-----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, OLPHmFg2wEUJ9tjGeTLUO6RpF/thrKDxcPjNysHG6o8OUNSk2qbDwT4/E/rJFPG7 7+HCzvEmLPDvDkNArBrBlA== 0000889812-96-000151.txt : 19960216 0000889812-96-000151.hdr.sgml : 19960216 ACCESSION NUMBER: 0000889812-96-000151 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960215 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13104 FILM NUMBER: 96520627 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: 4049169090 MAIL ADDRESS: STREET 1: 566R NORTHSIDE DRIVE NW CITY: ATLANTA STATE: GA ZIP: 30328 FORMER COMPANY: FORMER CONFORMED NAME: CENTURY PROPERTIES FUND 84 DATE OF NAME CHANGE: 19831018 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 December 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 0-13104 MRI Business Properties Fund, Ltd. (Exact name of Registrant as specified in its charter) California 94-2919856 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) One Insignia Financial Plaza, P.O. Box 1089, Greenville S.C. 29602 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code (864) 239-1000 5665 Northside Drive N.W., Georgia 30328 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 12 MRI BUSINESS PROPERTIES FUND, LTD. - FORM 10-Q - DECEMBER 31, 1995 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. Consolidated Balance Sheets December 31, September 30, 1995 1995 Assets Cash and cash equivalents $ 4,015,000 $ 3,795,000 Other assets 502,000 474,000 Real Estate: Real estate 38,248,000 38,220,000 Accumulated depreciation (10,329,000) (10,225,000) Allowance for impairment of value (12,981,000) (12,981,000) ------------ ------------ Real estate, net 14,938,000 15,014,000 Deferred costs, net 389,000 414,000 ------------ ------------ Total assets $ 19,844,000 $ 19,697,000 ============ ============ Liabilities and Partners' Equity Note payable $ 1,099,000 $ 1,110,000 Accounts payable, accrued liabilities and interest 540,000 528,000 Due to affiliate -- 50,000 ------------ ------------ Total liabilities 1,639,000 1,688,000 ------------ ------------ Partners' Equity: General partners (deficit) (1,045,000) (1,049,000) Limited partners equity (82,158 units outstanding at December 31, 1995 and September 30, 1995) 19,250,000 19,058,000 ------------ ------------ Total partners' equity 18,205,000 18,009,000 ------------ ------------ Total liabilities and partners' equity $19,844,000 $19,697,000 ============ ============ See notes to consolidated financial statements. 2 of 12 MRI BUSINESS PROPERTIES FUND, LTD. - FORM 10-Q - DECEMBER 31, 1995 Consolidated Statements of Operations For the Three Months Ended December 31, December 31, 1995 1994 Revenues: Commercial operations $ 848,000 $ 816,000 Hotel lease -- 85,000 Interest and other income 41,000 41,000 Gain on sale of property -- 2,097,000 ---------- ---------- Total revenues 889,000 3,039,000 ---------- ---------- Expenses: Hotel operations -- 59,000 Commercial operations 451,000 465,000 Depreciation 104,000 300,000 Interest 25,000 258,000 General and administrative 113,000 125,000 ---------- ---------- Total expenses 693,000 1,207,000 ---------- ---------- Income before extraordinary item 196,000 1,832,000 Extraordinary item: Gain on extinguishment of debt -- 4,596,000 ---------- ---------- Net income $ 196,000 $6,428,000 ========== ========== Net income per limited partnership unit: Income before extraordinary item $ 2.34 $ 17.26 Extraordinary item -- 44.76 ---------- ---------- Net income $ 2.34 $ 62.02 ========== ========== See notes to consolidated financial statements. 3 of 12 MRI BUSINESS PROPERTIES FUND, LTD. - FORM 10-Q - DECEMBER 31, 1995 Consolidated Statement of Partners' Equity (Deficit) For the Three Months Ended December 31, 1995 General Limited Total Partners' Partners' Partners' (Deficit) Equity Equity Balance - October 1, 1995 $(1,049,000) $19,058,000 $18,009,000 Net income 4,000 192,000 196,000 ----------- ----------- ----------- Balance - December 31, 1995 $(1,045,000) $19,250,000 $18,205,000 =========== =========== =========== See notes to consolidated financial statements. 