SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
- - - - - - - - - - - - -
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1996
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 033-80104
GRANITE DEVELOPMENT PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 34-1754061
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10800 Brookpark Road Cleveland, Ohio 44130
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 216-267-1200
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
PART I. FINANCIAL INFORMATION
<TABLE>
GRANITE DEVELOPMENT PARTNERS, L.P.
(A Delaware Limited Partnership)
BALANCE SHEETS
<CAPTION>
April 30, January 31,
1996 1996
---------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
LAND $11,569,615 $11,567,790
LAND IMPROVEMENTS 787,757 711,034
----------- -----------
12,357,372 12,278,824
RESTRICTED CASH EQUIVALENTS 3,951,000 1,308,453
MORTGAGE NOTES RECEIVABLE 4,071,151 4,413,089
INVESTMENTS IN AND ADVANCES TO
JOINT VENTURES 23,422,786 22,686,561
OTHER ASSETS
Mortgage procurement costs, net of
accumulated amortization of
$1,088,977 at April 30, 1996 and
$973,515 at January 31, 1996 1,166,724 1,282,186
Organization costs, net of
accumulated amortization of
$327,033 at April 30, 1996 and
$287,034 at January 31, 1996 421,084 461,083
Cash 97,000 3,635,578
Interest receivable 4,280,402 3,701,612
Administrative fee receivable 15,000 -
----------- -----------
5,980,210 9,080,459
----------- -----------
$49,782,519 $49,767,386
=========== ===========
LIABILITIES, WARRANTS,
PARTNERS' SPECIAL UNITS
& PARTNERS' DEFICIT
SENIOR NOTES PAYABLE $36,000,000 $36,000,000
MORTGAGE NOTES PAYABLE 5,010,025 5,110,025
LOAN PAYABLE - SUNRISE 921,768 731,768
OTHER LIABILITIES
Accounts payable 58,168 133,935
Accrued fees, partners 201,630 173,220
Accrued interest 1,971,173 971,116
Accrued real estate taxes 182,228 281,885
Deposits 1,644,886 1,618,514
Deferred income 3,863,086 3,368,908
----------- -----------
7,921,171 6,547,578
WARRANTS (TEMPORARY) 1,000,080 1,000,080
PARTNERS' EQUITY (DEFICIT)
Partners' special units 9,000,000 9,000,000
Partners' deficit (10,070,525) (8,622,065)
----------- ----------
(1,070,525) 377,935
----------- ----------
$49,782,519 $49,767,386
=========== ===========
<FN>
See notes to financial statements.
</FN>
</TABLE>
<TABLE>
GRANITE DEVELOPMENT PARTNERS, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended
April 30,
---------------------------
1996 1995
----------- -----------
<S> <C> <C>
REVENUES
Sales of developed property $ - $ -
Cost of sales - -
----------- -----------
- -
Interest 183,203 157,465
Other 15,543 19,133
----------- -----------
198,746 176,598
----------- -----------
EXPENSES
Interest 1,114,441 992,546
Fees, partners 201,630 246,318
Real estate taxes 97,503 164,135
Operating and other 65,934 31,325
Amortization 155,461 148,469
----------- -----------
1,634,969 1,582,793
----------- -----------
(1,436,223) (1,406,195)
Income (loss) from joint
ventures (12,237) 29,298
----------- -----------
NET LOSS $(1,448,460) $(1,376,897)
=========== ===========
<FN>
See notes to financial statements.
</FN>
</TABLE>
<TABLE>
GRANITE DEVELOPMENT PARTNERS, L.P.
