-----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, FgUER/vlWYGSZh2kqyEqaCIe9zJFKu7eUDax/872pLQd8HfOMa5h4frgzH86Y9sw S4uXxdMdSkyg4LpycHKWeQ== 0000808460-99-000003.txt : 19990331 0000808460-99-000003.hdr.sgml : 19990331 ACCESSION NUMBER: 0000808460-99-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONCORD MILESTONE PLUS L P CENTRAL INDEX KEY: 0000808460 STANDARD INDUSTRIAL CLASSIFICATION: LESSORS OF REAL PROPERTY, NEC [6519] IRS NUMBER: 521494615 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-16757 FILM NUMBER: 99577396 BUSINESS ADDRESS: STREET 1: 5200 TOWN CENTER CIR STREET 2: 4TH FLOOR CITY: BOCA RATON STATE: FL ZIP: 33486 BUSINESS PHONE: 4073949260 10-K 1 ANNUAL REPORT Exhibit Index p.23 Exhibits begin p. (n/a) Total pages: 43 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 1998 Commission file number 000-16757 CONCORD MILESTONE PLUS, L.P. (Exact name of registrant as specified in its charter) DELAWARE 52-1494615 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 150 EAST PALMETTO PARK ROAD, 4TH FLOOR BOCA RATON, FLORIDA 33432 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (561) 394-9260 --------------- Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: None Class A Interests ("Class A Interests"), each such interest representing an assignment of one Class A Limited Partnership Interest held by CMP Beneficial Corp., a Delaware corporation (the "Assignor"), under the Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement") of Concord Milestone Plus, L.P. (Title of Class) Class B Interests ("Class B Interests"), each such interest representing an assignment of one Class B Limited Partnership Interest held by the Assignor under the Partnership Agreement. (Title of Class) 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X The Class A and Class B Interests are not traded on any established public trading market. DOCUMENTS INCORPORATED BY REFERENCE NONE PART I This Form 10-K and any documents incorporated herein by reference, if any, contain forward-looking statements that have been made within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are based on current expectations, estimates and projections about the Partnership's (as defined below) industry, management beliefs, and certain assumptions made by the Partnership's management and involve known and unknown risks, uncertainties and other factors. Such factors include, among other things, the following: general economic and business conditions, which will, among other things, affect the demand for retail space or retail goods, availability and creditworthiness of prospective tenants, lease rents and the terms and availability of financing; risks of real estate development and acquisition; governmental actions and initiatives; and environmental and safety requirements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Unless required by law, the Partnership undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Item 1. Business. (a) General Development of Business. Concord Milestone Plus, L.P. (the "Partnership") was organized as a Delaware limited partnership on December 12, 1986 with CM Plus Corporation, a Delaware corporation (the "General Partner"), as its general partner. The General Partner is wholly owned by Concord Assets Group, Inc. ("Concord"). The Partnership is engaged in the business of owning and operating three shopping centers. CMP Beneficial Corp., a wholly owned subsidiary of Concord, was organized under Delaware law in December 1986 for the sole purpose of holding limited partnership interests in the Partnership for the benefit of holders of the Class A Interests and Class B Interests and has engaged in no business activities other than fulfilling its obligations under the Amended and Restated Agreement of Limited Partnership of the Partnership (the "Partnership Agreement"). (b) Industry Segment Information. The Partnership has only one industry segment, commercial real estate. See Item 6, "Selected Financial Data", of this report for a summary of the Partnership's operations for the last five fiscal years. (c) Narrative Description of Business. The Partnership was formed for the purpose of investing in existing income-producing commercial and industrial real estate, such as shopping centers, office buildings, free-standing commercial buildings, warehouses and distribution centers. The Partnership currently owns and operates three shopping centers, one located in Searcy, Arkansas (the "Searcy Property"), one located in Valencia, California (the "Valencia Property") and one located in Green Valley, Arizona (the "Green Valley Property"). The amount of revenues attributable to the Searcy Property, the Valencia Property and the Green Valley Property (collectively, the "Properties") from tenants not affiliated with the Partnership was (i) $438,026, $1,347,971 and $1,296,987, respectively, for the fiscal year ended December 31, 1998; (ii) $457,514, $1,303,348 and $1,262,050, respectively, for the fiscal year ended December 31, 1997; and (iii) $409,186, $1,354,547 and $1,196,679, respectively, for the fiscal year ended December 31, 1996. There are no affiliated tenants. 1 See Item 2, "Properties", of this Report for additional information as to the Properties, including a description of the competitive conditions affecting them, and for certain environmental issues previously affecting the Valencia Property. Employees The Partnership employs six people at the Green Valley Property who provide general maintenance and security services. Milestone Property Management, Inc., an affiliate of the General Partner, provides all management services for the Partnership and is reimbursed for its cost of administrative services provided to the Partnership, including the pro rata cost of personnel. Aside from its officers, the General Partner has no employees. See Item 11, "Compensation", of this Report. Impact of Year 2000 Year 2000 compliance programs and information systems modifications were initiated by the Partnership's affiliated management company, Milestone Property Management, Inc. ("MPMI") in early 1998 in an attempt to ensure that these systems and key processes will remain functional. This objective is expected to be achieved either by modifying present systems using existing internal and external programming resources or by installing new system hardware and software, and by monitoring supplier, customer and other third party readiness. Such modifications are expected to be completed by MPMI by September 1999. There have been no costs charged to the Partnership for the Year 2000 program being completed by MPMI. The Partnership does not anticipate that the costs of any required modifications by MPMI to its information technology or embedded technology systems will have a material adverse effect on its financial position, results of operations or liquidity, although there can be no assurances that this will be the case. MPMI has contacted many of the Partnership's major customers, suppliers and vendors to inquire about their Year 2000 compliance programs. MPMI has not received responses from all those contacted, but those who have responded do not indicate any problems at this time. In the event that MPMI or material third parties fail to complete their Year 2000 compliance programs successfully and on time, the Partnership's ability to operate its business, service tenants, bill or collect its revenue in a timely manner could be adversely affected. Although there can be no assurance that the conversion of the Partnership's systems will be successful or that the Partnership's key third-party relationships will have successful conversion programs, the General Partner does not expect that any such failure would have a material adverse effect on the financial position, results of operations or liquidity of the Partnership, although there can be no assurances that this will be the case. The Partnership has day-to-day operational contingency plans, and the General Partner is in the process of updating these plans for possible Year 2000 specific operational requirements. Item 2. Properties. The Properties consist of three shopping centers: the Searcy Property, the Valencia Property and the Green Valley Property. For the purposes of this section, the following is a glossary of terms: a. Occupancy rate - The rate of the actual leased area (square footage) to gross leaseable area (square footage) as of the end of the fiscal year (December 31). b. Leasable area - The area (square footage) for which rent is charged. c. Average effective annual rental per square foot - The average rental rate received per square foot of leased space taking rental concessions and discounts into consideration. 2 d. Total rent - Minimum annual base rent plus percentage rental revenue. Refinancing of Bonds Payable As of September 30, 1997, the Partnership, with the assistance of Tri-Stone Mortgage Company, an affiliate of the General Partner, closed three new fixed rate first mortgage loans (the "Mortgage Loans") from Westco Real Estate Finance Corp. (the "Lender") in the amounts of $2,865,000, $8,445,000 and $5,400,000, respectively. Tri-Stone Mortgage Company did not receive any compensation for its services. All three Mortgage Loans are secured by first mortgages on all three of the Properties. Prior to September 30, 1997, the Properties were encumbered by mortgages granted by the Partnership to United States Trust Company of New York, as trustee for the benefit of the holders of the Partnership's Escalating Rate Collateralized Mortgage Bonds due November 30, 1997 (the "Bonds"). The Partnership used the proceeds of the Mortgage Loans and available cash to redeem all of the outstanding Bonds. The Mortgage Loans and related terms at December 31, 1998 for the Properties are summarized as follows: Principal Monthly Balance at Payments of December Interest Principal Property/Location 31, 1998 Rate % and Interest - ----------------- -------------- ------ ------------ Searcy, AR $2,836,228 8.125 $21,640 Valencia, CA 8,329,540 8.125 65,881 Green Valley, AZ 5,347,286 8.250 41,252 --------- ------ Total $16,513,054 $128,773 ========== ======= The Mortgage Loans require payments of principal and interest through and including September 1, 2007. On October 1, 2007, the balance of principal and interest is estimated to be $2,505,981, $7,003,227, and $4,738,096 for the Searcy, Valencia and Green Valley Properties, respectively, and will be due and payable. Subsequent to October 31, 2003 and prior to May 31, 2007, each Mortgage Loan may be prepaid in whole but not in part on any payment date with a prepayment penalty equal to the greater of (i) 1% of the outstanding principal balance at such time, or (ii) the excess, if any, of the present value of the remaining scheduled principal and interest payments (including any balloon payment), discounted at the Discount Rate (as defined below), over the amount of principal being prepaid. The Mortgage Loans may be prepaid without penalty on any payment date after May 31, 2007. The Discount Rate is a rate determined as of the week ending prior to the prepayment date and is based on the published rates of U.S. Government securities having maturities approximating the maturity date of the Mortgage Loans. The Mortgage Loans are each secured by first mortgages on all three of the Partnership's Properties and a default under any of the Mortgage Loans constitutes a default on all of the Mortgage Loans. Each mortgage may be released at the Partnership's option after the corresponding Mortgage Loan is fully paid provided that no event of default exists under any of the Mortgage Loans, the mortgagee has not given the Partnership notice of any event which, with the passage of time, would constitute an event of default, and certain other conditions are satisfied. In connection with the Green Valley Mortgage Loan, the Partnership has deposited $150,000 into an escrow account (the "Green Valley Escrow Account") with the Lender. The funds held in the Green Valley Escrow Account may be released upon the execution of a new lease or renewal lease, with a termination date of July 31, 2004 or later, by Abco, a tenant of the Green Valley Property and the satisfaction of certain other conditions. 