-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, g7wLnVQC+HHwT+J1gaKOJHt1XXOKPS1IYSHSBROdISvm9gFUr/o6MCxSthXRt8XI DfFiZ1OXq3ncMgP041fJCQ== 0000889812-95-000223.txt : 19950516 0000889812-95-000223.hdr.sgml : 19950516 ACCESSION NUMBER: 0000889812-95-000223 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREFERRED PROPERTIES FUND 82 CENTRAL INDEX KEY: 0000702173 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 942775846 STATE OF INCORPORATION: CA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10878 FILM NUMBER: 95539467 BUSINESS ADDRESS: STREET 1: 5665 NORTHSIDE DR NW STE 370 STREET 2: C/O METRIC MANAGEMENT INC CITY: ATLANTA STATE: GA ZIP: 30328 BUSINESS PHONE: 4049169090 MAIL ADDRESS: STREET 1: 5665 NORTHSIDE DRIVE NW CITY: ATLANTA STATE: GA ZIP: 30328 10-Q 1 QUARTERLY REPORT 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 March 31, 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 0-10878 Preferred Properties Fund 82 (Exact name of Registrant as specified in its charter) California 94-2775846 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 5665 Northside Drive N.W., Ste. 370, Atlanta, Georgia 30328 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code (404) 916-9090 N/A Former name, former address and fiscal year, if changed since last report. 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 ----- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date . ------------------ 1 of 13 PREFERRED PROPERTIES FUND 82 - FORM 10-Q - MARCH 31, 1995 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. Consolidated Balance Sheets March 31, September 30, 1995 1994 (Unaudited) (Audited) Assets Cash and cash equivalents $ 3,255,000 $ 3,196,000 Restricted cash - 1,014,000 Accounts receivable, net 569,000 1,034,000 Inventories and operating supplies 81,000 327,000 Prepaid expenses and other assets 184,000 478,000 Note receivable from property sale 4,250,000 4,250,000 Real Estate: Real estate 18,703,000 58,187,000 Accumulated depreciation (9,411,000) (20,039,000) Allowance for impairment of value - (5,330,000) ----------- ----------- Real estate, net 9,292,000 32,818,000 Deferred costs, net 30,000 168,000 ----------- ----------- Total assets $17,661,000 $43,285,000 =========== =========== Liabilities and Partners' Equity Notes payable $12,393,000 $33,679,000 Note payable to joint venture partner 511,000 529,000 Accrued interest, property taxes and other liabilities 1,096,000 5,131,000 Accounts payable 273,000 748,000 ----------- ----------- Total liabilities 14,273,000 40,087,000 ----------- ----------- Minority interest in joint venture (237,000) (186,000) ----------- ----------- Commitments and Contingencies Partners' Equity (Deficit): General partners (5,105,000) (5,138,000) Limited partners (58,400 units outstanding at March 31, 1995 and September 30, 1994) 8,730,000 8,522,000 ----------- ----------- Total partners' equity 3,625,000 3,384,000 ----------- ----------- Total liabilities and partners' equity $17,661,000 $43,285,000 =========== =========== See notes to consolidated financial statements. 2 of 13 PREFERRED PROPERTIES FUND 82 - FORM 10-Q - MARCH 31, 1995 Consolidated Statements of Operations (Unaudited) For the Six Months Ended March 31, 1995 March 31, 1994 Revenues: Room revenue $4,178,000 $7,128,000 Food and beverage revenues 2,028,000 3,890,000 Other operating revenues 370,000 723,000 Interest income 267,000 245,000 Gain on sale of property 168,000 - ---------- ----------- Total revenues 7,011,000 11,986,000 ---------- ----------- Expenses: Room expense 1,050,000 2,020,000 Food and beverage expense 1,567,000 3,125,000 Other operating expenses 2,673,000 4,791,000 Interest 779,000 1,143,000 Depreciation 527,000 530,000 General and administrative 132,000 239,000 Loss on disposition of property 37,000 - ---------- ----------- Total expenses 6,765,000 11,848,000 ---------- ----------- Income before minority interest in joint venture's operations 246,000 138,000 Minority interest in joint venture's operations (5,000) 25,000 ---------- ----------- Net income $ 241,000 $ 163,000 ========== =========== Net income per limited partnership unit $ 4 $ 2 ========== =========== See notes to consolidated financial statements. 