-----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, Vq/2cGiV0hpKr5qnYM3gtqNWWtw6VHN9nzhneuP72znDwzc6tziqhbnwCsNkUfRe rJ8+OFYARaR7LWurSFtk6w== 0000722886-97-000002.txt : 19970520 0000722886-97-000002.hdr.sgml : 19970520 ACCESSION NUMBER: 0000722886-97-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MRI BUSINESS PROPERTIES FUND LTD CENTRAL INDEX KEY: 0000722886 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942919856 STATE OF INCORPORATION: CA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13104 FILM NUMBER: 97608166 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ PO BOX 1089 STREET 2: C/O INSIGNIA FINANCIAL GROUP INC CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8642391513 MAIL ADDRESS: STREET 1: C/O INSIGNIA FINANCIAL GROUP INC STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 FORMER COMPANY: FORMER CONFORMED NAME: CENTURY PROPERTIES FUND 84 DATE OF NAME CHANGE: 19831018 10QSB 1 FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT (As last amended by 34-32231, eff. 6/3/93) U. S. 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 March 31, 1997 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period.........to......... Commission file number 0-13104 MRI BUSINESS PROPERTIES FUND LTD. (Exact name of small business issuer as specified in its charter) California 94-2919856 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) (864) 239-1000 Issuer's telephone number Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 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 ITEM 1. FINANCIAL STATEMENTS a) MRI BUSINESS PROPERTIES FUND LTD. BALANCE SHEET (Unaudited) (in thousands, except unit data) March 31, 1997
Assets Cash and cash equivalents $ 4,173 Receivables and deposits 2,066 Other assets 17 Investment property Land $ 440 Building and related personal property 4,035 Property valuation reserve (300) 4,175 Accumulated depreciation (1,793) 2,382 $ 8,638 Liabilities and Partners' Deficit Accounts payable $ 7 Tenants' security deposits payable 4 Accrued property taxes 31 Other liabilities 11 Partners' Deficit: Limited partners' (82,158 units outstanding) $ 9,605 General Partner's (1,020) 8,585 $ 8,638 See Accompanying Notes to Financial Statements
b) MRI BUSINESS PROPERTIES FUND LTD. STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Six Months Ended March 31, March 31, 1997 1996 1997 1996 Revenues: Commercial operations $ 85 $ 813 $ 253 $ 1,635 Interest and other income 40 44 95 111 Gain on sale of property -- -- 858 -- Total revenues 125 857 1,206 1,746 Expenses: Operating 44 460 148 911 Interest -- 25 6 50 Depreciation 30 226 69 330 General and administrative 238 133 320 246 Total expenses 312 844 543 1,537 (Loss) income before property valuation reserve and extraordinary item (187) 13 663 209 Property valuation reserve 300 -- 300 -- (Loss) income before extraordinary item (487) 13 363 209 Extraordinary item: Loss on extinguishment of debt -- -- 94 -- Net (loss) income $ (487) $ 13 $ 269 $ 209 Net (loss) income allocated to general partners $ (10) $ -- $ 143 $ 4 Net (loss) income allocated to limited partners (477) 13 126 205 Net (loss) income $ (487) $ 13 $ 269 $ 209 Net (loss) income per limited partnership unit: (Loss) income before extraordinary item $ (5.81) $ .16 $ 2.44 $ 2.49 Extraordinary loss on extinguishment of debt -- -- (.91) -- Net (loss) income per limited partnership unit $ (5.81) $ .16 $ 1.53 $ 2.49 Distribution per limited partnership unit $ -- $ 40.35 $ 83.50 $ 40.35 See Accompanying Notes to Financial Statements
c) MRI BUSINESS PROPERTIES FUND LTD. STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (Unaudited) (in thousands, except unit data)
Limited General Limited Partnership Partners' Partners' Total Units Deficit Equity Equity Original capital contributions 82,158 $ 100 $ 82,158 $ 82,258 Partners' (deficit) capital at September 30, 1996 82,158 $ (1,023) $ 16,339 $ 15,316 Distributions paid to partners (140) (6,860) (7,000) Net income for the six months ended March 31, 1997 -- 143 126 269 Partners' (deficit) capital at March 31, 1997 82,158 $ (1,020) $ 9,605 $ 8,585 See Accompanying Notes to Financial Statements
d) MRI BUSINESS PROPERTIES FUND LTD. STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended March 31, 1997 1996 Cash flows from operating activities: Net income $ 269 $ 209 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation 69 330 Amortization 7 69 Gain on disposal of property (858) -- Property valuation reserve 300 -- Extraordinary loss on early extinguishment of debt 94 -- Change in accounts: Receivables and deposits 189 103 Other assets 6 10 Accounts payable 7 (5) Tenant security deposits payable (34) -- Accrued property taxes (85) (159) Other liabilities (23) (8) Net cash (used in) provided by operating activities (59) 549 Cash flows from investing activities: Property improvements and replacements -- (27) Proceeds from sale of property 3,889 -- Net cash provided by (used in) investing activities 3,889 (27) Cash flows from financing activities: Satisfaction of notes payable (1,063) -- Costs paid to extinguish debt (32) (23) Distribution to partners (7,000) (3,383) Net cash used in financing activities (8,095) (3,406) Net decrease in cash and cash equivalents (4,265) (2,884) Cash and cash equivalents at beginning of period 8,438 3,795 Cash and cash equivalents at end of period $ 4,173 $ 911 Supplemental information: Cash paid for interest $ 13 $ 47 See Accompanying Notes to Financial Statements
