<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1-10643
---------------------
HALLWOOD REALTY PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
-----------------------
DELAWARE 75-2313955
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3710 RAWLINS
SUITE 1500
DALLAS, TEXAS 75219-4298
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 528-5588
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
----- ------
THE REGISTRANT IS A LIMITED PARTNERSHIP AND ISSUES UNITS REPRESENTING
OWNERSHIP OF LIMITED PARTNER INTERESTS.
NUMBER OF UNITS OUTSTANDING AT MAY 5, 1999: 1,672,556 UNITS.
===============================================================================
Page 1
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HALLWOOD REALTY PARTNERS, L.P.
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION
Page
----
Item 1 Financial Statements (unaudited) :
Consolidated Balance Sheets as of March 31, 1999
and December 31, 1998 3
Consolidated Statements of Operations for the
Three Months Ended March 31, 1999 and 1998 4
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1999 and 1998 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations, Liquidity and Capital Resources 8
Item 3 Quantitative and Qualitative Disclosures About Market Risk 11
PART II - OTHER INFORMATION
Items 1 to 6 Other Information 12
Signature 13
</TABLE>
Page 2
<PAGE> 3
HALLWOOD REALTY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT UNIT AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, December 31,
1999 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Real estate:
Land $ 56,441 $ 56,441
Buildings and improvements 262,100 262,588
Tenant improvements 17,446 17,692
------------ ------------
335,987 336,721
Accumulated depreciation and amortization (161,891) (160,942)
------------ ------------
Real estate, net 174,096 175,779
Cash and cash equivalents 15,168 14,497
Accounts receivable 1,682 1,456
Deferred lease commissions, net 7,206 7,186
Lease concessions 3,183 2,955
Loan reserves and escrows 6,906 6,986
Loan costs, net 3,829 3,923
Prepaid expenses and other assets 1,104 1,241
------------ ------------
Total assets $ 213,174 $ 214,023
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgages payable $ 161,450 $ 162,078
Accounts payable and accrued expenses 3,369 4,435
Prepaid rent and security deposits 2,337 2,703
Payable to affiliates, net 170 173
------------ ------------
Total liabilities 167,326 169,389
------------ ------------
Partners' capital:
Limited partners - 1,672,556 units outstanding 45,390 44,188
General partner 458 446
------------ ------------
Total partners' capital 45,848 44,634
------------ ------------
Total liabilities and partners' capital $ 213,174 $ 214,023
============ ============
</TABLE>
See notes to consolidated financial statements.
Page 3
<PAGE> 4
HALLWOOD REALTY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER UNIT AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
1999 1998
------------ ------------
<S> <C> <C>
REVENUES:
Property operations $ 14,338 $ 13,676
Interest 221 147
------------ ------------
Total revenues 14,559 13,823
------------ ------------
EXPENSES:
Property operations 5,836 5,591
Interest 3,379 3,183
Depreciation and amortization 3,025 3,078
General and administrative 1,105 902
------------ ------------
Total expenses 13,345 12,754
------------ ------------
INCOME BEFORE EXTRAORDINARY ITEM 1,214 1,069
Extraordinary item -
Loss on early extinguishment of debt -- (1,611)
------------ ------------
NET INCOME (LOSS) $ 1,214 $ (542)
============ ============
ALLOCATION OF NET INCOME (LOSS):
Limited partners $ 1,202 $ (537)
General partner 12 (5)
------------ ------------
Total $ 1,214 $ (542)
============ ============
NET INCOME (LOSS) PER UNIT AND
POTENTIAL UNIT:
Earnings per unit - basic
Income before extraordinary item $ .72 $ .63
Loss on early extinguishment of debt -- (.95)
------------ ------------
Net income (loss) $ .72 $ (.32)
============ ============
Earnings per unit -assuming dilution
Income before extraordinary item $ .69 $ .61
Loss on early extinguishment of debt -- (.92)
------------ ------------
Net income (loss) $ .69 $ (.31)
============ ============
WEIGHTED AVERAGE UNITS USED IN
COMPUTING NET INCOME (LOSS) PER UNIT
AND POTENTIAL UNIT:
Basic 1,673 1,673
============ ============
Assuming dilution 1,740 1,739
============ ============
</TABLE>
See notes to consolidated financial statements.