3 In connection with the Valencia Mortgage Loan, the Partnership deposited $45,000 into an escrow account (the "Valencia Escrow Account") with the Lender. Such amount was released to the Partnership during February 1998 after a certain environmental condition existing at the Property was shown to require no further action to the satisfaction of the State of California Environmental Protection Agency Department of Toxic Substances Control ("DOTSC"). The cost of the various tests, studies, legal representation and negotiations with the DOTSC relating to the resolution of this environmental problem was approximately $71,000, all of which was accrued and expensed during 1997. CM Plus Corporation, the general partner of the Partnership, guarantees certain limited recourse obligations under the Mortgage Loans. The Searcy Property Searcy, Arkansas Location. The Searcy Property is situated on an irregularly shaped parcel of approximately 10.78 acres, which has frontages on Race Avenue and Frontage Road in the City of Searcy, Arkansas. Searcy, the county seat of White County, is located in the central portion of the State of Arkansas, approximately 50 miles northeast of Little Rock, Arkansas. The Searcy Property is part of a two-mile stretch of commercial development along Race Avenue that is the main shopping area for the city, county and surrounding areas. Searcy's marketing area includes all of White County and portions of surrounding counties. The Searcy Property is part of a larger shopping complex known as the Town and Country Plaza. In addition to the Searcy Property, the Town and Country Plaza consists of an approximately seven acre parcel (formerly the site of a free-standing Wal-Mart department store which is now sub-divided into four retail stores) and five adjacent out parcels totaling 3.86 acres. Description. The Searcy Property, which was completed in July 1985, is a one-story masonry and steel building whose exterior is painted concrete block with masonry, brick and glass fronts. The Searcy Property contains 78,436 gross leasable square feet divided into nine units. The entire Town and Country Plaza has parking for 970 cars of which approximately 570 parking spaces are allocated to the Searcy Property. Taxes. The Partnership's adjusted federal income tax basis for the Searcy Property is approximately $3,157,000 of which $430,000 is allocated to land and $2,727,000 to the building and improvements. For financial statement purposes, the Partnership depreciates the cost of the building over 31.5 years and improvements over 5 to 12 years using the straight-line method of cost recovery. In the opinion of the General Partner, the Searcy Property is adequately insured. Competition. There are three shopping centers within two miles to the west of the Town and Country Plaza on Race Avenue. The first shopping center consists of a Goody's department store and a vacant Heilig- Meyers furniture store. The second shopping center consists of a Fred's discount store, Warehouse Foods, a Sears catalog store and two satellite stores. The third center consists of a Kroger food store and a Revco drugstore. Directly across the highway from the Searcy Property is a Wal-Mart superstore. The Wal-Mart which relocated from the Town and Country Plaza in 1992, has since vacated and subdivided its superstore. Books-A-Million, Stage, Hibetts Sports and TSC Tractor Supply currently occupy this space. Operating and Tenant Information. As of March 1, 1999, there were nine tenants including, two anchor tenants, at the Searcy Property. The two anchor tenants are a J.C. Penney department store and a Stage apparel store which has vacated the premises. Stage remains responsible under the terms of the lease through July, 2001. The other seven tenants provide a variety of goods and services. The occupancy rate was 95.5%, 95.5% and 92.9% in 1998, 1997 and 1996, respectively. 4 The tables on pages 8 and 9 further describe and summarize certain operating data and tenant information for the Property. Old Orchard Shopping Center Valencia, California Location. The Valencia Property is situated on an approximately 9.94-acre parcel that has frontages on Lyons Avenue and Orchard Village Road in the town of Valencia, California. Valencia is located in the Santa Clarita Valley in Los Angeles County, approximately 35 miles north of Los Angeles. Old Orchard Shopping Center is located on the northwest corner of Lyons Avenue and Orchard Village Road in a heavily developed commercial area. Lyons Avenue is improved with shopping centers, fast food restaurants, housing developments and free standing convenience stores. The surrounding area is densely populated with apartments, condominiums and single family residences. In 1996, a 78,000 square foot shopping center opened on Old Orchard Street across from the Valencia Property. This center includes a 46,000 square foot Ralph's Supermarket, a 16,000 square foot drugstore and 16,000 square feet of smaller stores. This shopping center has had an adverse impact on tenant sales but it has not materially adversely affected the occupancy rate at the Valencia Property. Description of the Property. Old Orchard Shopping center is an eight building, one-story masonry and steel shopping center complex that was originally constructed in 1965. During 1985 and 1986 the shopping center was renovated and enlarged to 103,413 square feet of gross leasable area. The exterior construction is pre-cast concrete, fluted block and decorative tile. The shopping center has over 500 parking spaces. Taxes. The Partnership's adjusted federal income tax basis for the Valencia Property is $10,946,000 of which $6,500,000 is allocated to land and $4,446,000 is allocated to the buildings and improvements. For financial statement purposes the Partnership depreciates the cost of the buildings over 31.5 years and improvements over 5 to 10 years using the straight-line method of cost recovery. In the opinion of the General Partner, the Valencia Property is adequately insured. Competition. Within two miles of the Valencia Property there are competing shopping facilities at Newhall Plaza with a Von's Food Store and 10 satellite stores, Granary Square with a Hughes Food Market, Long's Drugstore and 26 satellite stores, a Safeway Supermarket complimented by 14 satellite stores and the Alpha Beta Center with Alpha Beta Food stores and 16 satellite stores. In 1992, a strip center anchored by a Ralph's Foods opened within a mile of the Valencia Property. Operating and Tenant Information. As of March 1, 1999, there were 21 tenants, including two anchor tenants, at the Valencia Property. The two anchor tenants are a Lucky Store grocery and a Rite Aid pharmacy. The other 19 tenants provide a variety of goods and services. The occupancy rate was 96.6%, 93.9% and 97.1% in 1998, 1997 and 1996, respectively. The tables on pages 8 and 9 further describe and summarize certain operating data and tenant information for the Property. 5 Green Valley Mall Green Valley, Arizona Location. The Green Valley Property, a mall complex known as the Green Valley Mall, is situated on an approximately 21.31-acre parcel in the Town of Green Valley, Arizona. It has frontages on Interstate 19 and Esperenza Boulevard, with additional access from La Canada Road. Green Valley is a planned adult community located in Pima County in the Santa Cruz River Valley approximately 25 miles south of Tucson. Green Valley has two hotels and a number of office buildings, several community centers and six 18 hole golf courses. The Green Valley Property is located at intersection 65 of Interstate 19 and Esperenza Boulevard and serves Pima County, as well as Santa Cruz County to the south. Description of the Property. Green Valley Mall is an open-air shopping complex originally built in the 1960's and expanded at various times throughout the 1970's and 1980's. The shopping center is comprised of several buildings, including some that are free standing, totaling 194,750 gross leasable square feet (adjusted by 1,800 square feet representing the mall office). The exterior construction is a combination of adobe block, split face block and painted concrete block. The mall has approximately 975 parking spaces. Taxes. The Partnership's adjusted federal income tax basis for the Green Valley Property is $9,391,000, of which $5,100,000 is allocated to land and $4,291,000 to the buildings and improvements. For financial statement purposes, the Partnership depreciates the cost of the buildings over 31.5 years and improvements over 5 to 10 years using the straight-line method of cost recovery. In the opinion of the General Partner, the Green Valley Property is adequately insured. Other Information. In 1993 and 1994, the General Partner determined, based on the current market conditions and projected future cash flows that the Partnership's investment in the Green Valley Property was impaired and recorded a $1,000,000 and $1,085,932, non-cash charge against earnings to write-down the property, respectively. Since 1994, the General Partner has determined that an additional write-down was not necessary based on the projected future cash flows of the Property. Competition. The Green Valley Property competes directly with the 142,500 square foot Continental Shopping Plaza located at Continental Road and Interstate 19 approximately one mile south of the Green Valley Property. The Continental Shopping Plaza is anchored by a Safeway Supermarket. There is a shopping center located 3 miles to the north of the Green Valley Property in the newly incorporated town of Sahuarita. This shopping center includes a 65,000 square foot Wal-Mart Department Store and a 42,000 square foot Bashas' Food Store as anchor tenants plus 25,000 square feet of space for local tenants. Another center, which is located to the north of the Green Valley Property, was anchored by a 45,000 square foot Kmart and 10,000 square feet of space for local tenants, and closed during 1995. A quadruplex theater is planned to be built adjacent to Kmart with a projected opening of April 2000. Since the incorporation of this town, several large areas have been rezoned for commercial development. One area located 2.5 miles north of Green Valley, called "The Quorum", a small group of shops, was actively developed within the last 18 months. Operating and Tenant Information. As of March 1, 1999, there were 71 tenants, including three anchor tenants, at the Green Valley Property. The three anchor tenants include an Abco grocery, a Beall's outlet store and an Ace Hardware store. The other 68 tenants provide a variety of goods and services. The occupancy rate was 86.5%, 89.3% and 90.2% in 1998, 1997 and 1996, respectively. 6 During February 1999, the Partnership received notice from Abco, the principal anchor tenant at the Green Valley Property, that Abco would not be renewing its lease at the expiration of its current term on July 31, 1999. No replacement tenant has yet been identified, however, the Partnership is in the process of retaining a large regional real estate brokerage firm to help market the space. Many of the tenants at the Green Valley Property have short term leases. It is not possible to determine the long-term effects of the failure of Abco to renew its lease. In the short term, however, the vacancy of the Abco space could have a material adverse effect on the results of operations at the Green Valley Property by impairing the Partnership's ability to retain other tenants or to renew their leases on favorable terms, by reducing traffic at the Property and negatively affecting percentage rents. In addition, the Partnership will incur expenses in releasing the Abco space and cannot predict how soon such space will be leased and the terms of such new lease. Currently, approximately $150,000 of the Partnership's working capital is being held in escrow in connection with the refinancing by the Lender pending the resolution of the forthcoming Abco vacancy. The tables on pages 8 and 9 further describe and summarize certain operating data and tenant information for the Property. 7 Table 1. Summary of Operating and Tenant Information
Tenant Occupying Square Occupancy Base Rent Lease Annual Location Property > 10%of GLA/Nature Feet Rate Per Sq.Ft. Percentage Rent & Other Expiration R/E Taxes of Business - ----------- -------------- ------------------ ------- -------- ------ ------------------------ ---------- -------- Searcy, AR Town & Country 78,436 95.46% $5.28 (1) $25,697 Plaza J.C. Penney 39,396 $5.22 1.5% of Sales in excess 8/31/2007 Department Store of $11,820,004. Pro-rata reimbursementfro real estate taxes over the base year amount. Common area maintenance reimbursement at fixed intervals over the lease term. Stage 15,600 $5.25 Operation discontinued 7/30/2001 Clothing and Apparel 4/30/98 (2) Valencia, Old Orchard Shopping Ctr. 103,413 96.59% $11.79 (1) $129,117 CA Lucky Stores 31,842 $9.42 1.25% of Sales in excess 6/30/2006 Full Service Grocer of $38,000,000 less amounts paid for property taxes, assessments and insurance premiums. (4) Rite Aid 18,125 $2.48 Rent is payable in an amount 5/31/2005 Pharmacy equal to 3% of the tenant's gross sales for the previous month, but not less than $45,000 annually. Pays no reimbursed expenses. Green Green Valley Mall 194,750 86.53% $6.09 (1) $192,695 Valley, AZ Abco 38,983 $1.74 1% of Sales in excess 7/31/1999 Full Service Grocer of $4,000,000. Pro-rata (3) share reimbursement fro real estate taxes, common area maintenance and liability insurance
