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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 SEPTEMBER 30, 2000
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Commission file number 0-16855
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HIGH EQUITY PARTNERS L.P. - SERIES 88
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(Exact name of registrant as specified in its charter)
DELAWARE 13-3394723
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
CAMBRIDGE CENTER, 9TH FLOOR, CAMBRIDGE, MA 02142
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(Address of principal executive offices)
(617) 234-3000
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(Registrant's telephone number, including area code)
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>
INDEX
Page No.
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Part I. Financial Information:
Balance Sheets--September 30, 2000 and December 31, 1999 3
Statements of Operations--Three and Nine Months Ended
September 30, 2000 and l999 4
Statements of Partners' Equity--Nine Months Ended
September 30, 2000 5
Statements of Cash Flows-- Nine Months Ended
September 30, 2000 and 1999 6
Notes to Financial Statements 7 - 13
Management's Discussion and Analysis of Financial
Condition and Results of Operations 14 - 17
Part II. Other Information:
Legal Proceedings, Exhibits and Reports on Form 8-K 18
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88-FORM 10-Q - SEPTEMBER 30, 2000
BALANCE SHEETS
SEPTEMBER 30, 2000 DECEMBER 31, 1999
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ASSETS
Real estate - net $44,930,620 $45,961,310
Cash and cash equivalents 9,115,648 6,433,530
Other assets 1,568,808 1,454,764
Receivables 113,857 338,098
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$55,728,933 $54,187,702
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LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued expenses $ 608,684 $ 883,464
Due to affiliates 239,109 448,230
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847,793 1,331,694
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Commitments and contingencies (Note 6)
PARTNERS' EQUITY:
Limited partners' equity (371,766
units issued and outstanding) 52,137,064 50,213,189
General partners' equity 2,744,076 2,642,819
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54,881,140 52,856,008
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$55,728,933 $54,187,702
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SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88-FORM 10-Q - SEPTEMBER 30, 2000
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- -------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Rental Revenue $1,816,723 $1,731,239 $5,598,423 $5,526,702
---------- ---------- ---------- ----------
Costs and Expenses:
Operating expenses 346,730 450,300 1,248,417 1,355,720
Depreciation and amortization 409,030 390,750 1,179,700 1,172,250
Partnership management fee 183,415 139,605 518,255 579,807
Administrative expenses 210,132 216,664 776,891 1,077,377
Property management fee 65,440 47,352 165,338 152,933
---------- ---------- ---------- ----------
1,214,747 1,244,671 3,888,601 4,338,087
---------- ---------- ---------- ----------
Income before interest and other income 601,976 486,568 1,709,822 1,188,615
Interest income 117,206 61,510 290,360 205,113
Other income 16,750 9,730 24,950 83,600
---------- ---------- ---------- ----------
Net income $ 735,932 $ 557,808 $2,025,132 $1,477,328
========== ========== ========== ==========
Net income attributable to:
Limited partners $ 699,135 $ 529,918 $1,923,875 $1,403,462
General partners 36,797 27,890 101,257 73,866
---------- ---------- ----------- ----------
Net income $ 735,932 $ 557,808 $2,025,132 $1,477,328
========== ========== ========== ==========
Net income per unit of limited
partnership interest (371,766 units
outstanding) $ 1.88 $ 1.43 $ 5.17 $ 3.78
============ ========== ========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88-FORM 10-Q - SEPTEMBER 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 nine months
ended September 30, 2000 101,257 1,923,875 2,025,132
---------- ----------- ----------
Balance, September 30, 2000 $2,744,076 $52,137,064 $54,881,140
========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88-FORM 10-Q - SEPTEMBER 30, 2000
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
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2000 1999
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Cash Flows From Operating Activities:
Net income $2,025,132 $ 1,477,328
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,179,700 1,172,250
Straight line adjustment for stepped
lease rentals (40,386) 30,849
Changes in assets and liabilities:
Accounts payable and accrued expenses (274,780) 201,362
Receivables 224,241 (234,755)
Due to affiliates (209,121) (133,406)
Other assets (186,480) (230,155)
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Net cash provided by operating activities 2,718,306 2,283,473
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Cash Flows From Investing Activities:
Improvements to real estate (36,188) (45,404)
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Cash Flows From Financing Activities:
Distributions to partners -- (2,993,697)
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Increase (Decrease) in Cash and Cash Equivalents 2,682,118 (755,628)
Cash and Cash Equivalents, Beginning of Year 6,433,530 6,520,698
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Cash and Cash Equivalents, End of Quarter $9,115,648 $ 5,765,070
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SEE NOTES TO FINANCIAL STATEMENTS
6
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HIGH EQUITY PARTNERS L.P. - SERIES 88-FORM 10-Q - SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
1. 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 31, 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
nine months ended September 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.
