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 June 30, 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 July 24, 1995 was 800.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FORTY-SIX HUNDRED LIMITED PARTNERSHIP
Balance Sheets
(Unaudited)
June 30, December 31,
1995 1994 1994
Assets (note 5)
Real estate -- building and improvements $ --- 6,941,102 6,941,102
Less accumulated depreciation --- (1,080,867) (1,150,281)
--- 5,860,235 5,790,821
Cash and cash equivalents 129,235 132,955 112,310
Interest receivable --- 619 764
Loan origination fee, net of accumulated
amortization --- 19,020 16,560
Total Assets $129,235 6,012,829 5,920,455
Liabilities and Partners' Equity (note 5)
Liabilities
Mortgage loan payable $ --- 3,445,040 3,212,935
Accrued expenses 108 14,129 18,045
Total Liabilities 108 3,459,169 3,230,980
Commitments (note 2)
Partners' equity, net of syndication costs:
General Partner 48,686 (70,831) (75,873)
Limited Partners 80,441 2,624,491 2,765,348
129,127 2,553,660 2,689,475
Total Liabilities and Partner's Equity $129,235 6,012,829 5,920,455
See the accompanying notes to financial statements.
FORTY-SIX HUNDRED LIMITED PARTNERSHIP
Statements of Earnings
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Revenue (note 5)
Rents $65,518 263,520 469,416 603,118
Interest 46,038 1,856 48,464 3,357
Miscellaneous --- --- 75 ---
Total Revenue 111,556 265,376 517,955 606,475
Expenses (note 5)
Management fee 655 2,635 4,694 6,031
Legal, accounting and administrative 8,263 6,276 13,553 11,635
Data Processing 1,600 1,600 3,200 3,200
Land lease 1,133 6,000 7,133 12,000
Interest expense 11,710 70,406 75,175 154,449
Depreciation --- 34,707 34,707 69,414
Amortization 15,330 1,230 16,560 1,980
Total Expenses 38,691 122,854 155,022 258,709
Earnings from operations 72,865 142,522 362,933 347,766
Net gain on sale of Project 7,000,930 --- 7,000,930 ---
Net earnings allocable to:
General Partner 2,225,869 1,426 2,228,770 3,478
Limited Partners 4,847,926 141,096 5,135,093 344,288
$7,073,795 142,522 7,363,863 347,766
Net earnings per limited partnership unit $6,059.91 176.37 6,418.87 430.36
See the accompanying notes to financial statements.
FORTY-SIX HUNDRED LIMITED PARTNERSHIP
Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
1995 1994
Cash flows from operating activities:
Rents collected $469,416 603,118
Interest received 49,228 3,174
Miscellaneous 75 ---
Payments for operating expenses (46,517) (35,199)
Interest paid (75,175) (154,449)
Net cash provided by operating activities 397,027 416,644
Cash flows from investing activities:
Proceeds from property sale 12,757,044 ---
Net cash provided by investing activities 12,757,044 ---
Cash flows from financing activities:
Principal portion of scheduled mortgage loan payments (119,535) (227,325)
Principal repayment on mortgage loan (3,093,400) ---
Payment of loan modification fee --- (12,000)
Distributions to partners (9,924,211) (160,000)
Net cash used by financing activities (13,137,146) (399,325)
Net increase in cash and cash equivalents 16,925 17,319
Cash and cash equivalents at beginning of period 112,310 115,636
Cash and cash equivalents at end of period $129,235 132,955
Reconciliation of net earnings to net cash provided by
operating activities:
Net earnings $7,363,863 347,766
Gain on sale of property (7,000,930) ---
Earnings from operations 362,933 347,766
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation 34,707 69,414
Amortization 16,560 1,980
Decrease (increase) in interest receivable 764 (183)
Decrease in accrued expenses (17,937) (2,333)
Net cash provided by operating activities $397,027 416,644
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
Earnings from operations 3,629 359,304 362,933
Gain on sale 2,225,141 4,775,789 7,000,930
Distributions to partners (2,104,211) (7,820,000) (9,924,211)
Balance at June 30, 1995 $ 48,686 80,441 129,127
See the accompanying notes to financial statements.
