-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B/sm6u0X7myhBVRcNPkJPBD8PLM3Btw99evvhv33lsFOXoY57HloiRXdsFzAGZH+ 25eM9lwfEw7dJ0rKV+b2xg== 0000928790-95-000140.txt : 19951121 0000928790-95-000140.hdr.sgml : 19951121 ACCESSION NUMBER: 0000928790-95-000140 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUTTON CONAM REALTY INVESTORS 81 CENTRAL INDEX KEY: 0000350023 STANDARD INDUSTRIAL CLASSIFICATION: 6500 IRS NUMBER: 133069026 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10223 FILM NUMBER: 95592362 BUSINESS ADDRESS: STREET 1: 388 GREENWICH ST CITY: NEW YORK STATE: NY ZIP: 10013 BUSINESS PHONE: 2125263237 MAIL ADDRESS: STREET 1: 3 WORLD FINANCIAL CENTER STREET 2: 29TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10285 FORMER COMPANY: FORMER CONFORMED NAME: HUTTON CONAM PROPERTIES 81 DATE OF NAME CHANGE: 19810616 10-Q 1 UNITED STATES 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 September 30, 1995 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: 0-10223 HUTTON/CONAM REALTY INVESTORS 81 (Exact name of registrant as specified in its charter) California 13-3069026 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3 World Financial Center, 29th Floor, New York, NY Attention: Andre Anderson 10285 (Address of principal executive offices) (Zip Code) (212) 526-3237 (Registrant's telephone number, including area code) 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 Consolidated Balance Sheets September 30, December 31, Assets 1995 1994 Investments in real estate: Land $ 3,944,195 $ 5,255,820 Buildings and improvements 21,299,382 28,473,477 25,243,577 33,729,297 Less accumulated depreciation (11,157,301) (13,875,550) 14,086,276 19,853,747 Cash and cash equivalents 1,445,577 1,535,391 Restricted cash 572,290 659,076 Mortgage fees, net of accumulated amortization of $193,451 in 1995 and $202,797 in 1994 246,221 408,014 Other assets 34,301 41,055 Total Assets $ 16,384,665 $ 22,497,283 Liabilities and Partners' Capital Liabilities: Mortgages payable $ 11,983,626 $ 15,601,031 Distribution payable 173,978 173,978 Accounts payable and accrued expenses 288,094 183,869 Security deposits 74,609 141,408 Due to general partners and affiliates 42,578 44,814 Total Liabilities 12,562,885 16,145,100 Partners' Capital (Deficit): General Partners (1,344,898) (1,316,915) Limited Partners 5,166,678 7,669,098 Total Partners' Capital 3,821,780 6,352,183 Total Liabilities and Partners' Capital $ 16,384,665 $ 22,497,283 Consolidated Statement of Partners' Capital (Deficit) For the nine months ended September 30, 1995 General Limited Partners Partners Total Balance at January 1, 1995 $ (1,316,915) $ 7,669,098 $ 6,352,183 Net income 25,120 1,188,951 1,214,071 Cash distributions (53,103) (3,691,371) (3,744,474) Balance at September 30, 1995 $ (1,344,898) $ 5,166,678 $ 3,821,780 Consolidated Statements of Operations Three months ended Nine months ended September 30, September 30, Income 1995 1994 1995 1994 Rental $ 964,533 $ 1,171,769 $ 3,397,025 $ 3,494,492 Interest 34,460 17,406 82,773 39,587 Total Income 998,993 1,189,175 3,479,798 3,534,079 Expenses Property operating 549,483 595,624 1,797,212 1,670,982 Interest 399,699 331,540 1,059,073 996,748 Depreciation and amortization 347,098 306,796 960,199 920,387 General and administrative 74,233 36,857 156,436 118,257 Total Expenses 1,370,513 1,270,817 3,972,920 3,706,374 Loss from operations (371,520) (81,642) (493,122) (172,295) Gain on sale of properties 1,707,193 0 1,707,193 0 Net Income (Loss) $ 1,335,673 $ (81,642) $ 1,214,071 $ (172,295) Net Income (Loss) Allocated: To the General Partners $ 26,336 $ (816) $ 25,120 $ (1,723) To the Limited Partners 1,309,337 (80,826) 1,188,951 (170,572) $ 1,335,673 $ (81,642) $ 1,214,071 $ (172,295) Per limited partnership unit (78,290 outstanding) $ 16.73 $ (1.03) $ 15.19 $ (2.18) Consolidated Statements of Cash Flows For the nine months ended September 30, 1995 and 1994 Cash Flows from Operating Activities: 1995 1994 Net income (loss) $ 1,214,071 $ (172,295) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 960,199 920,387 Gain on sale of properties (1,707,193) 0 Increase (decrease) in cash arising from changes in operating assets and liabilities: Fundings to restricted cash (458,007) (428,941) Release of restricted cash to property operations 544,793 176,571 Other assets 6,754 37,446 Accounts payable and accrued expenses 104,225 126,823 Security deposits (66,799) 696 Due to general partners and affiliates (2,236) (6,429) Net cash provided by operating activities 595,807 654,258 Cash Flows From Investing Activities: Net proceeds from sale of properties 6,676,258 0 Net cash provided by investing activities 6,676,258 0 Cash Flows from Financing Activities: Distributions (3,744,474) (521,933) Mortgage principal payments (3,617,405) (100,446) Net cash used for financing activities (7,361,879) (622,379) Net increase (decrease) in cash and cash equivalents (89,814) 31,879 Cash and cash equivalents at beginning of period 1,535,391 1,418,054 Cash and cash equivalents at end