3 of 13 PREFERRED PROPERTIES FUND 82 - FORM 10-Q - MARCH 31, 1995 Consolidated Statements of Operations (Unaudited) For the Three Months Ended March 31, 1995 March 31, 1994 Revenues: Room revenue $1,836,000 $3,676,000 Food and beverage revenues 804,000 1,778,000 Other operating revenues 164,000 281,000 Interest income 122,000 125,000 Adjustment to gain on sale of property (108,000) - ---------- ----------- Total revenues 2,818,000 5,860,000 ---------- ----------- Expenses: Room expense 440,000 1,074,000 Food and beverage expenses 630,000 1,481,000 Other operating expense 1,167,000 2,367,000 Interest 355,000 592,000 Depreciation 264,000 264,000 General and administrative 55,000 145,000 ---------- ----------- Total expenses 2,911,000 5,923,000 ---------- ----------- Loss before minority interest in joint venture's operations (93,000) (63,000) Minority interest in joint venture's operations 10,000 50,000 ---------- ----------- Net loss $ (83,000) $ (13,000) ========== =========== Net loss per limited partnership unit $ (1) $ - ========== =========== See notes to consolidated financial statements. 4 of 13 PREFERRED PROPERTIES FUND 82 - FORM 10-Q - MARCH 31, 1995 Consolidated Statements of Partners' Equity (Unaudited) For the Six Months Ended March 31, 1995 General Limited Total partners' partners' partners' (deficit) equity equity Balance - October 1, 1994 $(5,138,000) $8,522,000 $3,384,000 Net income 33,000 208,000 241,000 ----------- ---------- ---------- Balance - March 31, 1995 $(5,105,000) $8,730,000 $3,625,000 =========== ========== ========== See notes to consolidated financial statements. 5 of 13 PREFERRED PROPERTIES FUND 82 - FORM 10-Q - MARCH 31, 1995 Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended March 31, 1995 March 31, 1994 Operating Activities: Net income $ 241,000 $ 163,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 540,000 566,000 Minority interest in joint venture's operations 5,000 (25,000) Gain on sale of property (168,000) - Loss on disposition of property 37,000 - Changes in operating assets and liabilities: Accounts receivable 261,000 313,000 Inventories and operating supplies 19,000 4,000 Prepaid expenses and other assets 34,000 (454,000) Accrued interest, property taxes, other liabilities and accounts payable (567,000) 620,000 --------- ---------- Net cash provided by operating activities 402,000 1,187,000 --------- ---------- Investing Activities: Net proceeds on sale of property 6,104,000 - Additions to real estate (413,000) (822,000) --------- ---------- Net cash provided by (used in) investing activities 5,691,000 (822,000) --------- ---------- Financing Activities: Satisfaction of notes payable (5,858,000) - Notes payable principal payments (120,000) (129,000) Joint venture partner distributions (56,000) - --------- ---------- Cash (used in) financing activities (6,034,000) (129,000) --------- ---------- Increase in Cash and Cash Equivalents 59,000 236,000 Cash and Cash Equivalents at Beginning of Period 3,196,000 3,377,000 --------- ---------- Cash and Cash Equivalents at End of Period $3,255,000 $3,613,000 ========== ========== Supplemental Disclosure of Cash Flow Information: Interest paid in cash during the period $ 776,000 $1,077,000 ========== ========== Supplemental Disclosure of Non-Cash Investing and Financing Activities: Deed in lieu of foreclosure - Denver Hilton Inn - See Note 4(b). See notes to consolidated financial statements. 6 of 13 PREFERRED PROPERTIES FUND 82 - FORM 10-Q - MARCH 31, 1995 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. General The accompanying consolidated financial statements, footnotes and discussions should be read in conjunction with the consolidated financial statements, related footnotes and discussions contained in the Partnership's Annual Report for the year ended September 30, 1994. The financial information contained herein is unaudited. In the opinion of management, however, all adjustments necessary for a fair presentation of such financial information have been included. All adjustments are of a normal recurring nature, except as discussed in Note 4. At March 31, 1995, the Partnership had approximately $1,634,000 invested in overnight repurchase agreements earning approximately 6% per annum. The results of operations for the six and three months ended March 31, 1995 and 1994 are not necessarily indicative of the results to be expected for the full year. 2. Transactions with Related Parties An affiliate of MGP received reimbursement of administrative expenses amounting to $86,000 and $33,000 during the six months ended March 31, 1995 and 1994, respectively. These reimbursements are included in general and administrative expenses. 