<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 March 31, 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 0-20273
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)
Five Cambridge Center, Cambridge, MA 02142
------------------------------------ ------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
-------------------------
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
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1 of 11
<PAGE>
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
<TABLE>
<CAPTION>
Consolidated Balance Sheets (Unaudited)
March 31, December 31,
(In Thousands, Except Unit Data) 1998 1997
--------------------- ---------------------
<S> <C> <C>
Assets
Real estate, at cost:
Land $ 1,700 $ 1,700
Buildings and improvements, net of accumulated
depreciation of $14,008 (1998) and $13,769 (1997) 31,655 31,952
--------------------- ---------------------
33,355 33,652
Other Assets:
Cash and cash equivalents 4,528 11,116
Restricted cash 608 668
Other assets 477 431
Deferred rent receivable 484 252
Deferred costs, net of accumulated amortization
of $2,027 (1998) and $3,765 (1997) 2,491 2,408
--------------------- ---------------------
Total assets $ 41,943 $ 48,527
===================== =====================
Liabilities and Partners' Capital
Liabilities:
Mortgage loan payable $ 25,843 $ 25,913
Distributions payable to partners - 4,646
Accrued interest payable 205 205
Accounts payable and accrued expenses 1,460 3,464
Payable to related party 169 79
Security deposits 166 163
--------------------- ---------------------
Total liabilities 27,843 34,470
--------------------- ---------------------
Commitments
Partners' Capital:
Preferred unit holders' capital (460 units outstanding) 10,430 10,387
Investor limited partners' capital (460 units outstanding) 5,177 5,177
General partner's deficit (1,507) (1,507)
--------------------- ---------------------
Total Partners' Capital 14,100 14,057
--------------------- ---------------------
Total Liabilities and Partners' Capital $ 41,943 $ 48,527
===================== =====================
</TABLE>
See notes to consolidated financial statements.
2 of 11
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
<TABLE>
<CAPTION>
Consolidated Statements of Operations (Unaudited) For the Three Months Ended
March 31, March 31,
(In Thousands, Except Unit Data) 1998 1997
--------------------- ---------------------
<S> <C> <C>
Revenues:
Rental $ 2,080 $ 1,191
Other 223 113
--------------------- ---------------------
Total revenues 2,303 1,304
--------------------- ---------------------
Expenses:
Real estate taxes 133 161
Payroll and payroll expense reimbursements 174 171
Operating expenses 150 115
Repairs and maintenance 206 176
Utilities 229 179
Management and other fees 142 139
General and administrative costs 52 83
Insurance 27 24
Depreciation 482 349
Amortization 125 88
--------------------- ---------------------
Total expenses 1,720 1,485
--------------------- ---------------------
Operating income (loss) 583 (181)
Non-operating income (expense):
Interest income 90 99
Interest expense (630) (691)
Reorganization item - professional fees - (54)
--------------------- ---------------------
Net income (loss) $ 43 $ (827)
===================== =====================
Net income (loss) allocated:
General Partners $ - $ (8)
Preferred Unit Holders 43 -
Investor Limited Partners - (819)
--------------------- ---------------------
$ 43 $ (827)
===================== =====================
Net income (loss) allocated per unit:
Preferred Unit Holders $ 93.48 $ -
===================== =====================
Investor Limited Partners $ - $ (1,780.43)
===================== =====================
</TABLE>
See notes to consolidated financial statements.
3 of 11
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
<TABLE>
<CAPTION>
Consolidated Statement of Partners' Capital (Unaudited)
(In Thousands, Except Unit Data)
Preferred
Units of Units of Preferred Investor
Limited Limited Unit Limited General
Partnership Partnership Holders' Partners' Partner's
Interest Interest Capital Capital (Deficit) Total
---------------- --------------- ---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance - January 1, 1998 460 460 $ 10,387 $ 5,177 $ (1,507) $ 14,057
Net income - - 43 - - 43
---------------- --------------- ---------------- --------------- --------------- ---------------
Balance - March 31, 1998 460 460 $ 10,430 $ 5,177 $ (1,507) $ 14,100
================ =============== ================ =============== =============== ===============
</TABLE>
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands) For the Three Months Ended
March 31, March 31,
1998 1997
--------------------- ---------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ 43 $ (827)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 622 459
Deferred rent receivable (232) 84
Changes in assets and liabilities:
Other assets (46) (407)
Accrued interest payable - (29)
Accounts payable, accrued expenses, payable
to related party and security deposits (1,911) (100)
--------------------- ---------------------
Net cash used in operating activities (1,524) (820)
--------------------- ---------------------
Cash Flows from Investing Activities:
Additions to buildings and improvements (185) (469)
Restricted cash 60 209
Deferred lease costs (223) (66)
--------------------- ---------------------
Net cash used in investing activities (348) (326)
--------------------- ---------------------
Cash Flows from Financing Activities:
Principal payments on mortgage loan (70) (2,005)
Distributions to partners (4,646) -
--------------------- ---------------------
Cash used in financing activities (4,716) (2,005)
--------------------- ---------------------
Net Decrease in Cash and Cash Equivalents (6,588) (3,151)
Cash and cash equivalents, beginning of period 11,116 8,580
--------------------- ---------------------
Cash and cash equivalents, end of period $ 4,528 $ 5,429
===================== =====================
Supplemental Disclosure of Cash Flow Information:
Cash Paid For Interest $ 615 $ 698
===================== =====================
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
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 "Partnership". 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, 1997.