(A Delaware Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
<CAPTION>
Sunrise FC-Granite,
Land Co. Inc. Total
-------- ------------ ------------
<S> <C> <C> <C>
Balance at November 15, 1993 $ - $ - $ -
(inception)
Initial capital contribution 100 300 400
Capital contribution - 1,000,000 1,000,000
Reduction of partners' equity
related to contribution
of land - (3,137,082) (3,137,082)
Reduction of partners' equity
related to purchase of land
from Sunrise - (1,350,227) (1,350,227)
Net loss - (863,561) (863,561)
-------- ------------ ------------
Balance at January 31, 1994 100 (4,350,570) (4,350,470)
Distribution of interest on
special units - (963,870) (963,870)
Net loss (35,352) (3,499,845) (3,535,197)
-------- ------------ ------------
Balance at January 31, 1995 (35,252) (8,814,285) (8,849,537)
Net income 2,275 225,197 227,472
-------- ------------ ------------
Balance at January 31, 1996 (32,977) (8,589,088) (8,622,065)
Net loss for the three months
ended April 30, 1996 (14,485) (1,433,975) (1,448,460)
-------- ------------ ------------
Balance at April 30, 1996
(unaudited) $(47,462) $(10,023,063) $(10,070,525)
======== ============ ============
<FN>
See notes to financial statements.
</FN>
</TABLE>
<TABLE>
GRANITE DEVELOPMENT PARTNERS, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended
April 30,
--------------------------
1996 1995
----------- ------------
<S> <C> <C>
Cash Flow from Operating Activities:
Net loss $(1,448,460) $ (1,376,897)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Amortization 155,461 148,469
Loss (income) from joint ventures 12,237 (29,298)
Changes in operating assets and liabilities:
Increase in land and land improvements (78,548) (181,543)
(Increase) decrease in restricted
cash equivalents (2,642,547) 3,957,780
Decrease in mortgage notes receivable 341,938 397,937
Increase in interest receivable (578,790) (542,839)
Increase in development fee receivable - (86,733)
Increase in administrative
fee receivable (15,000) (18,750)
Decrease in accounts payable (75,767) (57,702)
Increase in accrued fees, partner 28,410 246,318
Increase in accrued interest 1,000,057 973,586
(Decrease) increase in accrued
real estate taxes (99,657) 151,951
Increase in deposits 26,372 5,000
Increase in deferred income 494,178 502,693
----------- ------------
Net cash (used in) provided by
operating activities (2,880,116) 4,089,972
----------- ------------
Cash Flow from Investing Activities:
Investments in and advances to affiliates (748,462) (4,431,500)
----------- ------------
Net cash used in investing activities (748,462) (4,431,500)
----------- ------------
Cash Flow from Financing Activities:
Proceeds from loan payable - Sunrise 190,000 -
Repayment of mortgage notes payable (100,000) (100,000)
----------- ------------
Net cash provided by (used in)
financing activities 90,000 (100,000)
----------- ------------
Decrease in cash (3,538,578) (441,528)
Cash at beginning of the period 3,635,578 552,074
----------- ------------
Cash at end of the period $ 97,000 $ 110,546
=========== ============
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest $ 114,384 $ 18,960
Real estate taxes $ 197,160 $ 12,184
<FN>
See notes to financial statements.
</FN>
</TABLE>
GRANITE DEVELOPMENT PARTNERS, L.P.
(A Delaware Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
NOTE A - FINANCIAL STATEMENT DISCLOSURES
Certain information and footnote disclosures, which are normally
included in financial statements prepared in accordance with
generally accepted accounting principles, have been condensed or
omitted. It is suggested that these financial statements be read
in conjunction with the financial statements and notes thereto
included in the Partnership's January 31, 1996 Form 10-K Annual
Report.
NOTE B - PARTNERS' SPECIAL UNITS
Until the senior notes payable are paid in full, $9,000,000 of the
partners' special units bear interest at 10.83% and will be paid
pari-passu with interest on the Senior Notes.
Interest earned on the partners' special units amounted to $243,675
for the three months ended April 30, 1996 and has not been
distributed. As of January 31, 1996, $1,183,178 of the interest
earned on the special units remained undistributed. Total interest
earned of $1,426,853 as of April 30, 1996 will be distributed pari-
passu with the interest on the Senior Notes when funds are available.