3. Contingency and Commitment On October 21, 1994, the Partnership executed an option agreement to sell its joint venture interest in the Cleveland Marriott to an affiliate of its joint venture partner for $6,000,000 plus 65% of working capital in excess of $1,550,000. Based on current projections, it does not appear that there will be any excess working capital. If the option is not exercised prior to June 15, 1995, the joint venture partner has agreed to waive its right of first refusal and the joint venture partner's affiliated management company has agreed to waive its termination fee. If the sale is consummated, the Partnership, for financial statement purposes, would recognize a substantial gain on sale. 4. Disposition of Hotel Properties a) On December 1, 1994, the Holiday Inn was sold for $6,900,000. After repayment of the existing loan of $5,858,000 and closing expenses and adjustments, net proceeds received by the Partnership were $246,000. For financial statement purposes, the sale resulted in a gain of $168,000. A provision for impairment of value of $3,047,000 was previously recorded on this property. b) In May 1994, a Receiver was appointed to administer the affair of the Denver Hilton Inn. On December 14, 1994, the Partnership conveyed the Denver Hilton Inn to the lender's nominee by deed in lieu of foreclosure in exchange for a full release of the Partnership's obligations. For financial statement purposes, the conveyance resulted in a loss on disposition of property of $37,000. A provision for impairment of value of $2,283,000 was previously recorded on this property. 7 of 13 PREFERRED PROPERTIES FUND 82 - FORM 10-Q - MARCH 31, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This item should be read in conjunction with the Consolidated Financial Statements and other Items contained elsewhere in this Report. Liquidity and Capital Resources Registrant's remaining property is a 65% joint venture interest in a hotel. Registrant receives hotel operating revenues and is responsible for operating expenses, administrative expenses, capital improvements and debt service payments. Registrant uses working capital reserves provided from any undistributed cash flow from operations and cash reserves as its primary source of liquidity. In order to preserve working capital reserves required for necessary capital improvements to the property and provide resources for potential debt modifications, cash distributions from operations remained suspended during the six months of fiscal year 1995. It is expected that cash distributions will continue to be suspended until the disposition of Registrant's remaining asset. The level of liquidity based upon cash and cash equivalents experienced a $59,000 increase at March 31, 1995, as compared to September 30, 1994. Registrant's $5,691,000 of net cash from investing activities and $402,000 of net cash from operating activities were substantially offset by $6,034,000 of cash used in financing activities. Cash from investing activities consisted of proceeds from the sale of the Holiday Inn Marin which was only slightly offset by additions to real estate at Registrant's remaining property. Cash used in financing activities consisted of the satisfaction of the $5,858,000 mortgage encumbering the Holiday Inn Marin, $120,000 of notes payable principal payments and $56,000 of joint venture partner distributions. Registrant has spent approximately $400,000 of the $1,000,000 it has budgeted for capital improvements at its remaining property. All other increases (decreases) in certain assets and liabilities are the result of the timing of receipt and payment of various operating activities. Working capital reserves are invested in a money market account, U.S. Treasury bills or in repurchase agreements secured by United States Treasury obligations The Managing General Partner believes that, if market conditions remain relatively stable, cash flow from operations, when combined with working capital reserves, would be sufficient to fund required capital improvements and regular debt service