of period $ 1,445,577 $ 1,449,933 Supplemental Disclosure of Cash Flow Information: Cash paid during the period for interest $ 1,059,073 $ 996,748 Notes to the Consolidated Financial Statements The unaudited interim consolidated financial statements should be read in conjunction with the Partnership's annual 1994 consolidated financial statements within Form 10-K. The unaudited consolidated financial statements include all adjustments which are, in the opinion of management, necessary to present a fair statement of financial position as of September 30, 1995 and the results of operations and cash flows for the nine months ended September 30, 1995 and 1994 and the statement of changes in partners' capital (deficit) for the nine months ended September 30, 1995. Results of operations for the periods are not necessarily indicative of the results to be expected for the full year. The following significant events have occurred subsequent to fiscal year 1994, which require disclosure in this interim report per Regulation S-X, Rule 10-01, Paragraph (a)(5): Sale of Properties On July 20, 1995, Hutton/ConAm Realty Investors 81 (the "Partnership") closed on the sale of Kingston Village and Cedar Bay Village (the "Properties"). Kingston Village and Cedar Bay Village sold for $5,370,000 and $1,410,000, respectively, to an institutional buyer (the "Buyer"), which is unaffiliated with the Partnership. The selling price was determined by arm's length negotiations between the Partnership and the Buyer. The Partnership received net proceeds of $6,676,258 from the transaction of which $3,662,325, representing outstanding principal, interest, and pre-payment penalties, was used to fully satisfy the Partnerships mortgage obligations on the Properties. The transaction resulted in a gain on sale of $1,707,193. On August 17, 1995, the General Partners paid a special distribution of $3,170,745 to limited partners. The special distribution was comprised of the net proceeds from the sale of the Properties and $156,812 from the Partnership's cash reserves. Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources At September 30, 1995, the Partnership had cash and cash equivalents of $1,445,577, which were invested in unaffiliated money market funds. The Partnership also maintains a restricted cash balance, which totaled $572,290 at September 30, 1995, composed of escrows required by the lender for property improvements, real estate taxes, and insurance. Pursuant to the terms of the loans, as costs are incurred for property improvements or when real estate taxes and insurance are due, reimbursements are made from the escrow accounts maintained by the lender to the Partnership. The General Partners expect sufficient cash to be generated from operations to meet the Partnership's current operating expenses and debt service requirements. The sale of Kingston Village and Cedar Bay Village was completed on July 20, 1995. Kingston Village and Cedar Bay Village sold for $5,370,000 and $1,410,000, respectively, to an institutional buyer, which is unaffiliated with the Partnership. The Partnership received net proceeds of $6,676,258 from the transaction of which $3,662,325, representing outstanding principal, interest, and pre-payment penalties, was used to fully satisfy the Partnership's mortgage obligations on the Properties. On August 17, 1995, the Partnership paid a special cash distribution of $3,170,745 or $40.50 per Unit to the limited partners. The special distribution was comprised of the net proceeds from the sale of the Properties and $156,812 from the Partnership's cash reserves. The Partnership's 1995 third quarter distribution, in the amount of $2.00 per Unit, will be paid on or about November 15, 1995. Cash distributions will be determined on a quarterly basis and will be based on cash flow generated by the Partnership. Results of Operations Partnership operations for the three and nine months ended September 30, 1995 resulted in net income of $1,335,673 and $1,214,071, respectively, compared with net losses of $81,642 and $172,295 for the three and nine months ended September 30, 1994. The change from net loss in 1994 to net income in 1995 reflects the $1.7 million gain on sale of Cedar Bay Village and Kingston Village. Excluding the gain recognized on the sale of the properties, the Partnership recognized higher losses from operations in 1995 compared to 1994, primarily as a result of lower rental income and in the nine-month period and increased property operating expense. After adding back depreciation and amortization, both noncash expenses, and subtracting mortgage amortization and the gain on sale of Cedar Bay Village and Kingston Village, operations generated cash flow of $(53,247) and $366,163, respectively, for the three and nine months ended September 30, 1995, compared with cash flow of $190,963 and $647,646 for the corresponding periods in 1994. The lower cash flow from operations reflects reduced rental income, higher property operating expenses and an approximately $120,000 pre-payment penalty associated with the repayment of the mortgages on Cedar Bay Village and Kingston Village. Rental income for the three and nine months ended September 30, 1995, was $964,533 and $3,397,025, respectively, compared with $1,171,769 and $3,494,492 for the corresponding periods in 1994. The decreases in 1995 reflect the sales of Cedar Bay Village and Kingston Village and lower occupancy rates at the three remaining properties, partially offset by increased rental rates at the remaining properties. Interest income totaled $34,460 and $82,773, respectively, for the three and nine months ended September 30, 1995 compared with $17,406 and $39,587 for the corresponding periods in 1994. The increases are due to the Partnership's higher cash balance and higher interest rates in 1995. Total expenses for the three and nine months ended September 30, 1995 were $1,370,513 and $3,972,920, respectively, compared with $1,270,817 and $3,706,374 for the corresponding periods in 1994. Property operating expenses were $549,483 and $1,797,212, respectively, for the three and nine months ended September 30, 1995, compared with $595,624 and $1,670,982 for the corresponding periods in 1994. The decrease for the three-month period reflects the sale of two of the properties in the portfolio. The increase for the nine-month period reflects higher repair and maintenance expenses at Las Colinas and Tierra Catalina, due to exterior painting, landscaping and interior maintenance on vacated units. Interest expense for the three and nine months ended September 30, 1995 was $399,699 and $1,059,073, respectively, compared with $331,540 and $996,748 for the corresponding periods in 1994. The increases in 1995 primarily reflect the pre-payment penalties paid on Cedar Bay Village and Kingston Village's mortgage obligations when the properties were sold in July. General and administrative expenses for the three and nine months ended September 30, 1995 were $74,233 and $156,436, respectively, compared with $36,857 and $118,257 for the corresponding periods in 1994. The increases primarily reflect legal expenses due to work related to the tender offer of the limited partnership shares in the third quarter of 1995. (See Part II, Item 1, "Legal Proceedings"). For the three and nine month periods ended September 30, 1995 and 1994, average occupancy levels at each of the properties were as follows: Three Months Ended Nine Months Ended September 30, September 30, Property 1995 1994 1995 1994 Las Colinas 92% 93% 93% 95% Ridge Park 97% 98% 96% 97% Tierra Catalina 91% 97% 92% 96% PART II OTHER INFORMATION Item 1 Legal Proceedings An offer dated August 3, 1995, was sent by Everest Investors, LLC and W. Robert Kohorst (collectively, "Everest") to limited partners of the Partnership to purchase up to 4.9% of their limited partnership interests for $70 per unit less any distributions paid prior to the expiration of the offer on September 8, 1995. On August 16, 1995, the General Partners of the Partnership sent a letter to limited partners recommending against the offer because the price was inadequate especially in view of the Net Asset Value of the units and the capital return that was to be made from the July 20, 1995 sale of the Properties. On August 29, 1995, the Partnership filed a complaint with the United States District Court, Central District of California (the "Court") that Everest's solicitation letter constituted a tender offer which violated Section 14(e) of the Securities Exchange Act of 1934, which prohibits false or misleading statements of material fact in connection with any tender offer. Additionally, the Partnership requested a Temporary Restraining Order against Everest until Everest issues a disclosure that complies with Section 14(e) of the Securities Exchange Act of 1934 and offers rescission to any limited partners that have tendered their limited partnership interests. On August 31, 1995 the Court dismissed the Partnership's request for a Temporary Restraining Order. Items 2-5 Not applicable. Item 6 Exhibits and Reports on Form 8-K. (a) Exhibits: (27) Financial Data Schedule (b) Reports on Form 8-K On August 4, 1995, a Current Report on Form 8-K was filed reporting the consummation of the sale of Kingston Village and Cedar Bay Village for $5,370,000 and $1,410,000, respectively. Such information was provided in response to Item 2 of Form 8-K. 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. HUTTON/CONAM REALTY INVESTORS 81 BY: RI81 REAL ESTATE SERVICES INC. General Partner Date: November 14, 1995 BY: /s/ Paul L. Abbott Name: Paul L. Abbott Title: Director, President, Chief Executive Officer and Chief Financial Officer EX-27 2 RI81 FINANCIAL DATA SCHEDULE FOR 3Q'95 10-Q
5 9-MOS DEC-31-1995 SEP-30-1995 2,017,867 000 000 000 000 000 25,243,577 11,157,301 16,384,665 579,259 11,983,626 000 000 000 3,821,780 16,384,665 000 3,479,798 000 1,797,212 1,116,635 000 1,059,073 000 000 000 000 000 000 1,214,071 15.19 15.19
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