(1) Represents the average rental rate including base and percentage rent per square foot of leased space taking rental concessions and discounts into consideration. (2) Stage discontinued its operations effective April 30, 1998. Stage will still be responsible for the basic minimum rental and the average of the amounts actually received each lease year under the provisions for contingent additional rentals including real estate taxes, common area maintenance and insurance. (3)Abco has given notice that they will let their lease at the Green Valley Mall expire on July 31, 1999. (4) Pro-rata reimbursement for real estate taxes, common area maintenance and insurance. 8 Table 1. Summary of Lease Expirations
Year of Number of Gross Leasable Annual % of Total Annual Location Property Lease Expiration Leases Expiring Area Expiring Minimum Rent Minimum Rent - ------------ ----------------------- ---------------- ------====---- --------------- ------------- ------------ Searcy, AR Town & Country Plaza 1999 3 6,360 $39,720 9.9% 2000 1 5,973 (1) - 2001 3 23,147 $154,300 38.6% 2007 1 39,396 $205,600 51.5% Vacancies 1 3,560 - - - ------ ---------- ------- Total 9 78,436 $399,620 100.0% ===== = ====== ======= ====== Valencia, CA Old Orchard Shopping Center 1999 3 6,700 $118,409 10.6% 2000 3 11,880 $112,846 10.2% 2002 5 9,867 $189,400 17.0% 2003 5 11,272 $186,723 16.8% 2005 3 27,429 $170,910 15.3% 2006 1 31,842 $300,000 26.9% M-T-M 1 900 $36,072 3.2% Vacancies 3 3,523 - - --- -------- ---------- ------- Total 24 103,413 $1,114,360 100.0% ===== == ======= ========= ====== Green Valley, Green Valley Mall 1999 20 53,472 $172,089 17.50% AZ 2000 17 36,870 $306,487 31.17% 2001 13 30,065 $212,358 21.60% 2002 8 15,617 $154,357 15.70% 2003 7 14,335 $97,496 9.92% 2004 2 2,400 $20,320 2.07% 2008 1 11,425 $9,600 .98% M-T-M 3 1,034 $10,455 1.06% Vacancies 11 29,532 - - -- -------- ---------- ------- Total 82 194,750 $983,162 100.0% ===== == ======= ======= ======
(1) Tenant currently pays 4% of gross sales in lieu of all rental obligations. 9 Commitments and Contingencies Investments in real property create a potential for environmental liability on the part of the owner, operator or developer of such real property. If hazardous substances are discovered on or emanating from any of the Properties, the Partnership and/or others may be held strictly liable for all costs and liabilities relating to the clean-up of such hazardous substances. The Partnership is not aware of any existing environmental conditions that will have a material effect on the financial statements. Item 3. Legal Proceedings None Item 4. Submission of Matters to a Vote of Security Holders. None 10 PART II Item 5. Market for Registrant's Units and Related Security Holders Matters. (a) Class A and Class B Interests are not traded on any established public trading market and no organized market has developed for the interests in the Partnership. Sales of the Class A and Class B Interests occur from time to time through independent broker-dealers, but to the best of the Partnership's knowledge, there are no market makers for the interests. Recently published information relating to other real estate limited partnerships (which may not be analogous to the Partnership) indicates that sales of limited partnership interests in those partnerships occur at substantial discounts from the amounts of the original investments. (b) As of March 1, 1999, 1,518,800 Class A Interests and 2,111,072 Class B Interests were held by approximately 1,245 and 1,319 holders, respectively. (c) The Partnership is a limited partnership and, accordingly, does not pay dividends. It does, however, make quarterly distributions of cash to its partners depending upon distributable cash flow and certain other conditions. The table on page 12 lists cash distributions. Pursuant to the Partnership Agreement, distributable cash flow (as defined), if any, for each fiscal quarter is distributed as follows: (i) first, 99% to the holders of the Class A Interests as a group and 1% to the General Partner until the holders of the Class A Interests have received an amount of cumulative distributions necessary to provide such holders with a non-compounded 10.5% cumulative annual return (determined in accordance with the Partnership Agreement); (ii) next, 90% to the holders of the Class A Interests and 10% to the General Partner until the holders of the Class A Interests have received distributions of distributable capital proceeds (i.e., net proceeds of a sale or other disposition or a refinancing of Properties available for distribution) and uninvested offering proceeds equal to $10.00 for each Class A Interest plus an amount of cumulative distributions necessary to provide such holders with a cumulative, non-compounded 12.5% annual return (determined in accordance with the Partnership Agreement on their Adjusted Priority Base Amount as defined in the Partnership Agreement) (a "12.5% Priority Return"); and (iii) thereafter, 85% to the holders of the Class B Interests, 5% to the holders of the Class A Interests and 10% to the General Partner. Pursuant to the Partnership Agreement, distributable capital proceeds are distributed as follows: (i) first, 100% to the holders of the Class A Interests as a group until they have received distributions of distributable capital proceeds and uninvested offering proceeds equal to $10.00 for each Class A Interest plus an amount of cumulative distributions necessary to provide such holders with a 12.5% Priority Return; and (ii) thereafter, 85% to the holders of the Class B Interests and 15% to the General Partner. Distributable cash flow, as defined in the Partnership Agreement, means, with respect to any period, (i) revenues and payments (which do not include refundable deposits or unearned rent) of the Partnership received in cash during such period, and reserves set aside out of revenues during prior periods and no longer needed for the Partnership's business, but not including cash proceeds attributable to a capital transaction (as defined), Bond proceeds or capital contributions (as defined), less (ii) the sum of (A) amounts paid in cash by the Partnership during such period for operating expenses of the Partnership (excluding amounts paid from reserves or funds provided by capital contributions or loans), for debt payments, and for compensation to a removed General Partner and other fees or payments to the General Partner, (B) any capital expenditures with respect to Properties, and (C) any amount set aside for the restoration, increase or creation of reserves. Distributable cash flow is deemed to include the amount of any income tax withheld with respect to revenues that are includable in distributable cash flow. 11 During its two most recent fiscal years, the Partnership has made the following cash distributions with respect to the Class A Interests: Amount of Portion Distribution Distribution Representing With Respect Per 100 Class a Return of To Quarter Ended: A Interests (1) Capital (2) ----------------- --------------- -------------- March 31, 1998 (3) $0 $0 June 30, 1998 (3) $0 $0 September 30, 1998 (3) $0 $0 December 31, 1998 (4) $3.29 $3.29 March 31, 1997 $3.29 $3.29 June 30, 1997 (3) $0 $0 September 30, 1997 (3) $0 $0 December 31, 1997 (3) $0 $0 - --------------------------------- (1) The amounts listed represent distributions of distributable cash flow. (2) That portion of the total "Amount of Distribution per 100 Class A Interests" which is a return of capital. Return of capital is defined as distributions in excess of cumulative net income. (3) The Partnership suspended making distributions subsequent to the first quarter of 1997 due to the cost of addressing an environmental issue identified at the Valencia Property, and payment of certain expenses relative to the refinancing. (4) The Partnership resumed making distributions after determining that unrestricted working capital levels were adequate. The distribution was made during February 1999. There have been no distributions with respect to the Class B Interests. In general, profits are allocated annually among the holders of Class A Interests and Class B Interests and the General Partner, first in the ratio and to the extent that they receive distributions of distributable cash flow. Profits will next be allocated 100% to holders of Class A Interests until their capital accounts equal the greater of zero or their Adjusted Priority Base Amounts (as defined in the Partnership Agreement) plus their 12.5% Priority Return. Any additional profits will be allocated to the holders of Class B Interests and the General Partner to increase their capital accounts to reflect the manner in which they are expected to share in further distributions. Gain arising upon the sale of a Property or otherwise is allocated first to holders of Class A Interests and Class B Interests and the General Partner to eliminate any deficits in their capital accounts, and then to the holders of the Class A Interests and Class B Interests and the General Partner to increase their capital accounts to reflect the manner in which they are expected to share in further distributions. In general, losses are allocated first to the holders of Class B Interests and the General Partner in the ratio and to the extent of any positive balances in their capital accounts; then, to the holders of Class A Interests to the extent of any positive balances in their capital accounts; and finally, 100% to the General Partner. 12 Item 6. Selected Financial Data. The following page sets forth a summary of the selected financial information for the Partnership. The information below should be read in conjunction with the audited financial statements. Notes to Selected Financial Data Schedule: (a) All income allocated with respect to Equity Units was allocated with respect to the 100 Class A Interests in each such unit. No income was allocated with respect to Class B Interests. (b) The net (loss) income per 100 Class A Interests has been calculated by dividing the net (loss) income for the period by the average number of Class A Interests outstanding for the period and multiplying that quotient by 100. (c) Distributions have been allocated based upon the dates that Class A Interests were issued. Distributions with respect to each fiscal quarter of the Partnership are paid 60 days following the end of that fiscal quarter. No distributions were paid with respect to Class B Interests. (d) Return of Capital is defined as distributions in excess of cumulative net income. (e) The net loss for 1994 included a write-down of $1,085,932 for impairment of the Green Valley Property. 13 CONCORD MILESTONE PLUS, L.P. (A Limited Partnership) Selected Financial Data
For Year Ended For Year Ended For Year Ended For Year Ended For Year Ended December 31, 1998 December 31, 1997 December 31, 1996 December 31, 1995 December 31, 1994 ----------------- ----------------- ----------------- ----------------- ----------------- Operating Statement Data: Revenue $3,103,638 $3,046,796 $3,009,663 $3,061,279 $3,156,657 Net income (loss) 31,270 (271,920) (238,119) (307,810) (1,317,075)(e) Balance Sheet Data: Total assets 21,841,605 22,051,864 22,086,775 22,537,617 23,005,298 Long term debt 16,513,045 16,683,574 16,473,060 16,425,967 16,334,737 Total liabilities 16,974,551 17,216,080 16,877,282 16,893,481 16,853,645 Statement of Partners' (Deficit) Capital: General Partner (73,894) (74,207) (70,470) (66,124) (61,049) Class A Interests 4,940,948 4,909,991 5,279,963 5,710,260 6,212,702 Class B Interests 0 0 0 0 0 Total 4,867,054 4,835,784 5,209,493 5,644,136 6,151,653 Per 100 Class A Interests (a) Net income (loss) (b): 2.06 (17.90) (15.68) (20.27) (86.72) Distributions (c): 3.29 3.29 12.94 13.15 13.04 Return of Capital (d): 3.29 3.29 12.94 13.15 13.04
