<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(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, 1998
OR
/ /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 0-17683
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P.,
I
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware
94-3069380
- ---------------------------------------------------------------------------
(State or other jurisdiction of I.R.S. Employer
Identification No.)
incorporation or organization)
1341 West Robinhood, B-9, Stockton, CA
95207
- ---------------------------------------------------------------------------
(Address of principal executive offices)
(Zip code)
Registrant's telephone number, including area code (209) 478-0140
N/A
- ---------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed
since
last report
Indicate by check CK 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 such shorter period
that the
registrant was required to file such reports), and (2) has been
subject to
such filing requirement for the past 90 days. Yes _CK_ No__
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
- ------
<S> <C> <C>
Part I. Financial Information
Item 1: Balance Sheets - June 30, 1998 and
December 31, 1997 . . . . . . . . . . . . . . . . .
3
Statements of operations for the six months ended
June 30, 1998 and 1997 . . . . . . . . . . . . . .
4
Statements of operations for the three months ended
June 30, 1998 and 1997 . . . . . . . . . . . . . .
5
Statement of changes in partners' equity (deficit)
for the six months ended June 30, 1998 . . . . . .
6
Statements of cash flows for the six months
ended June 30, 1998 and 1997 . . . . . . . . . . .
7
Notes to Financial Statements . . . . . . . . . . .
8
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . .
11
Part II. Other Information . . . . . . . . . . . . . . . . .
12
</TABLE>
2
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
(A Limited Partnership)
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30,
December 31,
1998
1997
----------
- ----------
<S> <C>
<C>
ASSETS
Property, net $73,096,397
$74,608,817
Cash and cash equivalents 4,637,382
4,161,323
Other assets (net of accumulated amortization
of $1,307,686 and $1,297,372, respectively) 416,379
487,017
----------
- ----------
$78,150,158
$79,257,157
----------
- ----------
----------
- ----------
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Mortgage loans payable $63,579,368
$64,183,994
Accounts payable 999,623
608,500
Accounts payable, affiliate 391,815
203,930
Accrued distributions 394,418
394,418
Accrued interest 423,467
428,040
Unearned rent and tenant deposits 585,300
569,495
----------
- ----------
66,373,991
66,388,377
----------
- ----------
Partners' equity (deficit):
Limited partners' equity (316,828 units
authorized and outstanding) 4,259,959
5,330,720
Subordinated limited partners' equity (46,364 units
authorized and outstanding) 8,878,175
8,878,175
General partners' deficit (1,361,967)
(1,340,115)
----------
- ----------
11,776,167
12,868,780
----------
- ----------
$78,150,158
$79,257,157
----------
- ----------
----------
- ----------
</TABLE>
See notes to financial statements.
3
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the six months ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998
1997
----------
- ----------
<S> <C>
<C>
Revenues:
Rental $ 7,998,008 $
7,968,057
Interest 64,491
64,408
----------
- ----------
8,062,499
8,032,465
----------
- ----------
Expenses:
Property operating expenses 2,793,630
2,793,759
Property taxes 577,371
576,882
Property management fees to affiliates 239,426
239,109
General and administrative expense 80,459
76,242
Proxy solicitation costs 306,370
-0-
Interest expense 2,536,680
2,552,122
Management fees to General Partners 319,920
318,722
Depreciation 1,512,420
1,512,420
----------
- ----------
8,366,276
8,069,256
----------
- ----------
Net loss $ (303,777) $
(36,791)
----------
- ----------
----------
- ----------
Net loss allocated to General Partners $ (6,076) $
(736)
----------
- ----------
----------
- ----------
Net loss allocated to Limited Partners $ (297,701) $
(36,055)
----------
- ----------
----------
- ----------
Net loss allocated to Subordinated
Limited Partners $ -0- $
-0-
----------
- ----------
----------
- ----------
Net loss per unit of limited partnership
interest $ (0.94) $
(0.11)
----------
- ----------
----------
- ----------
</TABLE>
See notes to financial statements.