4 of 12 MRI BUSINESS PROPERTIES FUND, LTD. - FORM 10-Q - DECEMBER 31, 1995 Consolidated Statements of Cash Flows For the Three Months Ended December 31, December 31, 1995 1994 Operating Activities: Net income $ 196,000 $ 6,428,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Gain on sale of property -- (2,097,000) Extraordinary gain on extinguishment of debt -- (4,596,000) Depreciation and amortization 139,000 334,000 Deferred costs paid (10,000) (14,000) Provision for doubtful receivables -- (1,000) Changes in operating assets and liabilities: Other assets (28,000) (159,000) Accounts payable, accrued liabilities and interest 12,000 (1,294,000) Due to affiliate (50,000) -- ----------- ----------- Net cash provided by (used in) operating activities 259,000 (1,399,000) ----------- ----------- Investing Activities: Net proceeds from sale of property -- 27,681,000 Additions to real estate (28,000) (401,000) ----------- ----------- Net cash (used in) provided by investing activities (28,000) 27,280,000 ----------- ----------- Financing Activities: Satisfaction of notes payable -- (27,051,000) Notes payable principal payments (11,000) (17,000) ----------- ----------- Cash (used in) financing activities (11,000) (27,068,000) ----------- ----------- Increase (Decrease) in Cash and Cash Equivalents 220,000 (1,187,000) Cash and Cash Equivalents at Beginning of Period 3,795,000 5,031,000 ----------- ----------- Cash and Cash Equivalents at End of Period $ 4,015,000 $ 3,844,000 =========== =========== Supplemental Disclosure of Cash Flow Information: Interest paid in cash during the period $ 24,000 $ 1,161,000 =========== =========== See notes to consolidated financial statements. 5 of 12 MRI BUSINESS PROPERTIES FUND, LTD. - FORM 10-Q - DECEMBER 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, 1995. 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, except for the gain on sale of property and the gain on extinguishment of debt, as discussed in Note 3. The results of operations for the three months ended December 31, 1995 and 1994 are not necessarily indicative of the results to be expected for the years ended September 30, 1996 and 1995, respectively. On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued and outstanding stock of NPI, Inc. to an affiliate of Insignia Financial Group ("Insignia"). As a result of the transaction, the Managing General Partner of the Partnership is controlled by Insignia. Insignia affiliates now maintain the Partnership books and records and oversee its operations. Property management and asset management services continue to be performed by unaffiliated third parties. The limited partnership units owned by Deforest Ventures I, L.P., representing approximately 31% of total limited partnership units, were not acquired by Insignia. 2. Transactions with Related Parties An affiliate of the Managing General Partner received reimbursement of administrative expenses amounting to $30,000 and $32,000 during the three months ended December 31, 1995 and 1994, respectively. These reimbursements are included in general and administrative expenses. 3. Gain on Sale of Property and Extraordinary Gain on Extinguishment of Debt On October 24, 1994, the Partnership sold its Dallas Marriott Quorum Hotel for $29,815,000. After repayment of the first and second mortgage loan balances of $22,221,000 (including $170,000 of accrued interest) and $5,000,000, respectively, deferred interest of $750,000 and closing costs and adjustments of $515,000, the cash received by the Partnership was $1,329,000. Under the terms of the agreement, cash in the hotel's bank account of approximately $1,980,000 was retained by the purchaser, to be used as a partial repayment of the second loan. Accrued but unpaid interest of approximately $4,596,000 on the second loan was forgiven by the lender. The sale resulted in a gain of $2,097,000 and an extraordinary gain on extinguishment of debt of $4,596,000. 4. Subsequent Event On January 11, 1996, the Partnership distributed $3,315,000 ($40.35 per unit) and $68,000 to the limited and general partners, respectively, from working capital reserves. 6 of 12 MRI BUSINESS PROPERTIES FUND, LTD. - FORM 10-Q - DECEMBER 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 real estate properties consist of three office buildings, one office/warehouse complex and one shopping center located in Colorado, Arizona, Texas, and Georgia. The commercial properties are leased to tenants subject to leases currently ranging from one to seven years. All of Registrant's remaining properties generated positive cash flow for the three months ended December 31, 1995. Registrant receives rental income from commercial spaces and is responsible for operating expenses, administrative expenses, capital improvements and debt service payments. Registrant is marketing all of its properties for sale. As of February 1, 1996, two of the eight properties originally