Page 4
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HALLWOOD REALTY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 1,214 $ (542)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 3,025 3,078
Loss on early extinguishment of debt -- 1,611
Amortization of mortgage principal forgiveness -- (425)
Lease concessions (228) (85)
Changes in assets and liabilities:
Receivables (226) (85)
Deferred lease commissions (566) (600)
Prepaid expenses and other assets 258 (981)
Accounts payable and other liabilities (1,435) (497)
------------ ------------
Net cash provided by operating activities 2,042 1,474
------------ ------------
INVESTING ACTIVITIES:
Property and tenant improvements (743) (1,103)
------------ ------------
Net cash used in investing activities (743) (1,103)
------------ ------------
FINANCING ACTIVITIES:
Mortgage principal proceeds -- 34,000
Mortgage principal refinanced -- (28,707)
Mortgage prepayment penalty -- (1,465)
Mortgage principal payments (628) (826)
Loan reserves -- (550)
Loan fees -- (849)
------------ ------------
Net cash provided by (used in) financing activities (628) 1,603
------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS 671 1,974
BEGINNING CASH AND CASH EQUIVALENTS 14,497 6,665
------------ ------------
ENDING CASH AND CASH EQUIVALENTS $ 15,168 $ 8,639
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid in cash during the period $ 3,259 $ 3,687
============ ============
</TABLE>
See notes to consolidated financial statements.
Page 5
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HALLWOOD REALTY PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(UNAUDITED)
1 ORGANIZATION AND ACCOUNTING POLICIES
Hallwood Realty Partners, L.P. ("HRP"), a publicly traded Delaware limited
partnership, operates in the commercial real estate business segment. HRP's
activities include the acquisition, ownership and operation of its
commercial real estate assets. The limited partners' interests, or units,
are traded on the American Stock Exchange under the symbol "HRY".
As of March 31, 1999, there were 1,672,556 units outstanding.
Hallwood Realty, LLC ("Realty" or the "General Partner"), a Delaware
limited liability company and wholly-owned subsidiary of The Hallwood Group
Incorporated ("Hallwood"), is HRP's general partner and is responsible for
asset management of HRP and its real estate properties. Hallwood Commercial
Real Estate, LLC ("HCRE"), another wholly-owned subsidiary of Hallwood,
provides property management services for HRP's real estate properties.
The accompanying unaudited consolidated financial statements of Hallwood
Realty Partners, L.P. have been prepared in accordance with generally
accepted accounting principles for the interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnote
disclosures required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation have been
included.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of certain assets,
liabilities, revenues, and expenses as of and for the reporting periods.
Actual results may differ from these estimates.
Operating results for the three months ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1999. These financial statements should be read in
conjunction with the audited consolidated financial statements and related
disclosures thereto included in Form 10-K for the year ended December 31,
1998.
2 TRANSACTIONS WITH RELATED PARTIES
Realty and HCRE are compensated for services provided to HRP and its real
estate properties and are set forth in the following table for the periods
presented (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
ENTITY MARCH 31,
PAID OR ---------------------
REIMBURSED 1999 1998
---------- -------- --------
<S> <C> <C> <C>
Asset management fee Realty $ 123 $ 121
Reimbursements of costs (a) Realty 718 646
Property management fee HCRE 410 391
Lease commissions HCRE 416 387
Construction fees HCRE 95 57
</TABLE>
(a) These costs are mostly recorded as general and administrative
expenses and represent reimbursement to Realty, at cost, for
partnership level salaries, employee and director insurance, and
certain overhead costs. HRP pays, on a monthly basis, the
balance of its account with Realty.
