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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarter ended March 31, 1995 Commission file number 2-97178-C
FORTY-SIX HUNDRED LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Iowa
(State or other jurisdiction of incorporation or
organization) 42-1247738
(I.R.S. Employer Identification No.)
4333 Edgewood Road N.E., Cedar Rapids, IA
(Address of principal executive offices) 52499
(Zip Code)
Registrant's telephone number, including area code: (319) 398-8895
N/A
Former name, address and 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 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
The number of units of limited partnership interests of the
registrant outstanding at May 4, 1995 was 800.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FORTY-SIX HUNDRED LIMITED PARTNERSHIP
Balance Sheets
(Unaudited)
FORTY-SIX HUNDRED LIMITED PARTNERSHIP
Balance Sheets
(Unaudited)
March 31, December 31,
1995 1994 1994
Assets (note 5)
Real estate -- building and
improvements 6,941,102 6,941,102 6,941,102
Less accumulated
depreciation (1,184,988) (1,046,160) (1,150,281)
5,756,114 5,894,942 5,790,821
Cash and cash equivalents 236,972 151,576 112,310
Interest receivable 795 633 764
Loan origination fee, net of accumulated
amortization 15,330 20,250 16,560
6,009,211 6,067,401 5,920,455
Liabilities and Partners' Equity (note 5)
Liabilities
Mortgage loan payable 3,093,400 3,557,635 3,212,935
Accrued expenses 20,479 18,628 18,045
3,113,879 3,576,263 3,230,980
Commitments (note 2)
Partners' equity, net of syndication
costs:
General Partner (77,183) (68,257) (75,873)
Limited Partners 2,972,515 2,559,395 2,765,348
2,895,332 2,491,138 2,689,475
6,009,211 6,067,401 5,920,455
See the accompanying notes to financial statements.
FORTY-SIX HUNDRED LIMITED PARTNERSHIP
Statements of Earnings
(Unaudited)
Three Months Ended
March 31,
1995 1994
Revenue (note 5)
Rents $403,898 339,598
Interest 2,426 1,501
Miscellaneous 75 --
406,399 341,099
Expenses (note 5)
Management fee 4,039 3,396
Legal, accounting and administrative 5,290 5,359
Data Processing 1,600 1,600
Land lease 6,000 6,000
Interest expense 63,465 84,043
Depreciation 34,707 34,707
Amortization 1,230 750
116,331 135,855
Net earnings allocable to:
General Partner 2,901 2,052
Limited Partners 287,167 203,192
290,068 205,244
Net earnings per limited partnership unit 358.96 253.99
See the accompanying notes to financial statements.
FORTY-SIX HUNDRED LIMITED PARTNERSHIP
Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
1995 1994
Cash flows from operating activities:
Rents collected 403,898 339,598
Interest received 2,395 1,304
Miscellaneous 75 --
Payments for operating expenses (14,495) (14,189)
Interest paid (63,465) (84,043)
Net cash provided by operating activities 328,408 242,670
Cash flows from financing activities:
Principal portion of scheduled mortgage loan
payments (119,535) (114,730)
Payment of loan modification fee -- (12,000)
Distributions to partners (84,211) (80,000)
Net cash used by financing activities (203,746) (206,730)
Net increase in cash and cash equivalents 124,662 35,940
Cash and cash equivalents at beginning of
period 112,310 115,636
Cash and cash equivalents at end of period 236,972 151,576
Reconciliation of net earnings to net cash
provided by
operating activities:
Net earnings 290,068 205,244
Adjustments to reconcile net earnings to net
cash provided
by operating activities:
Depreciation 34,707 34,707
Amortization 1,230 750
Decrease (increase) in interest receivable (31) (197)
Increase in accrued expenses 2,434 2,166
Net cash provided by operating activities 328,408 242,670
See the accompanying notes to financial statements.
FORTY-SIX HUNDRED LIMITED PARTNERSHIP
Statement of Partners' Equity
(Unaudited)
Limited Total
General Partners Partners
Partner (800 units) Equity
Balance at December 31, 1994 $(75,873) 2,765,348 2,689,475
Net earnings 2,901 287,167 290,068
Distributions to partners (4,211) (80,000) (84,211)
Balance at March 31, 1995 (77,183) 2,972,515 2,895,332
See the accompanying notes to financial statements.
FORTY-SIX HUNDRED LIMITED PARTNERSHIP
Notes to Financial Statements
March 31, 1995
(Unaudited)
1. Accounting Policies
Interim financial statements are prepared in accordance with
generally accepted accounting principles and include all
adjustments of a normal recurring nature necessary for a fair
presentation of the financial position and quarterly results.
Interim financial statements should be read in conjunction
with the audited financial statements and related footnotes in
the 1994 Annual Report.
2. Commitments
The Partnership owns an office building and convention center
(the Project) which is master leased to Life Investors
Insurance Company of America (LIICA), an affiliate of AEGON
USA Realty Advisors, Inc., the General Partner. The master
lease requires LIICA to pay rent, property taxes, utilities
and other expenses incurred in operating the Project. The
land on which the Project is constructed is leased from LIICA.
On March 1, 1995, under the terms of the master lease, LIICA
notified the Partnership of its election to exercise its
option to purchase the Project. See Note 5 below for
information concerning LIICA's purchase of the Project.