purchased by Registrant were sold and one was lost through foreclosure. Registrant uses working capital reserves from any undistributed cash flow from operations, proceeds from mortgage financings and the sale of properties as its primary sources of liquidity. On January 11, 1996, Registrant distributed $3,315,000 ($40.35 per unit) to the limited partners and $68,000 to the general partners, from working capital reserves. Management is currently negotiating a lease extension with a tenant that occupies 75% of Registrant's Mardot II office/warehouse complex, whose lease expires in March 1996. A significant portion of the unoccupied space at Parkway Village Shopping Center is currently being marketed to potential long term tenants. In addition, a tenant occupying approximately 41% of Parkway Village Shopping Center may not renew its lease, which expires on October 31, 1996. The re-leasing of these spaces might require significant expenditures for tenant installations and leasing commissions. If the spaces are not re-leased, it will have a significant negative impact on Registrant's operations. Registrant's level of liquidity based upon cash and cash equivalents experienced a $220,000 increase at December 31, 1995, as compared to September 30, 1995. Registrant's $259,000 of cash provided by operating activities was only slightly offset by $28,000 of cash used for improvements to real estate (investing activities) and $11,000 of cash used for mortgage principal payments (financing activities). All other increases (decreases) in certain assets and liabilities are the result of the timing of receipt and payment of various operating activities. In December 1995, Registrant entered into a contract to sell its Norwood Tower Office Building for $5,750,000. The sale, which is subject to the purchaser's due diligence review and other customary conditions, is expected to close in April 1996. If the sale is consummated, Registrant expects to receive net proceeds of approximately $5,500,000. For financial statement purposes, no gain or loss on sale would be recognized since Registrant has already provided for an impairment of value to reduce the carrying value of the property to its estimated fair value. 7 of 12 MRI BUSINESS PROPERTIES FUND, LTD. - FORM 10-Q - DECEMBER 31, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources (Continued) Working capital reserves are invested in a money market account 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 and proceeds from the sale of properties will be sufficient to fund required capital improvements and regular debt service payments in fiscal 1996 and the foreseeable future. In the event that additional resources are required, the Managing General Partner could attempt to arrange further financing, refinancing or borrow under the credit line (of up to $150,000 per property) provided by the Managing General Partner. Registrant has no outstanding amounts due under this line of credit. Based on present plans, management does not anticipate the need to borrow in the near future. Other than cash and cash equivalents, the line of credit is Registrant's only unused source of liquidity. On January 19, 1996, the stockholders of NPI, Inc., the sole shareholder of NPI Equity II, sold to Insignia all of the issued and outstanding stock of NPI, Inc. Insignia has elected new officers and directors of NPI Equity II. The Managing General Partner does not believe these events will have a significant effect on Registrant's liquidity or results of operations or upon the marketing of the Registrant's assets previously initiated by the former officers. At this time, it appears that the investment objective of capital growth will not be attained and that 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 performance of Registrant's remaining properties and the markets in which such properties are located and on the sales price of the remaining properties. Registrant is currently marketing its remaining properties for sale. Registrant, however, does not believe it will be able to maximize some of the properties sales prices until a substantial portion of the vacant space is re-leased and leases which are due to expire in 1996 are renewed or the space re-leased. Upon sale of all properties and termination of the Partnership, the general partners may be required to contribute certain funds to the Partnership in accordance with the partnership agreement. Real Estate Market The national real estate market has suffered