<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
- --- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------- --------
Commission file number 33-45291
--------
Winthrop Miami Associates Limited Partnership
---------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 04-3131735
------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer Id. 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 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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<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
PART I - FINANCIAL INFORMATION
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Item 1. Consolidated Financial Statements
(In Thousands, Except Unit Data) For the Three Month Period For the Nine Month Period
Ended September 30, Ended September 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Rental income $ 3,164 $ 2,899 $ 9,211 $ 8,594
Operating expense and tax escalation
reimbursements ............................... 187 136 468 358
Interest income................................. 71 100 234 371
--------- --------- -------- ----------
Total Revenues.............................. 3,422 3,135 9,913 9,323
--------- --------- -------- ----------
EXPENSES:
Repairs and maintenance......................... 321 289 1,000 906
Utilities....................................... 318 286 903 825
Payroll......................................... 146 150 443 443
Security ....................................... 113 90 321 288
Lease costs and rental expense.................. 224 213 680 675
Insurance....................................... 41 38 123 110
Real estate and other taxes..................... 458 415 1,369 1,216
Management fees ................................ 171 142 495 433
General and administrative...................... 66 79 294 326
Interest expense................................ 1,215 1,215 3,645 3,605
Depreciation and amortization................... 778 736 2,275 2,156
--------- --------- -------- ----------
Total Expenses............................... 3,851 3,653 11,548 10,983
--------- --------- -------- ----------
Net Operating Loss................................. (429) (518) (1,635) (1,660)
Gain due to refinancing....................... -- -- -- 1,895
--------- --------- -------- ----------
Net Income (loss) before minority interest......... (429) (518) (1,635) 235
Minority interest in (income) loss................. 50 52 193 (30)
--------- --------- -------- ----------
Net Income (loss).................................. $ (379) $ (466) $ (1,442) $ 205
--------- --------- -------- ----------
NET INCOME (LOSS) ALLOCATED TO
GENERAL PARTNER................................. $ (39) $ (47) $ (145) $ 21
========== ========= ======== =========
NET INCOME (LOSS) ALLOCATED TO
INVESTOR LIMITED PARTNERS....................... $ (340) $ (419) $ (1,297) $ 184
========== ========= ======== =========
Net Income (Loss) Per Investor
Limited Partner Unit............................ $ (1,259) $ (1,554) $ (4,804) $ 685
========== ========= ======== =========
Number of Investor Limited Partner
Units Outstanding.............................. 270 270 270 270
========== ========= ======== =========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
FOR SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
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ASSETS (Amounts in Thousands)
- ------
<TABLE>
<CAPTION>
1998 1997
(Unaudited) (Audited)
----------- ---------
<S> <C> <C>
Building and improvements, net of accumulated
depreciation of $13,528 and $12,240, respectively.................. $ 47,542 $ 47,675
Tenant receivables, net of allowance for doubtful accounts of
$20 and $20, respectively.......................................... 124 327
Prepaid expenses and other assets...................................... 139 263
Deferred rents receivable.............................................. 4,421 4,254
Deferred costs, net.................................................... 1,400 1,462
Cash and cash equivalents ............................................. 1,983 2,708
Other restricted cash and cash equivalents ............................ 5,761 5,671
---------- ----------
TOTAL ASSETS........................................................ $ 61,370 $ 62,360
========== ==========
<CAPTION>
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
<S> <C> <C>
Liabilities:
Permanent Loan......................................................... $ 51,158 $ 51,158
Prepaid tenant rent.................................................... 323 264
Accounts payable and accrued liabilities............................... 2,028 877
Security deposits...................................................... 356 298
---------- ----------
TOTAL LIABILITIES................................................... 53,865 52,597
Commitments
Minority interest...................................................... 686 957
---------- ----------
Partners' capital (deficit):
General Partner........................................................ (4,232) (4,082)
Limited Partners - 270 units issued and outstanding.................... 11,051 12,888
---------- ----------
TOTAL PARTNERS' CAPITAL............................................. 6,819 8,806
---------- ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL............................. $ 61,370 $ 62,360
========== ==========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(UNAUDITED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