3. Transactions with the General Partner
The Partnership has incurred expenses of $5,245 to reimburse
the General Partner for certain administrative services
necessary to the prudent operation of the Partnership. The
reimbursement represents the General Partner's estimated costs
of the following services for the quarter ended March 31,
1995:
Type of Service Amount
Preparation and filing of quarterly reports 1,200
Financial accounting 2,445
Data processing and ledger recordkeeping 800
Partner recordkeeping & communications 800
5,245
The Partnership also paid $4,039 in management fees for the
quarter ended March 31, 1995 to AEGON USA Realty Management,
Inc., an affiliate of the General Partner. A distribution of
$4,211 was paid to the General Partner in accordance with the
Partnership Agreement.
4. Overage rent
The Partnership received overage rent from LIICA of $140,378
in March 1995 ($76,078 in March 1994). The overage rent is
based on a percentage of gross premium income for the previous
year, as set forth in the master lease.
FORTY-SIX HUNDRED LIMITED PARTNERSHIP
Notes to Financial Statements (continued)
March 31, 1995
(Unaudited)
5. Subsequent Events
On April 18, 1995, the Partnership sold the Project to LIICA.
The sale price was $12,757,044 cash, as determined by the
option formula contained in the master lease with LIICA, from
which the Partnership retired the mortgage indebtedness of
$3,093,400. A gain on sale of approximately $7,000,000 was
recognized for financial accounting purposes. A cash
distribution of $7,740,000 ($9,675 per limited partnership
unit) was declared payable May 15, 1995 to all limited
partners of record March 31, 1995. A final distribution will
be made after a full accounting of the Partnership is
completed at which time the Partnership will terminate.
6. Reconciliation of Tax and Financial Results
The net earnings of the Partnership as determined for
financial accounting purposes differs from the net earnings as
determined for income tax purposes, as reflected in the
following reconciliation:
Three Months
Ended
March 31, 1995
Net earnings (financial accounting basis) 290,068
Adjustments:
Amortization of construction period interest (7,704)
Depreciation (financial accounting basis) 34,707
Cost Recovery (tax basis) (99,025)
Taxable income 218,046
Less allocation to the General Partner (2,180)
Taxable income allocated to the Limited Partners 215,866
Taxable income per Limited Partnership unit 269.83
Net earnings (financial accounting basis) has been adjusted by
the amortization of construction period interest and the
difference in depreciation between financial basis and tax
basis to arrive at taxable income. Depreciation (financial
accounting basis) is computed on the cost of the Project over
an estimated useful life of fifty years. For tax purposes,
construction period interest is separately amortized over ten
years and the remaining tax basis of the Project is cost
recovered over eighteen and thirty-one and one-half years, as
allowed by federal income tax regulations. The General
Partner is allocated 1% of the taxable income in accordance
with the Partnership Agreement. The Limited Partners are
allocated the remaining 99%.
PART I - FINANCIAL INFORMATION (continued)
Item 2. Management's Discussion and Analysis of Financial
Condition
and Results of Operations.
The Partnership's net earnings for the three months ended
March 31, 1995 were $290,068 compared with $205,244 for the
same period in 1994. Net cash provided by operating
activities, as shown in the Statements of Cash Flows, totaled
$328,408 for the first three months of 1995, compared to
$242,670 in 1994. The increase in earnings and cash flow is
due to an increase in overage rents of $64,300 received from
Life Investors Insurance Company of America and a decrease in
interest expense of $20,578. Overage rents are based on a
percentage of gross premium income for the previous year,
which income increased from 1993 to 1994, resulting in higher
overage rents collected in 1995. Interest expense continues
to decline as the mortgage principal balance is reduced by
scheduled monthly payments.
The Partnership's capital resources are primarily invested in
an office building and convention center (the Project), which
is subject to a mortgage loan representing 45% of its recorded
cost at March 31, 1995. The Partnership's cash and cash
equivalents, together with cash provided by operating
activities, represent the Company's liquidity. At March 31,
1995 the Partnership had approximately $237,000 in cash and
cash equivalents. During the first quarter of 1995, the
Partnership paid a cash distribution of $84,211 ($100 per
limited partnership unit plus $4,211 to the General Partner).
On March 1, 1995, the Partnership was notified by LIICA of its
election to purchase the Project. See Part II Item 5 on the
following page for information concerning the sale of the
Project.
PART II - OTHER INFORMATION
Item 5. Other Information
On April 18, 1995, the Partnership sold the Project to LIICA,
an affiliate of AEGON USA Realty Advisors, Inc., the General
Partner. The sale price was $12,757,044 cash, as determined
by the option formula contained in the master lease with
LIICA, from which the Partnership retired the mortgage
indebtedness of $3,093,400. A cash distribution of $7,740,000
($9,675 per limited partnership unit) was declared payable May
15, 1995 to all limited partners of record March 31, 1995. A
final distribution will be made after a full accounting of the
Partnership is completed at which time the Partnership will
terminate.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
FORTY-SIX HUNDRED LIMITED PARTNERSHIP
By AEGON USA Realty Advisors, Inc.
General Partner
/s/ Alan F. Fletcher
Alan F. Fletcher
Senior Vice President
(principal financial officer)
/s/ Edward J. Kittleson
Edward J. Kittleson
Treasurer
(principal accounting officer)
Date: May 4, 1995