See Notes to Selected Financial Data 14 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Certain statements made in this report may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. See Part I. The following discussion and analysis should be read in conjunction with the Financial Statements of the Partnership and the notes thereto appearing in Item 14 of this report. General The Partnership commenced a public offering of Equity Units and Bond Units (together, "Units") on April 8, 1987 in order to fund the Partnership's real property acquisitions. The Partnership terminated the public offering of Units on April 2, 1988. On April 14, 1988, the Partnership held its final closing on the sale of Units. The Partnership was fully subscribed to with a total of 16,452 Bond Units and 15,188 Equity Units from which the Partnership received aggregate net proceeds (after deduction of sales commissions, discounts and selling agent's expense otherwise required to be reimbursed to the General Partner and its Affiliates) of $29,285,960. Of such total amounts, 15,954 Bond Units and 15,188 Equity Units were sold by the Partnership during 1988 from which the Partnership received net proceeds (after deduction of sales commissions, discounts and selling agent's expense allowance and credit for organization and offering expenses) of $19,599,176. The Partnership purchased three shopping centers with the proceeds from this offering. No further acquisitions are planned and the Partnership has no plans to raise additional capital. On September 30, 1997, the Partnership closed three new fixed rate first mortgage loans in the amounts of $2,865,000, $8,445,000 and $5,400,000, on the Searcy, Valencia and Green Valley Properties, respectively. All three Mortgage Loans are secured by first mortgages on each of the Properties. The Partnership used the proceeds of the Mortgage Loans and available cash to redeem all of the outstanding Bonds. The Mortgage Loans are described in further detail in Item 2. Properties Section. The Partnership has an agreement with Milestone Property Management, Inc. ("MPMI"), an affiliate of the General Partner, to provide management services to the Properties. In addition, MPMI is responsible for leasing space at the properties and actively monitors all vacancies to ensure the highest occupancy rate possible. All leasing is performed by MPMI and the terms of the leases are negotiated on a lease by lease basis. Impact of Year 2000 Year 2000 compliance programs and information systems modifications were initiated by the Partnership's affiliated management company, Milestone Property Management, Inc. ("MPMI") in early 1998 in an attempt to ensure that these systems and key processes will remain functional. This objective is expected to be achieved either by modifying present systems using existing internal and external programming resources or by installing new system hardware and software, and by monitoring supplier, customer and other third party readiness. Such modifications are expected to be completed by MPMI by September 1999. There have been no costs charged to the Partnership for the Year 2000 program being completed by MPMI. The Partnership does not anticipate that the costs of any required modifications by MPMI to its information technology or embedded technology systems will have a material adverse effect on its financial position, results of operations or liquidity, although there can be no assurances that this will be the case. 15 MPMI has contacted many of the Partnership's major customers, suppliers and vendors to inquire about their Year 2000 compliance programs. MPMI has not received responses from all those contacted, but those who have responded do not indicate any problems at this time. In the event that MPMI or material third parties fail to complete their Year 2000 compliance programs successfully and on time, the Partnership's ability to operate its business, service tenants, bill or collect its revenue in a timely manner could be adversely affected. Although there can be no assurance that the conversion of the Partnership's systems will be successful or that the Partnership's key third-party relationships will have successful conversion programs, the general partner does not expect that any such failure would have a material adverse effect on the financial position, results of operations or liquidity of the Partnership, although there can be no assurances that this will be the case. The Partnership has day-to-day operational contingency plans, and the general partner is in the process of updating these plans for possible Year 2000 specific operational requirements. Competition Rental property owned by the Partnership will have substantial competition from similar properties in the vicinity in which such property is located. Such competition is generally for the retention of existing tenants and for new tenants upon space becoming vacant. The Partnership believes that the profitability of each of the Properties is based, in part, upon its geographic location, the operations and identity of the property's tenants, the performance of the property and leasing managers, the maintenance and appearance of the property, the ease of access to the property and the adequacy of property related facilities. The Partnership also believes that general economic circumstances and trends as well as the character and quality of new and existing properties which may be located in the vicinity of the Properties are factors that may affect the operation and competitiveness of the property. Results of Operations Comparison of Year Ended December 31, 1998 to 1997. Revenues of the Partnership increased $56,842, or 1.87%, to $3,103,638 in 1998 from $3,046,796 in 1997 primarily due to the net effect of the following: (1) Rent - An increase in base rent of $44,728, or 1.76%, to $2,588,112 in 1998 from $2,543,384 in 1997 caused by an increase in base rent revenue at the Valencia Property due to one new tenant and escalations in the rental rates of several tenants. (2) Reimbursed Expenses - An increase in reimbursed expenses of $17,106 or 3.58%, to $494,418 in 1998 from $477,312 in 1997 primarily due to an increase in the recovery from tenants on both real estate taxes and insurance. Management and property expenses decreased $20,862, or 2.55%, to $795,955 in 1998 from $816,817 in 1997 due to concerted efforts by management to contain operating costs at the Properties. Professional fees and other expenses decreased $82,771, or 45.48%, to $99,227 in 1998 from $181,998 in 1997, primarily due to the costs associated with the investigation and subsequent resolution of chemical contamination in the soil at a site at the Valencia Property which costs were expensed during 1997. Administrative and management fees to a related party increased by $24,184 or 18.2% to $156,909 in 1998 from $132,725 in 1997 due to management fees being properly calculated in accordance with the management agreement based on a percentage of gross revenues rather than a percentage of base rents and percentage rents as had been calculated in prior years. 16 Interest expense decreased $229,203, or 14.3%, to $1,373,559 in 1998 from $1,602,762 in 1997 due to the interest rates of between 8.125% and 8.25% on mortgage loans payable throughout 1998 versus the 10% interest rate paid during 1997 on the bonds payable until the September 30, 1997 refinancing. Depreciation and amortization expense increased $62,304, or 10.66%, to $646,718 in 1998 from $584,414 in 1997, primarily due to a full year of amortization on the debt financing costs and an increase in property improvements during 1998. Comparison of Year Ended December 31, 1997 to 1996. Revenues of the Partnership increased $37,133, or 1.23%, to $3,046,796 in 1997 from $3,009,663 in 1996 primarily due to the net effect of the following: (1) Rent - A decrease in base rent of $40,230, or 1.56%, to $2,543,384 in 1997 from $2,583,614 in 1996 primarily due to a decrease in percentage rent revenue at the Valencia Property due to decreased tenant sales and a drop in the occupancy rate to 93.9% in 1997 from 97.1% in 1996. (2) Reimbursed Expenses - An increase in reimbursed expenses of $71,869, or 17.73%, to $477,312 in 1997 from $405,443 in 1996 primarily due to increased recovery percentages on both common area expenses and real estate taxes. Additionally, refunds given to tenants in 1996, due to an incorrect billing in a prior year, were charged to revenue in 1996. (3) Other Income - An increase in other income of $5,494 primarily due to transfer fees paid by an investor in 1997. Management and property expenses remained consistent, increasing only $13,846, or 1.72% to $816,817 from $802,971 in 1996, due to concerted efforts by management to contain costs at the Properties. Professional fees and other expenses increased $77,674, or 74.45%, to $181,998 in 1997 from $104,324 in 1996, primarily due to the costs associated with the investigation and subsequent resolution of chemical contamination in the soil at a site at the Valencia Property. Administrative and management fees to a related party remained consistent, increasing only $718, or .54%, to $132,725 in 1997 from $132,007 in 1996 as management fees were charged using a percentage of base rents and percentage rents in both 1997 and 1996. Base rents and percentage rents remained consistent during 1996 and 1997. Interest expense increased $32,967, or 2.10%, to $1,602,762 in 1997 from $1,569,795 in 1996 primarily due to the scheduled increase in the interest rate on the Bonds from 9.50% in 1996 to 10.0% in 1997. Depreciation and amortization expense decreased $54,271, or 8.50%, to $584,414 in 1997 from $638,685 in 1996, primarily due to a decrease in amortization of net bond premium and discount in 1997. 17 Liquidity and Capital Resources The General Partner believes that the Partnership's expected revenue and working capital is sufficient to meet the Partnership's current operating requirements for the remainder of the year. Nevertheless, because the cash revenues and expenses of the Partnership will depend on future facts and circumstances relating to the Partnership's properties, as well as market and other conditions beyond the control of the Partnership, a possibility exists that cash flow deficiencies may occur. The Partnership completed various property improvements during the fourth quarter of 1998 which cost approximately $133,000 and were paid during the fourth quarter of 1998 and during January 1999. The property improvements consisted of tenant buildouts at all the properties, HVAC upgrades at the Searcy Property and parking lot improvements at the Green Valley Property. The Partnership resumed making distributions commencing with the fourth quarter of 1998. A distribution of $50,001 was paid during February 1999. The Partnership had suspended making distributions subsequent to the first quarter of 1997 due to the cost of addressing an environmental issue identified at the Valencia Property and payment of certain expenses relative to the refinancing. The Partnership did not resume distributions until unrestricted working capital levels were deemed adequate. During February 1999, the Partnership received notice from Abco, the principal anchor tenant at the Green Valley Property, that Abco would not be renewing its lease at the expiration of its current term on July 31, 1999. No replacement tenant has yet been identified, however, the Partnership is in the process of retaining a large regional real estate brokerage firm to help market the space. Many of the tenants at the Green Valley Property have short term leases. It is not possible to determine the long-term effects of the failure of Abco to renew its lease. In the short term, however, the vacancy of the Abco space could have a material adverse effect on the results of operations at the Green Valley Property by impairing the Partnership's ability to retain other tenants or to renew their leases on favorable terms, by reducing traffic at the Property and negatively affecting percentage rents. In addition, the Partnership will incur expenses in releasing the Abco space and cannot predict how soon such space will be leased and the terms of such new lease. Currently, approximately $150,000 of the Partnership's working capital is being held in escrow in connection with the refinancing by the Lender pending the resolution of the forthcoming Abco vacancy. The cash on hand at December 31, 1998 may be used to fund (a) costs associated with releasing the Abco space should the costs of releasing exceed the $150,000 already held in escrow by the Lender for this purpose (b) quarterly distributions to the partners depending on distributable cash flows and certain other conditions, and (c) other general Partnership purposes. Management is not aware of any other trends, events, commitments or uncertainties that will or are likely to materially impact the Partnership's liquidity. Net cash provided by operating activities of $487,409 for the year ended December 31, 1998 was comprised of (i) net income of $31,270, (ii) adjustments of $646,719 for depreciation and amortization and (iii) a net change in operating assets and liabilities of $190,580. Net cash provided by operating activities of $479,718 for the year ended December 31, 1997 was comprised of (i) net loss of $271,920, (ii) adjustment of $584,414 for depreciation and amortization, and (iii) a net change in operating assets and liability of $167,224. Net cash used in investing activities of $176,503 for the year ended December 31, 1998 was comprised of capital expenditures for building improvements. Net cash used in investing activities of $94,486 for the year ended December 31, 1997 was comprised of capital expenditures for building improvements. 