SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB - Quarterly or Transitional Report
/ X / QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission File Number 33-9075-LA
Mission Bay Super 8 Ltd., A California Limited Partnership
(Exact name of small business issuer as specified in its charter)
California 33-0202890
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1466 9th Avenue, San Diego, CA 92101
(Address of principal executive offices)
(619) 699-6100
(Issuer's telephone number)
3145 Sports Arena Blvd., San Diego, CA 92110
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the registrant (1) has filed all reports required to be filed
by Sections 13 or 15(d) of the Exchange Act during the last 12 months (or for
such shorter period that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes / X / No / /
State the number of limited partnership interests outstanding as of the
latest practicable date: 6,600
PART I. -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Incorporated herein is the following unaudited financial
information:
Balance Sheet as of September 30, 1996 and December 31, 1995.
Statement of Operations for the three-month and nine-month
periods ended September 30, 1996 and September 30, 1995.
Statement of Cash Flows for the three-month and nine-month
periods ended September 30, 1996 and September 30, 1995.
Notes to Financial Statements.
MISSION BAY SUPER 8 LTD.
A California Limited Partnership
Balance Sheet
September 30, 1996 and December 31, 1995
(Unaudited)
(Part 1 of 2)
Sept 30, December 31,
ASSETS 1996 1995
-------- --------- ------------
Current Assets:
Cash and cash equivalents $ 50,300 $ 65,349
Accounts receivable 0 41,550
Operating supplies 0 18,891
Prepaid expenses 0 21,729
---------- ----------
Total current assets 50,300 147,519
Investment property, at value:
Land 0 1,212,000
Building and improvements 0 2,024,033
Furniture, fixtures & equipment 0 724,183
---------- ----------
0 3,960,216
Less accumulated depreciation 0 1,211,396
Total investment property, net ---------- ---------
(note 5) 0 2,748,820
Franchise fees, net (notes 3 & 5) 0 11,829
---------- ----------
$ 50,300 $2,908,168
---------- ----------
---------- ----------
See accompanying notes to financial statements.
MISSION BAY SUPER 8 LTD.
A California Limited Partnership
Balance Sheet
September 30, 1996 and December 31, 1995
(Unaudited)
(Part 2 of 2)
LIABILITIES AND Sept 30, December 31,
PARTNER'S CAPITAL ACCOUNTS 1996 1995
-------------------------- -------- ------------
Current liabilities:
Accounts payable and accrued expenses $ 0 $ 21,580
Due to Affiliates (note 4) 4,212 9,338
---------- ----------
Total current liabilities 4,212 30,918
---------- ----------
Total liabilities 4,212 30,918
---------- ----------
Partners' capital accounts:
General partners:
Cumulative net earnings 26,716 26,079
Cumulative cash distributions (307,197) (307,197)
---------- ----------
(280,481) (281,118)
Limited partners:
Capital contributed, net of offering
costs and REIT shares issued 5,761,115 5,761,115
Cumulative net earnings 211,886 234,699
Cumulative cash distributions (5,646,432) (2,837,446)
---------- ----------
326,569 3,158,368
---------- ----------
Total partners' capital accounts 46,088 2,877,250
---------- ----------
$ 50,300 $2,908,168
---------- ----------
---------- ----------
See accompanying notes to financial statements.
MISSION BAY SUPER 8 LTD.,
A California Limited Partnership
Statement of Operations
Nine Months Ended Sept. 30, 1996 and Sept. 30, 1995
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------- --------- -------- --------
1996 1995 1996 1995
--------- -------- -------- --------
Income (Loss) from $ 0 $ 0 $ 0 $ 0
Continuing Operations
Income (Loss) from $ 8,878 $ 151,001 $ (79,263) $ 226,414
Discontinued Operations
Gain (Loss) on disposal $ (1,030) $ 0 $ 57,087 $ 0
of Discontinued Operations
--------- --------- --------- --------
Net earnings (loss) $ 7,848 $ 151,001 $ (22,176) $ 226,414
========= ========= ========== =========
Net earnings (loss) $ 1.07 $ 20.59 $ (3.02) $ 30.87
per limited ========= ========= ========== ========
partnership interest
See accompanying notes to financial statements.