- ------------------------------------------------------------------------------
(Amounts in Thousands)
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
-------- ------- -----
<S> <C> <C> <C>
Balance, December 31, 1997....................... $ 12,888 $(4,082) $ 8,806
Net loss......................................... (1,297) (145) (1,442)
Distributions.................................... (540) (5) (545)
--------- -------- ---------
Balance, September 30, 1998...................... $ 11,051 $(4,232) $ 6,819
========= ======== ========
Balance, December 31, 1996 ...................... $ 16,086 $(4,000) $ 12,086
Distribution Payable............................. (2,700) (27) (2,727)
Net Income....................................... 184 21 205
-------- -------- --------
Balance, September 30, 1997...................... $ 13,570 $(4,006) $ 9,564
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
- ------------------------------------------------------------------------------
(Amounts in Thousands)
<TABLE>
<CAPTION>
1998 1997
-------- ------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................................................... $ (1,442) $ 205
Minority interest in income (loss)................................... (193) 30
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization..................................... 2,275 2,156
Bad debt recovery ................................................ -- (7)
Changes in operating assets and liabilities:
Decrease in tenant and other receivables........................ 203 83
Decrease in prepaid expenses and other assets................... 124 182
Increase in deferred rents receivable........................... (167) (490)
Increase in accounts payable, accrued liabilities
and security deposits......................................... 1,209 611
Decrease in due to affiliates................................... -- (56)
Increase in prepaid tenant rent................................. 59 109
Decrease in accrued interest payable............................ -- (2,020)
--------- --------
Net cash provided by operating activities....................... 2,068 803
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in restricted cash and cash equivalents .................... (90) (4,278)
Expenditures for building and improvements........................... (1,879) (576)
Deferred costs....................................................... (201) (275)
--------- --------
Net cash used in investing activities........................... (2,170) (5,129)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid to partners....................................... (545) (2,727)
Net withdrawals from mortgage escrow................................. -- 1,447
Distributions paid to minority partner............................... (78) (174)
Minority interest capital contributions received..................... -- 61
--------- -------
Net cash provided by financing activities....................... (623) (1,393)
--------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.................... (725) (5,719)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD....................... 2,708 8,423
--------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD............................. $ 1,983 $ 2,704
========= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest............................................... $ 3,645 $ 3,730
========= =======
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Gain from refinancing (see note 5)................................... $ -- $ 1,895
========= =======
Retirement of fully depreciated assets............................... $ 1,490 $ --
========= =======
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
1. General
The accompanying consolidated financial statements, footnotes and
discussions of Winthrop Miami Associates Limited Partnership (the
"Partnership") should be read in conjunction with the 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 September 30, 1998 presentation.
The balance sheet at December 31, 1997 was derived from audited
financial statements at such date.
The results of operations for the nine months ended September 30,
1998 and 1997 are not necessarily indicative of the results to be
expected for the full year.
2. Related Party Transactions
Management fees are paid to an affiliate of the General Partner and
are based on 5% of cash receipts. Fees of $495,000 and $433,000 were
earned by affiliates during the periods ending September 30, 1998 and
September 30, 1997, respectively.
The Operating Partnerships owed management fees to an affiliate of
the General Partner $63,000 and $50,000 at September 30, 1998 and
September 30, 1997 respectively.
3. Sale of the Permanent Loan
On May 28, 1997, AP Nations LLC, a related party, acquired the
outstanding balance of the permanent loan together with contractual
interest due of $14,357,938 from the FDIC for $47,000,000. The
accrued interest was capitalized and consolidated with the principal
balance into a single note (the "Consolidated Note"). The
Consolidated Note was then restructured into two separate notes (the
"First Note" and the "Subordinated Note"). The First Note of
$40,000,000, which is held by Travelers Life Insurance Company, bears
interest at Libor plus 180 basis points (7.47% at June 30, 1998) and
is collateralized by the office tower and retail space. The first
note was assigned to Travelers Life Insurance Company on May 30,
1997.