18 Net cash used in financing activities of $132,555 for the year ended December 31, 1998 included (i) principal repayments on mortgages loans payable of $170,520 and (ii) funds held in escrow of $37,965. Net cash used in financing activities of $453,447 for the year ended December 31, 1997 included (i) redemption of Bonds payable of $16,452,000, (ii) funds held in escrow of $269,895, (iii) debt financing costs of $313,337, (iv) proceeds from mortgages loans payable of $16,710,000, (v) principal repayments on mortgages loans payable of $26,426 and (vi) cash distributions to partners of $101,789. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The Partnership is not subject to any material market risk. Item 8. Financial Statements and Supplementary Data. The financial statements and supplementary data, shown by index on page 30, begin on page 31 of this Report. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. On October 28, 1998, the Partnership dismissed the accounting firm of Deloitte & Touche LLP as the Partnership's independent auditor. The dismissal of Deloitte & Touche LLP was not the result of any disagreements between the Partnership and Deloitte & Touche LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. On November 2, 1998, the Partnership retained the accounting firm of Ahearn, Jasco + Company, P.A. as its new independent auditor for the fiscal year ending December 31, 1998. The decision to change accounting firms as the Partnership's independent auditor was approved by the Audit Committee of CM Plus Corporation, General Partner of Concord Milestone Plus, L.P., on October 28, 1998. 19 PART III Item 10. Directors and Officers of the Registrant. The names, offices held and the ages of the directors and executive officers of the General Partner and of CMP Beneficial Corp. are as follows: Has Served As a Director and/or Name Age Position Held Officer Since (1) Leonard S. Mandor (3) 52 President Inception (2) and Director Robert A. Mandor (3) 46 Vice President Inception and Director Harvey Shore 53 Vice President December 24, 1987 Joseph P. Otto 45 Vice President October 3, 1997 and Secretary Patrick Kirse 30 Treasurer and October 3, 1997 Controller - ---------------------------------- (1) Each director and officer of the General Partner and CMP Beneficial Corp. will hold office until the next annual meeting of the General Partner and CMP Beneficial Corp. and until his successor is elected and qualified. (2) The General Partner was incorporated on December 12, 1986 and CMP Beneficial Corp. was incorporated on December 18,1986. (3) Robert A. Mandor and Leonard S. Mandor are brothers. LEONARD S. MANDOR is the Chief Executive Officer and a Director of Concord. Mr. Mandor is the Chairman of the Board, Chief Executive Officer and a Director of Milestone Properties, Inc. Mr. Mandor has been associated with Concord since its inception in 1981. ROBERT A. MANDOR is the President and a Director of Concord. For at least the past five years he has served as the President, Chief Financial Officer, and a Director of Milestone Properties, Inc. Mr. Mandor has been associated with Concord since its inception. HARVEY SHORE joined Concord in 1983 and is a Senior Vice President. He also serves as a Senior Vice President and Secretary of Milestone Properties, Inc. Before joining Concord he worked at Chase Manhattan Bank as a Vice President. 20 JOSEPH P. OTTO was appointed Vice President and Secretary of CM Plus Corporation, the General Partner of Concord Milestone Plus, L.P. in October 1997 to fill a vacancy. Mr. Otto is also a Vice President of Concord and has been associated with Concord since 1984. Mr. Otto is also a Vice President and Director of Milestone Properties, Inc. PATRICK KIRSE was appointed Treasurer and Controller of CM Plus Corporation, the General Partner of Concord Milestone Plus, L.P. in October 1997 to fill a vacancy. Mr. Kirse also serves as a Vice President of Milestone Properties, Inc. He is a CPA licensed in the state of Missouri. Before joining Milestone in 1995 he worked as a senior auditor with Deloitte & Touche LLP since 1991. On February 2, 1995, the Securities and Exchange Commission filed a civil complaint against Concord in the United States District Court for the District of Columbia in connection with the proxy solicitation conducted with respect to the merger of Concord Milestone Income Fund, L.P. and Concord Milestone Income Fund II, L.P. into a publicly held corporation, Milestone Properties, Inc., in 1990. The complaint alleged that Concord violated the anti-fraud provisions of the Securities Exchange Act of 1934 through the forgery of investors' signatures on proxy cards and further alleged that Concord failed to provide certain investors in the affected partnerships with lists of partners, as required under the proxy rules. In April, 1995, Concord consented, without admitting or denying the Commission's allegations, to the entry of a final judgment ordering it to pay a civil penalty of $500,000 and enjoining it from violating Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 14(a) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14a-7 thereafter. Compliance with Section 16(a) of the Exchange Act. Based on the General Partner's review of Forms 3, 4 and 5 furnished to the Partnership, there were no late reports filed during 1998. Item 11. Compensation. During 1998, the Partnership paid or accrued: (i) $25,000 to Milestone Property Management, Inc. ("MPMI"), an affiliate of the General Partner, for administrative services rendered to the Partnership. Pursuant to an agreement between MPMI and the Partnership, the Partnership reimburses MPMI for administrative services provided to the Partnership, such as payroll, investor services and supplies in an amount equal to $25,000 per year. (ii)$131,909 to MPMI for property management fees for the fiscal year ended December 31, 1998. Pursuant to the management agreement between the Partnership and MPMI, property management fees are equal to a percentage of gross revenues not to exceed 5 percent for multiple tenant property for which MPMI performs leasing services, 3 percent for multiple tenant property for which MPMI does not perform leasing services and 1 percent for single tenant property. The management fees are 3 percent for the Searcy Property, 4 percent for the Valencia Property and 5 percent for the Green Valley Property. The management fee for any Property may not exceed competitive fees for comparable services reasonably available to the Partnership in the same geographic area as the property in question. Gross revenues are defined in the management agreement to mean, with respect to each Property, all base, additional and percentage rents collected from the Property but exclude all other receipts or income with respect to that Property, such as, (i) receipts arising out of any sale of assets or of all or part of the Property, condemnation proceeds and other items of a similar nature; (ii) payments made by tenants for over-standard finish out improvements or other amortization; (iii) income derived from interest on investments, security deposits utility deposits; (iv) proceeds of claims under insurance policies; (v) abatements or reductions of taxes; (vi) security deposits made by tenants; or (vii) any portions of rentals which 21 are specifically designated as amortization of, or interest on, tenant moving expenses, takeover expenses or similar items in the nature of advances by the Partnership. No officer, director, or employee of the General Partner received any direct compensation from the Partnership during the fiscal year ended December 31, 1998. Item 12. Security Ownership of Certain Beneficial Owners and Management. (a) The General Partner does not know of any beneficial owner of five percent or more of the issued and outstanding Class A Interests. The General Partner knows of only one owner of five percent or more of the issued and outstanding Class B Interests, the information as to which is set forth below as of March 1, 1999: Amount and Nature of Percent Title Name and Address of Beneficial of of Class Beneficial Owner Ownership Class Class B The Guardian Life 572,292* 27.1% Interests Insurance Company of America 203 Park Avenue South New York, NY 10003 - ----------------------- * To the best of the Partnership's knowledge, The Guardian Life Insurance Company of America has sole voting power and investment power with respect to these securities. (b) The General Partner, together with its affiliates and the officers and directors of the General Partner, own less than 1% of the issued and outstanding Class A Interests and less than 1% of the issued and outstanding Class B Interests. The number of shares of stock, no par value, of Concord (which is the parent of the General Partner) beneficially owned by all directors of the General Partner and CMP Beneficial Corp. and all directors and officers of the General Partner and CMP Beneficial Corp. as a group as of March 1, 1999 is set forth in the following table: Amount and Nature of Percent Name of Beneficial of Beneficial Owner Ownership Class Leonard S. Mandor 267 67% Robert A. Mandor 133 33% Item 13. Certain Relationships and Related Transactions. See Item 1, "Business," Item 5, "Market for Registrant's Units and Related Security Holders Matters," Item 10, "Directors and Officers of the Registrant," and Item 11, "Compensation," of this Report for details. See also Note 5 of the Notes to Financial Statements of the Partnership's Financial Statements included in this Report. 22 PART IV Item 14. Exhibits, Financial Statements, Financial Schedule, and Reports on Form 8-K. (a) Financial Statements and Financial Schedule See Index to Financial Statements and Financial Schedule included herewith on page 30 of this Report. (b) Reports on Form 8K. On November 4, 1998, a Form 8-K was filed with the Commission reporting changes in the Partnership's certifying accountant. (c) Exhibits: Exhibit Number Description of Document 3.1 Amended and Restated Agreement of Limited Partnership of Concord Milestone Plus, L.P. Incorporated herein by reference to Exhibit A to the Registrant's Prospectus included as Part I of the Registrant's Post-Effective Amendment No. 3 to the Registrant's Registration Statement on Form S-11 (the "Registration Statement") which was declared effective on April 3, 1987. 3.2 Amendment No. 1 to Amended and Restated Agreement of Limited Partnership of Concord Milestone Plus, L.P., included as Exhibit 3.2 to Registrant's Form 10-K for the fiscal year ended December 31, 1987 ("1987 Form 10-K"), which is incorporated herein by reference. 3.3 Amendment No. 2 to Amended and Restated Agreement of Limited Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.3 to the 1987 Form 10-K, which is incorporated herein by reference. 3.4 Amendment No. 3 to Amended and Restated Agreement of Limited Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.4 to the 1987 Form 10-K, which is incorporated herein by reference. 3.5 Amendment No. 4 to Amended and Restated Agreement of Limited Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.5 to the 1987 Form 10-K, which is incorporated herein by reference. 23 3.6 Amendment No. 5 to Amended and Restated Agreement of Limited Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.6 to Registrant's Form 10-K for the fiscal year ended December 31, 1988, which is incorporated herein by reference. 4. Form of Indenture relating to Escalating Rate Collateralized Mortgage Bonds due November 30, 1997 between Concord Milestone Plus, L.P. and United States Trust Company of New York, as Trustee. Incorporated herein by reference to Exhibit 4 to the Registration Statement. 4.1 Form of Supplemental Indenture. Incorporated herein by reference to Exhibit 4.7 to the Registrant's Post-Effective Amendment No. 1 ("Post-Effective Amendment No. 1") to the Registration Statement. 4.2 Form of Escalating Rate Collateralized Mortgage Bond due November 30, 1997 included as Exhibit 4.2 to the 1987 Form 10-K, which is incorporated herein by reference. 4.3 Form of certificate evidencing Class A Interests included as Exhibit 4.3 to the 1987 Form 10-K, which is incorporated herein by reference. 4.4 Form of certificate evidencing Class B Interests included as Exhibit 4.4 to the 1987 Form 10-K, which is incorporated herein by reference. 