4
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the three months ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998
1997
----------
- ----------
<S> <C>
<C>
Revenues:
Rental $ 4,023,441 $
3,964,784
Interest 34,420
32,387
----------
- ----------
4,057,861
3,997,171
----------
- ----------
Expenses:
Property operating expenses 1,434,532
1,466,471
Property taxes 291,373
312,133
Property management fees to affiliates 120,706
119,292
General and administrative expense 32,502
39,012
Proxy solicitation costs 306,370
-0-
Interest expense 1,280,236
1,273,354
Management fees to General Partners 160,938
158,592
Depreciation 756,210
756,210
----------
- ----------
4,382,867
4,125,064
----------
- ----------
Net loss $ (325,006) $
(127,893)
----------
- ----------
----------
- ----------
Net loss allocated to General Partners $ (6,500) $
(2,558)
----------
- ----------
----------
- ----------
Net loss allocated to Limited Partners $ (318,506) $
(125,335)
----------
- ----------
----------
- ----------
Net loss allocated to Subordinated
Limited Partners $ -0- $
-0-
----------
- ----------
----------
- ----------
Net loss per unit of limited partnership
interest $ (1.01) $
(0.40)
----------
- ----------
----------
- ----------
</TABLE>
See notes to financial statements.
5
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
(A Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
For the six months ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Subordinated
Limited Limited
General
Total Partners Partners
Partners
---------- ---------- ----------
- ----------
<S> <C> <C> <C>
<C>
Partners' equity
(deficit)-
December 31, 1997 $12,868,780 $ 5,330,720 $ 8,878,175
$(1,340,115)
Net loss (303,777) (297,701) -0-
(6,076)
Distributions (788,836) (773,060) -0-
(15,776)
---------- ---------- ----------
- ----------
Partners' equity
(deficit)-
June 30, 1998 $11,776,167 $ 4,259,959 $ 8,878,175
$(1,361,967)
---------- ---------- ----------
- ----------
---------- ---------- ----------
- ----------
</TABLE>
See notes to financial statements.
6
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998
1997
----------
- ----------
<S> <C>
<C>
Cash flows from operating activities:
Net loss $ (303,777) $
(36,791)
----------
- ----------
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 1,512,420
1,512,420
Amortization of loan fees included in
interest expense 10,314
10,314
Change in other assets 60,324
6,824
Change in accrued liabilities 386,550
232,472
Change in accounts payable, affiliate 187,885
(1,770)
Change in unearned rent and tenant deposits 15,805
76,336
----------
- ----------
Total adjustments 2,173,298
1,836,596
----------
- ----------
Net cash provided by operating activities 1,869,521
1,799,805
----------
- ----------
Cash flows from financing activities:
Mortgage loan principal amortization (604,626)
(557,563)
Distributions to partners (788,836)
(788,836)
----------
- ----------
Net cash used in financing activities (1,393,462)
(1,346,399)
----------
- ----------
Net increase in cash and cash equivalents 476,059
453,406
Cash and cash equivalents, beginning of period 4,161,323
3,946,802
----------
- ----------
Cash and cash equivalents, end of period $ 4,637,382 $
4,400,208
----------
- ----------
----------
- ----------
</TABLE>
See notes to financial statements.
7
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/A. G. SPANOS REALTY PARTNERS L.P.,
I
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS(Unaudited)
NOTE A - FINANCIAL STATEMENT PREPARATION
The June 30, 1998 financial statements have been prepared without
audit.
In the opinion of management, the financial statements contain
all
adjustments (consisting of normal recurring accruals) necessary
to present
fairly the Partnership's financial position, results of
operations and cash
flows. The operating results for the six months ended June 30,
1998 may
not necessarily be indicative of the results expected for the
full year.
Certain information and footnote disclosures normally included in
annual
financial statements prepared in accordance with generally
accepted
accounting principles have been omitted. These financial
statements must
be read in conjunction with the financial statements and notes
thereto
included in the Partnership's annual report for the year ended
December 31,
1997.
NOTE B - PROPERTY
Property is comprised of the following:
<TABLE>
<CAPTION>
June 30,1998 December 31,
1997
- ----------------------------------
<S> <C> <C>
Apartment buildings $ 83,030,825 $
83,030,825
Equipment 4,369,974
4,369,974
Land 18,053,226
18,053,226
-----------
- -----------
105,454,025
105,454,025
Less: Accumulated depreciation (32,357,628)
(30,845,208)
-----------
- -----------
$ 73,096,397 $
74,608,817
-----------
- -----------
-----------
- -----------
</TABLE>
8
<PAGE>
<PAGE>
NOTE C - RELATED PARTY TRANSACTIONS
Set forth below are the fees and other amounts relating to
transactions
between the Partnership and the General Partners and their
affiliates for
the six months ended June 30, 1998 and 1997.