The Subordinate Note in the amount of $11,157,938, which is held by
AP Nations LLC, bears interest at 9.5% per annum plus 9.5% per annum
on the outstanding principal balance on the First Note less the
amount of interest due and payable with respect to the First Note.
The Subordinate Note is collateralized by the general partnership
interest in the operating partnerships.
In connection with the new loan agreement, an interest rate
protection agreement was entered into to provide the operating
partnership with funds should the First Note interest exceed 9.5% per
annum.
The First Note and Subordinate Note combined require interest only
payments until July 1999 when principal payments of $48,660 per month
begin. The stated maturity date of the loans is May 30, 2001.
As a result of the restructuring, the operating partnerships
recognized an extraordinary gain of approximately $1,845,000 for
financial reporting purposes.
6
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- ------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis or Plan of Operation
---------------------------------------------------------
This item should be read in conjunction with the financial statements
and other items contained elsewhere in the report.
Liquidity and Capital Resources
-------------------------------
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.) The discussion of the Partnership's business 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 business and results of 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.
The Registrant's sole assets are its approximately 88% interest in
each of Miami Tower Associates Limited Partnership ("Miami Tower")
and Miami Retail Associates Limited Partnership ("Miami Retail").
Miami Tower and Miami Retail (collectively, the "Operating
Partnerships") own a 37-story commercial office building located in
Miami, Florida and a ground floor retail arcade located in the same
building, respectively (the "Property"). The Operating Partnerships
generate rental revenue from the Property and are responsible for the
Property's operating expenses, administrative expenses, debt service
and capital improvements.
In October 1998, the General Partner of the Registrant hired an
unaffiliated third party broker to market for sale all of the
Operating Partnership's property. The General Partner believes that,
as a result of the recovery of the overall area economy, the property
is well positioned for sale. There have been no offers made to date.
The Registrant's primary source of revenue is distributions from the
cash flow of the Operating Partnerships. In April 1998 the Operating
Partnerships made aggregate distributions of $545,000 to the
Registrant and $78,000 to the minority partner. The Registrant used
cash reserves to satisfy administrative and other expenses during the
nine months ended September 30, 1998. In addition, in April 1998 the
Registrant distributed $545,000 to its partners ($2,000 per unit).
As of September 30, 1998, the Registrant had cash and cash
equivalents of $1,983,000. The Registrant's and the Operating
Partnership's level of liquidity, on a consolidated basis, decreased
$725,000 during the nine months ended September 30, 1998, as compared
to December 31, 1997. This decrease was due to $2,170,000 of cash
used in investing activities and distributions of $623,000 which were
partially offset by $2,068,000 in cash provided by operating
activities. Cash used by investing activities consisted of $1,879,000
of additions to building and improvements and $201,000 of deferred
leasing commissions paid and $90,000 transferred to restricted cash.
On May 28, 1997, AP Nations LLC, a related party, acquired the
outstanding balance of the permanent loan together with contractual
interest due of $14,357,938 from the FDIC for $47,000,000. The
accrued interest was capitalized and consolidated with the principal
balance into a single note (the "Consolidated Note"). The
Consolidated Note was then restructured into two separate notes (the
"First Note" and the "Subordinated Note"). The First Note of
$40,000,000, which is held by Travelers Life Insurance Company, bears
interest at Libor plus 180 basis points (7.44% at September 30, 1998)
and is collateralized by the office tower and retail space. The first
note was assigned to Travelers Life Insurance Company on May 30,
1997.
7
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- ------------------------------------------------------------------------------
Liquidity and Capital Resources (continued)
-------------------------------------------
The Subordinate Note in the amount of $11,157,938, which is held by
AP Nations LLC, bears interest at 9.5% per annum plus 9.5% per annum
on the outstanding principal balance on the First Note less the
amount of interest due and payable with respect to the First Note.
The Subordinate Note is collateralized by the general partnership
interest in the Operating Partnerships.
