<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 September 30, 2000
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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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 2000
PART 1 - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT UNIT DATA) 2000 1999
------------- ------------
<S> <C> <C>
Assets
Real estate, at cost:
Land $ 1,700 $ 1,700
Buildings and improvements, net of accumulated
depreciation of $19,997 (2000) and $18,159 (1999) 29,330 30,800
------------- ------------
31,030 32,500
Other Assets:
Cash and cash equivalents 2,012 3,194
Restricted cash 2,609 2,528
Other assets 283 284
Deferred rent receivable 1,266 1,152
Deferred costs, net of accumulated amortization
of $2,433 (2000) and $1,902 (1999) 2,554 2,575
------------- ------------
Total assets $ 39,754 $ 42,233
============= ============
Liabilities and Partners' Capital
Liabilities:
Mortgage loan payable $ 37,000 $ 37,000
Accrued interest payable 304 287
Accounts payable and accrued expenses 1,225 1,737
Payable to related party 300 285
Security deposits 171 128
------------- ------------
Total liabilities 39,000 39,437
------------- ------------
Partners' Capital:
Preferred unitholders' deficit (460 units outstanding) (2,126) (626)
Investor limited partners' capital (460 units outstanding) 4,407 4,944
General partner's deficit (1,527) (1,522)
------------- ------------
Total Partners' Capital 754 2,796
------------- ------------
Total Liabilities and Partners' Capital $ 39,754 $ 42,233
============= ============
</TABLE>
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(IN THOUSANDS, EXCEPT UNIT DATA) 2000 1999
----------------- ---------------
<S> <C> <C>
Revenues:
Rental $ 7,238 $ 6,957
Other 577 523
----------------- ---------------
Total revenues 7,815 7,480
----------------- ---------------
Expenses:
Real estate taxes 545 407
Payroll and payroll expense reimbursements 436 486
Operating expenses 460 524
Repairs and maintenance 637 628
Utilities 651 698
Management and other fees 534 490
General and administrative costs 92 128
Insurance 79 82
Depreciation 1,838 1,771
Amortization 357 394
----------------- ---------------
Total expenses 5,629 5,608
----------------- ---------------
Operating income 2,186 1,872
Non-operating income (expense):
Interest income 160 168
Interest expense (2,888) (1,839)
----------------- ---------------
Net (loss) income $ (542) $ 201
================= ===============
Net (loss) income allocated:
General Partners $ (5) $ -
Preferred Unitholders - 201
Investor Limited Partners (537) -
----------------- ---------------
$ (542) $ 201
================= ===============
Net (loss) income allocated per unit:
Preferred Unitholders $ - $ 436.96
================= ===============
Investor Limited Partners $ (1,167.39) $ -
================= ===============
Distribution Per Preferred Unitholder $ 3,260.87 $ -
================= ===============
</TABLE>
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(IN THOUSANDS, EXCEPT UNIT DATA) 2000 1999
-------------- --------------
<S> <C> <C>
Revenues:
Rental $ 2,349 $ 2,443
Other 151 188
--------------- --------------
Total revenues 2,500 2,631
--------------- --------------
Expenses:
Real estate taxes 174 134
Payroll and payroll expense reimbursements 164 161
Operating expenses 162 156
Repairs and maintenance 189 185
Utilities 228 234
Management and other fees 181 163
General and administrative costs 32 35
Insurance 26 28
Depreciation 586 611
Amortization 123 132
--------------- --------------
Total expenses 1,865 1,839
--------------- --------------
Operating income 635 792
Non-operating income (expense):
Interest income 46 66
Interest expense (1,002) (624)
--------------- --------------
Net (loss) income $ (321) $ 234
=============== ==============
Net (loss) income allocated:
General Partners $ (3) $ -
Preferred Unitholders - 234
Investor Limited Partners (318) -
--------------- --------------
$ (321) $ 234
=============== ==============
Net (loss) income allocated per unit:
Preferred Unitholders $ - $ 508.70
=============== ==============
Investor Limited Partners $ (691.30) $ -
=============== ==============
</TABLE>
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 2000
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT DATA)
<TABLE>
<CAPTION>
PREFERRED
UNITS OF UNITS OF PREFERRED INVESTOR
LIMITED LIMITED UNIT- LIMITED GENERAL