FORTY-SIX HUNDRED LIMITED PARTNERSHIP
Notes to Financial Statements
June 30, 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 owned an office building and convention
center (the Project) which was master leased to Life Investors
Insurance Company of America (LIICA), an affiliate of AEGON
USA Realty Advisors, Inc., the General Partner. The master
lease required LIICA to pay rent, property taxes, utilities
and other expenses incurred in operating the Project. The
land on which the Project was constructed was 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 $10,870 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 June 30, 1995:
Type of Service Amount
Preparation and filing of quarterly reports $1,200
Financial accounting 8,070
Data processing and ledger recordkeeping 800
Partner recordkeeping & communications 800
$10,870
The Partnership also paid $655 in management fees for the
quarter ended June 30, 1995 to AEGON USA Realty Management,
Inc., an affiliate of the General Partner. A distribution of
$2,100,000 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 Partnership also
received overage rent from LIICA of $15,742 in April 1995
representing the prorata portion for 1995 due to the sale of
the Project. 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)
June 30, 1995
(Unaudited)
5. Sale of Project and Termination of Partnership
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 a formula contained in the master lease with
LIICA, from which the Partnership retired the mortgage
indebtedness of $3,093,400. The book value of the Project at
the time of sale was $5,756,114 and a gain on sale of
$7,000,930 was recognized for financial accounting purposes.
On May 15, 1995, the Partnership paid a cash distribution of
$9,840,000 ($9,675 per limited partnership unit plus
$2,100,000 to the General Partner). A final cash distribution
of $129,644 ($101 per limited partnership unit plus $48,844 to
the General Partner) was declared payable July 31, 1995 to all
partners of record March 31, 1995. The General Partner will
file dissolution documents with the Iowa Secretary of State as
soon as administratively possible after payment of the final
cash distribution 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:
Six Months
Ended
June 30, 1995
Net earnings (financial accounting basis) $7,363,863
Adjustments:
Amortization of construction period interest (8,989)
Depreciation (financial accounting basis) 34,707
Cost Recovery (tax basis) (115,530)
Net gain on sale of Project (financial accounting basis) (7,000,930)
Net gain on sale of Project (tax basis) 9,533,888
Deduction of syndication costs (108,989)
Taxable income 9,698,020
Less allocation to the General Partner (2,253,208)
Taxable income allocated to the Limited Partners $7,444,812
Taxable income per Limited Partnership unit $ 9,306.02
Net earnings (financial accounting basis) have been adjusted
by the amortization of construction period interest, the
differences in depreciation and net gain on sale of the
Project between financial basis and tax basis, and the
deduction of syndication costs 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. Syndication costs are not deductible for
financial accounting purposes, but are deferred and deducted
upon termination of the Partnership for tax purposes. The
General Partner is allocated 1% of the regular taxable income
in accordance with the Partnership Agreement. The Limited
Partners are allocated the remaining 99%. A priority return
of 12% per annum is paid to the partners upon sale of the
Project, after which the net gain on sale is allocated 25% to
the General Partner and 75% to the Limited Partners.
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
June 30, 1995 were $7,073,795 compared with $142,522 for the
same period in 1994, bringing year-to-date net earnings to
$7,363,863 compared to $347,766 in 1994. Earnings from
operations were $72,865 for the second quarter of 1995
compared to $142,522 in 1994, and year-to-date earnings from
operations were $362,933 for 1995 compared to $347,766 for the
same period in 1994. The increase in net earnings is due to
the gain from the sale of the Project on April 18, 1995.
Earnings from operations were lower for the quarter ended June
30, 1995 compared to the same period one year ago as rents
were lower due to the sale of the Project. Interest income
was higher as the net proceeds from the sale were invested in
a money market account from April 18, 1995 until the May 15,
1995 distribution. Legal, accounting and administrative
expenses were higher due to the additional work involved with
sale of the Project, allocations to partners, and final
Partnership distributions. Interest expense was lower as the
mortgage indebtedness was paid off on April 18, 1995.
Depreciation expense was lower as no depreciation was taken in
the second quarter and amortization was higher as the
remaining prepaid loan fees were written off. Net cash
provided by operating activities, as shown in the Statements
of Cash Flows, totaled $397,027 for the six months ended June
30, 1995 compared with $416,644 in 1994.
At June 30, 1995, the Partnership had approximately $129,000
in cash and cash equivalents. On May 15, 1995, the
Partnership paid a cash distribution of $9,840,000 ($9,675 per
limited partnership unit plus $2,100,000 to the General
Partner). A final cash distribution of $129,644 ($101 per
limited partnership unit plus $48,844 to the General Partner)
was declared payable July 31, 1995 to all partners of record
March 31, 1995.
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: July 31, 1995