In connection with the new loan agreement, an interest rate
protection agreement was entered into to provide the operating
partnership with funds should the First Note interest exceed 9.5% per
annum.
The First Note and Subordinate Note combined require interest only
payments until July 1999 when principal payments of $48,660 per month
begin. The stated maturity date of the loans is May 30, 2001.
As a result of the restructuring, the operating partnerships
recognized an extraordinary gain of approximately $1,845,000 for
financial reporting purposes.
The Registrant has invested and expects to continue to invest its
unrestricted cash in money market instruments until required for
operating purposes. The operating partnership had in capital
improvement, real estate taxes and security deposit escrows at
September 30, 1998, $3,533,000; $1,705,000; and $357,000
respectively, held by the mortgage lender. Restricted cash also
includes a utility deposit of $166,000. Therefore, at September 30,
1998, the Registrant has total reserves of $5,761,000, which is
expected to be sufficient to satisfy foreseeable working capital
requirements.
Results of Operations
---------------------
The Net Operating Loss before minority interest of the Operating
Partnerships and Gain due to refinancing decreased by $25,000 for the
nine months ended September 30, 1998, as compared to the nine months
ended September 30, 1997 as a result of a $590,000 increase in
revenues which was partially offset by a $565,000 increase in
expenses. The Net Operating Loss before minority interest of the
Partnership and Gain due to refinancing decreased by $89,000 for the
three months ended September 30, 1998, as compared to 1997, as a
result of a $287,000 increase in revenues which was partially offset
by a $198,000 increase in expenses.
Revenues increased for the nine months ended September 30, 1998, as
compared to 1997, due to increases in rental income of $617,000 and
operating expense reimbursements of $110,000, which was partially
offset by a decrease in interest income of $137,000. Rental revenues
increased due to an increase in rental rates from $23.17 per square
foot to $24.24 per square foot and an increase in occupancy from 85%
to 91%.
8
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- ------------------------------------------------------------------------------
Results of Operation (continued)
--------------------------------
Expenses for the nine months ended September 30, 1998, as compared to
1997, increased due to increases in real estate taxes ($153,000),
depreciation and amortization ($119,000), interest expense ($40,000),
utilities ($78,000), repairs and maintenance ($94,000) and management
fees ($62,000). Real estate taxes increased due to an abatement filed
for and received for calendar 1997. Depreciation and amortization
increased because of the new additions in 1998. Interest expense
increased for financial reporting purposes as a result of the
modification of the Permanent Loan. Prior to the modification,
interest expense was reported using the effective interest method
that resulted in a level yield interest rate of 8.64%. The accrual
interest rate under the restated and amended loan is 9.5%. Utilities
increased in 1998 due to occupancy and the decrease in tenant
overtime reimbursements. Repairs and maintenance increased due to
higher contract prices. Management fees went up due to higher rent
collections. All other expense items remain relatively constant for
the comparative periods.
9
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
PART II - OTHER INFORMATION
- ------------------------------------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8K:
No Reports of Form 8-K were filed during the nine months ended
September 30, 1998.
10
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
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.
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
(Registrant)
BY: ONE INTERNATIONAL ASSOCIATES
LIMITED PARTNERSHIP,
ITS GENERAL PARTNER
BY: ONE INTERNATIONAL, INC.
ITS 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: November 12, 1998
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from unaudited
financial statements for the nine month period ending September 30, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 1,983,000
<SECURITIES> 0
<RECEIVABLES> 4,565,000
<ALLOWANCES> (20,000)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 61,070,000
<DEPRECIATION> (13,528,000)
<TOTAL-ASSETS> 61,370,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,819,000
<TOTAL-LIABILITY-AND-EQUITY> 61,370,000
<SALES> 9,211,000
<TOTAL-REVENUES> 9,913,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,609,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,645,000
<INCOME-PRETAX> (1,442,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,422,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,422,000)
<EPS-PRIMARY> (4,804)
<EPS-DILUTED> (4,804)
</TABLE>