PARTNERSHIP PARTNERSHIP HOLDERS' PARTNERS' PARTNER'S
INTEREST INTEREST DEFICIT CAPITAL (DEFICIT) TOTAL
----------- ----------- ----------- --------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Balance - January 1, 2000 460 460 $ (626) $ 4,944 $ (1,522) $ 2,796
Net Loss - - - (537) (5) (542)
Distribution to Partners - - (1,500) - - (1,500)
----------- ----------- ----------- --------- ------------ --------
Balance - September 30, 2000 460 460 $ (2,126) $ 4,407 $ (1,527) $ 754
=========== =========== =========== ========= ============ ========
</TABLE>
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 2000
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS) FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
-------------- --------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net (loss) income $ (542) $ 201
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation and amortization 2,369 2,166
Deferred rent receivable (114) (457)
Changes in assets and liabilities:
Other assets 1 67
Accrued interest payable 17 (131)
Accounts payable, accrued expenses, payable
to related party and security deposits (454) (24)
-------------- --------------
Net cash provided by operating activities 1,277 1,822
-------------- --------------
Cash Flows from Investing Activities:
Additions to buildings and improvements (368) (873)
Increase in restricted cash (81) (2,162)
Deferred lease costs (410) (224)
-------------- --------------
Cash used in investing activities (859) (3,259)
-------------- --------------
Cash Flows from Financing Activities:
Satisfaction of mortgage loan - (25,413)
Proceeds of mortgage loan - 37,000
Principal payments on mortgage loan - (209)
Distribution to partners (1,500) -
Deferred loan costs (100) (694)
-------------- --------------
Net cash (used in) provided by financing activities (1,600) 10,684
-------------- --------------
Net (decrease) increase in cash and cash equivalents (1,182) 9,247
Cash and cash equivalents, beginning of period 3,194 3,788
-------------- --------------
Cash and cash equivalents, end of period $ 2,012 $ 13,035
============== ==============
Supplemental Disclosure of Cash Flow Information:
Cash Paid For Interest $ 2,697 $ 1,969
============== ==============
</TABLE>
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 2000
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, 1999.
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. The balance sheet at December 31, 1999 was
derived from audited financial statements at such date.
The results of operations for the three and nine months ended September
30, 2000 and 1999 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 Limited Partnership, the managing general partner of the
Investor 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 nine months ended September 30, 2000
and 1999, management fees of $391,000 and $356,000,
respectively, were incurred.
b. The Partnership pays or accrues to the General Partner an
annual partnership administration and investor service fee, as
provided for in the partnership agreement, of $100,000, which,
since 1990, has been increased annually by 6% to its present
level of approximately $190,000 per annum. Fees of $143,000
and $134,000 were paid or accrued during the periods ended
September 30, 2000 and 1999, respectively.
c. The Partnership pays or accrues to an affiliate of the General
Partner a construction management fee equal to 5% of the
aggregate cost of each applicable construction project. Fees
of $19,000 and $42,000 were incurred during the nine months
ended September 30, 2000 and 1999, respectively, and have been
capitalized to the cost of buildings and improvements.
d. In April 2000, the Preferred Unitholders who are also
affiliates of the General Partner, received approximately
$864,000 of the $1,500,000 distribution of cash from
operations.
In October 1999, in accordance with the Partnership's Second
Amended and Restated Partnership Agreement ("Agreement"), the
Preferred Unitholders who are also affiliates of the General
Partner, received $6,158,000 of the $10,695,000 in cash
distributions from the proceeds received from the mortgage
refinancing.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. RELATED PARTY TRANSACTIONS (CONTINUED)
e. For services rendered in obtaining the new mortgage loan in
September 1999, an affiliate of the General Partner earned
$185,000, which has been capitalized as a deferred cost.