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HALLWOOD REALTY PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(UNAUDITED)
3 COMPUTATION OF NET INCOME (LOSS) PER UNIT
Basic earnings per unit is computed by dividing net income attributable to
the limited partners' interests by the weighted average number of units
outstanding. Earnings per unit assuming dilution is computed by dividing
net income attributable to the limited partners' interests by the weighted
average number of units and potential units outstanding. Options to acquire
units were issued during 1995 and are considered to be potential units. The
number of potential units is computed using the treasury stock method which
assumes that the increase in the number of units is reduced by the number
of units which could have been repurchased by HRP with the proceeds from
the exercise of these options. The following table illustrates the amounts
used to calculate the weighted average number of units outstanding:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Weighted average units outstanding - basic 1,673 1,673
Issuance of units from options 86 86
Repurchase of units from unit option proceeds (19) (20)
------------ ------------
Weighted average units outstanding - assuming dilution 1,740 1,739
============ ============
</TABLE>
4 LITIGATION
Reference is made to Note 9 to the audited consolidated financial
statements contained in Form 10-K for the year ended December 31, 1998.
Beginning in 1997, HRP has been involved in two lawsuits with Gotham
Partners, L.P. The first complaint seeks access to certain books and
records of HRP, a list of the limited partners and reimbursement of the
plaintiff's expenses. The second complaint alleges claims of breach of
fiduciary duties, breach of HRP's partnership agreement, fraud, and as to
Hallwood, aiding and abetting these alleged breaches.
On June 27, 1997, the parties entered into a Stipulation and Order under
which HRP provided to plaintiff copies of certain of the documents
requested. The other claims in the two actions remain outstanding.
On August 27, 1997, defendants moved to dismiss the complaint in the
separate action for plaintiff's failure either to make a demand on the
general partner to bring suit or to allege adequately that such a demand
was futile. On February 6, 1998, the Court granted defendants' motion to
dismiss but gave plaintiff thirty days to file an amended complaint.
Plaintiffs filed an amended complaint on March 6, 1998, which defendants
again moved to dismiss.
This motion was denied and the parties are proceeding with discovery.
HRP's management believes that the claims are without merit and intend to
defend the cases vigorously, but because of their early stages, cannot
predict the outcome of the claims or any possible effect an adverse outcome
might have.
HRP is from time to time involved in various legal proceedings and claims
which arise in the ordinary course of business. These matters are generally
covered by insurance. Management believes that the resolution of these
matters will not have a material adverse effect on HRP's financial
position, cash flow or operations.
Page 7
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HALLWOOD REALTY PARTNERS, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, LIQUIDITY AND CAPITAL RESOURCES
RESULTS OF OPERATIONS
FIRST QUARTER 1999 COMPARED TO FIRST QUARTER 1998
REVENUE FROM PROPERTY OPERATIONS increased $662,000, or 4.8%, for the first
quarter of 1999, compared to the 1998 first quarter. The following table
illustrates the components of the change, in thousands:
<TABLE>
<S> <C>
Rental income, net $ 247
Expense recoveries 114
Other property income 301
-------
Net increase $ 662
=======
</TABLE>
Overall, net rental income increased due to higher rental rates, partially
offset by a temporary and slight decline in average occupancy between the
comparable periods from 94.0% to 92.3%. Expense recoveries remained relatively
stable in comparison to the prior year. Other property income increased due to
the receipt of non-recurring parking revenues and due to an increase in
tenants' utility cost reimbursements.
INTEREST INCOME increased $74,000 as a result of additional earnings on
overnight investments due to higher average cash balances available for
investment between the periods.
PROPERTY OPERATING EXPENSES increased $245,000, or 4.4%, for the first quarter
of 1999, compared to the same period in 1998. The increase is comprised of the
following components:
o Snow removal costs increased $95,000 due to a milder 1998 winter.
o Management fees increased $21,000 due to the increase in net rental
income mentioned above.
o Combined all other operating costs increased $129,000, or 2.3%,
between the periods.