payments for the Cleveland Marriott in the foreseeable future. On October 21, 1994, Registrant executed an option agreement to sell its joint venture interest in the Cleveland Marriott to an affiliate of its joint venture partner for $6,000,000 plus 65% of working capital in excess of $1,550,000. Based on current projections, it does not appear that there will be any excess working capital. If the option is not exercised prior to June 15, 1995, the joint venture partner has agreed to waive its right of first refusal and the joint venture partner's affiliated management company has agreed to waive its termination fee. If the sale is consummated, Registrant, for financial statement purposes, would recognize a substantial gain on the sale. On December 1, 1994, the Holiday Inn was sold for $6,900,000. After repayment of the existing loan of $5,858,000 and closing expenses and adjustments, net proceeds received by Registrant were 8 of 13 PREFERRED PROPERTIES FUND 82 - FORM 10-Q - MARCH 31, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources (Continued) $246,000. For financial statement purposes, the sale resulted in a gain of $168,000. A provision for impairment of value of $3,047,000 was previously recorded on this property. Registrant's investment objective of capital growth will not be attained. As a result, a significant portion of invested capital will not be returned to investors. The extent to which invested capital is returned to investors is dependent upon the success of the performance of Registrant's remaining property and the market in which the property is located and on the eventual sales price of the remaining property. Real Estate Market The income and expenses of operating the property owned by Registrant are subject to factors outside of Registrant's control, such as over-supply of similar properties resulting from over-building, increases in unemployment, population shifts, or changes in patterns or needs of users. Expenses, such as local real estate taxes and miscellaneous expenses, are subject to change and cannot always be reflected in room rate increases due to market conditions. In addition, there are risks inherent in owning and operating a lodging facility because the property is management and labor intensive and is especially susceptible to the impact of economic and other conditions outside the control of Registrant. There have been, and it is possible there may be other Federal, state and local legislation and regulations enacted relating to the protection of the environment. Registrant is unable to predict the extent, if any, to which such new legislation or regulations might occur and the degree to which such existing or new legislation or regulations might adversely affect the property still owned by Registrant. Results of Operations Six Months Ended March 31, 1995 vs. March 31, 1994 Operating results, before minority interest in joint venture's operations, improved by $108,000 for the six months ended March 31, 1995, as compared to 1994, due to decreases in revenues of $4,975,000 and in expenses of $5,083,000. Revenues and expenses decreased due to the sale of the Holiday Inn property and the disposition of the Denver Hilton property. With respect to the remaining property, operating results improved by $283,000 for the six months ended March 31, 1995, as compared to 1994, due to an increase in revenues of $352,000 and in expenses of $69,000. 9 of 13 PREFERRED PROPERTIES FUND 82 - FORM 10-Q - MARCH 31, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Six Months Ended March 31, 1995 vs. March 31, 1994 (Continued) With respect to the remaining property, revenues increased by $352,000 due to increases in room revenue of $300,000, other revenues of $48,000 and interest income of $26,000, which were slightly offset by a decrease in food and beverage revenue of $22,000. Room and other revenues increased due to higher room rates, which was only partially offset by a decrease in occupancy. Food and beverage revenues decreased slightly due to the decreased occupancy. Interest income increased primarily due to the effect of higher interest rates. With respect to the remaining property, expenses increased by $178,000 due to increases of $145,000 in room, food and beverage and other operating expenses and $33,000 in interest expense. Room, food