NOTE C - MORTGAGE NOTES PAYABLE
The Partnership entered into mortgage notes payable aggregating
$1,010,025 and $1,110,025 at April 30, 1996 and January 31, 1996,
respectively, to purchase certain properties. Amounts borrowed of
$842,940 bear interest at a fixed rate of 8% per annum and $167,085
bears interest at two percent (2%) in excess of the prime rate
(8.25% at April 30, 1996). The notes payable are collateralized by
mortgages on the properties. Principal and interest are generally
payable one year after the date of the notes payable.
The Partnership holds a mortgage note payable aggregating
$4,000,000 at April 30, 1996 and January 31, 1996. The note bears
interest at 1.5% in excess of the prime rate and matures on June
12, 1997. The note is collateralized by a mortgage on the 194th
Street Property.
NOTE D - TRANSACTIONS WITH AFFILIATES
FC-Granite and Sunrise are reimbursed for all direct costs of
operations of the Partnership's affairs and development activities.
FC-Granite is paid a monthly administrative fee as compensation for
its services in administering the business of the partnership which
is equal to one-sixth of 1% of the book value of the partnership
properties, as defined. Total administrative fees accrued for the
three months ended April 30, 1996 were $179,967. Outstanding fees
of $67,582 as of January 31, 1996, were paid during the three month
period ended April 30, 1996.
Pursuant to a management agreement, Sunrise is paid a semi-annual
development fee equal to 4% of gross revenues as compensation for
its services in managing the development of the partnership
properties. Total development fees accrued for the three months
ended April 30, 1996 were $11,554. Outstanding fees of $56,340 as
of January 31, 1996, were paid during the three month period ended
April 30, 1996.
In addition, accrued real estate commissions to FC-Granite were
$10,109 for the three months ended April 30, 1996. Outstanding
commissions of $49,298 as of January 31, 1996, were paid during the
three month period ended April 30, 1996.
Pursuant to the Amended and Restated Silver Canyon Partnership
agreement, the Partnership is to receive a monthly administrative
fee in the amount of $5,000 per month. Fees earned as of April 30,
1996 totalled $15,000.
In addition, the Partnership is to receive a commission equal to 1%
of gross sales, as defined in the Amended and Restated Silver
Canyon Partnership agreement, as compensation for its services in
conducting marketing and sales duties and authorization of sales
contracts. No commissions were earned during the three month
period ended April 30, 1996.
The Partnership has advanced $20,191,660 at April 30, 1996 and
$19,443,198 at January 31, 1996 to its joint ventures. Total
interest earned on the advances amounted to $494,178 and $1,883,707
for the three months ended April 30, 1996 and for the year ended
January 31, 1996, respectively, in addition to $873,157 earned in
prior years. The Partnership repaid $37,550 and $3,174,603 was
originally recorded as deferred income. No interest was recognized
as income for the three months ended April 30, 1996. For the year
ended January 31, 1996, $87,084 was recognized as income.
During the three months ended April 30, 1996, Sunrise loaned the
Partnership an additional $190,000 to fund additional development
expenditures. Total funds advanced of $921,768 bear interest at
10% and will be paid back when excess funds are available.
Included in restricted cash equivalents and deposits at April 30,
1996 and January 31, 1996 is $1,118,886 and $1,102,514,
respectively, which represents sales proceeds invested on behalf of
Eaton Estate Partnership in short-term commercial paper. The
funds, together with interest earned, will be returned to the Eaton
Estate Partnership as funding of development expenditures is
needed.
NOTE E - INVESTMENTS IN AND ADVANCES TO JOINT VENTURES
The Partnership has a 33 1/3% interest in Silver Canyon Partnership
and a 30% interest in Eaton Estate Partnership. The Partnership's
investments in Silver Canyon Partnership at April 30, 1996 and
January 31, 1996, were $1,249,880 and $1,301,245, respectively, and
in Eaton Estate Partnership at April 30, 1996 and January 31, 1996,
were $1,979,263 and $1,940,135, respectively.
