<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
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 0-20273
1999 Broadway Associates Limited Partnership
(Exact name of small business issuer as specified in its charter)
DELAWARE 04-6613783
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One International Place, Boston, MA 02110
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 330-8600
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___
1 of 12
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
PART 1 - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT UNIT DATA) 1997 1996
---------------------------------------------
<S> <C> <C>
Assets
Real estate, at cost:
Land $ 1,700 $ 1,700
Buildings and improvements, net of accumulated
depreciation of $12,885 (1997) and $12,204 (1996) 27,876 27,442
--------------------- ---------------------
29,576 29,142
Other Assets:
Cash and cash equivalents 4,545 8,580
Restricted cash 799 1,000
Other assets 471 290
Deferred rent receivable 509 665
Deferred costs, net of accumulated amortization
of $3,469 (1997) and $3,248 (1996) 1,348 1,153
--------------------- ---------------------
Total assets $ 37,248 $ 40,830
===================== =====================
Liabilities and Partners' Capital
Liabilities:
Mortgage loan payable $ 26,048 $ 28,135
Accrued interest payable 206 252
Accounts payable and accrued expenses 859 1,072
Payable to related party 105 22
Security deposits 136 140
--------------------- ---------------------
Total liabilities 27,354 29,621
--------------------- ---------------------
Commitments
Partners' Capital:
Investor limited partners' equity (460 units outstanding) 11,338 12,640
General partner's deficit (1,444) (1,431)
--------------------- ---------------------
Total Partners' Capital 9,894 11,209
--------------------- ---------------------
Total Liabilities and Partners' Capital $ 37,248 $ 40,830
===================== =====================
</TABLE>
See notes to consolidated financial statements.
2 of 12
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
(IN THOUSANDS, EXCEPT UNIT DATA) 1997 1996
--------------------- ---------------------
<S> <C> <C>
Revenues:
Rental $ 2,515 $ 2,508
Other 307 168
--------------------- ---------------------
Total Revenues 2,822 2,676
--------------------- ---------------------
Expenses:
Real estate taxes 324 323
Payroll and payroll expense reimbursements 327 309
Operating expenses 246 269
Repairs and maintenance 354 365
Utilities 351 349
Management and other fees 278 217
General and administrative costs 145 72
Insurance 47 62
Depreciation and amortization 902 945
--------------------- ---------------------
Total Expenses 2,974 2,911
--------------------- ---------------------
Operating loss (152) (235)
Non-operating income (expense):
Interest income 167 320
Interest expense (1,272) (1,431)
Reorganization item - professional fees (58) -
--------------------- ---------------------
Net loss $ (1,315) $ (1,346)
===================== =====================
Net loss allocated:
General Partner $ (13) $ (13)
Investor Limited Partners (1,302) (1,333)
--------------------- ---------------------
$ (1,315) $ (1,346)
===================== =====================
Net loss allocated to Limited Partners per
Limited Partner Unit $ (2,830.43) $ (2,897.83)
===================== =====================
</TABLE>
See notes to consolidated financial statements.
3 of 12
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED
JUNE 30, JUNE 30,
(IN THOUSANDS, EXCEPT UNIT DATA) 1997 1996
--------------------- ---------------------
<S> <C> <C>
Revenues:
Rental $ 1,324 $ 1,282
Other 194 77
--------------------- ---------------------
Total Revenues 1,518 1,359
--------------------- ---------------------
Expenses:
Real estate taxes 163 162
Payroll and payroll expense reimbursements 156 139
Operating expenses 131 133
Repairs and maintenance 178 210
Utilities 172 176
Management and other fees 139 94
General and administrative costs 62 23
Insurance 23 30
Depreciation and amortization 443 473
--------------------- ---------------------
Total Expenses 1,467 1,440
--------------------- ---------------------
Operating income (loss) 51 (81)
Non-operating income (expense):
Interest income 68 152
Interest expense (603) (726)
Reorganization item - professional fees (4) -
--------------------- ---------------------
Net loss $ (488) $ (655)
===================== =====================
Net loss allocated:
General Partner $ (5) $ (7)
Investor Limited Partners (483) (648)
--------------------- ---------------------
$ (488) $ (655)
===================== =====================
Net loss allocated to Limited Partners per
Limited Partner Unit $ (1,050.00) $ (1,408.70)
===================== =====================
</TABLE>
See notes to consolidated financial statements.