e) MRI BUSINESS PROPERTIES FUND LTD. NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited financial statements of MRI Business Properties Fund Ltd. (the "Partnership") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of NPI Equity Investments II, Inc. ("NPI Equity" or the "Managing General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended March 31, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 1997. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the fiscal year ended September 30, 1996. Certain reclassifications have been made to the fiscal year 1996 information to conform to the fiscal year 1997 presentation. NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on the Managing General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The Managing General Partner of the Partnership is Montgomery Realty Company-83 ("Montgomery"), a California limited partnership of which Fox Realty Investors ("FRI"), a California general partnership, is the managing general partner. The associate general partner of the Partnership is MRI Associates, Ltd., a California limited partnership, of which FRI is the general partner, and Two Broadway Associates II, an affiliate of Merrill Lynch, Pierce, Fenner & Smith, Incorporated, is the limited partner. Pursuant to a series of transactions which closed during 1996, affiliates of Insignia Financial Group, Inc. ("Insignia") acquired all of the issued and outstanding shares of stock of NPI Equity and National Property Investors, Inc. ("NPI"). In connection with these transactions, affiliates of Insignia appointed new officers and directors of NPI Equity and NPI. The following transactions with affiliates of Insignia, NPI, and affiliates of NPI were charged to expense during the six month periods ended March 31, 1997 and 1996 (dollar amounts in thousands): For the Six Months Ended March 31, 1997 1996 Reimbursement for services of affiliates (included in general and administrative expenses) $ 8 $ 77 For the period from January 19, 1996, to March 31, 1997, the Partnership insured its properties under a master policy through an agency and insurer unaffiliated with the Managing General Partner. An affiliate of the Managing General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. The current agent assumed the financial obligations to the affiliate of the Managing General Partner who received payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Managing General Partner by virtue of the agent's obligations is not significant. NOTE C - GAIN ON SALE OF PROPERTY AND EXTRAORDINARY LOSS ON EXTINGUISHMENT OF DEBT On October 22, 1996, the Partnership sold Resource Park West Office Building to an unrelated third party for a contract amount of $4,025,000. After the payment of the note payable, closing costs and related expenses of approximately $136,000, the Partnership received proceeds of approximately $3,889,000. The sale resulted in a gain of approximately $858,000 in fiscal year 1997. The early extinguishment of debt resulted in an extraordinary loss of approximately $94,000, arising from prepayment penalties and the write off of unamortized loan costs. NOTE D - PROPERTY VALUATION RESERVE The occupancy rate at the Parkway Village Shopping Center decreased during the first fiscal quarter of 1997 as the result of the relocation of an anchor tenant who occupied 41% of the total space. An additional 12% of the property's space, consisting of five tenants, was vacated since the loss of the anchor tenant. At March 31, 1997, occupancy for the property had declined to 11% as a result of the aforementioned tenant losses. With these tenant losses, the Managing General Partner believed it was prudent to continue marketing the property for sale as opposed to expending significant amounts of cash flow in an effort to fully lease the property. Near the end of the second fiscal quarter of 1997, the Managing General Partner signed a contract for sale for the investment property at a contract price of $2,400,000. The sale, which is subject to the purchaser's due diligence and other customary conditions, is expected to close during the third fiscal quarter of 1997. During the six month period ended March 31, 1997, the Partnership determined that the low occupancy rate was other than temporary. A property valuation reserve of $300,000, based on the current contract price in relation to the net book value of the investment property, has been recognized to reduce the carrying value of the property to its estimated fair value. NOTE E - DISTRIBUTIONS In October 1996, the Partnership distributed approximately $6,860,000 ($83.50 per limited partnership unit) to the limited partners and approximately $140,000 to the general partners from proceeds from the disposition of the Norwood Tower Office Building and Mardot II Building which occurred during fiscal year 1996. During the six month period ended March 31, 1996, the Partnership distributed approximately $3,315,000 ($40.35 per limited partnership unit) to the limited partners and approximately $68,000 to the general partners from proceeds from the disposition of the Dallas Marriott Quorum Hotel, which occurred during fiscal year 1995. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment property consists of Parkway Village Shopping Center, located in Atlanta Georgia. The average occupancy for the six month periods ended March 31, 1997 and 1996, was 39% and 77%, respectively. The decrease in occupancy at the Parkway Village Shopping Center is the result of the relocation of an anchor tenant who occupied 41% of the total space, during the first fiscal quarter of 1997. An additional 12% of the property's space, consisting of five tenants, was vacated since the loss of the anchor tenant. At March 31, 1997, occupancy for the property had declined to 11% as a result of the above mentioned tenant losses. With these tenant losses, the Managing General Partner believed it was prudent to continue marketing the property for sale as opposed to expending significant amounts of cash flow in an effort to fully lease the property. Near the end of the second fiscal quarter of 1997, the Managing General Partner signed a contract for sale for the investment property at a contract price of $2,400,000. The sale, which is subject to the purchaser's due diligence and other customary conditions, is expected to close during the third fiscal quarter of 1997. During the six month period ended March 31, 1997, the Partnership determined that the low occupancy rate was other than temporary. A property valuation reserve of $300,000, based on the current contract price in relation to the net book value of the investment property, has been recognized to reduce the carrying value of the property to its estimated fair value. The Partnership realized net income of approximately $269,000 and $209,000 for the six months ended March 31, 1997, and 1996, respectively. The Partnership realized a net loss of approximately $487,000 for the three month period ended March 31, 1997, versus net income of approximately $13,000 for the same corresponding period in fiscal year 1996. The increase in net income for the six month period is the result of the gain on sale of the Resource Park West Building, during the first fiscal quarter of 1997, which was partially offset by the extraordinary loss on early extinguishment of debt, also related to the sale of the property and the property valuation reserve related to Parkway Village (see discussion above). Additionally, during fiscal 1996, the Partnership sold three properties, the Norwood Tower Office Building, in June of 1996; the Mardot II Building, in July of 1996; and the Priest Office Building in September of 1996. Due to the above mentioned property sales, in fiscal 1996 and 1997, the Partnership has seen a significant reduction in interest, operating, and depreciation expenses. General and administrative expenses increased during the six month period ended March 31, 1997, due to interest and penalties paid to the Internal Revenue Service related to the deposit required under Section 444 of the Internal Revenue Code. At the time the deposit was due to the Internal Revenue Service, the Partnership did not have sufficient funds to make the deposit. As funds became available, the deposit was made. The amount expensed for major repairs and renovations for the six month periods ended March 31, 1997 and 1996, is not significant. Revenues and expenses at the remaining property, Parkway Village Shopping Center, decreased during the three and six month period ended March 31, 1997 as compared to March 31, 1996. This decrease was the result of tenant losses discussed above. This decrease was partially offset by an increase in tenant reimbursements. At March 31, 1997, the Partnership had unrestricted cash of approximately $4,173,000 as compared to approximately $911,000 at March 31, 1996. Net cash used in operations decreased due to the decrease in net operating income from the Partnership's remaining property and the sale of the Partnership's four properties during fiscal 1996 and the first quarter of fiscal 1997. Net cash provided by investing activities increased as the result of the proceeds from the sale of the Resource Park West Building. Net cash used in financing activities increased as the result of the satisfaction of approximately $1,063,000 in mortgage indebtedness secured by the Resource Park West Building, and a distribution of approximately $7,000,000 to the partners. An affiliate of the Managing General Partner has made available to the Partnership a line of credit of $150,000, per property owned by the Partnership. As of March 31, 1997, there are no outstanding amounts due under this line of credit. Based on present plans, the Managing General Partner does not anticipate the need to borrow in the near future. Other than cash and cash equivalents, the line of credit is the Partnership's only unused source of liquidity. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the property to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. Future cash distributions will depend on the levels of cash generated from operations, a property sale, and the availability of cash reserves. In October 1996, the Partnership distributed $6,860,000 ($83.50 per limited partnership unit) to the limited partners and $140,000 to the general partners from proceeds from the disposition of the Norwood Tower Office Building and Mardot II Building. The Partnership anticipates making a distribution during 1997. PART II - OTHER INFORMATION ITEMS 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended March 31, 1997. 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. MRI BUSINESS PROPERTIES FUND, LTD. By: MONTGOMERY REALTY COMPANY 83, its Managing General Partner By: FOX REALTY INVESTORS, its Managing General Partner By: NPI EQUITY INVESTMENTS, II INC. its managing general partner By: /s/ William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/ Ronald Uretta Ronald Uretta Vice President and Treasurer Date: May 15, 1997 EX-27 2
5 This schedule contains summary financial information extracted from MRI Business Properties Fund Ltd. 1997 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000722886 MRI BUSINESS PROPERTIES FUND LTD. 1,000 6-MOS SEP-30-1997 MAR-31-1997 4,173 0 0 0 0 0 4,175 (1,793) 8,638 0 0 0 0 0 8,585 8,638 0 1,206 0 0 543 300 6 0 0 663 0 (94) 0 269 1.53 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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