from the effects of the real estate recession including, but not limited to, a downward trend in market values of existing properties. In addition, the bailout of the savings and loan associations and sales of foreclosed properties by auction reduced market values and caused a further restriction on the ability to obtain credit. These factors caused a decline in market property values and served to reduce market rental rates and/or sales prices. Management believes, however, that the emergence of new institutional purchasers, including real estate investment trusts and insurance companies, relatively low interest rates and the improved economy, have created a more favorable market for Registrant's properties. 8 of 12 MRI BUSINESS PROPERTIES FUND, LTD. - FORM 10-Q - DECEMBER 31, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Three Months Ended December 31, 1995 vs. December 31, 1994 Operating results (before extraordinary gain on extinguishment of debt) declined by $1,636,000 for the three months ended December 31, 1995, as compared to 1994, as the decrease in revenues of $2,150,000 was only partially offset by the decrease in expenses of $514,000. Operating results declined due to the $2,097,000 gain on sale of Registrant's Dallas Marriott Quorum Hotel in October 1994. With respect to the remaining properties, operating results improved by $135,000 due to an increase in revenues of $32,000 and a decrease in expenses of $103,000. With respect to the remaining properties, revenue from commercial operations increased by $32,000 for the three months ended December 31, 1995, as compared to 1994, due to an increase in rental rates at Registrant's Priest, Norwood Tower and Resource Park West Office Buildings and increased occupancy at Registrant's Parkway Village Shopping Center. Occupancy and rental rates remained relatively constant at Registrant's remaining properties. In addition, interest income remained constant. With respect to the remaining properties, expenses decreased for the three months ended December 31, 1995, as compared to 1994, primarily due to a decrease in depreciation expense of $77,000. Depreciation expense decreased due to the additional provision for impairment of value recorded on Registrant's Norwood Tower Office Building in June 1995, which was slightly offset by an increase in depreciation expense due to fixed asset additions. Commercial operations and interest expense remained relatively constant. In addition, general and administrative expenses decreased by $12,000 during the three months ended December 31, 1995, as compared to 1994. 9 of 12 MRI BUSINESS PROPERTIES FUND, LTD. - FORM 10-Q - DECEMBER 31, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Properties A description of the properties in which Registrant has an ownership interest during the period covered by this Report, together with occupancy and room rate data follows: MRI BUSINESS PROPERTIES FUND, LTD. OCCUPANCY AND ROOM RATE SUMMARY Average Occupancy Rate (%) Three Months Date Ended of December 31, Name and Location Size Purchase 1995 1994 - ----------------- ---- -------- ---- ---- Commercial Buildings: Resource Park West Office Building 61,000 01/84 100 100 Lakewood, Colorado sq. ft. Priest Office Building 31,000 04/84 100 100 Tempe, Arizona sq. ft. Mardot II Building 67,000 04/84 100 100 Tempe, Arizona sq. ft. Parkway Village Shopping Center 116,000 06/84 61 56 Atlanta, Georgia sq. ft. Norwood Tower Office Building 121,000 01/85 96 96 Austin, Texas sq. ft. 10 of 12 MRI BUSINESS PROPERTIES FUND, LTD. - FORM 10-Q - DECEMBER 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. 11 of 12 MRI BUSINESS PROPERTIES FUND, LTD. - FORM 10-Q - DECEMBER 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. 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 Partner /S/ William H. Jarrard Jr. William H. Jarrard Jr. President and Director /S/ Ronald Uretta Ronald Uretta Principal Financial Officer And Principal Accounting Officer 12 of 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information extracted from MRI Business Properties Fund, Ltd. and is qualified in its entirety by reference to such financial statements. 1 3-MOS SEP-30-1996 OCT-01-1995 DEC-31-1995 4,015,000 0 0 0 0 0 38,248,000 23,310,000 19,844,000 0 1,099,000 0 0 0 18,205,000 19,844,000 0 848,000 0 555,000 0 0 25,000 196,000 0 196,000 0 0 0 196,000 2.34 2.34 Depreciation includes $12,981,000 of allowance for impairment of value.
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