0000755869-95-000006.txt : 19950817 0000755869-95-000006.hdr.sgml : 19950817 ACCESSION NUMBER: 0000755869-95-000006 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950816 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLENBOROUGH PENSION INVESTORS CENTRAL INDEX KEY: 0000755869 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 330058349 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-13448 FILM NUMBER: 95564511 BUSINESS ADDRESS: STREET 1: 400 S EL CAMINO REAL STE 1100 CITY: SAN MATEO STATE: CA ZIP: 94402 BUSINESS PHONE: 4153439300 MAIL ADDRESS: STREET 1: 400 S EL CAMINO REAL STE 1100 CITY: SAN MATEO STATE: CA ZIP: 94402 FORMER COMPANY: FORMER CONFORMED NAME: OUTLOOK PENSION INVESTORS DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AUGUST PENSION INVESTORS DATE OF NAME CHANGE: 19890815 10-Q/A 1 FORM 10-Q/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [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 0-13448 GLENBOROUGH PENSION INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP -------------------------------------------------------------- (Exact name of Registrant as specified in its charter) California 33-0058349 --------------------------- --------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 400 South El Camino Real, Suite 1100 94402-1708 San Mateo, California ------------ -------------------------------------------- (Zip Code) (Address of principal executive offices) (415) 343-9300 ----------------------------------- (Registrant's telephone number) 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 ---- ---- Total number of units outstanding as of March 31, 1995: 118,942 NO EXHIBIT INDEX REQUIRED Page 1 of 15 PART I. FINANCIAL INFORMATION Item 1. Financial Statements GLENBOROUGH PENSION INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP Consolidated Balance Sheets (in thousands, except units outstanding) (Unaudited) March 31, December 31, 1995 1994 Assets --------- ------------ ------- Real estate investments: Land $ 8,312 $ 6,456 Buildings and improvements, net of accumulated depreciation of $1,567 and $1,366 in 1995 and 1994, respectively 15,000 12,958 -------- -------- Net real estate investments 23,312 19,414 Cash and cash equivalents 174 382 Accounts receivable 208 106 Prepaid expenses and other assets, net of accumulated amortization of $144 and $129 in 1995 and 1994, respectively 563 510 -------- -------- Total assets $ 24,257 $ 20,412 ======== ======== Liabilities and Partners' Equity (Deficit) ------------------------- Accounts payable and accrued expenses $ 559 $ 559 Notes payable 3,908 - -------- -------- Total liabilities 4,467 559 Partners' equity (deficit): General Partner (55) (55) Limited Partners - 118,942 limited partnership units outstanding 19,845 19,908 -------- -------- Total partners' equity 19,790 19,853 -------- -------- Total liabilities and partners' equity $ 24,257 $ 20,412 ======== ======== See accompanying notes to consolidated financial statements. Page 2 of 15 GLENBOROUGH PENSION INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP Consolidated Statements of Operations (in thousands, except per unit amounts) (Unaudited) Three months ended March 31, ------------------------ 1995 1994 ------ ------ Revenues: Rental revenue $ 1,279 $ 1,028 Interest and other - 9 -------- -------- Total revenues 1,279 1,037 -------- -------- Costs and expenses: Operating (including $231 paid to an affiliate in the three months ended March 31, 1995) 702 585 General and administrative (including $67 paid to an affiliate in the three months ended March 31, 1995) 104 101 Depreciation and amortization 213 170 Interest 75 8 Other 23 - -------- -------- Total expenses 1,117 864 -------- -------- Net income $ 162 $ 173 ======== ======== Net income per limited partnership unit $ 1.35 $ 1.44 ======== ======== Distributions per limited partnership unit: From net income $ 1.35 $ 1.44 Representing return of capital 0.52 0.12 -------- -------- Total distributions per limited partnership unit $ 1.87 $ 1.56 ======== ======== See accompanying notes to consolidated financial statements. Page 3 of 15 GLENBOROUGH PENSION INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP Consolidated Statements of Partners' Equity (Deficit) (in thousands) For the three months ended March 31, 1995 and 1994 (Unaudited) Total General Limited Partners' Partner Partners Equity --------- -------------------- Balance at December 31, 1993 $ (56) $ 19,874 $ 19,818 Distributions (2) (186) (188) Net income 2 171 173 -------- -------- -------- Balance at March 31, 1994 $ (56) $ 19,859 $ 19,803 ======== ======== ======== Balance at December 31, 1994 $ (55) $ 19,908 $ 19,853 Distributions (2) (223) (225) Net income 2 160 162 -------- -------- -------- Balance at March 31, 1995 $ (55) $ 19,845 $ 19,790 ======== ======== ======== See accompanying notes to consolidated financial statements. Page 4 of 15 GLENBOROUGH PENSION INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP Consolidated Statements of Cash Flows (in thousands) (Unaudited) Three months ended March 31, --------------- 1995 1994 ----- ----- Cash flows provided by operating activities: Net income $ 162 $ 173 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 