--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|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
Commission file number 0-16855
-------
HIGH EQUITY PARTNERS L.P. - SERIES 88
(Exact name of registrant as specified in its charter)
DELAWARE 13-3394723
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Cambridge Center, 9th Floor, Cambridge, MA 02142
(Address of principal executive offices)
(617) 234-3000
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check 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
----- ----
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<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
INDEX
Part I.
Item 1. Financial Information:
Balance Sheets - June 30, 2000 and December 31, 1999........... 3
Statements of Operations - Three and Six Months Ended
June 30, 2000 and l999....................................... 4
Statement of Partners' Equity - Six Months Ended
June 30, 2000................................................ 5
Statements of Cash Flows - Six Months Ended June 30,
2000 and 1999............................................... 6
Notes to Financial Statements.................................. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk..... 16
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K............................... 17
Signatures .............................................................. 18
2
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
BALANCE SHEETS
JUNE 30, DECEMBER 31,
2000 1999
----------- -----------
ASSETS
Real estate - net $45,275,859 $45,961,310
Cash and cash equivalents 8,036,758 6,433,530
Other assets 1,600,751 1,454,764
Receivables 226,223 338,098
----------- -----------
$55,139,591 $54,187,702
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued expenses 780,746 883,464
Due to affiliates 213,637 448,230
----------- -----------
994,383 1,331,694
----------- -----------
Commitments and contingencies
PARTNERS' EQUITY:
Limited partners' equity (371,766
units issued and outstanding) 51,437,929 50,213,189
General partners' equity 2,707,279 2,642,819
----------- -----------
54,145,208 52,856,008
----------- -----------
$55,139,591 $54,187,702
=========== ===========
See notes to financial statements.
3
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------------- -----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Rental Revenue $1,726,534 $2,051,488 $3,781,700 $3,795,463
---------- ---------- ---------- ----------
Costs and Expenses:
Operating expenses 440,071 424,240 901,687 905,420
Depreciation and amortization 383,157 390,750 770,670 781,500
Partnership management fee 167,420 220,101 334,840 440,202
Administrative expenses 311,653 143,470 566,759 860,713
Property management fee 37,909 58,555 99,898 105,581
---------- ---------- ---------- ----------
1,340,210 1,237,116 2,673,854 3,093,416
---------- ---------- ---------- ----------
Income before interest and other income 386,324 814,372 1,107,846 702,047
Interest income 96,002 80,342 173,154 143,603
Other income 8,200 6,210 8,200 73,870
---------- ---------- ---------- ----------
Net income $ 490,526 $ 900,924 $1,289,200 $ 919,520
========== ========== ========== ==========
Net income attributable to:
Limited partners $ 466,000 $ 855,878 $1,224,740 $ 873,544
General partners 24,526 45,046 64,460 45,976
---------- ---------- ---------- ----------
Net income $ 490,526 $ 900,924 $1,289,200 $ 919,520
========== ========== ========== ==========
Net income per unit of limited partnership
interest (371,766 units outstanding) $ 1.25 $ 2.30 $ 3.29 $ 2.35
========== ========== ========== ==========
</TABLE>
See notes to financial statements.
4
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
STATEMENT OF PARTNERS' EQUITY
GENERAL LIMITED
PARTNERS' PARTNERS'
EQUITY EQUITY TOTAL
----------- ----------- -----------
Balance, January 1, 2000 $ 2,642,819 $50,213,189 $52,856,008
Net income for the six months
ended June 30, 2000 64,460 1,224,740 1,289,200
----------- ----------- -----------
Balance, June 30, 2000 $ 2,707,279 $51,437,929 $54,145,208
=========== =========== ===========
See notes to financial statements.