MISSION BAY SUPER 8 LTD.,
A California Limited Partnership
Statement of Cash Flows
Nine Months Ended September 30, 1996 and September 30, 1995
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPT. 30, SEPT. 30,
------------------ -----------------
1996 1995 1996 1995
------- ------ ------ ------
Cash flows from operating activities:
Net earnings (loss) $ 7,848 $ 151,001 $ (22,176) $ 226,414
Adjustments to reconcile net income to cash:
(Gain) Loss on disposal of discont. oper.(note 5) 1,030 0 (57,087) 0
Depreciation and amortization 0 20,236 28,484 62,840
Changes in assets and liabilities
(Increase) in other assets 31,188 (11,900) 65,603 (39,687)
Increase (decrease) in liabilities
Accounts payable and accrued expenses (8,579) 3,028 (21,580) (3,755)
Due to affiliates (1,697) 33,857 (5,126) 29,926
----------- ---------- ---------- ---------
Net cash provided by (used in) 29,790 196,222 (11,881) 275,738
operating activities ----------- ---------- ---------- ---------
Cash flows from investing activities:
Acquisition and construction costs
of investment property 0 (484) (3,168) (17,283)
Cash received for dissenting partners (note 5) 0 0 284,408 0
Cash received for fractional shares (note 5) 0 0 5,118 0
----------- --------- ----------- ---------
Net cash provided by (used in) financing activities 0 (484) 286,358 (17,283)
----------- --------- ----------- ---------
Cash flows from financing activities:
Cash Distributions to partners 0 (100,000) 0 (100,002)
Cash distributions to partners (fractional shares) 0 0 (5,118) 0
(note 5)
Cash distributions to dissenting partners (note 5) 0 0 (284,408) 0
---------- ---------- ----------- ---------
Net cash provided by (used in) 0 (100,000) (289,408) (100,002)
financing activities ---------- ---------- ----------- ---------
Net decrease in cash and cash equivalents 29,790 95,738 (15,049) 158,453
Cash and cash equivalents, beginning of period 20,510 105,975 65,349 43,260
---------- ---------- ----------- ---------
Cash and cash equivalents, end of period 50,300 201,713 50,300 201,713
========== ========== =========== =========
See accompanying notes to financial statements. Refer to footnote 5 regarding Sale of Motel.
Notes to Financial Statements
September 30, 1996
(Unaudited)
Readers of this quarterly report should refer to the partnership
audited financial statements and annual report Form 10-KSB (File
No. 33-9075-LA) for the period ended December 31, 1995, as certain
footnote disclosures which would substantially duplicate those
contained in such financial reports have been omitted from this
report.
1. THE PARTNERSHIP AND A SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Mission Bay Super 8 Ltd., A California Limited Partnership (the
Partnership), formerly Motels of America Series IX, A California
Limited Partnership, was formed on February 5, 1987 pursuant to the
California Revised Uniform Limited Partnership Act. The purpose of
the Partnership is to construct, own, and operate a 117-room
"economy" motel under a Super 8 franchise. The motel was opened in
November 1987.
The following is a summary of the Partnership's significant
accounting policies:
Cash and Cash Equivalents
The Partnership considers all highly liquid instruments purchased
with an original maturity of three months or less to be cash
equivalents.
Investment Property
Investment property is recorded at cost. Writedowns to fair value
are recorded when investment property has been permanently impaired
based on comparing carrying value to the undiscounted sum of future
cash flows expected from the property. Depreciation is computed
using the straight-line method based on estimated useful lives of
5 to 35 years. Maintenance and repairs costs are expensed as
incurred, while significant improvements, replacements, and major
renovations are capitalized.
NET INCOME PER INTEREST
Net income per interest is based upon the income allocated to
limited partners divided by 6,600 limited partner interests
outstanding throughout the year.
(Continued)
MISSION BAY SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements, Continued
2. PARTNERSHIP AGREEMENT
Net income or loss and cash distributions from operations of the
Partnership are allocated 90% to the limited partners and 10% to
the general partner. Profits from the sale or other disposition of
Partnership property are to be allocated to the general partner
until its capital account equals zero; thereafter, to the limited
partners until their capital accounts equal their capital
contributions reduced by prior distributions of cash from sale or
refinancing plus an amount equal to a cumulative but not compounded
annual 8% return thereon which cumulative return shall be reduced
(but not below zero) by the aggregate amount of prior distributions
of cash available for distribution; thereafter, gain shall be
allocated 15% to the general partner and 85% to the limited
partners. Loss from sale shall be allocated 1% to the general
partner and 99% to the limited partners.
3. FRANCHISE AGREEMENT
The Partnership has entered into a twenty-year franchise agreement
with Super 8 Motels, Inc. to provide the Partnership with
consultation in the areas of design, construction and operation of
the motel. The agreement required the payment of an initial fee of
$20,000 and ongoing royalties equal to 4% of gross room revenues
and a chain-affiliated advertising fee equal to 2% of gross room
revenues. In April 1996, the franchise agreement was transferred
to Host Funding, Inc., a real estate investment trust (REIT) as
part of the terms of the sale. See Note 5 for detail.
4. RELATED PARTY TRANSACTIONS
The motel is operated pursuant to a management agreement with GHG.
The agreement provides for the payment of monthly management fees
of 6% of gross revenues.
The Partnership has agreed to reimburse GHG for certain expenses
related to services performed in maintaining the books and
administering the affairs of the Partnership.
GHG and an affiliate, GMS Management Services, Inc. (GMS), allocate
to the Partnership certain marketing, accounting, and maintenance
salaries and certain other expenses directly related to the
operation of the Partnership.