<TABLE>
<CAPTION>
1998
1997
- -----------------------
<S> <C> <C>
Expensed to the General Partners:
Supervisory management fee $159,960
$159,361
Special distribution 146,085
145,486
Administrative expense reimbursements 13,875
13,875
-------
- -------
$319,920
$318,722
-------
- -------
-------
- -------
Expensed to A.G. Spanos Management, Inc.:
Property management fees $239,426
$239,109
-------
- -------
-------
- -------
</TABLE>
Accruals of $40,734 and $41,966 for property management fees and
$160,938
and $161,964 for General Partner fees were outstanding at June
30, 1998
and December 31, 1997, respectively. The General Partners'
capital account
deficit for financial accounting purposes exceeds the amount the
General
Partners would be obligated to restore if the Partnership were to
dissolve.
Prudential Securities Incorporated ("PSI"), an affiliate of the
Bache
General Partner, owned 4,663 Units at June 30, 1998.
On May 15, 1998, the Spanos General Partner initiated a consent
solicitation for the Unitholders to consider a proposal to sell
the
Properties at a public auction and then distribute the sale
proceeds in
liquidation of the Partnership. The proposed auction and
liquidation are
part of an overall settlement of the Multidistrict Litigation
described in
Note D. The settlement includes a provision whereby an affiliate
of the
Spanos General Partner will open the auction with a bid of
$22,440,000 in
excess of the outstanding mortgage debt. The settlement also
provided for
the Spanos General Partner to pay the costs of the consent
solicitation
subject to reimbursement by the Partnership if a majority in
interest of
the Unitholders approved the proposal. As of June 30, 1998, the
Partnership had received consent from the requisite number of
Unitholders.
On July 20, 1998, the Partnership reimbursed the Spanos General
Partner for
$190,143 of solicitation costs. Such amount was accrued at June
30, 1998.
9
<PAGE>
<PAGE>
NOTE D - CONTINGENCIES
On May 12, 1997, the Spanos General Partner and certain of its
affiliates
entered into a Stipulation of Settlement with legal counsel
representing
the plaintiff class in a number of actions pending before a
single judge of
the United States District Court for the Southern District of New
York.
The settlement contemplated, among other things, the sale of all
of the
Partnership Properties at public auction and the subsequent
liquidation and
dissolution of the Partnership. The settlement agreement was
preliminarily
approved by the Court on August 28, 1997. On June 30, 1998, a
majority
in interest of the Unitholders approved the proposed auction sale
of the
properties and the liquidation of the Partnership. On July 21,
1998, a
hearing before the Court was held to determine whether the
settlement is
fair and reasonable. After the hearing, the Court entered an
order and
final judgment approving the settlement, which includes the
auction of the
Partnership's properties and liquidation of the Partnership.
There can be
no assurance that the conditions to implementation of the
settlement will
be satisfied.
On or about April 15, 1994 a multiparty petition entitled
Schreiber, et al.
v. Prudential Securities, Inc., et al. (Cause No. 94-17696) was
filed in
the 189th Judicial District Court of Harris County, Texas,
purportedly on
behalf of investors in the Partnership against the Partnership,
the General
Partners, PSI, The Prudential Insurance Company of America and a
number of
other defendants. The Petition alleges common law fraud, fraud
in the
inducement and negligent misrepresentation in connection with the
offering
of limited partnership interests and negligence, breach of
fiduciary duty,
civil conspiracy, and violations of the federal Securities Act of
1933
(sections 11 and 12) and of the Texas Securities and Deceptive
Trade
Practices statutes. The suit seeks, among other things,
compensatory and
punitive damages, costs and attorneys' fees. Most of the
plaintiffs have
released their claims against the defendants in exchange for
monetary
payments by PSI. It is expected that the remaining claims will
be resolved
by PSI at no cost to the Partnership. Accordingly, no provision
for any
loss that may result upon resolution of this matter has been made
in the
accompanying financial statements.