5
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 30,
--------------------------
2000 1999
----------- -----------
Cash Flows From Operating Activities:
Net income $ 1,289,200 $ 919,520
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 770,670 781,500
Straight line adjustment for stepped
lease rentals (21,048) 20,566
Changes in assets and liabilities:
Accounts payable and accrued expenses (102,718) 748,053
Receivables 111,875 (188,705)
Due to affiliates (234,593) (45,796)
Other assets (185,856) (174,357)
----------- -----------
Net cash provided by operating activities 1,627,530 2,060,781
----------- -----------
Cash Flows From Investing Activities:
Improvements to real estate (24,302) (21,823)
----------- -----------
Cash Flows From Financing Activities:
Distributions to partners -- (1,995,798)
----------- -----------
Increase (Decrease) in Cash and Cash Equivalents 1,603,228 43,160
Cash and Cash Equivalents, Beginning of Year 6,433,530 6,520,698
----------- -----------
Cash and Cash Equivalents, End of Quarter $ 8,036,758 $ 6,563,858
=========== ===========
See notes to financial statements.
6
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS
l. GENERAL
The accompanying financial statements, notes and discussions should be read
in conjunction with the financial statements, related notes and discussions
contained in the Partnership's Annual Report on Form l0-K for the year ended
December 3l, l999.
The financial information contained herein is unaudited; however, in the
opinion of management, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of such financial information
have been included. Results of operations for the three and six months ended
June 30, 2000 are not necessarily indicative of the results to be expected
for the entire year.
2. SIGNIFICANT ACCOUNTING POLICIES
Investment in Joint Ventures
Certain properties were purchased in joint ventures with affiliated
partnerships that have the same, or affiliated, general partners as the
Partnership. The Partnership owns as undivided interest and is severally
liable for indebtedness it incurs in connection with its ownership interest
in those properties. Therefore, the Partnership's financial statements
present the assets, liabilities, revenues, and expenses of the joint venture
on a pro rata basis in accordance with the Partnership's percentage of
ownership.
Real Estate
Real estate is carried at cost, net of adjustments for impairment. Repairs
and maintenance are charged to expense as incurred. Replacement and
betterments are capitalized. The Partnership evaluates the recoverability of
the net carrying value of its real estate and related assets at least
annually, and more often if circumstances dictate. If this review indicates
that the carrying value of a property may not be recoverable, the Partnership
estimates the future cash flows expected to result from the use of the
property and its eventual disposition, generally over a five-year holding
period. In performing this review, management takes into account, among other
things, the existing occupancy, the expected leasing prospects of the
property and the economic situation in the region where the property is
located.
If the sum of the expected future cash flows, undiscounted, is less than the
carrying amount of the property, the Partnership recognizes an impairment
loss, and reduces the carrying amount of the asset to its estimated fair
value. Fair value is the amount at which the asset could be bought or sold in
a current transaction between willing parties, that is, other than in a
forced or liquidation sale. Management estimates fair value using discounted
cash flows or market comparables, as most appropriate for each property.
Independent certified appraisers are utilized to assist management, when
warranted.
7
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Real Estate (continued)
Impairment write-downs recorded by the Partnership do not affect the tax
basis of the assets and are not included in the determination of taxable
income or loss.
Because the expected cash flows used to evaluate the recoverability of the
assets and their fair values are based upon projections of future economic
events, such as property occupancy rates, rental rates, operating cost
inflation and market capitalization rates, the amounts ultimately realized at
disposition may differ materially from the net carrying values at the balance
sheet dates. The cash flows and market comparables used in this process are
based on good faith estimates and assumptions developed by management.
Unanticipated events and circumstances may occur and some assumptions may not
materialize; therefore, actual results may vary materially from the
estimates. The Partnership may in the future provide additional write-downs,
which could be material, in subsequent years if real estate markets or local
economic conditions change.
3. RELATED PARTY TRANSACTIONS
The Managing General Partner of the Partnership, Resources High Equity, Inc.,
is a wholly-owned subsidiary of Presidio Capital Corp. ("Presidio"). Presidio
AGP Corp., which is a wholly-owned subsidiary of Presidio, is the Associate
General Partner (together with the Managing General Partner, the "General
Partners"). The General Partners and affiliates of the General Partners are
also engaged in businesses related to the acquisition and operation of real
estate. Presidio is also the parent of other corporations (and affiliated
with other entities) that are or may in the future be engaged in businesses
that may be in competition with the Partnership. Accordingly, conflicts of
interest may arise between the Partnership and such other businesses. Subject
to the right of the limited partners under the Limited Partnership Agreement,
Presidio controls the Partnership through its indirect ownership of the
General Partners. Effective July 31, 1998, Presidio is indirectly controlled
by NorthStar Capital Investment Corp., a Maryland corporation.
