FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1998
Commission file number 0-7752
CONTINENTAL REAL ESTATE PARTNERS, LTD.
(Exact name of Registrant as Specified in its
Certificate of Limited Partnership)
Massachusetts 04-2523977
(State of organization) (Internal Revenue Service
Employer Identification
Number)
Wood Ridge Road
Glen Arbor, Michigan 49636
(Address of principal executive (Zip code)
offices)
(616) 334-5000
Registrants' telephone number
Including area code
Not applicable
Former name, former address and former fiscal year,
if changed since last report.
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 and Exchange Act of 1934 during the preceding 12 months
(or 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
The number of limited partnership interests outstanding as of March
31, 1998:
Limited partnership units, $500 per unit - 30,004 units
Index
CONTINENTAL REAL ESTATE PARTNERS, LTD.
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Statements of assets, liabilities and partners' capital -
March 31, 1998 and December 31, 1997 3
Statements of operations - quarter ended and nine months
ended March 31, 1998 and 1997 4
Statements of changes in partners' capital - nine months
ended March 31, 1998 and 1997 5
Statements of cash flows - nine months ended
March 31, 1998 and 1997 6
Notes to financial statements - March 31, 1998 7
Report of Independent Certified Public Accountants on
Interim Financial Information 8
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K 9
SIGNATURES 10
May 7, 1998
To Our Partners:
This report contains information on the Partnership's operations for the
first quarter and on the potential sale discussed in our Annual Report.
Therefore, please read it with care.
For the quarter ended March 31, 1998, the Partnership had a loss of
$52,757, which compared to a year prior loss of $35,237. On review,
you will note that the primary difference related to an accural for
real estate taxes which was not accrued last year. The net cash
flow provided by operating activities was $70,500, and the
Partnership ended the quarter with $1,292,723 in cash reserves.
As to the potential sale of the Lakeland Mall to the First Baptist
Church, you should know that a change has occurred since the date of
our last report to you.
The change arose when it became apparent to the First Baptist Church
officers and professionals advising them that the small portion of
the Partnership's remaining property (about one acre or 3% of the
total), which was to be excluded from the sale, was important to the
long-term needs of the First Baptist Church. Therefore, the First
Baptist Church officials approached us and asked us to include the
excluded parcel in the sale without an increase in compensation. We
declined to do so and negotiations followed.
During our negotiations, the First Baptist Church officials advised
us that they had reached a satisfactory agreement with Wal-Mart and
had obtained a commitment for the requisite financing. They also
advised us that they were willing to consider an inspection period
shorter than the eight months allowed by the Purchase and Sale
Agreement.
After consideration, we concluded that the progress the First
Baptist Church had made removed two of the contingencies about which
we had written. We also concluded that the investment value of the
capital coming from the sale, if received some seven months earlier
than anticipated, would approach the value of the excluded parcel,
regardless of whether the Partnership or its individual partners were
making the investment decisions. Therefore, we negotiated for and
obtained a much shorter inspection period and, in return for it,
agreed to amend the Purchase and Sale Agreement to include the
excluded parcel if the sale is closed prior to the end of this month.
It appears that the First Baptist Church is resolving the remaining
contingencies. Therefore, we have a higher degree of confidence in
this transaction than we had previously expressed and feel there are
some reasons to believe the sale may close before the end of this
month. Therefore, if the sale closes, we have taken additional
steps to be prepared to promptly distribute funds and liquidate the
Partnership in accordance with Article XVII of the Partnership
Agreement.
We will, of course, keep you fully advised.
Sincerely,
Robert A. Kuras
President
PART I. FINANCIAL INFORMATION
Continental Real Estate Partners, Ltd.
STATEMENTS OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
March 31, December 31,
1998 1997
ASSETS (Unaudited) (Note B)
Investments in real estate
Land $183,581 $183,581
Land improvements 1,877,263 1,877,263
Buildings and equipment 11,932,804 11,932,804
13,993,648 13,993,648
Less accumulated depreciation 11,703,681 11,601,241
2,289,967 2,392,407
Cash 1,292,723 1,222,223
Other assets 237,725 264,343
$3,820,415 $3,878,973
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Unclaimed distribution checks $170,164 $170,164
Accounts payable and accrued expenses 57,913 48,073
Liabilities to general partner 2,127,568 2,143,209
2,355,645 2,361,446
PARTNERS' CAPITAL
General partner 365,619 368,257
Limited partners - 30,004 units of
limited partnership interest 1,099,151 1,149,270
1,464,770 1,517,527
$3,820,415 $3,878,973
See Notes to Financial Statements.