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.
7
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HIGH EQUITY PARTNERS L.P. - SERIES 88-FORM 10-Q - SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Real Estate (continued)
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.
Revenue Recognition
The Securities and Exchange Commission released staff accounting bulletin
No. 101, "Revenue Recognition in Financial Statements" on December 3, 1999.
The partnership has reviewed its revenue recognition policies and as a
result there will be no material change in the revenue recognized by the
Partnership.
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, previously provided by NorthStar Presidio. The Partnership
does not pay any fees to the Agent.
8
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HIGH EQUITY PARTNERS L.P. - SERIES 88-FORM 10-Q - SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
3. RELATED PARTY TRANSACTIONS (CONTINUED)
The Partnership had a property management services agreement with Resources
Supervisory Management Corp. ("Resources Supervisory"), an affiliate of the
General Partners, to perform certain functions relating to the management
of the properties of the Partnership. Resources Supervisory in turn
sub-contracted with management companies to provide property management
services for specific properties. For the nine months ended September 30,
2000 Resources Supervisory was entitled to receive $165,338 for property
management services, $99,189 of which was paid to Kestrel Management, L.P.
("Kestrel"), an affiliate of the General Partners and the Agent, and
$66,149 of which was paid to unaffiliated management companies. For the
nine months ended September 30, 1999 Resources Supervisory was entitled to
receive $152,933 for property management services, $66,675 of which was
paid to unaffiliated management companies with the balance being retained
by Resources Supervisory. As of October 1, 2000 all property management
services for the Partnership were being performed directly by Kestrel and
Resources Supervisory was no longer performing any property management
services.
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 September 30, 2000 and 1999, the
Managing General Partner received $50,000. For the nine months ended
September 30, 2000 and 1999 the Managing General Partner received $150,000.
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 September 30, 2000 and 1999, the Managing
General Partner earned partnership management fees of $183,415 and
$139,605, respectively. For the nine months ended September 30, 2000 and
1999, the Managing General Partner earned partnership management fees of
$518,255 and $579,807.
The General Partners are allocated 5% of the net income of the Partnership,
which amounted to $36,797 and $27,890 for the quarters ended September 30,
2000 and 1999, respectively. Net income allocated to the General Partners
amounted to $101,257 and $73,866 for the nine months ended September 30,
2000 and 1999, respectively. The General Partners are also entitled to
receive 5% of distributions, $99,792 for the nine months ended September
30, 1999.
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.
9
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HIGH EQUITY PARTNERS L.P. - SERIES 88-FORM 10-Q - SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
3. RELATED PARTY TRANSACTIONS (CONTINUED)
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 had 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 Millennium Funding IV, LLC, an affiliate of the
General Partners, acquired 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.
Pursuant to the settlement of a class action lawsuit (see Note 7),
Millennium Funding IV, LLC completed a tender offer in January 2000 in
which it purchased 25,034 limited partnership units (representing
approximately 6.7% of the outstanding units) at a price of $113.15 per unit
or $2,832,597 in total. As a result of these purchases as well as the
purchases of units by affiliates of the General Partners, affiliates of the
General Partners own 105,107 units representing purchasing approximately
28.27% of the total outstanding units.
10
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 88-FORM 10-Q - SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
4. REAL ESTATE
The following table is a summary of the Partnership's real estate as of:
SEPTEMBER 30, 2000 DECEMBER 31, 1999
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Land $ 8,040,238 $ 8,040,238
Buildings and improvements 53,920,446 53,884,258
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61,960,684 61,924,496
Less: Accumulated depreciation (17,030,064) (15,963,186)
------------ ------------
$ 44,930,620 $ 45,961,310
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5. DUE TO AFFILIATES
SEPTEMBER 30, 2000 DECEMBER 31, 1999
------------------ -----------------
Partnership asset management fee $183,415 $279,206
Property management fee 5,694 69,024
Non-accountable expense reimbursement 50,000 100,000
-------- --------
$239,109 $448,230
======== ========
Such amounts were paid in the subsequent quarters.