From August 28, 1997 to October 21, 1999, Presidio was party to a management
agreement with NorthStar Presidio Management Company LLC ("NorthStar
Presidio"), an affiliate of NorthStar Capital Investment Corp., pursuant to
which NorthStar Presidio provided the day-to-day management of Presidio and
its direct and indirect subsidiaries and affiliates, including the
Partnership. Effective October 21, 1999, Presidio entered into a Services
Agreement with AP-PCC III, L.P. (the "Agent") pursuant to which the Agent was
retained to provide asset management and investor relation services to the
Partnership and other entities affiliated with the Partnership.
8
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS
3. RELATED PARTY TRANSACTIONS (CONTINUED)
The Partnership has a property management services agreement with Resources
Supervisory Management Corp. ("Resources Supervisory"), an affiliate of the
Managing General Partner, to perform certain functions relating to the
management of the properties of the Partnership. Some of the property
management fees are paid to unaffiliated management companies that perform
certain management functions for certain properties.
For the quarter ended June 30, 2000, Resources Supervisory was entitled to
receive $37,909. Due to flat fee agreements with certain properties and
collection of outstanding receivables, $37,909 was paid to unaffiliated
management companies for property management services. For the quarter ended
June 30, 1999, Resources Supervisory was entitled to receive $58,555 of which
$31,430 was paid to unaffiliated management companies for property management
services and the balance was retained by Resources Supervisory.
For the six months ended June 30, 2000, Resources Supervisory was entitled to
receive $99,898. Due to flat fee agreements with certain properties and
collection of outstanding receivables, $99,898 was paid to unaffiliated
management companies for property management services. For the six months
ended June 30, 1999, Resources Supervisory was entitled to receive $105,581
of which $58,917 was paid to unaffiliated management companies for property
management services and the balance was retained by Resources Supervisory.
For the administration of the Partnership, the Managing General Partner is
entitled to receive reimbursement of expenses of a maximum of $200,000 per
year. For each of the quarters ended June 30, 2000 and 1999, the Managing
General Partner received $50,000. For the six months ended June 30, 2000 and
1999 the Managing General Partner received $100,000.
For managing the affairs of the Partnership, the Managing General Partner is
entitled to receive an annual partnership asset management fee. Pursuant to
the amendment to the Partnership Agreement, which became effective on August
20, 1999, the annual partnership management fee for 1999 was reduced to
$719,411. Further, the Partnership Agreement was amended (for the year 2000
and beyond) so that the partnership management fee will be 1.25% of the Gross
Asset Value of the Partnership, defined as the appraised value of all the
assets of the Partnership based on the most recent appraisal. For each of the
quarters ended June 30, 2000 and 1999, the Managing General Partner earned
partnership management fees of $167,420 and $220,101, respectively. For the
six months ended June 30, 2000 and 1999, the Managing General Partner earned
partnership management fees of $334,840 and $440,202.
The General Partners are allocated 5% of the net income of the Partnership,
which amounted to $24,526 and $45,046 for the quarters ended June 30, 2000
and 1999, respectively. The General Partners are also entitled to receive 5%
of distributions, which amounted to $49,896 for the quarter ended June 30,
1999 and $99,792 for the six months ended June 30, 1999.
9
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS
3. RELATED PARTY TRANSACTIONS (CONTINUED)
During the liquidation stage of the Partnership, the Managing General Partner
or an affiliate may be entitled to receive certain fees which are
subordinated to the limited partners receiving their original invested
capital and certain specified minimum returns on their investment. All fees
received by the General Partners are subject to certain limitations as set
forth in the Partnership Agreement.