10.1 Property purchase agreements. Incorporated herein by reference to Exhibit 10.1 to the Registration Statement. 10.2 Form of property management agreement. Incorporated herein by reference to Exhibit 10.2 of the Registration Statement. 10.3 First Amendment to Management Agreement by and between Concord Milestone Plus, L.P. and Concord Assets Management, Inc. Incorporated herein by reference to Exhibit 10.3 of the 1988 Form 10-K. 10.4 Second Amendment to Management Agreement by and between Concord Milestone Plus, L.P. and Concord Assets Management, Inc. Incorporated herein by reference to Exhibit 10.4 of the 1988 Form 10-K. 24 10.5 Omitted intentionally. 10.6 Omitted intentionally. 10.7 Mortgage Promissory Note executed by Concord Milestone Plus, L.P. in favor of United States Trust Company of New York, as trustee, in the principal amount of $7,523,500 and secured by a mortgage on certain property located in Valencia, California. Incorporated herein by reference to Exhibit 10.5 to the 1987 Form 10-K. 10.8 Mortgage Promissory Note executed by Concord Milestone Plus, L.P. in favor of United States Trust Company as trustee, in the principal amount of $6,296,000 and secured by a mortgage on a certain property located in Green Valley, Arizona. Incorporated herein by reference to Exhibit 10.8 to the 1988 Form 10-K. 10.9 Deed of Trust and Uniform Commercial Code Security Agreement and Financing Statement with Assignment of Leases, Rents and Profits executed by Concord Milestone Plus, L.P. in favor of United States Trust Company of New York, as trustee, with respect to property located in Valencia, California. Incorporated herein by reference to Exhibit 10.6 to the 1987 Form 10-K. 10.10 Mortgage Deed of Trust and Uniform Commercial Code Security Agreement and Financing Statement with Assignment of Leases, Rents and Profits, in favor of United States Trust Company of New York, as trustee, with respect to certain property located in Green Valley, Arizona. Incorporated herein by reference to Exhibit 10.10 to the 1988 Form 10-K. 10.11 Amended and Restated Mortgage Promissory Note executed by Concord Milestone Plus, L.P. in favor of United States Trust Company of New York, as trustee, in the principal amount of $2,632,500 and secured by a mortgage on certain property located in Searcy, Arkansas. Incorporated herein by reference to Exhibit 10.7 of the 1987 Form 10-K. 25 10.12 Mortgage, Deed of Trust and Uniform Commercial Code Security Agreement and Financing Statement with Assignment of Leases, Rents and profits by Concord Milestone Plus, L.P. in favor of United States Trust Company of New York, as trustee, with respect to property located in Searcy, Arkansas. Incorporated herein by reference to Exhibit 10.8 of the 1987 Form 10-K. 10.13 Modification of Mortgage, Deed of Trust and Uniform Commercial Code Security Agreement and Financing statement with Assignment of Leases, Rents and Profits by Concord Milestone Plus, L.P. in favor of United States Trust Company of New York, as trustee, with respect to property located in Searcy, Arkansas. Incorporated herein by reference to Exhibit 10.9 of the 1987 Form 10-K. 10.14 Second Modification to Mortgage, Deed of Trust and Uniform Commercial Code Security Agreement and Financing Statement with Assignment of Leases, Rents and Profits by Concord Milestone Plus, L.P. in favor of United States Trust Company of New York, as trustee, with respect to property located in Searcy, Arkansas. Incorporated herein by reference to Exhibit 10.10 of the 1987 Form 10-K. 10.15 Fixed Rate Note, dated September 23, 1997, executed by the Partnership in favor of Lender, relating to the property located in Green Valley, Arizona. Incorporated herein by reference to Exhibit 10.1 of the Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 (the "September 1997 10-Q"). 10.16 Mortgage, Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated September 23, 1997, executed by the Partnership for the benefit of Lender, relating to the property located in Green Valley, Arizona. Incorporated herein by reference to Exhibit 10.2 of the September 1997 10-Q. 10.17 Assignment of Leases and Rents, dated September 23, 1997, executed by the Partnership for the benefit of Lender, relating to the property located in Green Valley, Arizona. Incorporated herein by reference to Exhibit 10.3 of the September 1997 10-Q. 26 10.18 Environmental Liabilities Agreement, dated September 23, 1997, executed by the Partnership and CM Plus Corporation for the benefit of Lender, relating to the property located in Green Valley, Arizona. Incorporated herein by reference to Exhibit 10.4 of the September 1997 10-Q. 10.19 Tenant Occupancy Escrow and Security Agreement, dated September 23, 1997, by and between the Partnership and the Lender, relating to the property located in Green Valley, Arizona. Incorporated herein by reference to Exhibit 10.5 of the September 1997 10-Q. 10.20 Fixed Rate Note, dated September 23, 1997, executed by the Partnership in favor of Lender, relating to the property located in Searcy, Arkansas. Incorporated herein by reference to Exhibit 10.6 of the September 1997 10-Q. 10.21 Mortgage, Deed of Trust and Security Agreement, dated September 23, 1997, executed by the Partnership for the benefit of Lender, relating to the property located in Searcy, Arkansas. Incorporated herein by reference to Exhibit 10.7 of the September 1997 10-Q. 10.22 Assignment of Leases and Rents, dated September 23, 1997, executed by the Partnership for the benefit of Lender, relating to the property located in Searcy, Arkansas. Incorporated herein by reference to Exhibit 10.8 of the September 1997 10-Q. 10.23 Environmental Liabilities Agreement, dated September 23, 1997, executed by the Partnership and CM Plus Corporation for the benefit of Lender, relating to the property located in Searcy, Arkansas. Incorporated herein by reference to Exhibit 10.9 of the September 1997 10-Q. 10.24 Fixed Rate Note, dated September 23, 1997, executed by the Partnership in favor of Lender, relating to the property located in Valencia, California. Incorporated herein by reference to Exhibit 10.10 of the September 1997 10-Q. 10.25 Deed of Trust, Assignment of leases, and Rents, Security Agreement and Fixture Filing, dated September 23, 1997, executed by the Partnership for the benefit of Lender, relating to the property located in Valencia, California. Incorporated herein by reference to Exhibit 10.11 of the September 1997 10-Q. 10.26 Assignment of Leases and Rents, dated September 23, 1997, executed by the Partnership for the benefit of Lender, relating to the property located in Valencia, California. Incorporated herein by reference to Exhibit 10.12 of the September 1997 10-Q. 27 10.27 Environmental Liabilities Agreement, dated September 23, 1997, executed by the Partnership and CM Plus Corporation for the benefit of Lender, relating to the property located in Valencia, California. Incorporated herein by reference to Exhibit 10.13 of the September 1997 10-Q. 10.28 Environmental Escrow and Security Agreement, dated September 23, 1997, by and between the Partnership and the Lender, relating to the property located in Valencia, California. Incorporated herein by reference to Exhibit 10.14 of the September 1997 10-Q. 27. Financial Data Schedule Article 5 included for Electronic Data Gathering, Analysis, and Retrieval (EDGAR) purposes only. This Schedule contains summary financial information extracted from the consolidated balance sheets and consolidated statements of revenues and expenses of the Company as of and for the fiscal year ended December 31, 1998, and is qualified in its entirety by reference to such financial statements. 28 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunder duly authorized on March 12, 1999. CONCORD MILESTONE PLUS, L.P. By: CM PLUS CORPORATION, General Partner By: /s/ Leonard S. Mandor Leonard S. Mandor, President CMP BENEFICIAL CORP. (Registrant of Beneficial Interests) By: /s/ Leonard S. Mandor Leonard S. Mandor, President Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons in the capacities and on the dates indicated. By: /s/ Leonard S. Mandor March 12, 1999 ----------------------------------------------- Leonard S. Mandor President (Principal Executive Officer) and Director of CM Plus Corporation and CMP Beneficial Corp. By: /s/ Robert A. Mandor March 12, 1999 ----------------------------------------------- Robert A. Mandor Vice President and Director of CM Plus Corporation and CMP Beneficial Corp. By: /s/ Patrick Kirse March 12, 1999 ----------------------------------------------- Patrick Kirse Treasurer and Controller (Principal Accounting Officer) of CM Plus Corporation and CMP Beneficial Corp. 29 INDEX TO FINANCIAL STATEMENTS AND FINANCIAL SCHEDULE Page No. 1.Financial Statements: a. Concord Milestone Plus, L.P. 1. Independent Auditors' Reports .......................... 31 2. Balance Sheets, December 31, 1998 and December 31, 1997. 33 3. Statements of Revenues and Expenses for the Years Ended December 31, 1998, 1997 and 1996 ....................... 34 4. Statements of Changes in Partners' Capital for the Years Ended December 31, 1998, 1997 and 1996 ................. 35 5. Statements of Cash Flows for the Years Ended December 31, 1998, 1997 and 1996 ............................... 36 6. Notes to Financial Statements .......................... 37 2.Financial Schedule: a. Real Estate and Accumulated Depreciation (Schedule III) ....... 43 This financial statement schedule of the Partnership for each of the years ended December 31, 1998, 1997 and 1996 is filed as part of this Form 10-K and should be read in conjunction with the Financial Statements, and related notes thereto, of the Partnership. All other financial statement schedules have been omitted because the required information is not present or not present in amounts sufficient to require submission of the schedule or because the information required is included in the financial statements or notes thereto. 30 INDEPENDENT AUDITORS' REPORT Concord Milestone Plus, L.P. We have audited the accompanying balance sheet of Concord Milestone Plus, L.P. (the "Partnership") as of December 31, 1998, and the related statements of revenues and expenses, changes in partners' capital, and cash flows for the year then ended. Our audit also included the financial statement schedule of real estate and accumulated depreciation. These financial statements and the financial statement schedule of real estate and accumulated depreciation are the responsibility of the Partnership's management. Our responsibility is to express in opinion on the financial statements and the financial statement schedule of real estate and accumulated depreciation based on our audit. We conducted our audit in accordance with the generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Concord Milestone Plus, L.P. as of December 31, 1998, and the results of its operations, charges in partners' capital and its cash flows for the year ended December 31, 1998, in conformity with general accepted accounting principles. Also, in our opinion, the financial statement schedule of real estate and accumulated depreciation, when considered in relation to the basic financial statements, presents fairly, in all material respects, the information set forth therein. /s/ Ahearn, Jasco + Company, P.A. Pompano Beach, Florida March 12, 1999 31 INDEPENDENT AUDITORS' REPORT Concord Milestone Plus, L.P. We have audited the accompanying balance sheet of Concord Milestone Plus, L.P. (the "Partnership") as of December 31, 1997 and the related statements of revenues and expenses, changes in partners' capital and cash flows for each of the two years in the period ended December 31, 1997 and 1996. Our audits also included the information pertaining to 1997 and 1996 contained in the financial statement schedule of real estate and accumulated depreciaion. These financial statements and the financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express in opinion on the financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Concord Milestone Plus, L.P. at December 31, 1997 and the results of its operations, changes in partners' capital and cash flows for each of the two years in the period ended December 31, 1997 and 1996 in conformity with general accepted accounting principles. Also, in our opinion, the information pertaining to 1997 and 1996 contained in such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. /s/ Deloitte & Touche New York, New York March 20, 1998 32 CONCORD MILESTONE PLUS, L.P. (a Limited Partnership) BALANCE SHEETS DECEMBER 31, 1998 and 1997 December 31, December 31, 1998 1997 Property, at cost Building and improvements $ 15,630,448 $15,453,945 Less: accumulated depreciation 6,017,284 5,413,087 ----------- --------- Building and improvements, net 9,613,164 10,040,858 Land 10,987,034 10,987,034 ---------- ---------- Total property 20,600,198 21,027,892 Cash and cash equivalents 436,256 257,905 Accounts receivable 224,272 123,152 Restricted cash 231,930 269,895 Debt financing costs, net 274,170 305,504 Prepaid expenses and other assets, net 74,779 67,516 ------------- ------------- Total assets $21,841,605 $22,051,864 ========== ========== Liabilities: Mortgage loans payable $ 16,513,054 $16,683,574 Accrued interest 116,110 117,308 Accrued expenses and other liabilities 299,746 341,263 Accrued expenses payable to affiliates 45,641 73,935 ------------- ------------- Total liabilities 16,974,551 17,216,080 ---------- ---------- Commitments and Contingencies Partners' capital General partner (73,894) (74,207) Limited partners: Class A Interests, 1,518,800 4,940,948 4,909,991 Class B Interests, 2,111,072 - - ------------- ------------------ Total partners' capital 4,867,054 4,835,784 ----------- ----------- Total liabilities and partners' capital $21,841,605 $22,051,864 ========== ========== See Accompanying Notes to Financial Statements 33 CONCORD MILESTONE PLUS, L.P. (a Limited Partnership) STATEMENTS OF REVENUES AND EXPENSES FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
