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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED SEPTEMBER 30, 1998
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Commission File Number 1-9648
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NATIONAL REALTY, L.P.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 75-2163175
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10670 North Central Expressway, Suite 300, Dallas, Texas 75231
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(Address of Principal Executive Office) (Zip Code)
(214) 692-4700
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(Registrant's Telephone Number,
Including Area Code)
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 [ ].
Units of Limited Partner Interest 6,321,255
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(Class) (Outstanding at October 30, 1998)
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This Form 10-Q/A amends the Registrant's quarterly report on Form 10-Q for the
quarter ended September 30, 1998 as follows:
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - page 21.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Introduction (Continued)
In November 1992, the Operating Partnership, in conjunction with a refinancing
of 52 of its apartment properties and a wraparound note receivable, transferred
such assets to Garden Capital, L.P. ("GCLP"), a Delaware limited partnership in
which the Operating Partnership holds a 99.3% limited partner interest. In July
1998, the 50 properties then owned by GCLP were refinanced, as discussed below.
Liquidity and Capital Resources
Cash and cash equivalents aggregated $42.2 million at September 30, 1998
compared to $17.2 million at December 31, 1997. The principal reasons for this
increase in cash are discussed in the paragraphs below.
The Managing General Partner of the Partnership's General Partner has discretion
in determining methods of obtaining funds for the Partnership's operations. The
Partnership's governing documents place no limitation on the amount of leverage
that the Partnership may incur either in the aggregate or with respect to any
particular property or other investment. At September 30, 1998, the aggregate
loan-to-value ratio of the Partnership's real estate portfolio was 57.2%,
computed on the basis of the ratio of total property-related debt to aggregate
appraised values as of September 30, 1998, as compared with a loan-to-value
ratio of 43.4% at December 31, 1997.
The Partnership's principal sources of cash have been and will continue to be
from property operations and externally generated funds. Externally generated
funds include borrowings, proceeds from the sale of Partnership properties and
other assets and proceeds from the issuance of debt secured by Partnership
properties or mortgage notes receivable. The Partnership expects that its cash
on hand, net cash generated from property operations together with externally
generated funds will be sufficient to meet the Partnership's various cash needs
and commitment in 1998, including, but not limited to the payment of
distributions, debt service obligations coming due and property maintenance and
improvements, as more fully discussed in the paragraphs below.
The Partnership's net cash flow from property operations (rents collected less
payments for property operating expenses) decreased from $11.3 million and $35.1
million for the three and nine months ended September 30, 1997 to $8.5 million
and $29.7 million for the three and nine months ended September 30, 1998.
Decreases of $1.3 million and $2.5 million are due to the sale of one apartment
complex and three commercial properties in 1997 and the sale of five apartment
complexes and two commercial properties in 1998. The remaining decrease is due
to the payment of certain property expenses in 1998 which were incurred in 1997.
Cash flow from property operations will decrease as the Partnership sells
additional of its properties.
Interest collected decreased from $2.9 million for the nine months ended
September 30, 1997 to $2.8 million for the nine months ended September 30, 1998.
A decrease of $913,000 was due to loans paid off in 1997, a decrease of $293,000
was due to a loan paid off in 1998, and a decrease of $375,000 was due to a loan
on which the Partnership stopped accepting a reduced payment from the borrower.
These decreases were partially offset by an increase of $862,000 due to loans
funded in late 1997 or in 1998 and an increase of $615,000 due to increased
short term investments in 1998.
Interest paid increased from $21.5 million for the nine months ended September
30, 1997 to $22.1 million for the nine months ended September 30, 1998. An
increase of $1.0 million is due to borrowings funded in 1997 and 1998, secured
by notes receivable and four previously unencumbered shopping centers, $398,000
due to properties refinanced in 1997 and 1998 and $330,000 due to a loan on
which payments were not being made in 1997, pending modification which occurred
in 1998. These increases were offset in part by a decrease of $702,000 due to
loans secured by notes receivable which were paid off and a decrease of $1.5
million due to properties sold in 1997 and 1998.
General and administrative expenses paid increased from $6.2 million for the
nine months ended September 30, 1997 to $6.6 million for the nine months ended
September 30, 1998. The increase is due primarily to June 30, 1998 accruals for
payroll, legal and other expenses paid in the third quarter of 1998.
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NATIONAL REALTY, L.P.
Signature Page
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NATIONAL REALTY, L.P.
By its General Partner:
SYNTEK ASSET MANAGEMENT, L.P.
By its General Partners:
SYNTEK ASSET MANAGEMENT, INC.
Date: January 25, 1999 By: /s/ Randall M. Paulson
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Randall M. Paulson
President
Date: January 25, 1999 By: /s/ Thomas A. Holland
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Thomas A. Holland
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: January 25, 1999 By: /s/ Gene E. Phillips
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Gene E. Phillips
General Partner
Syntek Asset Management, L.P.