213 170 Other expenses 23 - Changes in certain assets and liabilities: Accounts receivable (102) (82) Prepaid expenses and other assets (68) (13) Accounts payable and accrued expenses - 18 -------- -------- Total adjustments 66 93 -------- -------- Net cash provided by operating activities 228 266 -------- -------- Cash flows used for investing activities: Acquisitions of and additions to real estate (211) (43) -------- -------- Net cash used for investing activities (211) (43) -------- -------- Cash flows used for financing activities: Distributions paid to partners (225) (188) -------- -------- Net cash used for financing activities (225) (188) -------- -------- Net increase (decrease) in cash and cash equivalents (208) 35 Cash and cash equivalents at beginning of period 382 342 -------- -------- Cash and cash equivalents at end of period $ 174 $ 377 ======== ======== Supplemental disclosure of cash flow information: Cash paid for interest $ - $ 8 ======== ======== Supplemental disclosure of non cash investing and financing activities: Acquisition of real estate through foreclosure and assumption of first trust deed note payable $ 3,908 $ - ======== ======== See accompanying notes to consolidated financial statements. Page 5 of 15 GLENBOROUGH PENSION INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP Notes to Consolidated Financial Statements March 31, 1995 (Unaudited) Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING ----------------------------------------------------- POLICIES -------- In the opinion of Glenborough Realty Corporation, the managing General Partner, the accompanying unaudited financial statements contain all adjustments (consisting of only normal accruals) necessary to present fairly the financial position of Glenborough Pension Investors, A California Limited Partnership (the "Partnership") as of March 31, 1995 and December 31, 1994, the related statements of operations for the three months ended March 31, 1995 and 1994, and the changes in partners' equity and cash flows for the three months ended March 31, 1995 and 1994. Note 2. REFERENCE TO 1994 AUDITED FINANCIAL STATEMENTS ---------------------------------------------- These unaudited financial statements should be read in conjunction with the Notes to Financial Statements included in the 1994 audited financial statements. Note 3. TRANSACTIONS WITH AFFILIATES ---------------------------- In accordance with the limited partnership agreement, the Partnership paid the General Partner and its affiliates compensation for services provided to the Partnership. Glenborough Corporation and Glenborough Hotel Group ("Glenborough"), affiliates of Glenborough Realty Corporation, have been compensated for property management services. Included in operating expenses for the three months ended March 31, 1995 are the following amounts paid to Glenborough: March 31, 1995 --------- Property management fees $ 38,200 Property salaries (reimbursed) 27,300 Hotel management fees 20,700 Hotel salaries (reimbursed) 117,700 Property administrative services 26,800 The Partnership also reimbursed Glenborough for direct expenses plus a 1.0% fee for general and administrative costs and services provided to the Partnership such as accounting, investor services, data processing, duplicating, office supplies, legal and administrative services. Glenborough was paid $66,600 by the partnership for these expenses in the three months ended March 31, 1995. Page 6 of 15 GLENBOROUGH PENSION INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP Notes to Consolidated Financial Statements March 31, 1995 (Unaudited) Note 4. PROPERTY ACQUISITION -------------------- On January 12, 1995, the Partnership acquired a property, Summerbreeze Apartments (the "Property") (formerly owned by Glenfed Summerbreeze Investors, Ltd., a California Limited Partnership ("Summerbreeze Investors") by a deed-in-lieu of foreclosure. Prior to January 12, 1995, the Partnership held a note secured by a second deed of trust on the Property and an unsecured note with unpaid balances of principal and accrued interest as of September 30, 1993 aggregating approximately $1,159,000. The Property was also encumbered by a first deed of trust. Because the amount of the Summerbreeze Investors partnership's total debt was approximately equal to the value of its assets, the partnership had little or no net worth. Since the limited partners of Summerbreeze Investors elected not to contribute any capital to pay for new financing, they agreed to give a deed-in-lieu of foreclosure to the Partnership in exchange for $150,000. The Partnership immediately began seeking new financing for the Property while continuing to make payments on the first deed of trust which matured on September 1, 1994 and was now in default. The Partnership was informed by the first deed of trust lender (Calfed Bank) that they were attempting to reduce their commercial loan portfolio in accordance with federal regulations, and that they therefore would not extend the loan and in fact had scheduled a foreclosure sale to occur on March 29, 1995. The General Partner had previously obtained a "term sheet" from a San Francisco bank to provide the necessary financing to