The Partnership has also advanced $20,191,660 at April 30, 1996 and
$19,443,198 at January 31, 1996 to the partnerships and committed
to contribute, either in the form of a capital contribution or a
loan, an amount equal to $25,750,000 to Silver Canyon Partnership.
Pursuant to the Amended and Restated Partnership Agreement for
Silver Canyon Partnership, funds advanced to Silver Canyon
Partnership as of January 31, 1996, bear interest at ten percent
(10%) and funds advanced subsequent to January 31, 1996 bear
interest at the rate of prime plus 1 3/4% (8.25% at April 30,
1996). Funds advanced to Eaton Estate Partnership bear interest at
prime plus three percent (3%).
For the three months ended April 30, 1996, the Silver Canyon
Partnership generated a net loss of $154,109 primarily attributable
to overhead costs, administrative fees and amortization of mortgage
procurement costs. Of this amount, $51,365 has been recorded by
the Partnership under the equity method. For the year ended
January 31, 1996, the Silver Canyon Partnership generated income of
$615,625, of which $338,594 has been recorded by the Partnership
under the equity method.
For the three months ended April 30, 1996, the Eaton Estate
Partnership generated net income of $130,427. Of this amount,
$39,128 has been recorded by the Partnership under the equity
method. For the year ended January 31, 1996, the Eaton Estate
Partnership generated income of $1,462,021 primarily from the
proceeds from sales of developed property offset by real estate
taxes, commissions, interest and other miscellaneous expenses, of
which $438,606 has been recorded by the Partnership under the
equity method.
NOTE F - JOINT VENTURE STATEMENT OF OPERATIONS
<TABLE>
Shown below is the statement of operations for the Silver Canyon
Partnership:
<CAPTION>
Three Months Ended
April 30,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
REVENUES
Operating income $ 41,712 $ -
EXPENSES
Interest expense - 553
Fees, partners 30,000 18,750
Commissions - -
Legal and professional 14,773 -
Travel and entertainment 7,277 11,117
Real estate taxes - -
Operating and other 107,684 77,039
Depreciation and amortization 36,087 4,630
----------- -----------
195,821 112,089
----------- -----------
NET LOSS $ (154,109) $ (112,089)
=========== ===========
</TABLE>
The enclosed financial statements have been prepared on a
basis consistent with accounting principles applied in the prior
periods and reflect all adjustments which are, in the opinion of
management, necessary for a fair representation of the results of
the operations for the periods presented. All adjustments for the
three months ended April 30, 1996 were of a normal recurring
nature. Results of operations for the three months ended April 30,
1996 are not necessarily indicative of results of operations which
may be expected for the full year.
The following discussion and analysis of Granite Development
Partners, L.P. should be read in conjunction with the audited
financial statements as of January 31, 1996 contained in the Form
10-K Annual Report.
Item 2. Management's Discussion and Analysis of Financial
Condition
Results of Operations
The Partnership recorded no sales for the three months ended
April 30, 1996 and 1995. The Eaton Estate Partnership, a joint
venture of the Partnership accounted for under the equity method,
reported sales of $962,798 for the three months ended April 30,
1996 versus sales of $2,574,733 for the three months ended April
30, 1995. Sales of land and related earnings vary from period to
period, depending on management's decisions regarding the
disposition of significant land holdings.
As of April 30, 1996, the following significant sales were
under contract: the 6.3 acre oceanfront portion of 194th Street in
Miami Beach, Florida for $8,000,000; 5.4 acres of the North Olmsted
Industrial Park for $280,900; a thirteen acre cluster parcel of the
West Grove development in Olmsted Falls, Ohio for $902,000; five
parcels of the Silver Canyon development in Henderson, Nevada for
$16,834,861; and 67 sublots in the Eaton Estate subdivision for
$3,066,213. None of the contracts are guaranteed to close.