4 of 12
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT DATA)
<TABLE>
<CAPTION>
UNITS OF INVESTOR
LIMITED GENERAL LIMITED TOTAL
PARTNERSHIP PARTNER'S PARTNERS' PARTNERS'
INTEREST DEFICIT CAPITAL CAPITAL
------------------ ------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Balance - January 1, 1997 460 $ (1,431) $ 12,640 $ 11,209
Net loss - (13) (1,302) (1,315)
------------------ ------------------- -------------------- --------------------
Balance - June 30, 1997 460 $ (1,444) $ 11,338 $ 9,894
================== =================== ==================== ====================
</TABLE>
See notes to consolidated financial statements.
5 of 12
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS) FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996
--------------------- ---------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (1,315) $ (1,346)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation 681 664
Amortization 221 281
Deferred rent receivable 156 214
Changes in assets and liabilities:
Other assets (181) (177)
Deferred costs (416) (23)
Accrued interest payable (46) 1,431
Accounts payable, accrued expenses, payable
to related party and security deposits (134) 132
--------------------- ---------------------
Net cash (used in) provided by operating activities (1,034) 1,176
--------------------- ---------------------
Cash Flows from Investing Activities:
Additions to buildings and improvements (1,115) (11)
Decrease in restricted cash 201 -
--------------------- ---------------------
Net cash used in investing activities (914) (11)
--------------------- ---------------------
Cash Flows from Financing Activities:
Principal payments on mortgage note (2,087) -
--------------------- ---------------------
Cash used in financing activities (2,087) -
--------------------- ---------------------
Net (Decrease) Increase in Cash and Cash Equivalents (4,035) 1,165
Cash and cash equivalents, beginning of period 8,580 14,130
--------------------- ---------------------
Cash and cash equivalents, end of period $ 4,545 $ 15,295
===================== =====================
Supplemental Disclosure of Cash Flow Information:
Cash Paid For Interest $ 1,318 $ -
===================== =====================
</TABLE>
See notes to consolidated financial statements.
6 of 12
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The accompanying financial statements reflect the accounts of 1999
Broadway Associates Limited Partnership (the "Investor Partnership") and
1999 Broadway Partnership (the "Operating Partnership"). The Investor
Partnership and the Operating Partnership are collectively referred to
as the "Partnerships". These consolidated financial statements,
footnotes and discussions should be read in conjunction with the
consolidated financial statements, related footnotes and discussions
contained in the Partnership's Annual Report on Form 10-KSB for the year
ended December 31, 1996.
The financial information contained herein is unaudited. In the opinion
of management, all adjustments necessary for a fair presentation of such
financial information have been included. All adjustments are of a
normal recurring nature. Certain amounts have been reclassified to
conform to the June 30, 1997 presentation. The balance sheet at December
31, 1996 was derived from audited financial statements at such date.
The results of operations for the three and six months ended June 30,
1997 and 1996 are not necessarily indicative of the results to be
expected for the full year.
2. RELATED PARTY TRANSACTIONS
The Partnership has incurred charges and made commitments to companies
affiliated by common ownership and management with Winthrop Financial
Associates, a Maryland Limited Partnership (the "General Partner").
Related-party transactions with the General Partner and its affiliates
include the following:
a. The Operating Partnership accrues to an affiliate of the
General Partner an annual property management fee equal to the
greater of 5% of cash receipts or $397,560. For the period
ended June 30, 1997, management fees of $198,000 were
incurred. In accordance with the Plan of Reorganization (see
Note 3), commencing on the Plan's effective date, property
management fee payments were reduced to 4% of cash receipts as
long as the New Note (as defined below) is outstanding.
Management fees of $116,000 were paid during the period ended
June 30, 1997.
b. The Partnership pays or accrues to the General Partner an
annual partnership administration and investor service fee of
$100,000, which, since 1990, has been increased annually by 6%
to its present level of $160,000 per annum. Fees of $80,000
were paid during the period ended June 30, 1997.
3. PETITION OF RELIEF UNDER CHAPTER 11 AND MODIFICATION OF MORTGAGE LOAN
PAYABLE
The Partnership and the holder of the mortgage on the Property (the
"Lender") reached an agreement pursuant to which the Lender voted in
favor of the Plan of Reorganization (the "Plan") submitted by the
Operating Partnership, which was confirmed by the Bankruptcy Court on
November 13, 1996. The Plan became effective on February 28, 1997
("Effective Date") and provides for the modification of the existing
loan as follows: (i) the maturity date has been extended one year to
September 1999,
7 of 12
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. PETITION OF RELIEF UNDER CHAPTER 11 AND MODIFICATION OF MORTGAGE LOAN
PAYABLE (CONTINUED)
(ii) principal payments are based on a 25 year amortization schedule,
(iii) additional principal payments of $2,000,000 were paid on the
Initial Consummation Date (as defined below) and on the Plan's Effective
Date, (iv) monthly interest only payments from the Initial Consummation
Date to the Effective Date and (v) the modification of the existing
mortgage as of the Effective Date to incorporate the above modifications
("New Note"). The loan continues to bear interest at 9.5% per annum.