retire the Calfed loan. However, on March 24, 1995, the San Francisco bank advised the General Partner that an additional two weeks of time was needed to close the loan, and there was no assurance of closing. Given the foreclosure date of March 29, this approach clearly was no longer viable, and the Partnership was facing the possible loss of the property. On March 28, 1995, the Partnership obtained short-term financing from two sources to payoff Calfed. GPA West, a subsidiary of a partnership whose general partner is also Glenborough Realty Corporation, loaned the Partnership $1,908,000, secured by a first deed of trust on the Property. In addition, the Partnership obtained a short-term $2,000,000 bank loan, guaranteed personally by Robert Batinovich and Glenborough Realty Corporation, and secured by a second deed of trust on the Property and a collateral assignment of the Partnership's mortgage on Park Center. On May 18, 1995, subsequent to the Partnership's quarter end, the debt will be totally refinanced with a $4,000,000 first mortgage loan from Wells Fargo Bank, Page 7 of 15 GLENBOROUGH PENSION INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP Notes to Consolidated Financial Statements March 31, 1995 (Unaudited) which will be additionally secured by a mortgage on the Park 100 buildings. This loan will mature on May 15, 1996, and bear interest at prime plus 2.00%. The Partnership will pay an initial loan fee of 1.00% and will pay an additional 1.00% fee if the loan has not been paid off by November 17, 1995. During negotiations with Calfed, $23,000 in costs were incurred by Calfed and the Partnership in association with the potential foreclosure proceedings, which the Partnership agreed to incur. These costs are categorized as other expense on the Partnership's 1995 statement of operations. Note 5. OTHER INFORMATION ----------------- The Partnership has been named in a Registration Statement proposing a consolidation by merger of several entities, which has been filed with the Securities and Exchange Commission. In that regard, as of March 31, 1995, the Partnership has advanced and accrued $365,000 toward its pro rata share of the transaction costs associated with the consolidation (included in prepaid expense and other assets). An additional $6,000 in transaction costs have been included in prepaid expenses and other assets and was payable at March 31, 1995. In the event the proposal is not approved by the Partnership's limited partners, and the consolidation goes forward with any of the other entities, the amounts advanced will be fully reimbursed by an affiliate of the general partners of the Partnership. If the Consolidation, itself, does not go forward with any of the other entities, the Partnership will bear a proportion of the transaction costs based upon the number of limited partners who voted for approval of the transaction as compared to those who dissented or abstained. The limited partners are expected to receive their solicitation materials for the potential transaction in 1995. Page 8 of 15 Item 2. Managements Discussion and Analysis of Financial Conditions and Results of Operations LIQUIDITY AND CAPITAL RESOURCES The Partnership maintains nominal cash reserves and distributes the net cash flow from operations to the partners. Distributions to the Limited Partners were paid at an annual rate of 2.5% for the three months ended March 31, 1994. After reviewing the effects of the implementation of the workout between the Partnership and the Borrower, management increased the distribution rate to 3% effective for the distribution paid August 31, 1994. Of the distributions paid in the three months ended March 31, 1994, $14,300 represented return of capital. However, the total distributions paid by December 31, 1994 were provided by net income since net income for the quarters ended June 30 and September 30, 1994 exceeded the distribution. Of the distributions paid in 1995, $61,800 were distributed in excess of operational cash flow and therefore represented a return of capital. As discussed in Note 4 of the Notes to Consolidated Financial Statements, the Partnership acquired the Summerbreeze property by a deed-in-lieu of foreclosure on January 12, 1995 which primarily accounts for the increase in net real estate investments from December 31, 1994 to March 31, 1995. The cost basis of the property when title transferred to the Partnership was the equivalent of the note payable secured by a first deed of trust and $150,000 that the Partnership paid for a deed-in-lieu of foreclosure. Accounts receivable increased approximately $102,000 from December 31, 1994 to March 31, 1995 due to an increase in accounts receivable at the Country Suites - DFW property. Payments are currently being received and all accounts receivable is expected to be collected. Prepaid expenses and other assets increased approximately $53,000 from December 31, 1994 to March 31, 1995 due to the acquisition of the Summerbreeze property whose balance sheet included $11,000 relating to a utility deposit, the payment of a deposit in February 1995 in the amount of $25,000 to a lender that management is currently working to refinance Summerbreeze and $13,000 in advances