6. COMMITMENTS AND CONTINGENCIES
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.
a) The Broadway Joint Venture's action for rent against Solo Press was tried
in 1992 and resulted in a judgment 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
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HIGH EQUITY PARTNERS L.P. - SERIES 88-FORM 10-Q - SEPTEMBER 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
meritless 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 for 2000 and
thereafter 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. 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.
12
<PAGE>
c
NOTES TO FINANCIAL STATEMENTS
7. SETTLEMENT OF LAWSUIT (CONTINUED)
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
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HIGH EQUITY PARTNERS L.P. - SERIES 88-FORM 10-Q - SEPTEMBER 30, 2000
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 financial statements and other
items contained elsewhere in the report.
Liquidity and Capital Resources
The Partnership is engaged in the business of operating and holding for
investment previously acquired income-producing properties, consisting of office
buildings, shopping centers and other commercial and industrial properties such
as industrial parks and warehouses. The Partnership holds an interest in six
properties, one of which, Melrose Crossing, is currently being marketed for
sale. The Partnership generates rental revenues from the commercial properties
and is responsible for each property's operating expenses as well as its
administrative costs.
The Partnership had $9,115,648 in cash and cash equivalents at September 30,
2000. 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 $2,682,118 to $9,115,648 at September 30, 2000 as compared to
December 31, 1999. The increase in cash and cash equivalents at September 30,
2000 is due to $2,718,306 of cash provided by operating activities which was
partially offset by $36,188 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.
14
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HIGH EQUITY PARTNERS L.P. - SERIES 88-FORM 10-Q - SEPTEMBER 30, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Liquidity and Capital Resources (continued)
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.
Results of Operations
The Partnership experienced an increase in net income for the nine months ended
September 30, 2000 of $547,804 in comparison to the same period in 1999 due to
increases in rental revenue and interest income as well as a decrease in costs
and expenses partially offset by a decrease in other income. The Partnership
experienced an increase in net income for the three months ended September 30,
2000 of $178,124 in comparison to the same period in 1999 due to increases in
rental revenues interest income and other income. as well as a decrease in costs
and expenses of $29,924.
Rental revenues for the nine months ended September 30, 2000 increased to
$5,598,423 from $5,526,702 for the same period in 1999. The increase was due to
increased occupancy at Tri-Columbus. Rental revenues for the three months ended
September 30, 2000 increased to $1,816,723 from $1,731,239 for the same period
in 1999.
Costs and expenses decreased by $449,486 for the nine months ended September 30,
2000 as compared to 1999 due to decreases in all expense items except
depreciation and amortization and property management fees. 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. Partnership asset management fees decreased in 2000 as
compared to 1999 as a result of an amendment to the Partnership Agreement which
changed the calculation of such fee. (See Item 1 Financial Statements Note 3).
Operating expenses decreased due to lower non-recurring repairs and maintenance
expenses. The increase in property management fees was the result of higher
rental revenues.
Costs and expenses decreased by $29,924 for the three months ended September 30,
2000 as compared to 1999 due to a decrease of operating expenses of $103,570,
offset by increases in depreciation of and amortization, $18,280, partnership
management fees of, $43,810 and management fees of $18,088.
Interest income increased due to higher cash balances during the three and nine
months ended September 30, 2000 as compared to the same periods in 1999. Other
income increased during the three months ended September 30, 2000 as compared to
1999 due to an increase in transfer fees. Other income decreased for the nine
months ended September 30, 2000 due to less transfer fee income received during
the first nine 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 - SEPTEMBER 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
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HIGH EQUITY PARTNERS L.P. - SERIES 88-FORM 10-Q - SEPTEMBER 30, 2000
PART II. OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
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
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HIGH EQUITY PARTNERS L.P. - SERIES 88-FORM 10-Q - SEPTEMBER 30, 1999
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: November 14, 2000 By:/s/ MICHAEL L. ASHNER
---------------------------------------
Michael L. Ashner
President and Director
(Principal Executive Officer)
Dated: November 14, 2000 By:/s/ CAROLYN B. TIFFANY
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Carolyn B. Tiffany
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