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 March 31, 1998 presentation. The balance sheet at
December 31, 1997 was derived from audited financial statements at such
date.
The results of operations for the three months ended March 31, 1998 and
1997 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 5%
of cash receipts. For the three months ended March 31, 1998
and 1997, management fees of $100,000 and $60,000,
respectively, were incurred. In accordance with the Plan of
Reorganization, and commencing on the Plan's effective date,
property management fee payments were reduced to 4% of cash
receipts as long as the mortgage note is outstanding.
Management fees of $81,000 have been paid for the period ended
March 31, 1998.
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 approximately $169,000 per annum. Fees
of $42,000 and $40,000, were paid or accrued during the
periods ended March 31, 1998 and 1997, respectively.
6 of 11
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Related Party Transactions (Continued)
c. In accordance with the partnership agreement, the General
Partner is entitled to receive 1% of aggregate cash
distributions. In January 1998, the General Partner received a
distribution of $46,000.
3. Distribution
In January 1998, the Partnership distributed $4,600,000 ($10,000 per
unit) to Unitholders and $46,000 to the General Partner.
4. Allocation of Income
In accordance with the Partnership's Second Amended and Restated
Partnership Agreement, net income has been allocated, first, to the
Preferred Unitholders, in an amount equal to the excess of the
cumulative distributions made or to be made; second, to restore net loss
previously allocated to the Preferred Unitholders; and the balance to
the Unitholders and to the General Partner, to restore net loss
previously allocated to them during the period that the Preferred Units
were outstanding.
5. Legal Proceedings
Equity Resources Pilgrim Limited Partnership v. 1999 Broadway Associates
Limited Partnership, Winthrop Financial Associates, Bronco L.L.C. and
The Second Guarantor, Delaware Chancery Court, New Castle County (Civil
Action No. 16325-NC).
A limited partner in the Partnership is alleging that the allocation of
the preferred units subject to the oversubscription privilege made by
the Partnership pursuant to the October 30, 1997 Proxy Statement and
Prospectus, as amended (the "Prospectus"), was incorrect. The plaintiff
alleges that it should have received 188.0526 preferred units instead of
the 56.2812 preferred units plaintiff received. Plaintiff is presently
seeking declaratory relief. The Partnership believes its allocation was
consistent with the terms of the Prospectus and intends to defend this
action. If the Plaintiff is successful in its action, the Partnership
will be forced to reallocate the preferred units among all limited
partners who exercised their oversubscription privilege which would
result in such limited partners receiving less or more, depending on the
circumstance, preferred units. To the extent more preferred units are
allocated to a limited partner, such limited partner would be required
to pay for such units. To the extent that less preferred units are
allocated to a limited partner, such limited partner would receive a
reimbursement of its original purchase price for the preferred units.
The ultimate outcome of this litigation cannot presently be determined,
however, the General Partner does not believe that the litigation will
have a material adverse effect to the Partnership.
7 of 11
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
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 expenses as well as its administrative costs.
The Registrant's level of liquidity based on cash and cash
equivalents decreased by $6,588,000 during the three months ended
March 31, 1998, as compared to December 31, 1997. The decline is
attributable to $1,524,000 of cash used in operating activities,
$348,000 of cash used in investing activities and $4,716,000 of cash
used in financing activities. Cash from operations declined during
the period ended March 31, 1998, primarily as a result of the timing
of payments for tenant improvements and leasing costs. Cash used in
investing activities consisted of $185,000 of cash used for
improvements to real estate, primarily tenant improvements, and
$223,000 of cash expended on leasing costs and commissions, which
were slightly offset by a decline of $60,000 in restricted cash. Cash
used in financing activities consisted of the January 1998
distribution of $4,646,000 to partners in accordance with the Rights
Offering, and $70,000 of mortgage principal amortization. The
Property is 96% leased as of March 31, 1998. The Registrant has
budgeted to expend a portion of its working capital reserves for
tenant improvements and leasing commissions during the next twelve
months. The funding for expenditures for tenant improvements and
leasing commissions will be provided by the Registrant through funds
raised by the 1997 Rights Offering. At March 31, 1998, the Registrant
had approximately $4,528,000 in cash and cash equivalents which has
been invested primarily in a money market account.