and beverage and other expenses increased due to increased costs associated with operations. Interest expense increased due to an understatement of expense in the prior year comparative period. Depreciation expense remained relatively constant. General and administrative expenses decreased by $107,000 due to a reduction in asset management costs, relating to the disposition of two hotels. Three Months Ended March 31, 1995 vs. March 31, 1994 Operating results, before minority interest in joint venture's operations, declined by $30,000 for the three months ended March 31, 1995, as compared to 1994, due to decreases in revenues of $3,042,000 and in expenses of $3,012,000. Revenues and expenses decreased due to the sale of the Holiday Inn property and the disposition of the Denver Hilton property. With respect to the remaining property, operating results improved by $200,000 for the three months ended March 31, 1995, as compared to 1994, due to an increase in revenues of $158,000 and a decrease in expenses of $42,000. With respect to the remaining property, revenues increased by $158,000 due to an increase in room revenue of $152,000 and other revenues of $22,000, which were slightly offset by a decrease in food and beverage revenue of $16,000. Room and other revenues increased due to higher room rates, which was only partially offset by a decrease in occupancy. Food and beverage revenues decreased slightly due to the decreased occupancy. Interest income remained relatively constant. With respect to the remaining property, expenses increased by $48,000 due to increases of $35,000 in room, food and beverage and other operating expenses, $12,000 in interest expense and $1,000 in depreciation expense. Room, food and beverage and other expenses increased due to increased costs associated with operations. Interest expense increased due to an understatement of expense in the prior comparative period. Depreciation expense remained relatively constant. General and administrative expenses decreased by $90,000 due to a reduction in asset management costs. 10 of 13 PREFERRED PROPERTIES FUND 82 - FORM 10-Q - MARCH 31, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Properties A description of the hotel properties in which Registrant has an ownership interest during the period covered by this report, together with occupancy and room rate data, follows: PREFERRED PROPERTIES FUND 82 OCCUPANCY AND ROOM RATE SUMMARY Average Average Occupancy Rate (%) Daily Room Rate ($) Six Three Six Three Months Months Months Months Date Ended Ended Ended Ended of March 31, March 31, March 31, March 31, Name and Location Rooms Purchase 1995 1994 1995 1994 1995 1994 1995 1994 - ----------------- ----- -------- ---------- ---------- ---------- ---------- Cleveland Marriott Inn - Airport Cleveland, Ohio 379 09/83 60 70 58 74 87.39 73.88 89.09 75.26 Denver Hilton Inn-South(1) Englewood, Colorado 306 12/83 - 59 - 62 - 69.26 - 70.27 Holiday Inn Marin -(2) San Rafael San Rafael, California 227 06/84 - 65 - 70 - 59.23 - 58.02 (1) Property was conveyed by deed in lieu of foreclosure on December 14, 1994. (2) Property was sold on December 1, 1994. 11 of 13 PREFERRED PROPERTIES FUND 82 - FORM 10-Q - MARCH 31, 1995 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. No report on Form 8-K was required to be filed during the period covered by this Report. 12 of 13 PREFERRED PROPERTIES FUND 82 - FORM 10-Q - MARCH 31, 1995 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. PREFERRED PROPERTIES FUND 82 By: MONTGOMERY REALTY COMPANY - 80, its general partner By: FOX REALTY INVESTORS, its managing general partner By: NPI EQUITY INVESTMENTS II, INC. its managing partner ------------------------------------------ ARTHUR N. QUELER Secretary/Treasurer and Director (Principal Financial Officer) 13 of 13 EX-27 2 FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information extracted from Preferred Properties Fund 82 and is qualified in its entirety by reference to such financial statements. 1 6-MOS SEP-30-1995 OCT-01-1994 MAR-31-1995 3,255,000 0 569,000 0 81,000 0 18,703,000 (9,411,000) 17,661,000 0 12,904,000 0 0 0 3,625,000 17,661,000 0 6,744,000 0 5,854,000 0 0 779,000 241,000 0 241,000 0 0 0 241,000 4 4 Bonds include note payable to related party of $511,000.
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