INTEREST EXPENSE increased $196,000, or 6.2%, for the first quarter of 1999 as
compared to the same period in 1998. The 1998 period included $425,000 of
non-cash amortization of First Maryland's loan forgiveness, which was
eliminated in November 1998 as the result of the retirement and refinancing of
that loan. Partially offsetting this was a reduction in cash mortgage interest
of $221,000, primarily as the result of reduced contractual interest rates from
1998 loan refinancings, and due to lower miscellaneous interest of $8,000.
DEPRECIATION AND AMORTIZATION EXPENSE was consistent with the prior year
quarter, decreasing only $53,000, or 1.7%.
GENERAL AND ADMINISTRATIVE EXPENSES increased $203,000, or 22.5%, for the first
three months of 1999, as compared to 1998's first three months, as a result of
an increase in legal fees of $133,000 primarily due to the Gotham litigation
(see Note 4 to the consolidated financial statements) and due to increases in
salaries and Michigan's state franchise taxes.
LOSS ON EARLY EXTINGUISHMENT OF DEBT of $1,611,000 in the 1998 period
represents a prepayment penalty of $1,465,000 incurred with the early payoff of
a loan secured by Executive Park and the write off of $146,000 of unamortized
loan costs associated with the retired loan.
Page 8
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HALLWOOD REALTY PARTNERS, L.P.
LIQUIDITY AND CAPITAL RESOURCES
HRP is engaged in the acquisition, ownership and operation of commercial real
estate assets. While it is the General Partner's intention to operate HRP's
existing real estate investments and to acquire and operate additional real
estate investments, Realty also continually evaluates each of HRP's real estate
investments in light of current economic trends and operations to determine if
any should be considered for disposal.
As of March 31, 1999, HRP owned twelve real estate properties located in six
states containing 5,158,000 net rentable square feet. HRP seeks to maximize the
value of its real estate by making capital and tenant improvements, by
executing marketing programs to attract and retain tenants, and by controlling
or reducing, where possible, operating expenses.
HRP's cash position increased $671,000 during the first three months of 1999
from $14,497,000 as of December 31, 1998 to $15,168,000 as of March 31, 1999.
The source of cash during the period was $2,042,000 of cash provided by
operating activities. The uses of cash during the period were $743,000 of
property and tenant improvements and $628,000 of mortgage principal payments.
Substantially all of the buildings in eleven of HRP's real estate properties
were encumbered by and pledged as collateral under non-recourse mortgages as of
March 31, 1999. HRP has no mortgage loans maturing or requiring balloon
principal payments until the year 2003. Based upon loan amortizations in
effect, HRP is required to pay approximately $1,842,000 of principal payments
during the remainder of 1999.
HRP has estimated and budgeted tenant and capital improvements of approximately
$7,303,000 and lease commissions of about $2,126,000 for 1999. HRP has incurred
$743,000 of tenant and capital improvements and $566,000 of lease commissions
in the first three months of 1999 of these estimates.
Each quarter Realty reviews HRP's capacity to make cash distributions. HRP has
not made any cash distributions since February, 1992.
For the foreseeable future, HRP anticipates that mortgage principal payments,
tenant and capital improvements, and lease commissions will be funded by net
cash from operations. The primary sources of capital to fund any future
acquisitions will be proceeds from the sale or financing of one or more of its
real estate properties.
YEAR 2000 PLAN -
HRP realizes that many of the world's information systems and/or computer
programs currently do not have the ability to recognize four digit date code
fields and accordingly, they do not have the ability to distinguish a year that
begins with "20" instead of the familiar "19". If not corrected, many computer
applications could fail, become unstable, stop working altogether, or create
erroneous or incorrect results. Therefore, many companies and organizations are
spending considerable resources to update and modify their systems for Year
2000 compliance.