Interest income totalled $183,203 for the three months ended
April 30, 1996 versus $157,465 for the three months ended April 30,
1995. Interest income is comprised of interest earned on notes
receivable from the sales of developed property, from funds
advanced to the joint ventures and from the investment of proceeds
from sales in short-term commercial paper. Interest income earned
on funds advanced to the Silver Canyon Partnership is being
deferred. The increase in interest income is due to higher average
restricted cash balances available to invest in short-term
investments.
For the three months ended April 30, 1996 and 1995, the
Partnership reported net losses of $1,448,460 and $1,376,897,
respectively. The increase in net loss is due to an increase in
interest expense. The increase in interest expense is a result of
the addition of the mortgage note payable on the 194th Street
property for $4,000,000 subsequent to the period ended April 30,
1995. The note bears interest at 1.5% in excess of the prime rate.
Financial Condition and Liquidity
Net cash used by operating activities was $2,880,116 for the
three months ended April 30, 1996 versus net cash provided of
$4,089,972 for the three months ended April 30, 1995. During the
three month period ended April 30, 1996, the Partnership maintained
excess sales proceeds received in short-term commercial paper
investments. The restricted cash, which is reserved for
development purposes, will be used to fund development expenses of
the Partnership and the joint ventures as needed. The net cash
provided for the three months ended April 30, 1995, was the result
of decreases in restricted cash equivalents. The Partnership used
the funds provided by the restricted cash to fund the Silver Canyon
Partnership activities during the period and additional development
expenditures of the Partnership.
Net cash used in investing activities was $748,462 and
$4,431,500 for the three months ended April 30, 1996 and 1995,
respectively. The decrease in funds advanced to the Silver Canyon
Partnership for the three months ended April 30, 1996, is due to
the ability of the Silver Canyon Partnership to draw funds from the
underground improvement loan with General Motors Acceptance
Corporation - Residential Funding Corporation (GMAC). The loan did
not close until June 9, 1995 and therefore the Partnership advanced
funds of $4,431,500 for the three months ended April 30, 1995.
Net cash provided by financing activities was $90,000 for the
three month period ended April 30, 1996 versus net cash used of
$100,000 for the three month period ended April 30, 1995. The net
cash provided as of April 30, 1996 was the result of additional
funds advanced from Sunrise Land Company to the Partnership to fund
additional development expenditures offset by the scheduled
principal payment of $100,000 on a pre-existing mortgage note. The
net cash used for the three month period ended April 30, 1995 was
the result of the scheduled principal payment of $100,000 on the
mortgage note.
The Partnership had adequate funds available to make the first
semi-annual payment of interest on the Senior Notes on May 15,
1996. Short-term external financing has been pursued to provide
the funds necessary for the development of the Fairfax Meadows
development located in Medina, Ohio. The Partnership has received
formal commitment from an Akron, Ohio based bank for a $1,600,000
loan which would be used to provide financing for land development.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none.
(b) A Form 8-K was filed during the quarter for which this
report is filed reporting the sale of a portion of the
Partnership's interest in the Silver Canyon Partnership.
The date of the report was January 30, 1996.
SIGNATURES
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.
Granite Development Partners, L.P.
----------------------------------
(Registrant)
Date: 6/10/96 /s/ Robert F. Monchein
------------------ ----------------------------
President
FC-Granite, Inc., the general partner
of Granite Development Partners, L.P.
Date: 6/10/96 /s/ Mark A. Ternes
------------------ ----------------------------
Controller
FC-Granite, Inc., the general partner
of Granite Development Partners, L.P.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> APR-30-1996
<CASH> 97000
<SECURITIES> 0
<RECEIVABLES> 4071151
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12357372
<DEPRECIATION> 0
<TOTAL-ASSETS> 49782519
<CURRENT-LIABILITIES> 0
<BONDS> 41010025
0
0
<COMMON> 0
<OTHER-SE> (1070525)
<TOTAL-LIABILITY-AND-EQUITY> 49782519
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 520528
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1114441
<INCOME-PRETAX> (1448460)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1448460)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1448460)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