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 realizing capital appreciation.
The Operating Partnership did not have sufficient cash flows to meet
a portion of its February 1998 debt service requirements primarily
due to the timing of payment of the semi-annual real estate taxes.
Accordingly, $67,000 of the February 1998 principal and interest
payment were funded from the reserve established at the Initial
Consummation Date.
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 the limited partners will not receive a complete
return of their invested capital. The extent to which invested
capital is refunded to the limited partners and preferred unit
holders 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 Operating
Partnership's ability to restructure or refinance the first mortgage
loan or sell the Property.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Results of Operations
Operating results, before non-operating income (expenses), for the
three months ended March 31, 1998, as compared to 1997, increased by
$764,000 due to increases in revenues of $999,000, and expenses of
$235,000.
Revenues, for the three months ended March 31, 1998, as compared to
1997, increased due to increases in rental income of $889,000 and in
other income of $110,000. Rental and other income increased due to an
increase in overall occupancy from 63% at March 31, 1997 to 96% at
March 31, 1998, and an increase in rental rates.
Expenses increased by $235,000 for the three months ended March 31,
1998, as compared to 1997, primarily due to increases in depreciation
and amortization ($170,000), utilities ($50,000), operating expenses
($35,000), and repairs and maintenance ($30,000). These increases
were partially offset by decreases in general and administrative
expenses ($31,000) and real estate taxes ($28,000). Depreciation and
amortization expense increased due to expenditures for tenant
improvements and leasing commissions made in connection with an
increase in leasing activity. Utilities, operating expenses and
repairs and maintenance expenses also increased primarily as a result
of increased occupancy. General and administrative expenses decreased
due to decreases in advertising expense, which was substantial in
1997, due to previous leasing restrictions imposed by the bankruptcy
court, and lower professional fees in 1998. Real estate taxes
declined due to a reduction in the real estate tax rate and a lower
assessed value of the Property.
Interest expense decreased by $61,000 due to the payment of
$2,000,000 in mortgage principal in February 1997, as part of the
Plan of Reorganization and the amortization of mortgage principal.
All other income and expense items remained relatively constant.
9 of 11
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Equity Resources Pilgrim Limited Partnership v. 1999 Broadway
Associates Limited Partnership, Winthrop Financial Associates, Bronco
L.L.C. and The Second Guarantor, Delaware Chancery Court, New Castle
County (Civil Action No. 16325-NC).
A limited partner in 1999 Broadway Associates Limited Partnership (the
"Partnership") is alleging that the allocation of the preferred units
subject to the oversubscription privilege made by the Partnership
pursuant to the October 30, 1997 Proxy Statement and Prospectus, as
amended (the "Prospectus"), was incorrect. The plaintiff alleges that
it should have received 188.0526 preferred units instead of the 56.2812
preferred units plaintiff received. Plaintiff is presently seeking
declaratory relief. The Partnership believes its allocation was
consistent with the terms of the Prospectus and intends to defend this
action. If the Plaintiff is successful in its action, the Partnership
will be forced to reallocate the preferred units among all limited
partners who exercised their oversubscription privilege which would
result in such limited partners receiving less or more, depending on
the circumstance, preferred units. To the extent more preferred units
are allocated to a limited partner, such limited partner would be
required to pay for such units. To the extent that less preferred units
are allocated to a limited partner, such limited partner would receive
a reimbursement of its original purchase price for the preferred units.
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.
10 of 11
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
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: May 13, 1998
11 of 11
<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,136,000<F1>
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 47,363,000
<DEPRECIATION> (14,008,000)
<TOTAL-ASSETS> 41,943,000
<CURRENT-LIABILITIES> 0
<BONDS> 25,843,000
0
0
<COMMON> 0
<OTHER-SE> 14,100,000
<TOTAL-LIABILITY-AND-EQUITY> 41,943,000
<SALES> 0
<TOTAL-REVENUES> 2,303,000
<CGS> 0
<TOTAL-COSTS> 1,668,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 630,000
<INCOME-PRETAX> 43,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 43,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,000
<EPS-PRIMARY> 93.48<F2>
<EPS-DILUTED> 93.48<F2>
<FN>
<F1>
Includes $608,000 of restricted cash.
<F2>
Primary EPS and diluted EPS include $93.48
per Preferred Unit of Limited Partnership Interest.
</FN>
</TABLE>