HRP developed a program to review and modify, where necessary, its computers,
computer programming and building systems to process transactions and/or
operate in the Year 2000 and beyond. HRP identified that its four primary
business systems, which are vulnerable to the Year 2000 issue, are: (1) General
Ledger/Accounts Payable/Accounts Receivable Systems - These systems were
modified by the vendor at no cost to HRP during the third quarter of 1998 and
are now Year 2000 compliant. (2) Commercial Lease Administration - The system
used by HRP is Year 2000 compliant. (3) K-1 Processing - HRP maintains data
used to process its partners Schedule K-1's for tax reporting purposes in an
environment that is not Year 2000 compliant. HRP has selected a tested and
compliant system which will be installed in 1999 at minimal cost. (4) Payroll -
Year 2000 compliant software was purchased and installed in the fourth quarter
of 1998 at minimal cost.
Additionally, HRP is surveying all of its significant service providers and
other external parties to determine their compliance with the Year 2000 issue
and what impact, if any, their efforts will have on HRP's business and
operations. This survey includes the identification of certain on-site,
non-information technology systems that may be Year 2000 sensitive. Once these
systems have been fully identified , we will determine, with the help of
outside vendors, whether these systems are vulnerable to the Year 2000 issue.
Potential non-information technology systems include, but are not
Page 9
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HALLWOOD REALTY PARTNERS, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) -
limited to, access gates, alarms, elevators, heating and air conditioning
systems, irrigation systems, security systems, thermostats, and utility meters
and switches. HRP anticipates finalizing its survey of service providers and
vendors during the third quarter of 1999.
HRP will utilize external and internal resources to reprogram, replace and test
its systems for Year 2000 modifications. HRP anticipates completing the Year
2000 project, which includes repairing or replacing any vulnerable systems, by
September 30, 1999. Total costs, including information and non-information
technology systems, are not expected to exceed $100,000. In the event that a
system will not be Year 2000 compliant, HRP will assess the potential risk and,
to the extent it is feasible, transfer its business to an alternate vendor.
Although HRP believes that it will not have any detrimental effects on its
operations from Year 2000 compliance issues, there can be no assurance that the
systems of other companies, on which HRP's systems may rely, will be converted
timely, or converted in a manner that is compatible with HRP's systems, or that
any such failures by such other companies would not have a material adverse
effect or risk to HRP. HRP plans to devote all necessary resources to resolve
any such unforseen issues in a timely manner. In the event of a complete
failure of our information technology systems, HRP would be able to continue
the affected functions either manually or through the use of non-Year 2000
compliant systems. The primary costs associated with such a necessity would
probably include increased time delays associated with posting of information,
and increased personnel to manually process the information. HRP does not
currently have a contingency plan in place and believes, based upon current
knowledge, that one is not needed.
The cost of Year 2000 compliance and the estimated date of completion of
necessary modifications are based on HRP's best estimates, which were derived
from various assumptions of future events, including the continued availability
of certain resources, third party modification plans and other factors.
However, there can be no guarantee that these estimates will be achieved and
actual results could differ significantly from those anticipated.
FORWARD-LOOKING STATEMENTS -
In the interest of providing investors with certain information regarding HRP's
future plans and operations, certain statements set forth in this Form 10-Q
relate to management's future plans and objectives. Such statements are
forward- looking statements. Although any forward-looking statements contained
in this Form 10-Q or otherwise expressed by or on behalf of HRP are, to the
knowledge and in the judgment of the officers and directors of the General
Partner, expected to prove true and come to pass, management is not able to
predict the future with absolute certainty. Although HRP believes that the
assumptions underlying the forward-looking statements are reasonable, any of
the assumptions could be inaccurate and, therefore, there can be no assurance
that the forward-looking statements will prove to be accurate.
Forward-looking statements involve known and unknown risks and uncertainties,
which may cause HRP's actual performance and financial results in future
periods to differ significantly from any projection, estimate or forecasted
result. These risks and uncertainties include, among other things, future
economic, competitive and market conditions and future business decisions, all
of which are difficult or impossible to predict accurately and many of which
are beyond the control of HRP; other risks and uncertainties may be described,
from time to time, in HRP's periodic reports and filings with the Securities
and Exchange Commission.
In addition, the dates for completion of HRP's Year 2000 plan are based on its
best estimates, which were derived using numerous assumptions of future events.