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Continental Real Estate Partners, Ltd.
STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended March 31,
<CAPTION)
1998 1997
Operating revenue
Rental income $120,572 $122,028
Other, principally operating
expense reimbursements - 200
120,572 122,228
Operating expense
Depreciation 102,440 100,387
Repairs and maintenance 9,064 13,682
Insurance 24,732 23,687
Real estate taxes 18,161 -
Utilities 1,768 6,307
Professional services 6,000 6,297
Property management fees 9,102 9,104
Commissions 3,027 3,027
Investor communications 1,440 1,080
Other 10,971 6,838
186,705 170,409
Operating loss (66,133) (48,181)
Interest income 13,376 12,944
NET LOSS $(52,757) (35,237)
Net loss allocated to
General partner $(2,638) $(1,762)
Limited partners -
$(1.67) and $(1.12) net loss
per unit of limited partnership
interest outstanding for the
three months ended March 31,
1998 and 1997, respectively (50,119) (33,475)
$(52,757) $(35,237)
See Notes to Financial Statements.
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Continental Real Estate Partners, Ltd.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (UNAUDITED)
Three months ended March 31,
1998 1997
General Limited General Limited
Partner Partner Partner Partner
Beginning balance $368,257 $1,149,270 $380,796 $1,387,511
NET LOSS (2,638) (50,119) (1,762) (33,475)
Ending balance $365,619 $1,099,151 $379,034 $1,354,036
Balance, March 31, 1998 and
1997, per unit of limited
partnership interest $36.63 $45.13
See Notes to Financial Statements.
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Continental Real Estate Partners, Ltd.
STATEMENTS OF CASH FLOWS (UNAUDITED)
Three months ended March 31,
1998 1997
Operating activities
Net loss $(52,757) $(35,237)
Adjustments to reconcile net
loss to cash provided
by operating activities
Depreciation and amortization 102,440 103,414
Decrease in other assets 26,618 37,329
Increase in accounts payable and
accrued expenses (5,801) (10,667)
Net cash flow provided by operating activities 70,500 94,839
Cash flows from investing activities
Purchase of improvements - (5,038)
Net cash flow used by investing activities - (5,038)
NET INCREASE IN CASH 70,500 89,801
Balance of cash, beginning of period 1,222,223 1,065,816
Balance of cash, end of period $1,292,723 $1,155,617
See Notes to Financial Statements.
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Continental Real Estate Partners, Ltd.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three
month period ended March 31, 1998 are not necessarily indicative
of the results that may be expected for the year ended December
31, 1998. For further information, refer to the financial
statements and footnotes thereto included in the company's annual
report on Form 10-K for the year ended December 31, 1997.
NOTE B - DECEMBER 31, 1997 STATEMENT OF ASSETS, LIABILITIES AND
PARTNERS' CAPITAL
The statement of assets, liabilities and partners' capital at
December 31, 1997 has been derived from the audited financial
statements at that date.
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON INTERIM FINANCIAL INFORMATION
The Bayberry Group, Inc.
Sole General Partner of
Continental Real Estate Partners, Ltd.
The accompanying statement of assets, liabilities and partners'
capital of Continental Real Estate Partners, Ltd. (a Massachusetts
limited partnership) as of March 31, 1998 and the related statements
of operations for the three month period ended March 31, 1998 and
the statement of cash flows and changes in partners' capital for the
three month periods ended March 31, 1998 and 1997 were not audited
by us and, accordingly, we do not express an opinion on them.
The accompanying statement of assets and liabilities for the year
ended December 31, 1997 was audited by us, and we expressed an
unqualified opinion on it in our report dated January 16, 1998, but
we have not performed any auditing procedures since that date.
Traverse City, Michigan
April 23, 1998
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CONTINENTAL REAL ESTATE PARTNERS, LTD.
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
The company did not file any reports on Form 8-K during the three
months ended March 31, 1998.
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CONTINENTAL REAL ESTATE PARTNERS, LTD.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CONTINENTAL REAL ESTATE PARTNERS, LTD.
Date
Robert A. Kuras, Principal
Financial Officer and President of
The Bayberry Group, Inc.
Sole General Partner
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