3. ALLOCATION OF INCOME AND CASH DISTRIBUTIONS
In accordance with the Agreement, losses are allocated 1% to the
General Partner and 99% to the limited partners in proportion to and to
the extent of the positive balances in the limited partners' capital
accounts. Net income is 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 limited partners and to
the General Partner, to restore net loss previously allocated to them
during the period that the Preferred Units were outstanding. Gain from
the disposition of the Partnership's property is allocated in
accordance with the Agreement. The Agreement also provides that while
the Preferred Units are outstanding, cash flow and capital proceeds (as
defined in the Agreement) shall be distributed first to the Preferred
Unitholders in an amount equal to a cumulative annual 12%
non-compounded return on their preferred invested capital; and in the
case of capital proceeds only, to the Preferred Unitholders in a
cumulative amount equal to the greater of $46,500 (per Preferred Unit)
or an amount equal to the subscription price per Preferred Unit
together with a cumulative annual 15% compounded return thereon. Cash
flow is then distributed 99% to the limited partners and 1% to the
General Partner until the limited partners have received an amount
equal to an annual 6% per annum noncumulative, noncompounded return on
their invested capital and the balance, if any, 97% to the limited
partners, and 3% to the General Partners.
4. DISTRIBUTIONS
In April 2000, the Partnership distributed $1,500,000 ($3,260.87 per
unit) of cash from operations to the Preferred Unitholders.
In October 1999, the Partnership distributed $10,695,000 ($23,250.00
per unit) to Preferred Unitholders from the proceeds received from the
mortgage refinancing.
5. MORTGAGE REFINANCING
On September 23, 1999 the Partnership refinanced its existing mortgage.
The new mortgage in the amount of $37,000,000 replaced indebtedness of
approximately $25,413,000. The mortgage requires monthly payments of
interest only and bears interest at 325 basis points over 30-day LIBOR
(9.88% at September 30, 2000). The mortgage was due to mature on
September 20, 2002 at which time the principal and all unpaid interest
would be due (see Note 7).
6. SEGMENT INFORMATION
The Partnership has two reportable segments, the Office Tower and the
Garage. The Partnership evaluates performance based on net operating
income, which is income before depreciation, amortization, interest and
non-operating items.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. SEGMENT INFORMATION (CONTINUED)
Segment information for the nine months ended September 30, 2000 and
1999, is shown in the tables below (in thousands). The "Other" column
includes partnership administrative items and income and expense not
allocated to a reportable segment.
<TABLE>
<CAPTION>
Office Parking
Tower Garage Other Total
----------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
2000
Rental income $ 7,238 $ - $ - $ 7,238
Other income 186 391 - 577
Interest income 124 - 36 160
Interest expense 2,789 99 - 2,888
Depreciation and amortization 2,160 35 - 2,195
Segment profit (loss) (669) 257 (130) (542)
Total assets 38,126 1,063 565 39,754
Capital expenditures 368 - - 368
1999
Rental income $ 6,957 $ - $ - $ 6,957
Other income 189 334 - 523
Interest income 68 - 100 168
Interest expense 1,775 64 - 1,839
Depreciation and amortization 2,131 34 - 2,165
Segment profit (loss) 47 236 (82) 201
Total assets 48,378 1,110 3,006 52,494
Capital expenditures 873 - - 873
</TABLE>
7. SUBSEQUENT EVENTS
On October 20, 2000, the Partnership replaced its $37,000,000 mortgage
note payable with a new $50,000,000 mortgage note. The new mortgage is
payable over ten years, maturing on November 1, 2010, with monthly
payments of $365,837 representing principal and interest fixed at
7.97%. At maturity, a balloon payment of approximately $44,904,000 plus
accrued interest will be due. In addition to the monthly debt service
payment, the Partnership is required to pay $147,336 monthly for escrow
and reserve accounts. The reserve for tenant improvements required
under the previous mortgage was used towards the payoff of the previous
mortgage. For services rendered in obtaining the new mortgage, an
affiliate of the general partner earned a $125,000 fee.
On November 1, 2000, the Partnership distributed $11,713,714
($25,464.60 per unit) to the Preferred Unitholders in full satisfaction
of the remaining obligation to the Preferred Unitholders.
9 of 13
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 2000
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain
forward-looking statements and involve risks and uncertainties
(including changing market conditions, competitive and regulatory
matters, etc.) detailed in the disclosures contained in this Form
10-QSB and other filings with the Securities and Exchange
Commission made by the Partnership from time to time. The
discussion of the Partnership's liquidity, capital resources and
results of operations, including forward-looking statements
pertaining to such matters, does not take into account the effects
of any changes to the Partnership's operations. Accordingly,
actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors,
including those identified herein.