NOTE E - SUBSEQUENT EVENT
The Partnership paid second quarter cash distributions of
$386,530 to the
Unitholders and $7,888 to the General Partners in August 1998.
10<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and
Results of Operations
Capital Resources and Liquidity
The Partnership had cash of $4,637,000 at June 30, 1998. There
are no
proposed programs for renovation, improvement or development of
the
Properties other than maintenance and repairs (including major
repairs) in
the ordinary course which will be paid from operations, and the
Partnership's liquidity position is considered satisfactory.
The Partnership's operating activities provided cash of
$1,870,000 in the
first half of 1998, of which $651,000 reflects timing differences
related
to current assets and liabilities. Of the balance, $605,000 was
applied to
scheduled principal amortization on the Partnership's mortgage
debt and
$614,000 was paid in cash distributions. Total distributions for
the first
half of 1998 were $789,000, which included $175,000 paid from
previously
accumulated cash.
On June 1, 1998, the Partnership and the lender on the Sandpebble
mortgage
entered into an agreement to extend the maturity date of the debt
by eight
months to February 1, 1999. The Partnership paid a fee to the
lender and
other costs totaling $31,000 in connection with the extension,
which amount
is included in interest expense on the statements of operations.
On June 30, 1998, a majority in interest of the Unitholders
approved a
proposal to sell the Properties at a public auction and then
distribute the
sale proceeds in liquidation of the Partnership. The proposed
auction and
liquidation are part of an overall settlement of the
Multidistrict
Litigation described in Note D to the financial statements. The
settlement
includes a provision whereby an affiliate of the Spanos General
Partner
will open the auction with a bid of $22,440,000 in excess of the
outstanding mortgage debt. On July 21, 1998, the settlement,
including the
auction and liquidation, was approved by the court overseeing the
litigation. Although there can be no assurance that the
conditions to
implementation of the settlement will be satisfied, it appears
likely that
the affairs of the Partnership will begin to be wound down in
early 1999.
Results of Operations
Rental revenue was $7,998,000 for the first half months of 1998,
a
slight increase compared to the first half of 1997. Revenue was
down
$155,000 or 6.9% at the Partnership's two Nevada properties due
to lower
occupancy and effective rental rates, but the decline was offset
by revenue
increases at the Partnership's other properties. The average
occupancy of
the eight properties was 93.8% for the first six months of 1998
compared to
94.1% for the same period last year. Property operating expenses
were
$2,794,000 for the first six months of 1998, unchanged from the
comparable
period last year. Operations for the second quarter of 1998
reflect
$306,000 of nonrecurring costs incurred with respect to the
solicitation of
consents for the proposed auction and liquidation. Any future
costs with
respect to the solicitation are not expected to be material. The
General
Partners do not expect that any costs related to year 2000
compliance will
be material to the financial statements of the Partnership.
11
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
This information is incorporated by reference to Note D to the
financial
statements filed herewith in Item 1 of Part I of the Registrant's
Quarterly Report.
Item 2. Changes in Securities
(None)
Item 3. Defaults Upon Senior Securities
(None)
Item 4. Submission of Matters to a Vote of Security Holders
On May 15, 1998, the Spanos General Partner initiated a consent
solicitation for the Unitholders to consider a plan of action
(the "Plan")
involving: (i) the sale of substantially all of the assets of the
Partnership in a public auction (the "Auction"), (ii) the
amendment of the
Amended and Restated Agreement of Limited Partnership of the
Partnership to
permit an affiliate of one of the general partners of the
Partnership to
bid for, and if successful to purchase, one or more of the
Partnership's
real properties (the "Amendment") and (iii) the subsequent
complete
termination and liquidation of the Partnership (the "Plan of
Liquidation").
The Plan was proposed in connection with, and pursuant to the
terms of, a
proposed settlement by the Spanos General Partner and its
affiliates (the
"Settlement") of certain class action litigation (the
"Litigation") then
pending in the United States District Court for the Southern
District of
New York (the "Court").
Set forth below is a summary of the tabulation of the forms of
Consents
received through the close of business on July 10, 1998, the
extended
termination date of the solicitation, showing that the consents
of
Unitholders holding a majority of the outstanding Units have been
received
with respect to all three proposals.