made by the Partnership toward transaction costs associated with the proposed consolidation by merger, as discussed in Note 5 of the Consolidated Notes to Financial Statements. Notes payable in the amount of $3,908,000 at March 31, 1995 represents the new first and second trust deed notes secured by the Summerbreeze property that the Partnership acquired on January 12, 1995 (as discussed in Note 4 of the Notes to Consolidated Financial Statements.) RESULTS OF OPERATIONS Page 9 of 15 Rental revenue increased $251,000 in the three months ended March 31, 1995 compared to the same period in 1994 primarily due to the acquisition of the Summerbreeze property on January 12, 1995, which accounted for $175,000 of the increase. The remaining $76,000 increase in rental revenue was primarily due to the improved operations at Park 100, Building 42 (as a result of increased occupancy) and Country Suites - DFW (as a result of a higher average daily room rate). The amounts by which Sea Tac, Eagan, New Hope, College Park, Norcross, Smyrna and Snellville 1995 revenues exceeded 1994 revenues for the three months ended March 31 were minimal, and were offset by the decrease in revenues in 1995 from 1994 of the Park Center, Roswell and Marietta properties which resulted in a combined total decrease of $3,000. Operating expenses increased $117,000 in 1995 over 1994, of which $103,000 related to the Summerbreeze property. The remaining $12,000 increase was primarily due to an increase in expenses at the Sea Tac property relating to environmental surveys and remediation in the amount of $40,000 and an increase at the Country Suites - DFW property in the amount of $37,000 relating to an increase in sales and administrative costs. These increases were partially offset by a decrease in property administrative services and operating expenses at the remaining properties. See the discussion which follows regarding the individual property operations. Depreciation and amortization expense increased by approximately $43,000 primarily due to the acquisition of the Summerbreeze property on January 12, 1995. Interest expense in the amount of $75,000 in the three months ended March 31, 1995 is the interest relating to the first deed of trust on the Summerbreeze property (see Note 4 of the Notes to Consolidated Financial Statements). Other expenses in the amount of $23,000 for the three months ended March 31, 1995 were costs incurred by the original lender on the Summerbreeze property relating to the potential foreclosure proceedings before the note payable was refinanced (as discussed in Note 4 of the Notes to Consolidated Financial Statements). The Partnership agreed to assume these costs and recognized them on the 1995 statement of operations. Following is a discussion of the individual property operations. ATLANTA AUTO CARE CENTERS: Occupancy Level ------------------------- Percentage ------------------ March 31, March 31, 1995 1994 --------- --------- College Park 100% 100% Marietta 100% 100% Norcross 100% 91% Page 10 of 15 Roswell 100% 76% Smyrna 100% 80% Snellville 100% 100% The Auto Care Centers' occupancy rates are highly sensitive because each of the centers consist of only a few units. Therefore, if a single tenant vacates a space, occupancy can drop substantially. Likewise, if a new tenant leases a vacant space, there will be a dramatic increase in occupancy. College Park: The College Park Auto Center remains 100% leased with the next lease expiration in August 1995. This tenant, who occupies 1,920 square feet, has informed management that he will not renew his lease. Marietta: The Marietta Auto Center remains 100% leased as a result of successful renewals signed with two tenants whose leases were due to expire March 1995. The next lease expiration is November 1996. Norcross: The increase in occupancy from 91% in 1994 to 100% in 1995 is due to the leasing of a 1,000 square foot unit in June 1994. The next lease expiration is September 1996 due to the successful renewal of a 1,000 square foot lease which was due to expire May 1995. Roswell: The increase in occupancy from 76% in 1994 to 100% in 1995 is due to the leasing of a 1,400 square foot unit in March 1995. The next lease expiration is May 1998. Smyrna: The increase in occupancy from 80% in 1994 to 100% in 1995 is due to the leasing of a 1,920 square foot unit in April 1994. Management currently has successfully negotiated a renewal of 5,600 square feet. The next lease expiration is April 1997. Snellville: The Snellville Auto Center remains 100% leased with the next lease expiration in June 1995. Management has been notified that this tenant will not renew and is working on negotiations with a new tenant. This tenant currently occupies 2,520 square feet. Park Center: The occupancy rate at March 31, 1995 and March 31, 1994 was 97%. Management is currently working on negotiating a renewal of a 1,500 square foot unit. Park Center compares favorably with the Tustin/Santa Ana submarket which currently reflects a vacancy rate of approximately 15% for retail shopping centers. Brokers are being utilized to identify tenants in competing centers for a "cold- call" program. Income generated by this property has decreased