(Continued)
MISSION BAY SUPER 8 LTD.,
A California Limited Partnership
Notes to Financial Statements, Continued
4. RELATED PARTY TRANSACTIONS (Continued)
Fees, reimbursements, salaries, and other expenses paid to GHG and
GMS and included in total expenses for the three months and the
nine months ended September 30, 1996 are as follows:
Three Months Ended Nine Months Ended
9/30/96 9/30/95 9/30/96 9/30/95
------- ------- ------- -------
Management Fee 75 25,245 19,620 55,699
Reimbursement for
partnership admin.
expenses 5,000 10,620 44,689 31,860
In addition, all motel employees are paid by GMS. The Partnership
reimbursed GMS for the wages of these employees including a one
percent processing fee.
At September 30, 1996, $4,212 was due to GHG and GMS relating to
reimbursement for these operating expenses.
5. SALE OF MOTEL
On April 22, 1996, the Registrant sold all of its motel assets with
a book value of $2,751,899 to Host Funding, Inc. for 252,049 shares
of Class A Common Stock in Host Funding, Inc. The number of shares
received is based on an initial exchange value of $10 per share.
The shares have been distributed to the limited partners.
Limited partners holding approximately 10% of the limited
partnership interests perfected their rights as dissenting partners
and have received cash totaling $284,408 for their limited
partnership interests. Fractional shares were paid in cash
totaling $5,118. The total value of the transaction is $2.81
million based on the initial exchange value of the common stock,
the cash paid to dissenting partners and cash paid to partners for
fractional shares.
Revenues for three months and nine months ended September 30, 1996
were $331 and $401,918. This compares to the three and nine months
ended September 30, 1995 of $421,338 and $930,397.
The sale of the motel and dissolution of the Registrant were
pursuant to the Prospectus/Consent Solicitation Statement, included
in the Host Funding, Inc. Registration Statement on Form S-4
(Commission File No. 33-60011), and approved by the limited
partners in January 1996. (Continued)
Mission Bay Super 8 Ltd.,
A California Limited Partnership
Notes to Financial Statements, Continued
Management plans to dissolve the Registrant in November 1996. The
cash remaining after the payment of all liabilities, including the
costs of administering the final liquidation and dissolution of the
Registrant, will be distributed to the limited partners.
6. ADJUSTMENTS
In the opinion of the general partners, all adjustments (consisting
solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of and
for the nine months ended September 30, 1996.
7. SUBSEQUENT EVENT
In November 1996, the Partnership paid a final distribution of
$46,088 to the limited partners.
(Continued)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Condition:
On November 19, 1986, the Partnership commenced its public offering
pursuant to its Prospectus. On June 15, 1987, the Partnership
completed the public offering. The Partnership received $5,761,115
(net of offering costs of $838,885) from the sale of limited
partnership interests. These funds were available for investment
in property, to pay legal fees and other costs related to the
investments, to pay operating expenses, and for working capital.
The majority of the proceeds were used to acquire and construct the
property identified in Item 2 above.
In January 1996, 71% of the limited partners approved a proposal to
exchange substantially all of the Partnership's investment property
for 252,049 shares of Class A Common Stock in Host Funding, Inc.,
a real estate investment trust (REIT). The number of shares issued
is based on an initial exchange value of $10 per share. The common
stock in the REIT has been distributed to the limited partners and
the Partnership will be dissolved. Approximately 10% of the
limited partners perfected their rights as dissenting partners and
received $284,408 cash for their limited partnership interests.
The total value of the transaction is $2,810,000 based on the
initial exchange value of the common stock (252,049 shares @ $10.00
per share), cash paid to dissenting partners in the amount of
$284,408, and fractional shares paid of $5,118. The transaction
was conditioned upon Host Funding, Inc. completing a proposed
$5,000,000 initial public offering of its common stock. This
requirement was satisfied and the sale closed on April 22, 1996.
In connection with this transaction, an independent appraiser had
valued the Partnership's investment property at $2,810,000 as of
August 1, 1994. Because of the significant decrease in the market
value of investment property, and the proposed exchange of
investment property for common stock in the REIT, management
elected to writedown the Partnership's investment property to its
appraised value of $2,810,000 as of December 31, 1994.
During 1995 and 1996, the Partnership paid certain costs related to
the REIT transaction. The costs paid by the Partnership totaled
$113,405 of which $88,405 is an expense of the Partnership and
$25,000 was reimbursed by the REIT after the transaction was
completed.
Management plans to dissolve the Registrant in November 1996. The
final cash remaining after payment of all liabilities will be
distributed to the limited partners.
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.
(REGISTRANT) MISSION BAY SUPER 8 LTD.,
A California Limited Partnership
By: GHG Hospitality, Inc.
Corporate General Partner
BY (SIGNATURE) /s/ J. Mark Grosvenor
(NAME AND TITLE) J. Mark Grosvenor, President and Director
(DATE) November 14, 1996
BY (SIGNATURE) /s/ Sylvia Mellor Clark
(NAME AND TITLE) Sylvia Mellor Clark, Controller
(DATE) November 14, 1996