12<PAGE>
<PAGE>
Units % of % of
Units
Proposal Voted Units Voted
Outstanding
1. The Auction
Consents: 181,360 88.6%
57.2%
Does Not Consent: 11,662 5.7%
3.7%
Abstains: 11,641 5.7%
3.7%
-------
Total Votes 204,663
2. The Amendment
Consents: 170,767 83.4%
53.9%
Does Not Consent: 12,560 6.2%
4.0%
Abstains: 21,336 10.4%
6.7%
-------
Total Votes 204,663
3. The Plan of Liquidation
Consents: 183,194 89.5%
57.8%
Not Consent: 10,390 5.1%
3.6%
Abstains: 11,079 5.4%
3.5%
-------
Total Votes 204,663
Item 5. Other Information
(None)
Item 6. Exhibits and Reports on Form 8-K
Exhibits
4(a) Certificate of Limited Partnership of Registrant
as
filed with the Secretary of State of Delaware,
incorporated by reference to Exhibit 4(a) to
Registration Statement on Form S-11, File No.
33-22613,
filed with the Securities and Exchange
Commission on
October 14, 1988.
4(b) Amendment to Certificate of Limited Partnership
of
Registrant as filed with the Secretary of State
of
Delaware, incorporated by reference to Exhibit
4(b) to
Amendment No. 1 to Registration Statement on
Form S-11,
File No. 33-22613, filed with the Securities and
Exchange Commission on October 14, 1988.
4(c) Amended and Restated Agreement of Limited
Partnership of
Registrant, incorporated by reference to Exhibit
4(c) to
Amendment No. 1 to Registration Statement on
Form S-11,
File No. 33-22613, filed with the Securities and
Exchange Commission on October 14, 1988.
13
<PAGE>
<PAGE>
4(d) Amendments No. 1 through 7 dated November 21,
and
December 30, 1988 and January 31, February 28,
March 31,
April 28, and May 31, 1989 to the Amended and
Restated
Agreement of Limited Partnership of Registrant,
incorporated by reference to Exhibit 4(d) to
Post-Effective Amendment No. 1 to Registration
Statement
on Form S-11, File No. 33-22613, filed with the
Securities and Exchange Commission on June 30,
1989.
4(e) Amendments No. 8 through 14 dated June 30,
August 11
and 31, September 29, October 31, and December 1
and 22,
1989 to the Amended and Restated Agreement of
Limited
Partnership of Registrant, incorporated by
reference to
Exhibit 4(e) to Annual Report on Form 10-K, File
No.
0-17683, filed with the Securities and Exchange
Commission on March 28, 1991.
27 Financial Data Schedule (filed herewith)
Reports on Form 8-K
(None)
14
<PAGE>
<PAGE>
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.
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS, L.P., I
(Registrant)
By: A.G. Spanos Realty Partners, L.P., General Partner
By: AGS Financial Corporation, a general partner
By: /s/Arthur J. Cole Date: August 13,
1998
---------------------------------
Arthur J. Cole
President and Chief Accounting Officer
By: A.G. Spanos Realty Capital, Inc., a general partner
By: /s/Arthur J. Cole Date: August 13,
1998
---------------------------------
Arthur J. Cole
Vice President and Chief Accounting Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> The Schedule contains summary
financial
information extracted from the
financial
statements for
Prudential-Bache/A.G. Spanos
Realty Partners L.P., I, and is
qualified
entirely by reference to such
financial
statements.
</LEGEND>
<RESTATED>
<CIK> 000844159
<NAME> Prudential-Bache/A.G. Spanos Realty Partners
L.P., I
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-1-1998
<PERIOD-END> Jun-30-1998
<PERIOD-TYPE> 6-Mos
<CASH> 4637382
<SECURITIES> 0
<RECEIVABLES> 416379
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5053761
<PP&E> 105454025
<DEPRECIATION> 32357628
<TOTAL-ASSETS> 78150158
<CURRENT-LIABILITIES> 2794623
<BONDS> 63579368
0
0
<COMMON> 0
<OTHER-SE> 11776167
<TOTAL-LIABILITY-AND-EQUITY> 78150158
<SALES> 7998008
<TOTAL-REVENUES> 8062499
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5829596
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2536680
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (303777)
<EPS-PRIMARY> (0.94)
<EPS-DILUTED> 0
</TABLE>