From July 1996 through March 12, 1998, Millennium Funding IV Corp., a wholly
owned indirect subsidiary of Presidio, purchased 47,270 units of the
Partnership from various limited partners.
In connection with a tender offer for units of the Partnership made on March
12, 1998 (the "Offer") by Olympia Investors, L.P. ("Olympia"), Olympia and
Presidio entered into an agreement dated March 6, 1998 (the "Agreement").
Subsequent to the expiration of the offer, Olympia announced that it had
accepted for payment 14,955 units properly tendered pursuant to the Offer.
Pursuant to the Agreement, Presidio purchased 50% of those units owned by
Olympia as a result of the Offer, or 7,478 units, for $132.26 per unit. In
addition, Olympia has the right to cause Presidio to purchase its remaining
units for a price based on procedures set forth in the agreement. Olympia
recently exercised this right, and it is anticipated that Presidio or its
affiliates will acquire an additional 7,477 units.
Subsequent to the expiration of the tender offer described above, Millennium
Funding IV Corp. purchased an additional 12,396 limited partnership units
from August 1998 through May 1999. The total number of units purchased by
Millenium Funding IV Corp. represents approximately 18.1% of the outstanding
limited partnership units of the Partnership.
Pursuant to the settlement of a class action lawsuit (see Note 6), an
affiliate of the General Partners, Millennium Funding IV, LLC, made a tender
offer to limited partners to acquire up to 25,034 Units (representing
approximately 6.7% of the outstanding Units) at a price of $113.15 per Unit.
The offer closed in January 2000 and all 25,034 Units were acquired in the
offer. As a result of these purchases as well as the other purchases of units
by affiliates of the General Partners, affiliates of the General Partners own
105,106 units representing approximately 28.27% of the total outstanding
units.
10
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS
4. REAL ESTATE
The following table is a summary of the Partnership's real estate as of:
JUNE 30, DECEMBER
2000 31, 1999
------------ ------------
Land $ 8,040,238 $ 8,040,238
Buildings and improvements 53,908,561 53,884,258
------------ ------------
61,948,799 61,924,496
Less: Accumulated depreciation (16,672,940) (15,963,186)
------------ ------------
$ 45,275,859 $ 45,961,310
============ ============
5. DUE TO AFFILIATES
JUNE 30, DECEMBER
2000 31, 1999
------------ ------------
Partnership asset management fee $ 163,637 $ 279,206
Property management fee -- 69,024
Non-accountable expense reimbursement 50,000 100,000
------------ ------------
$ 213,637 $ 448,230
============ ============
Such amounts were paid in the subsequent quarters.
6. COMMITMENTS AND CONTINGENCIES
A) 568 Broadway Joint Venture is currently involved in litigation with a number
of present or former tenants who are in default on their lease obligations.
Several of these tenants have asserted claims or counter claims seeking
monetary damages. The plaintiffs' allegations include but are not limited to
claims for breach of contract, failure to provide certain services,
overcharging of expenses and loss of profits and income. These suits seek
total damages of in excess of $20 million plus additional damages of an
indeterminate amount. The Broadway Joint Venture's action for rent against
Solo Press was tried in 1992 and resulted in a judgement in favor of the
Broadway Joint Venture for rent owed. The Partnership believes this will
result in dismissal of the action brought by Solo Press against the Broadway
Joint Venture. Since the facts of the other actions which involve material
claims or counterclaims are substantially similar, the Partnership believes
that the Broadway Joint Venture will prevail in those actions as well.
11
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS
6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
B) A former retail tenant of 568 Broadway (Galix Shops, Inc.) and a related
corporation which is a retail tenant of a building adjacent to 568 Broadway
filed a lawsuit in the Supreme Court of The State of New York, County of New
York, against the Broadway Joint Venture which owns 568 Broadway. The action
was filed on April 13, 1994. The Plaintiffs allege that by erecting a
sidewalk shed in 1991, 568 Broadway deprived plaintiffs of light, air and
visibility to their customers. The sidewalk shed was erected, as required by
local law, in connection with the inspection and restoration of the 568
Broadway building facade, which is also required by local law. Plaintiffs
further allege that the erection of the sidewalk shed for a continuous period
of over two years is unreasonable and unjustified and that such conduct by
defendants has deprived plaintiffs of the use and enjoyment of their
property. The suit seeks a judgement requiring removal of the sidewalk shed
(since removed) compensatory damages of $20 million and punitive damages of
$10 million. The Partnership believes that this suit is merit less and
intends to vigorously defend it.