December 31, December 31, December 31, 1998 1997 1996 Revenues: Rent $2,588,112 $2,543,384 $2,583,614 Reimbursed expenses 494,418 477,312 405,443 Interest and other income 21,108 26,100 20,606 ----------- --------- ----------- Total revenues 3,103,638 3,046,796 3,009,663 --------- --------- --------- Expenses: Interest expense 1,373,559 1,602,762 1,569,795 Depreciation and amortization 646,719 584,414 638,685 Management and property expenses 795,954 816,817 802,971 Administrative and management fees to related party 156,909 132,725 132,007 Professional fees and other expenses 99,227 181,998 104,324 ----------- ---------- ----------- Total expenses 3,072,368 3,318,716 3,247,782 --------- ---------- ---------- Net income (loss) $ 31,270 $(271,920) $(238,119) ========== ======== ======== Net income (loss) attributable to: Limited partners $30,957 $(269,201) $(235,738) General partner 313 (2,719) (2,381) ----------- ----------- ----------- Net income (loss) $31,270 $(271,920) $(238,119) ====== ======== ======== Income (loss) per weighted average Limited Partnership 100 Class A Interests outstanding $2.06 $(17.90) $(15.68) ==== ====== ====== Weighted average number of 100 Class A interests outstanding 15,188 15,188 15,188 ====== ====== ======
See Accompanying Notes to Financial Statements 34 CONCORD MILESTONE PLUS, L.P. (a Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' CAPITAL FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, and 1996
General Class A Class B Total Partner Interests Interests PARTNERS' CAPITAL (DEFICIT) January 1, 1996 $5,644,136 $(66,124) $5,710,260 - Distributions (196,524) (1,965) (194,559) - Net Loss (238,119) (2,381) (235,738) - ---------- -------- ---------- -------------- PARTNERS' CAPITAL (DEFICIT) December 31, 1996 5,209,493 (70,470) 5,279,963 - ---------- -------- ---------- -------------- Distributions (101,789) (1,018) (100,771) - Net Loss (271,920) (2,719) (269,201) - --------- ------- --------- -------------- PARTNERS' CAPITAL (DEFICIT) December 31, 1997 4,835,784 (74,207) 4,909,991 - --------- ------- --------- ------------- Net Income 31,270 313 30,957 - ----------- --------- ----------- -------------- PARTNERS' CAPITAL (DEFICIT) December 31, 1998 $4,867,054 $(73,894) $4,940,948 - ========= ======= ========= ==============
See Accompanying Notes to Financial Statements 35 CONCORD MILESTONE PLUS, L.P. (a Limited Partnership) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
December 31, December 31, December 31, 1998 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $31,270 $(271,920) $(238,119) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 646,719 584,414 638,685 Change in operating assets and liabilities - net: (Increase) decrease in accounts receivable (101,120) 23,576 (32,631) (Increase) decrease in prepaid expenses and other assets, net (18,451) 15,364 61,846 Decrease in due from affiliate, net - - 47,879 (Decrease) increase in accrued interest (1,198) (19,792) 6,854 (Decrease) increase in accrued expenses and other liabilities (41,517) 86,126 (82,131) (Decrease) increase in accrued expenses payable to affiliates (28,294) 61,950 11,985 ------------ ------------- ---------- Net cash provided by operating activities 487,409 479,718 414,368 ----------- ------------ --------- CASH FLOWS FROM INVESTING ACTIVITIES: Property improvements (176,503) (94,486) (96,984) Purchase of other asset - - (13,612) ------------ ------------- --------- Net cash used in investing activities (176,503) (94,486) (110,596) ---------- ------------ -------- CASH FLOWS FROM FINANCING ACTIVITIES: Redemption of bonds payable - (16,452,000) - Restricted cash 37,965 (269,895) - Debt financing costs - (313,337) - Proceeds from mortgage loans payable - 16,710,000 - Principal repayments on mortgage loans payable (170,520) (26,426) - Cash distributions to partners - (101,789) (196,524) ---------- ----------- -------- Net cash used in financing activities (132,555) (453,447) (196,524) ---------- ----------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 178,351 (68,215) 107,248 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 257,905 326,120 218,872 ---------- ----------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 436,256 $ 257,905 $ 326,120 ========= =========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest $1,374,757 $1,622,554 $1,562,941 ========= ========== ==========
See Accompanying Notes to Financial Statements 36 CONCORD MILESTONE PLUS, L.P. NOTES TO FINANCIAL STATEMENTS December 31, 1998, 1997 and 1996 1. Organization and Capitalization Concord Milestone Plus, L.P., a Delaware limited partnership (the "Partnership"), was formed on December 12, 1986, to invest in existing income-producing commercial and industrial real estate, such as shopping centers, office buildings, free-standing commercial warehouses and distribution centers. Currently, the Partnership owns and operates three shopping centers (the "Properties"), one located in Searcy, Arkansas (the "Searcy Property"), one located in Valencia, California (the "Valencia Property") and one located in Green Valley, Arizona (the "Green Valley Property"). The Partnership commenced a public offering on April 8, 1987 in order to fund the Partnership's real property acquisitions. The Partnership terminated its public offering on April 2, 1988 and was fully subscribed to with a total of 16,452 Bond Units and 15,188 Equity Units issued. Each Bond Unit consisted of $1,000 principal amount of the Partnership's Escalating Rate Collateralized Mortgage Bonds (the "Bonds") due November 30, 1997 and 36 Class B Interests ("Class B Interests"), each such interest representing an assignment of one Class B Limited Partnership Interest held by CMP Benefit Corp., a Delaware corporation (the "Assignor"), under the Amended and Restated Agreement of Limited Partnership of the Partnership Agreement (the "Partnership Agreement"). Each Equity Unit consisted of 100 Class A Interests ("Class A Interests"), each interest representing an assignment of one Class A Limited Partnership Interest held by the Assignor under the Partnership Agreement, and 100 Class B Interests. Capital contributions to the Partnership consisted of $15,187,840 from the sale of the Equity Units and $592,272 from the sale of the Class B Interests that comprised the Bond Units. 2. Summary of Significant Accounting Policies Basis of Accounting, Fiscal Year The Partnership's records are maintained on the accrual basis of accounting for both financial and tax purposes. Its fiscal year is the calendar year. Cash and Cash Equivalents The Partnership considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Partnership occasionally maintains cash balances in financial institutions in excess of the federally insured limits. Restricted Cash Restricted cash consists of escrow deposits held by the lender for payment of property taxes and an amount held pending the execution of a new lease or renewal lease of the space presently leased to Abco at the Green Valley property and satisfaction of certain other conditions related thereto. Base Rents Base rents are recognized on a straight-line basis over the terms of the related leases, including free rent, if any, and lease step ups. 37 Property Property is carried at cost, and depreciated on a straight-line basis over the estimated useful life of 31.5 years. Building improvements are carried at cost, and depreciated on a straight-line basis using an estimate useful life of 5 to 12 years. Leasehold improvements are amortized on a straight-line basis over the lesser of the estimated useful life or the remaining term of the lease. Depreciation expense was $609,161, $588,520, $582,212 in 1998, 1997 and 1996, respectively. The Partnership's policy is to quarterly assess any impairment in value by making a comparison of the current and projected operating cash flows of each of its properties over its remaining useful life, on an undiscounted basis, to the carrying amount of such property. Such carrying amount would be adjusted, if necessary, to the estimated fair value to reflect an impairment in the value of the asset. The Partnership determined that an adjustment to the carrying amount of its properties was not necessary in 1998, 1997, and 1996. Income Taxes The Partnership makes no provision for income taxes because all income and losses are allocated to the partners and holders of Class A Interests and Class B Interests for inclusion in their respective tax returns. The tax bases of the Partnership's net assets and liabilities are $2,904,634 and $2,792,337 higher than the amounts reported for financial statement purposes at December 31, 1998 and 1997, respectively, due to the utilization of different estimated useful lives for the depreciation of property for tax and financial reporting purposes and the write-down of property during 1993 and 1994 for financial reporting purposes. Discount on Bonds Payable and Debt Financing Costs The Partnership amortized the original issue discount on bonds payable using the effective interest method over the term of the Bonds. The costs to obtain the new Mortgage Loans (see Note 6) were capitalized and are being amortized over the term of such mortgages using the effective interest method. Income (loss) Per Class A Interest In February 1997, the Financial Accounting Standard Board ("FASB") issued SFAS No. 128, "Earnings per Share" which establishes standards for computing and presenting earnings per share. The new standard replaces the presentation of primary earnings per share prescribed by Accounting Principles Board Opinion No. 15 ("APB 15"), "Earnings per Share" with a presentation of basic earnings per share and also requires dual presentation of basic and diluted earnings per share on the face of the statement of operations for all entities with complex capital structures. The Partnership has no dilutive interests. Income (loss) per Class A interest amounts are computed by dividing net loss allocable to the limited partners by the weighted average number of 100 Class A Interests outstanding during the year. The adoption of SFAS No. 128 will not have any effect on current or prior period financial statement displays presented by the Partnership. Statement of Comprehensive Income A statement of comprehensive income has not been included per SFAS 130, "Reporting Comprehensive Income", as the Partnership has no items of other comprehensive income. 38 Capital Structure In February 1997, the FASB issued SFAS No. 129, "Disclosure of Information About Capital Structure." SFAS No. 129 establishes certain standards for disclosing information about an entity's capital structure. SFAS No. 129 is effective for financial statement periods ending after December 15, 1997. SFAS No. 129 will not have any material effect on current or prior period financial statement displays presented by the Partnership. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain reclassifications were made to the accompanying 1996 and 1997 financial statements to conform with the 1998 presentation. 