This item should be read in conjunction with the consolidated
financial statements and other items contained elsewhere in the
report.
Liquidity and Capital Resources
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 $1,182,000 during the nine months ended
September 30, 2000, as compared to December 31, 1999. The decrease
is due to $1,600,000 of cash used in financing activities and
$859,000 of cash used in investing activities which was partially
offset by $1,277,000 of cash provided by operating activities.
Cash used in financing activities consisted of a $1,500,000
distribution to partners and $100,000 paid for deferred financing
costs. Cash used in investing activities consisted of $368,000 of
cash used for improvements to real estate, primarily tenant
improvements, $410,000 of cash expended on leasing costs and
commissions and an increase of $81,000 in restricted cash. The
Property is approximately 89% leased as of September 30, 2000. At
September 30, 2000, the Registrant's cash and cash equivalents
have been invested primarily in money market accounts.
The sufficiency of existing liquid assets to meet future liquidity
and capital expenditure requirements is directly related to the
level of capital expenditures required at the Property to
adequately maintain the physical assets and the other operating
needs of the Operating Partnership. Such assets are currently
thought to be sufficient for any near-term needs of the Operating
Partnership.
In April 2000, the Partnership distributed $1,500,000 ($3,260.87
per unit) of cash from operations to the Preferred Unitholders.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 2000
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(CONTINUED)
Liquidity and Capital Resources (Continued)
On October 20, 2000, the Partnership replaced its $37,000,000
mortgage note payable with a new $50,000,000 mortgage note. The
new mortgage is payable over ten years, maturing on November 1,
2010, with monthly payments of $365,837 representing principal and
interest fixed at 7.97%. At maturity, a balloon payment of
approximately $44,904,000 plus accrued interest will be due. In
addition to the monthly debt service payment, the Partnership is
required to pay $147,336 monthly for escrow and reserve accounts.
For services rendered in obtaining the new mortgage, an affiliate
of the general partner earned $125,000.
On November 1, 2000, the Partnership distributed $11,713,714
($25,464.60 per unit) to the Preferred Unitholders.
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 is dependent upon the
performance of the Property and the market in which it is located.
Results of Operations
Operating results, before non-operating income (expense) for the
nine months ended September 30, 2000, as compared to 1999,
increased by $314,000 due to an increase in revenue of $335,000,
which was slightly offset by an increase in expenses of $21,000.
Operating results, before non-operating income (expense) for the
three months ended September 30, 2000, as compared to 1999,
decreased by $157,000.
Revenues for the nine months ended September 30, 2000, as compared
to 1999, increased due to an increase in rental income of $281,000
and an increase in other income of $54,000. Rental income
increased due to an increase in rental rates, which was partially
offset by a decrease in occupancy due to a portion of a
significant tenant's space becoming vacant.
Expenses increased by $21,000 for the nine months ended September
30, 2000, as compared to 1999, primarily due to increases in real
estate taxes ($138,000), depreciation ($67,000) and management and
other fees ($44,000). These increases were substantially offset by
decreases in operating expenses ($64,000), payroll and payroll
expense reimbursements ($50,000), utilities ($47,000), general and
administrative expenses ($36,000) and amortization ($37,000).
Depreciation expense increased due to expenditures for tenant
improvements made in connection with an increase in leasing
activity in the previous two years. Real estate taxes increased as
a result of an increase in the assessed value of the Property.
Operating expenses and utilities decreased due to a decrease in
overall occupancy. Payroll and payroll expense reimbursements
decreased primarily as a result of the reduction of administrative
personnel.
Interest expense increased by $1,049,000 due to an increase in the
outstanding balance of the loan in connection with the refinancing
in September 1999. All other income and expense items, including
the garage operation, remained relatively constant.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB 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 of Form 8-K was filed during the period.
12 of 13
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 2000
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/ Thomas Staples
----------------------------------------
Thomas Staples
Chief Financial Officer
DATED: November 14, 2000
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