flows from investing activities-
additions to investment in real estate (56,494) (98,917)
---------------- ----------------
Cash flows from financing activities
Distributions to partners (382,684) (382,684)
Mortgage loan principal reduction (118,229) (109,967)
---------------- ----------------
Net cash used in financing activities (500,913) (492,651)
---------------- ----------------
Net increase (decrease) in cash and cash equivalents 162,335 (39,499)
Cash and cash equivalents
Beginning of period 541,297 668,208
---------------- ----------------
End of period $ 703,632 $ 628,709
================ ================
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
Notes to Financial Statements
June 30, 2000 and 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 financial position,
operating results and cash flows 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 1999 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:
June 30, 2000 December 31, 1999
-------------- -----------------
Land $ 1,257,000 $ 1,257,000
Buildings 21,416,568 21,416,568
Furniture, fixtures
and equipment 2,503,607 2,447,113
----------- ----------
25,177,175 25,120,681
Less: accumulated depreciation 12,039,196 11,523,622
----------- -----------
Total $13,137,979 $13,597,059
=========== ===========
NOTE 3 - CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist solely of cash and money market accounts,
stated at cost, which approximates market value at June 30, 2000 and December
31, 1999.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Administrative General Partner earned $13,788 and $10,968 during the
quarters ended June 30, 2000 and 1999, 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
$46,680 and $45,151 during the quarters ended June 30, 2000 and 1999,
respectively.
At June 30, 2000, accounts receivable includes short-term advances to an
affiliate of the Development General Partner of $36,108.
NOTE 5 - MORTGAGE LOANS PAYABLE
The mortgage loans on the Properties bear interest at 7.7% and are due June 1,
2002. Monthly payments are based on a 25-year amortization schedule with a
balloon payment due at maturity.
-5-
<PAGE>
NOTE 6 - NET INCOME PER UNIT OF ASSIGNEE LIMITED PARTNERSHIP INTEREST
---------------------------------------------------------------------
Net income per Unit of assignee limited partnership interest is disclosed on the
Statement of Operations and is based upon average units outstanding of 500,000
during the quarters ended June 30, 2000 and 1999.
-6-
<PAGE>
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 or about August 11, 2000, the Partnership will make a cash distribution
to its partners totaling $191,342, representing an annualized return of 6% on
invested capital. This distribution is from the operations of the three
apartment properties. Based on the operating results through June, and the
budget for the remainder of the year, operating cash flow during 2000 is
expected to fully fund a distribution rate of 6%.
The Partnership does not anticipate an outlay for any significant capital
improvements or repair costs that might adversely impact its liquidity in 2000.
Results of Operations
Second quarter 2000 revenues increased by $41,768 (4%) when compared to
revenues during the second quarter of 1999. Through the first half of 2000,
revenues increased by $81,815 (4%) when compared to those revenues for the first
half of 1999. The increase in revenues through the first half of the year is a
result of higher rental rates achieved at the properties as the aggregate
occupancy level of the portfolio was unchanged at approximately 92%.
Second quarter operating expenses, excluding interest charges, depreciation
and amortization costs, increased $13,642 (3%) versus similar expenses incurred
during the second quarter of 1999. Through the first half of the year, similar
expenses have increased $19,677 (2%), versus 1999. Operating costs are expected
to increase modestly during the second half of the year due to the exterior
painting of the properties.
Due to the proportionately larger increase in revenues versus operating
expenses (excluding interest charges, depreciation and amortization costs)
through the first half of 2000, the aggregate net operating income of the three
properties increased $62,138 (6%) when compared to the first half of 1999.
Occupancy levels at Woodhills, in Dayton, Ohio, averaged 93% during the
second quarter of 2000. Revenues through the first half of the year were $29,384
(5%) higher than those in 1999 due to lower rental concessions and modest rental
rate increases. The Dayton apartment rental market has improved and rental rates
have increased as a result. Market rental rates have increased from $565 during
the second quarter of 1999 to $592 during the second quarter of 2000,
representing an increase of approximately 5%. Management will continue to
implement rate increases as the market allows.
The rental market in Cincinnati remains strong. The average occupancy level
at the Deerfield property was 96% during the second quarter of 2000 representing
a 1% increase when compared to the second quarter of 1999. The average rental
rate at the community has increased from $623 during the second quarter of 1999
to $665 in the second quarter of 2000, representing an increase of 7%. Due to
occupancy and rental rate increases, revenues during the first half of 2000
increased $40,427 when compared to the first half of 1999. The Cincinnati market
continues to be strong and rents will be increased as the market allows.
At Oakbrook, in Columbus, Ohio, occupancy levels averaged 95% during the
second quarter of 2000, down from 97% during the second quarter of 1999.
Management has been successful in maintaining high occupancy levels at the
property in a competitive market. The average rental rates increased from $575
in the second quarter of 1999 to $591 during the second quarter of 2000,
representing an increase of 3%. Revenues through the first half of 2000
increased $7,351 (1%) when compared to 1999. Management's focus during the
second half of the year will be on increasing rents on all unit types and
keeping expenses at or below budget.
The General Partners are committed to sustaining the positive financial
performance achieved at each of the three properties.
<PAGE>
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
PART I. FINANCIAL INFORMATION
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Inapplicable
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
On May 8, 2000, the Partnership received a copy of the Tender Offer
Statement on Schedule TO, filed with the SEC on May 5, 2000, relating to the
offer by certain entities controlled by McKenzie Patterson, Inc. to purchase for
cash up to 125,000 assignee units of limited partnership interests ("Units") in
the Partnership at a purchase price of $12 per Unit.
This tender offer was amended on June 2, 2000 to extend the expiration date
to July 3, 2000 and increase the purchase price to $15 per Unit. The tender
offer expired on July 3, 2000 resulting in the offeror acquiring 24,000 Units.
The purchasers now hold an aggregate of approximately 32,360 Units or 6.47% of
outstanding Units.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits: Financial Data Schedule.
b) Reports on Form 8-K: None.
-8-
<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: By:
John M. Prugh
President and Director
Brown-Benchmark AGP, Inc.
Administrative General Partner
DATE: By:
Timothy M. Gisriel
Treasurer
Brown-Benchmark AGP, Inc.
Administrative General Partner
-9-
<PAGE>