Pursuant to the Plan, on November 26, 1996 (the "Initial Consummation
Date") the Partnership paid $7,147,000 to the lender. This payment
consisted of a $2,000,000 principal payment, $3,300,000 of accrued
interest from October 1, 1995 to November 26, 1996, a $1,000,000 payment
to a reserve fund for potential debt service shortfalls and to provide
funds to lease up the property, and approximately $847,000 for
pre-petition liabilities, other claims of the Lender and costs
associated with the reorganization. This payment represents the
satisfaction of the pre-petition liabilities at face value, and,
accordingly, no gain or loss was recognized. In addition, the following
covenants have been incorporated in the New Note: (i) property
management fee payments have been reduced to 4% of cash receipts as long
as the New Note is outstanding, (ii) no distributions to partners by
either the Investor or Operating Partnership are permitted while the New
Note is outstanding (although a distribution from the Investor
Partnership would constitute a default under the New Note, the lender
has no lien or other interest in cash that may be distributed by the
Investor Partnership), (iii) all tenant improvements shall be funded by
the Investor Partnership and, (iv) minimum tangible net worth
requirements of the partners of the Operating Partnership.
The Operating Partnership did not have sufficient cash flows to meet its
February 1997 debt service requirement due on the outstanding mortgage
primarily due to the timing of payment of the semi-annual real estate
taxes. Accordingly, the February 1997 interest only payment of $223,000
was funded entirely from the reserve fund established at the Initial
Consummation Date.
8 of 12
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This Item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in the report.
Liquidity and Capital Resources
The Registrant, through its 99.9% ownership interest in 1999 Broadway
Partnership (the "Operating Partnership"), owns a 42-story office tower
located in Denver, Colorado together with a parking garage located one
and one-half blocks northeast of the office tower (collectively, the
"Property"). The Operating Partnership generates rental revenue from the
Property and is responsible for the Property's operating expense as well
as its administrative costs.
The Registrant's original business plan was to selectively contribute
its reserves to the Operating Partnership to enhance the Property's
value (through leasing the Property). The Registrant hoped that the
Denver market would improve so that the Property could generate cash
flow distributions and realize capital appreciation above the first
mortgage loan. The Denver market has not yet achieved the fundamental
rebound required for the Registrant to achieve its long term investment
objectives of generating cash flow distributions and realizing capital
appreciation.
The Registrant's level of liquidity based on cash and cash equivalents
decreased by $4,035,000 during the six months ended June 30, 1997, as
compared to December 31, 1996. The decline is attributable to $1,034,000
of cash used in operating activities, $914,000 of cash used in investing
activities and $2,087,000, of cash used in financing activities. Cash
from operations declined primarily as a result of lower occupancy due to
restrictions on leasing imposed by the Bankruptcy Court and cash
expended on current leasing activities. Cash used in investing
activities consisted of $1,115,000 of cash used for improvements to real
estate, which was partially offset by a decline of $201,000 in
restricted cash. Cash used in financing activities consisted of a
$2,000,000 principal payment on the Plan's Effective Date and mortgage
principal amortization. During the bankruptcy petition period, the
Registrant's leasing activity was restricted by the bankruptcy court.
The Registrant is currently attempting to lease-up the unoccupied space.
At present, the Registrant is negotiating with a perspective tenant for
approximately 90,000 square feet of space. However, there is no
assurance at this time that the lease will be executed. The Registrant
has budgeted to expend all of its working capital reserves for tenant
improvements and leasing commissions during the next twelve months, with
the funding provided by the Investor Partnership. In its efforts to
obtain new tenants, the Registrant may be required to agree to expend
amounts in excess of amounts originally budgeted for tenant
improvements. As a result, it may be necessary for the Registrant to
obtain additional amounts in the near future either through additional
financing or permitted equity offerings. The Registrant invests its
working capital reserves in a money market account.