7. SETTLEMENT OF LAWSUIT
In April 1999, the California Superior Court approved the terms of the
settlement of a class action and derivative litigation involving the
Partnership. Under the terms of the settlement, the General Partners agreed
to take the actions described below subject to first obtaining the consent of
limited partners to amendments to the Agreement of Limited Partnership of the
Partnership summarized below. The settlement became effective in August 1999
following approval of the amendments. As amended, the Partnership Agreement
(a) provides for a Partnership Asset Management Fee equal to 1.25% of the
Gross Asset Value of the Partnership and a fixed 1999 Partnership Asset
Management Fee of $719,411 or $160,993 less than the amount that would have
been paid for 1999 under the prior formula and (b) fixes the amount that the
General Partners will be liable to pay to limited partners upon liquidation
of the Partnership as repayment of fees previously received (the "Fee
Give-Back Amount").
As of December 31, 1999, the Fee Give-Back Amount was $3.57 per Unit which
amount will be reduced by approximately $.40 per Unit for each full calendar
year after 1999 in which a liquidation does not occur. As amended, the
Partnership Agreement provides that, upon a reorganization of the Partnership
into a real estate investment trust or other public entity, the General
Partners will have no further liability to pay the Fee Give-Back Amount. In
accordance with the terms of the settlement, Presidio Capital Corp., an
affiliate of the General Partners, guaranteed payment of the Fee Give-Back
Amount.
As required by the settlement, an affiliate of the General Partners,
Millennium Funding IV LLC, made a tender offer to limited partners to acquire
up to 25,034 Units (representing approximately 6.7% of the outstanding Units)
at a price of $113.15 per Unit. The offer closed in January 2000 and all
25,034 Units were acquired in the offer.
12
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS
7. SETTLEMENT OF LAWSUIT (CONTINUED)
The final requirement of the settlement obligated the General Partners to use
their best efforts to reorganize the Partnership into a real estate
investment trust or other entity whose shares were listed on a national
securities exchange or on the NASDAQ National Market System. A Registration
Statement was filed with the Securities and Exchange Commission on February
11, 2000 with respect to the restructuring of the Partnership into a publicly
traded real estate investment trust. The Registration Statement has not yet
become effective and the consent of a majority of limited partners will be
needed to effect the restructuring.
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The matters discussed in this form 10-Q contain certain forward-looking
statements and involve risks uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-Q and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussion of the Partnership's liquidity, capital resources and results of
operations, including forward looking statements pertaining to such matters,
does not take into account the effects of any changes to the Partnership's
operations. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in the report.
Liquidity and Capital Resources
Cash and cash equivalents are temporarily invested in short term instruments and
together with cash flow from operations are expected to be sufficient to fund
future capital improvements to the Partnership's properties.
The Partnership's level of liquidity based upon cash and cash equivalents
increased by $1,603,228 to $8,036,758 at June 30, 2000 as compared to December
31, 1999. The increase in cash and cash equivalents at June 30, 2000 is due to
$1,627,530 of cash provided by operating activities which was partially offset
by $24,302 of cash used for capital expenditures. The Partnership primary source
of funds is cash flow from the operation of its properties, principally rents
received from tenants less property operating expenses. .