Due to the general uncertainty inherent in the Year 2000 issue, resulting in
part from the uncertainty of the Year 2000 readiness of third-parties and the
interconnection of computer systems, HRP cannot ensure its ability to timely
and cost-effectively resolve problems associated with the Year 2000 issue that
may affect its operations and business. Accordingly, partners and potential
investors are cautioned that certain events or circumstances could cause actual
results to differ significantly from those projected, estimated or predicted.
Page 10
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HALLWOOD REALTY PARTNERS, L.P.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to HRP's market risks during the three
months ended March 31, 1999.
QUALITATIVE INFORMATION -
HRP's primary risk management strategy is to manage its exposure to adverse
changes in interest rates by issuing fixed rate debt, where possible. HRP
attempts to manage the exposure to adverse changes in the fair value of its
fixed rate debt by issuing fixed rate debt when business and markets conditions
are favorable. There is inherent rollover risk for borrowings as they mature
and are renewed at the then current market rates. The extent of this risk is
not quantifiable or predictable because of the variability of future interest
rates and HRP's future financing requirements. HRP does not hold or issue
derivative financial instruments for trading purposes. As part of HRP's
financing activity, a derivative security was used for the sole purpose of
fixing the interest rate of HRP's only variable rate debt instrument.
SPECIFIC AND QUANTITATIVE INFORMATION -
HRP's derivative instrument, which is matched directly against an outstanding
borrowing is a "pay fixed / receive variable" interest rate swap with a highly
rated counterparty in which the interest payments are calculated on a notional
amount. The notional amount does not represent amounts exchanged by the parties
and thus are not a measure of exposure to HRP through its use of the
derivative. HRP is exposed to credit-related gains or losses in the event of
non-performance by counterparties to this financial instrument; however, HRP
does not expect any counterparties to fail to meet their obligations. The
interest rate swap is described as follows (in thousands):
<TABLE>
<CAPTION>
Variable Rate as of March 31, 1999
----------------------------------
Fair Value
Notional Amount Maturity Date Fixed Rate % % Based On of Swap (a)
- --------------- --------------- ------------ ------ ---------- ------------
<S> <C> <C> <C> <C> <C>
$ 25,000 April 30, 2006 6.87% 6.26% 30 day $ 366
LIBOR
</TABLE>
(a) The estimated amount that HRP would receive upon termination of its
interest rate swap agreement as of March 31, 1999 was based on a quote
received from the lender.
Page 11
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HALLWOOD REALTY PARTNERS, L.P.
PART II - OTHER INFORMATION
<TABLE>
<CAPTION>
Item
<S> <C> <C>
1 Legal Proceedings None.
2 Changes in Securities and Use of Proceeds None.
3 Defaults upon Senior Securities None.
4 Submission of Matters to a Vote of Security Holders None.
5 Other Information None.
6 Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule Page 14
(b) Reports on Form 8-K None.
</TABLE>
Page 12
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HALLWOOD REALTY PARTNERS, L.P.
SIGNATURE
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.
HALLWOOD REALTY PARTNERS, L.P.
------------------------------------------------
(Registrant)
By: HALLWOOD REALTY, LLC
General Partner
Date: May 5, 1999 By: /s/ JEFFREY D. GENT
--------------------------------------------
Jeffrey D. Gent
Vice President - Finance
(Principal Financial and Accounting Officer)
Page 13
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 15,168
<SECURITIES> 0
<RECEIVABLES> 1,682
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 335,987
<DEPRECIATION> 161,891
<TOTAL-ASSETS> 213,174
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 45,390
<OTHER-SE> 458
<TOTAL-LIABILITY-AND-EQUITY> 213,174
<SALES> 0
<TOTAL-REVENUES> 14,559
<CGS> 0
<TOTAL-COSTS> 8,861
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,379
<INCOME-PRETAX> 1,214
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,214
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,214
<EPS-PRIMARY> 0.72
<EPS-DILUTED> 0.69
</TABLE>