The Registrant and the holder of the first mortgage on the Property
reached an agreement pursuant to which the Lender voted in favor of the
Plan of Reorganization submitted by the Operating Partnership, which was
confirmed by the Bankruptcy Court on November 13, 1996. The Plan, as
approved by the Bankruptcy Court, provides for the modification of the
existing loan encumbering the property as follows: (i) the maturity date
has been extended one year to September 1999; and (ii) principal
payments are based on a 25 year amortization schedule (instead of 30
years), with a balloon payment being due at maturity. The loan continues
to bear interest at 9.5% per annum.
9 of 12
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Liquidity and Capital Resources (Continued)
On November 26, 1996 (the "Initial Consummation Date" of the Plan) the
Partnership paid $7,147,000 to the lender. The initial consummation
payment consisted of a $2,000,000 principal payment, $3,300,000 of
accrued interest from October 1, 1995 to November 26, 1996, a $1,000,000
payment to a reserve fund for potential debt service shortfalls and to
provide funds to lease up the property, and approximately $847,000 for
pre-petition liabilities, other claims of the Lender and costs
associated with the reorganization. This payment represents the
satisfaction of the pre-petition liabilities at face value, and,
accordingly, no gain or loss was recognized.
At this time, it appears that the original investment objective of
capital growth from the inception of the Registrant will not be attained
and that Limited Partners will not receive a return of their invested
capital. The extent to which invested capital is refunded to Limited
Partners is dependent upon the performance of the Property and the
market in which it is located. Subsequent to September 1999, the ability
to hold and operate the Property is dependent upon the Operating
Partnership's ability to restructure or refinance the first mortgage
loan or sell the property.
Results of Operations
Operating results, before non-operating income (expenses), for the six
months ended June 30, 1997, as compared to 1996, improved by $83,000 due
to an increase in revenue of $146,000, which was offset by an increase
in expenses of $63,000. Operating results, before non-operating income
(expenses), for the three months ended June 30, 1997, as compared to
1996, improved by $132,000.
Revenues, for the six months ended June 30, 1997, as compared to 1996,
increased due to an increase in other income of $139,000 and an increase
in rental income of $7,000. Other income increased primarily due to the
accrual of a real estate tax refund to be received. Rental revenues
remained relatively constant as occupancy (68% in 1996 vs. 67% in 1997)
and rental rates remained steady.
Expenses increased by $63,000 for the six months ended June 30, 1997, as
compared to 1996, primarily due to increases in management and other
fees ($61,000) and general and administrative costs ($73,000), which
were partially offset by decreases in depreciation and amortization
($43,000) and operating expenses ($23,000). The increase in general and
administrative expenses relates primarily to advertising expenditures,
which had previously been restricted by the bankruptcy court and an
increase in professional fees in 1997. Amortization expense declined due
to intangible assets becoming fully amortized during 1996.
Interest income decreased by $153,000 for the six months ended June 30,
1997, as compared to 1996, due to a decline in average working capital
reserves available for investment. This decline relates to the various
payments made by the Partnership on the Initial Consummation Date and
Effective Date of the Plan of Reorganization.
Interest expense decreased by $159,000 due to the payment of $4,000,000
in mortgage principal as part of the Plan of Reorganization and the
amortization of mortgage principal.
10 of 12
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
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 of Form 8-K was filed during the period.
11 of 12
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
BY: WINTHROP FINANCIAL ASSOCIATES, A LIMITED PARTNERSHIP
MANAGING GENERAL PARTNER
BY: /s/ Michael L. Ashner
-------------------------
Michael L. Ashner
Chief Executive Officer
BY: /s/ Edward V. Williams
-------------------------
Edward V. Williams
Chief Financial Officer
DATED: August 5, 1997
12 of 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from 1999 Broadway
Associates Limited Partnership and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,344,000 <F1>
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 42,461,000
<DEPRECIATION> (12,885,000)
<TOTAL-ASSETS> 37,248,000
<CURRENT-LIABILITIES> 0
<BONDS> 26,048,000
<COMMON> 0
0
0
<OTHER-SE> 9,894,000
<TOTAL-LIABILITY-AND-EQUITY> 37,248,000
<SALES> 0
<TOTAL-REVENUES> 2,822,000
<CGS> 0
<TOTAL-COSTS> 2,974,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,272,000
<INCOME-PRETAX> (1,315,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,315,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,315,000)
<EPS-PRIMARY> (2,830.43)
<EPS-DILUTED> (2,830.43)
<FN>
<F1> Includes $799,000 of restricted cash
</FN>
</TABLE>
