-----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, MYjvAEPp16XL4sOytmK3ae2NxerMSND2iTOpV2k1RGRIf9gqNwjVmF8/XzN4vJnR XJJIvhXPJJYsSNrWikt2aQ== 0000812564-98-000004.txt : 19980513 0000812564-98-000004.hdr.sgml : 19980513 ACCESSION NUMBER: 0000812564-98-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980512 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCCOMBS REALTY PARTNERS LTD CENTRAL INDEX KEY: 0000759198 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330068732 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-14570 FILM NUMBER: 98616850 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT U.S. Securities And Exchange Commission Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 [ ] 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 0-14570 MCCOMBS REALTY PARTNERS, LTD. (Exact name of small business issuer as specified in its charter) California 33-0068732 (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) (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) MCCOMBS REALTY PARTNERS, LTD. CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands) March 31, 1998 Assets Cash and cash equivalents $ 414 Receivables and deposits 56 Restricted escrows 279 Other assets 144 Investment properties: Land $ 499 Buildings and related personal property 5,409 5,908 Less accumulated depreciation (3,306) 2,602 $ 3,495 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 59 Tenant security deposit liabilities 23 Accrued property taxes 20 Other liabilities 62 Mortgage note payable 5,713 Partners' Capital (Deficit) General partners $ 1 Limited partners (17,199.69 units issued and outstanding) (2,383) (2,382) $ 3,495 See Accompanying Notes to Consolidated Financial Statements b) MCCOMBS REALTY PARTNERS, LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except for unit data) Three Months Ended March 31, 1998 1997 Revenues: Rental income $ 314 $ 336 Other income 29 33 Total revenues 343 369 Expenses: Operating 144 141 General and administrative 22 7 Depreciation 56 50 Interest 121 122 Property taxes 20 20 Total expenses 363 340 Net (loss) income $ (20) $ 29 Net (loss) income allocated to general partners (1%) $ -- $ -- Net (loss) income allocated to limited partners (99%) (20) 29 $ (20) $ 29 Net (loss) income per limited partnership unit $ (1.15) $ 1.67 See Accompanying Notes to Consolidated Financial Statements c) MCCOMBS REALTY PARTNERS, LTD. CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (Unaudited) (in thousands, except for unit data) Limited Partnership General Limited Units Partner Partners Total Partners' capital (deficit) at December 31, 1997 17,199.69 $ 1 $ (2,363) $ (2,362) Net loss for the three months ended March 31, 1998 -- -- (20) (20) Partners' capital (deficit) at March 31, 1998 17,199.69 $ 1 $ (2,383) $ (2,382) See Accompanying Notes to Consolidated Financial Statements d) MCCOMBS REALTY PARTNERS, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Three Months Ended March 31, 1998 1997 Cash flows from operating activities: Net (loss) income $ (20) $ 29 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation 56 50 Amortization of loan costs 5 5 Change in accounts: Receivables and deposits (14) 72 Other assets 3 2 Accounts payable (19) (19) Tenant security deposit liabilities (3) 2 Accrued property taxes 20 (56) Other liabilities (16) (19) Net cash provided by operating activities 12 66 Cash flows from investing activities: Property improvements and replacements (17) (15) Net deposits to restricted escrows (18) (17) Net cash used in investing activities (35) (32) Cash flows from financing activities: Payments on mortgage note payable (14) (13) Net cash used in financing activities (14) (13) Net (decrease) increase in cash and cash equivalents (37) 21 Cash and cash equivalents at beginning of period 451 386 Cash and cash equivalents at end of period $ 414 $ 407 Supplemental disclosure of cash flow information: Cash paid for interest $ 116 $ 117 See Accompanying Notes to Consolidated Financial Statements e) MCCOMBS REALTY PARTNERS, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A- GOING CONCERN Under the Plan of Reorganization described in Item 2, McCombs Realty Partners, Ltd. (the "Partnership") is required to pay claims to limited partners and creditors of approximately $11,000,000 on October 20, 1998. This raises substantial doubt about the Partnership's ability to continue as a going concern. In order to attempt to satisfy the remaining claims under the Plan, the Partnership would be required to sell the investment property. As an alternative to the sale of the property the Partnership may attempt to obtain authorization from the Court and the Limited Partners to extend the settlement date of October 20, 1998 to a future period. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. NOTE B - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of 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 Article 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 CRPTEX, Inc. ("General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1998 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in the annual report on Form 10-KSB for the year ended December 31, 1997 for the Partnership. Certain reclassifications have been made to the 1997 information to conform to the 1998 presentation. NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES Prior to February 25, 1998, the General Partner was a wholly-owned subsidiary of MAE GP Corporation ("MAE GP"). Effective February 25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"), which is an affiliate of Insignia Financial Group, Inc. ("Insignia"). Thus, the General Partner is now a wholly- owned subsidiary of IPT. The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for certain payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following amounts were paid to the General Partner and its affiliates during the three month periods ended March 31, 1998 and 1997: 1998 1997 (in thousands) Property management fees (included in operating expenses) $ 18 $ 18 Reimbursement for services from affiliates (included in operating and general and administrative expenses) (1) 12 8 (1) Included in "Reimbursements for services from affiliates" for 1997 is approximately $1,000 in reimbursements for construction oversight costs. For the period of January 1, 1997 to August 31, 1997, the Partnership insured its property under a master policy through an agency affiliated with the General Partner with an insurer unaffiliated with the General Partner. An affiliate of the 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 master policy. The agent assumed the financial obligations to the affiliate of the General Partner, which received payment on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the General Partner by virtue of the agent's obligations was not significant. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in IPT, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in the third quarter of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the General Partner of the Partnership. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment property consists of one apartment complex. The following table sets forth the average occupancy of the property for the three month periods ended March 31, 1998 and 1997: Average Occupancy Property 1998 1997 Lakewood at Pelham Greenville, South Carolina 89% 91% Results of Operations The Partnership's net loss for the three months ended March 31, 1998 was approximately $20,000 as compared to net income of approximately $29,000 for the three months ended March 31, 1997. The decrease in net income is due to a decrease in rental income and an increase in general and administrative expenses. Rental income decreased as a result of the decrease in occupancy at Lakewood at Pelham Apartments, despite an increase in rental rates. The increase in general and administrative expenses can be attributed to an increase in General Partner reimbursements and audit fees. Included in operating expense for the three months ended March 31, 1998 is approximately $9,000 of major repairs and maintenance primarily comprised of major landscaping. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of its investment property to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expense. As part of this plan, the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the General Partner will be able to sustain such a plan. Liquidity and Capital Resources At March 31, 1998, the Partnership held cash and cash equivalents of approximately $414,000 versus approximately $407,000 at March 31, 1997. The net decrease in cash and cash equivalents for the three months ended March 31, 1998 was approximately $37,000 as compared to a net increase of approximately $21,000 for the three months ended March 31, 1997. Net cash provided by operating activities decreased due to the increase in net loss, as discussed above. Also contributing to this decrease was an increase in receivables and deposits, partially offset by an increase in accrued property taxes with both increases related to the timing of payments. Net cash used in investing and financing activities remained consistent for the three months ended March 31, 1998 and 1997. The Partnership has no material capital programs scheduled to be performed in 1998 although certain routine capital expenditures and maintenance expenses have been budgeted. 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, including satisfaction of remaining claims related to the Partnership's Plan of Reorganization as described below. No cash distributions were paid or declared during the three months ended March 31, 1998 or 1997, and none are expected for the remainder of 1998. On March 9, 1987, the original General Partners, on behalf of the Partnership, filed a voluntary petition under Chapter 11 of the Federal Bankruptcy Code in U.S. Bankruptcy Court, Central District Court of California ("Court"). The Partnership continued as Debtor-In-Possession to operate its business in the ordinary course subject to control of the Court until the Court confirmed the Partnership's Plan of Reorganization ("Plan") effective October 25, 1988. The Plan was approved by all required classes of creditors. The Plan provides for the following claim priorities as of March 31, 1998: 1) First, all creditors, except Class 12 creditors ($23,100), will be satisfied; 2) Limited Partners, both original and substitute, who made additional capital contributions will be paid claims in the amount of the additional contributions of approximately $730,000 on October 20, 1998; 3) Class 12 creditors will be paid claims aggregating $23,100 on October 20, 1998; 4) Limited Partners who made additional capital contributions and who were original Limited Partners will be paid existing capital contributions of approximately $9,818,000 on October 20, 1998; 5) Limited Partners who did not make additional capital contributions will be paid one-third of existing capital contributions (one-third of $1,200,000) on October 20, 1998. All other claims noted in the Plan were settled on June 25, 1995 when the Partnership refinanced the then outstanding mortgages encumbering the property. Additionally, the Plan calls for the General Partner to make a capital contribution of $14,500 and loan or expend an additional $117,500 on behalf of the Partnership on an as needed basis. The Partnership received the $14,500 capital contribution but has not required the additional $117,500. In order to attempt to satisfy the remaining claims under the Plan, the Partnership would be required to sell the investment property, or as an alternative, the Partnership may attempt to obtain authorization from the Court and the Limited Partners to extend the settlement date of October 20, 1998 to a future period. Additionally, the Partnership's mortgage indebtedness of approximately $5,713,000 matures in July 2005, and would require a property sale or refinancing at that time. However, there can be no assurance that these courses of action will be successful and that the Partnership will have sufficient funds to meet its obligations in 1998 or beyond. Year 2000 The Partnership is dependent upon the General Partner and Insignia for management and administrative services. Insignia has completed an assessment and will have to modify or replace portions of its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter (the "Year 2000 Issue"). The project is estimated to be completed not later than December 31, 1998, which is prior to any anticipated impact on its operating systems. The General Partner believes that with modifications to existing software and conversions to new software, the Year 2000 Issue will not pose significant operational problems for its computer systems. However, if such modifications and conversions are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Partnership. Other Certain items discussed in this quarterly report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such forward-looking statements speak only as of the date of this quarterly report. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: 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, 1998. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MCCOMBS REALTY PARTNERS, LTD. By: CRPTEX, INC. the General Partner By: /s/ Carroll D. Vinson Carroll D. Vinson President By: /s/ Robert D. Long, Jr. Robert D. Long, Jr. Vice President/CAO Date: May 12, 1998 EX-27 2
5 This schedule contains summary financial information extracted from McCombs Realty Partners, Ltd. 1998 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000759198 MCCOMBS REALTY PARTNERS, LTD. 1,000 3-MOS DEC-31-1998 MAR-31-1998 414 0 0 0 0 0 5,908 (3,306) 3,495 0 5,713 0 0 0 (2,382) 3,495 0 343 0 0 363 0 121 0 0 0 0 0 0 (20) (1.15) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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