The Partnership expects to continue to utilize a portion of its cash flow from
operations and its reserves to pay for various capital and tenant improvements
to its properties and for leasing commissions. Vacancies at Tri-Columbus and
Melrose II are currently being marketed to a variety of potential tenants. The
Partnership is currently funding operating expenses at these locations from cash
reserves. If and when replacement tenants are secured, it is likely that capital
expenditures will be required to fund tenant improvements and leasing
commissions. Capital and tenant improvements and leasing commissions may in the
future exceed the Partnership's cash flow from operations. In that event, the
Partnership would utilize its remaining working capital reserves, reduce
distributions, or sell one or more properties. Except as discussed above,
management is not aware of any other trends, events, commitments, or
uncertainties that will have a significant impact on liquidity.
As discussed in "Item 1. Financial Statements-Note 7", the Partnership entered
into a settlement agreement relating to a class action lawsuit. In light of the
current implementation of the settlement and the filing of the Registration
Statement pursuant to which the General Partners are using their best efforts to
reorganize the Partnership into a real estate investment trust, the General
Partners have suspended any distributions until such reorganization is either
approved or disapproved.
14
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Partnership experienced a decrease in net income for the three months ended
June 30, 2000 of $410,398 in comparison to the same period in 1999 due to an
decrease in rental revenues and an increase in costs and expenses that was
partially offset by a increase in other income. The Partnership experienced an
increase in net income for the six months ended June 30, 2000 of $369,680 in
comparison to the same period in 1999 due to a decrease in costs and expenses
and an increase in interest income offset slightly by a decrease in rental
revenue and other income.
Rental revenues for the three months ended June 30, 2000 decreased to $1,726,534
from $2,051,488 for the same period in 1999. The decrease was due to lower
common area maintenance and real estate tax reimbursements offset by increased
occupancy at Tri-Columbus.
Rental revenues for the six months ended June 30, 2000 decreased to $3,781,700
from $3,795,463 for the same period in 1999 due to lower common area maintenance
and real estate tax reimbursements offset by increased occupancy at
Tri-Columbus.
Costs and expenses increased by $103,094 or 8.3% for the three months ended June
30, 2000 as compared to 1999, primarily due to an increase in administrative
expenses due to incurring legal and professional fees associated with the
conversion of the Partnership to a Real Estate Investment Trust. The increase
was partially offset by a decrease in partnership management fees ($52,681).
Item 1 Financial Statements Note 3.
Costs and expenses decreased by $419,562 or 13.6% for the six months ended June
30, 2000 as compared to 1999 due to decreases in all expense items.
Administrative expenses decreased as legal expenses associated with the
conversion of the partnership to a REIT were less than the legal fees associated
with the class action litigation. In addition, partnership asset management fees
decreased for the first quarter of 2000 as compared to the first quarter of 1999
as a result of an amendment to the Partnership Agreement which changed the
calculation of such fee. Item 1 Financial Statements Note 3. Operating expenses
decreased due to lower non-recurring repairs and maintenance expenses. The
decrease in property management fees is the result from lower rental revenues.
Interest income increased due to higher cash balances during the three and six
months ended June 30, 2000 as compared to the same periods in 1999. Other income
increased during the three months ended June 30, 2000 as compared to 1999 due to
an increase in transfer fees. Other income decreased for the six months ended
June 30, 2000 due to less transfer fee income received during the first six
months of 2000 as compared to the same period in 1999.
Inflation is not expected to have a material impact on the Partnership's
operations or financial position.
15
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HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership is not subject to market risk as its cash and cash equivalents
are invested in short term money market mutual funds. The Partnership has no
loans outstanding.
16
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
PART II. OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits: There were no exhibits filed.
27. Financial data schedule is filed as an exhibit to this report.
(b) Reports on Form 8-K
No report on Form 8-K was filed during this period.
17
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88
FORM 10-Q - JUNE 30, 2000
SIGNATURES
Pursuant to the requirements 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.
High Equity Partners L.P. - Series 88
By: Resources High Equity, Inc.
Managing General Partner
Dated: August 14, 2000 By: /s/ MICHAEL L. ASHNER
----------------------
Michael L. Ashner
President and Director
(Principal Executive Officer)
Dated: August 14, 2000 By: /s/ CAROLYN B. TIFFANY
-----------------------
Carolyn B. Tiffany
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
18