approximately $33,000 in the three months ended March 31, 1995 compared to the same period in 1994 as a result of decreased market rates driven by competition and credits given to tenants in the current year Page 11 of 15 for recoveries collected in the prior year in excess of actual expenses paid. Park 100 - Building 42: The increase in occupancy from 89% in 1994 to 100% in 1995 is due to the leasing of two 2,400 square foot units in March and June 1994, a 3,000 square foot unit in April 1994, an 1,800 square foot unit in May 1994 and a 1,200 square foot unit in December 1994. Management is currently negotiating renewals totaling 6,600 square feet for tenants whose leases expire in the current year between April and November. Marketing activity has been intensified and has proven successful. Each week, flyers are sent out advertising office/showroom space, and a space availability report is sent to all brokers in the Indianapolis area each month. An extensive data base which catalogs all industrial clients is being utilized. Income generated by this property in the three months ended March 31, 1995 increased by approximately $19,000 as a result of the increase in occupancy. Park 100 - Building 46: The occupancy rate at Park 100 Building 46 was 100% at March 31, 1995 and 1994. Since there are only two tenants who occupy 100% of the square footage of this property, a vacancy would dramatically affect the occupancy rate. However, the next lease expiration date is not until July 1996. Revenue generated by this property increased in the three months ended March 31, 1995 compared to the same period in 1994 due to an increase in market rates. Sea Tac: The occupancy rate at Sea Tac was 100% at March 31, 1995 and 1994. Two tenants occupy 100% of the square footage of the building. Both tenants' leases expire in December 1995. Management is currently negotiating renewals for both of these tenants. Income generated by this property in the three months ended March 31, 1995 did not significantly fluctuate compared to the same period in 1994. Eagan and New Hope Mini Storages: The occupancy rates at Eagan as of March 31, 1995 and 1994 were 95% and 92%, respectively. The occupancy rate at New Hope as of March 31, 1995 and 1994 was 91% for both periods. Marketing for these properties is difficult since other viable options for storage are competing with these properties. In addition, the winter months brought a slight decline in occupancy. Management is expecting the spring months to bring an increase. Income generated by the mini storages in the current period was slightly higher than the prior period due to a rate increase (partially offset by a decrease in occupancy) and an increase in Page 12 of 15 income from the sale of abandoned property held in the mini storages. Country Suites - DFW: The occupancy and daily room rate for Country Suites - DFW for the period ended March 31, 1995 was 76% and $62.69, respectively, compared to 79% and $54.82 for the period ended March 31, 1994. DFW's revenue increased approximately $44,000 in the three months ended March 31, 1995 over the same period in 1994 due to an increase in a sector of transient revenue (guests who stay from one to five days) which is higher rated business. The increases are also attributable to the maturity of the franchise reservation system and the repositioning and marketing of the property taking hold. DFW's operating expenses increased approximately $37,100 in the three months ended March 31, 1995 over the same period in 1994 due to an increase in direct expenses associated with high turnover of guests and an increase in indirect expenses such as sales and administration costs. Summerbreeze Apartments: The occupancy at Summerbreeze Apartments at March 31, 1995 was 96%. An estimate of the occupancy in the competitive area is approximately 92%. Summerbreeze consists of 104 units located in North Hollywood, California. Average rent for the property ranges from $605.00 for a one-bedroom/one- bathroom unit to $777.00 for a two-bedroom/two-bathroom unit, and is comparable with market rent which ranges from $595.00 to $805.00. The average turnover per month is five tenants. Rent concessions are being given to increase occupancy and meet market expectations. Page 13 of 15 PART II. Item 1. Legal Proceedings None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. None. (b) Reports on Form 8-K. No reports on Form 8-K were required to be filed during this reporting period. Page 14 of 15 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. GLENBOROUGH PENSION INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP By: Glenborough Realty Corporation, a California corporation the Managing General Partner Date: May 10, 1995 By: ---------------------------- Andrew Batinovich Senior Vice President, Chief Financial Officer and Director 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. GLENBOROUGH PENSION INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP By: Glenborough Realty Corporation, a California corporation the Managing General Partner Date: May 10, 1995 By: /s/ Andrew Batinovich ---------------------------- Andrew Batinovich Senior Vice President, Chief Financial Officer and Director Page 15 of 15