3. Partnership Agreement Pursuant to the terms of the Partnership Agreement, the general partner of the Partnership, CM Plus Corporation, a Delaware corporation (the "General Partner"), is liable for all general obligations of the Partnership to the extent not paid by the Partnership. Holders of Class A Interests and Class B Interests are not liable for expenses, liabilities or obligations of the Partnership beyond the amount of their contributed capital. All distributable cash, capital proceeds, profit, gain or loss from Partnership operations are generally allocated 1 percent to the General Partner and 99 percent to the holders of Class A Interests. The holders of Class B Interests were specifically allocated certain organization and offering expenses to the extent of their positive capital account balances, thus reducing their account balance to zero. After the holders of Class A Interests have received the 12.5 percent Priority Return (as defined in the Partnership Agreement) all distributable cash is allocated in a ratio of 85 percent to the holders of Class B Interests, 5 percent to the holders of Class A Interests and 10 percent to the General Partner. Since the inception of the Partnership, all income and distributable cash with respect to the Equity Units has been allocated to the holders of Class A Interests because they have not received the 12.5 percent Priority Return. Therefore, no income has been allocated to the holders of Class B Interests. 4. Properties On August 20, 1987, the Partnership purchased the Searcy Property, a shopping center in Searcy, Arkansas from Concord Milestone Plus of Arkansas Limited Partnership, an affiliated entity, for $4,050,000. On January 22, 1988, the Partnership purchased the Valencia Property, a shopping center in Valencia, California from Concord Milestone Plus of California Limited Partnership, an affiliated entity, for $11,575,000. On April 15, 1988, the Partnership purchased the Green Valley Property, a shopping center in Green Valley, Arizona from Concord Milestone Plus of Arizona Limited Partnership, an affiliated entity, for $9,687,000. 39 Minimum base rental income under non-cancelable tenant lease agreements, having lease terms expiring from one to nine years, at December 31, 1998 are as follows: Year Ended December 31 Amount ------------- -------- 1999 $2,359,660 2000 1,861,748 2001 1,469,499 2002 1,118,899 2003 876,097 Thereafter 1,872,215 ------------- Total $9,585,118 The above table does not include contingent rental amounts. The total contingent rentals received in 1998, 1997, and 1996, were $148,490, $163,307, and $185,117, respectively. A majority of the leases contain provisions for additional rent calculated as a specified percentage of the tenant's gross receipts above fixed minimum amounts and for reimbursement of all or a portion of the tenant's pro rata share of real estate taxes, insurance and common area maintenance expenses. There was no tenant in 1998, 1997 and 1996 whose rents exceed 10% of the Partnership's total revenue. 5. Related Party Transactions The Partnership pays fees for customary property management services ("Management Fees") equal to a percentage of gross revenues from the Properties, not to exceed 5 percent. The Management Fees are 3 percent for the Searcy Property, 4 percent for the Valencia Property and 5 percent for the Green Valley Property. Management Fees incurred for the years ended December 31, 1998, 1997, and 1996, were $131,909, $107,725, and $107,007, respectively. Management Fees are payable to Milestone Property Management, Inc., a Delaware corporation and affiliate of the General Partner ("MPMI"). The Partnership also paid $25,000 to MPMI for administrative services for the years ended December 31, 1998, 1997, and 1996. As of December 31, 1998 and 1997, the Partnership accrued $45,641 and $33,542, respectively, payable to Milestone Properties, Inc. ("MPI"), an affiliate of the General Partner for administrative and management fees and insurance. Tri-Stone Mortgage Company, an affiliate of the General Partner, assisted the Partnership in obtaining three new fixed rate Mortgage Loans. No fee was paid to Tri-Stone for its assistance. 6. Mortgage Loans Payable As of September 30, 1997, the Partnership, with the assistance of Tri-Stone Mortgage Company, an affiliate of the General Partner, closed three new fixed rate first mortgage loans (the "Mortgage Loans") from Westco Real Estate Finance Corp. (the "Lender") in the amounts of $2,865,000, $8,445,000 and $5,400,000, respectively. All three Mortgage Loans are secured by cross-collateralized first mortgages on the Partnership's shopping centers. Prior to September 30, 1997, the shopping centers were encumbered by mortgages granted by the Partnership for the benefit of the holders of the Partnership's Bonds. The Partnership used the proceeds of the Mortgage Loans and available cash to redeem all of the outstanding Bonds. An aggregate of $17,015,650 was paid to the holders of the Bonds in connection with such redemption, of which $16,452,000 was applied to prepay the principal of the Bonds and $563,650 was applied to pay interest accrued on the Bonds through the redemption date. 40 In conjunction with the refinancing of the Bonds, the lender engaged an independent environmental and geotechnical consulting firm to perform environmental due diligence on the properties at the Partnership's expense. After various tests, the consultant identified chemical contamination in the soil at a site at the Old Orchard Shopping Center in Valencia, California which it believed was attributable to improper handling of dry cleaning solvent by a tenant and its predecessors. During February 1998, the CALEPA issued a No Further Action letter with respect to the investigation and remediation at the Valencia Property. The cost to satisfactorily remedy this environmental problem was approximately $71,000, which was expensed during 1997. The Mortgage Loans and related terms at December 31, 1998 are summarized as follows: Principal Monthly Balance at Payments of December Interest Principal Property/Location 31, 1998 Rate % and Interest ----------------- -------------- ------ ------------ Searcy, AR $2,836,228 8.125 $21,640 Valencia, CA 8,329,540 8.125 65,881 Green Valley, AZ 5,347,286 8.250 41,252 --------- ------ Total $16,513,054 $128,773 ========== ======= The Mortgage Loans require payments of principal and interest through and including September 1, 2007. On October 1, 2007, the balance of principal and interest estimated to be $2,505,981, $7,003,227, and $4,738,096 for the Searcy, Valencia and Green Valley Properties, respectively, will be due and payable. Subsequent to October 31, 2003 and prior to May 31, 2007 each Mortgage Loan may be prepaid in whole but not in part on any payment date with a prepayment penalty equal to the greater of (i) 1% of the outstanding principal balance at such time, or (ii) the excess, if any, of the present value of the remaining scheduled principal and interest payments (including any balloon payment) over the amount of principal being prepaid. The Mortgage Loans may be prepaid without penalty on any payment date after May 31, 2007. The scheduled principal payments of the Mortgage Loans at December 31, 1998 are as follows: Year Ending December 31 1999 $185,171 2000 197,149 2001 218,023 2002 236,758 2003 257,101 Thereafter 15,418,852 ------------- Total $16,513,054 The recorded amount of the Mortgage Loans approximates fair value because the terms and interest rates approximate current market conditions. In connection with the Green Valley Mortgage Loan, the Partnership has deposited $150,000 into an escrow account with the Lender. The funds held in this escrow account may be released upon the execution of a renewal lease, with a termination date of July 31, 2004 or later, by a specified tenant of the Green Valley shopping center or the execution of a new lease of such store space and the satisfaction of certain other conditions related thereto. 41 In connection with the Valencia Mortgage Loan, the Partnership deposited $45,000 into an escrow account with the lender. The funds held were released during February 1998 following the issuance of a No Further Action letter by the Department of Toxic Substance Control, a branch of the State of California Environmental Protection Agency (CALEPA). CM Plus Corporation, the general partner of the Partnership, guarantees certain limited recourse obligations under the Mortgage Loans. 7. Commitments and Contingencies During February 1999, the Partnership received notice from Abco, the principal anchor tenant at the Green Valley Property, that Abco would not be renewing its lease at the expiration of its current term on July 31, 1999. No replacement tenant has yet been identified, however, the Partnership is in the process of retaining a large regional real estate brokerage firm to help market the space. Many of the tenants at the Green Valley Property have short term leases. It is not possible to determine the long-term effects of the failure of Abco to renew its lease. In the short term, however, the vacancy of the Abco space could have a material adverse effect on the results of operations at the Green Valley Property by impairing the Partnership's ability to retain other tenants or to renew their leases on favorable terms, by reducing traffic at the Property and negatively affecting percentage rents. In addition, the Partnership will incur expenses in releasing the Abco space and cannot predict how soon such space will be leased and the terms of such new lease. Currently, approximately $150,000 of the Partnership's working capital is being held in escrow in connection with the refinancing by the Lender pending the resolution of the forthcoming Abco vacancy. Investments in real property create a potential for environmental liability on the part of the owner, operator or developer of such real property. If hazardous substances are discovered on or emanating from any of the Properties, the Partnership and/or others may be held strictly liable for all costs and liabilities relating to the clean-up of such hazardous substances. The Partnership is not aware of any existing environmental conditions that will have a material effect on the financial statements. From time to time, the Partnership is exposed to claims, regulatory, and legal actions in the normal course of business, some of which are initiated by the Partnership. At December 31, 1998, management believes that any such outstanding issues will be resolved without significantly impairing the financial condition of the Partnership. Subsequent to December 31, 1998, a distribution of $50,001 was paid to Class A Interests during February 1999. 42 CONCORD MILESTONE PLUS, L.P. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1998
Costs Capitalized Subsequent Gross Amount at Initial Cost to Acquisition which Carried at Close of Period (A) ------------------------ --------------- ---------------------------------------- Land Building & Building & Building & Description and Location Encumbrances Land Improvements Improvements Land Improvements Total - ------------------------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- Town & Country Plaza $2,836,228 $430,000 $3,620,000 $455,340 $430,000 $4,075,340 $4,505,340 Searcy, AR Old Orchard Shopping Center 8,329,540 6,500,000 5,075,000 1,369,256 6,500,000 6,449,756 12,949,756 Valencia, CA Green Valley Mall 5,347,286 5,100,000 4,587,000 1,566,818 4,057,034 5,105,352 9,162,386 --------- --------- --------- --------- --------- --------- --------- Green Valley, AZ $16,513,054 $12,030,000 $13,282,000 $3,391,414 $10,987,034 $15,630,448 $26,617,482 ========== ========== ========== ========= ========== ========== ==========
Accumulated Date Depreciation Description and Location Depreciation(B) Acquired Life - ------------------------------ ---------------- -------- ---------------- Town & Country Plaza $1,459,016 08/20/87 31.5 years Searcy, AR Old Orchard Shopping Center 2,310,345 01/22/88 31.5 years Valencia, CA Green Valley Mall 2,247,923 04/15/88 31.5 years --------- Green Valley, AZ $6,017,284 =========
1998 1997 1996 (A) Reconciliation of investment properties owned: Beginning balance $26,440,979 $26,346,493 $26,249,509 Property acquisitions/improvements 176,503 94,486 96,984 Write-down of property 0 0 0 ------------ ----------- ----------- Balance at end of period $26,617,482 $26,440,979 $26,346,493 ========== ========== ========== (B) Reconciliation of accumulated depreciation: Beginning balance $5,413,087 $4,829,534 $4,253,132 Depreciation expense 604,197 583,553 576,402 ----------- ----------- ----------- Balance at end of period $6,017,284 $5,413,087 $4,829,534 ========= ========= =========
43 EX-27 2 FDS
5 1 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 436,256 0 224,272 0 0 0 26,617,482 6,017,284 21,841,605 0 16,513,054 0 0 0 4,867,054 21,841,605 0 3,103,638 0 1,698,809 0 0 1,373,559 31,270 0 0 0 0 0 31,270 2.06 2.06
-----END PRIVACY-ENHANCED MESSAGE-----