FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-16647
GLENBOROUGH ALL SUITE HOTELS L.P.,
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
California 33-0207312
-------------------------------- -------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification)
400 South El Camino Real, Suite 1100
San Mateo, California 94402
------------------------------ --------
(Address of principal executive offices) (Zip Code)
(415) 343-9300
----------------------------
(Registrant's telephone number)
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
--- ---
Total number of units outstanding as of September 30, 1995: 2,399,217
Page 1 of 11
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GLENBOROUGH ALL SUITE HOTELS L.P.,
Balance Sheets
(in thousands, except units outstanding)
(Unaudited)
September 30, December 31,
1995 1994
Assets -------- ---------
------
Real estate investments, at cost:
Land $ 2,704 $ 2,704
Building and improvements 14,969 14,753
-------- --------
17,673 17,457
Less accumulated depreciation
and amortization (7,172) (6,685)
-------- --------
Net real estate investments 10,501 10,772
Cash and cash equivalents 523 369
Accounts receivable, net 110 91
Prepaid expenses and other assets 685 391
-------- --------
Total assets $ 11,819 $ 11,623
======== ========
Liabilities and Partners' Equity (Deficit)
------------------------------------------
Accounts payable $ 124 $ 117
Accrued expenses 397 238
Due to affiliate 31 -
-------- --------
Total liabilities 552 355
Partners' equity (deficit):
General Partner (1,790) (1,790)
Limited Partners, 2,399,217
units outstanding 13,057 13,058
-------- --------
Total partners' equity 11,267 11,268
-------- --------
Total liabilities and
partners' equity $ 11,819 $ 11,623
======== ========
See accompanying notes to financial statements.
Page 2 of 11
GLENBOROUGH ALL SUITE HOTELS L.P.,
Statements of Operations
(in thousands, except per unit amounts)
(Unaudited)
Nine Months Three Months
Ended Ended
September 30, September 30,
1995 1994 1995 1994
------ ------ ------ ------
Revenues:
Rooms $3,783 $3,455 $1,077 $1,030
Interest and other 172 180 49 57
------ ------ ------ ------
Total revenues 3,955 3,635 1,126 1,087
------ ------ ------ ------
Operating costs and expenses
(including reimbursed salaries of $942
and $830 paid to affiliates in the nine
months ended September 30, 1995 and 1994,
respectively):
Rooms 892 776 308 270
Utilities 306 291 107 105
Management fees (paid to an affiliate) 197 181 56 54
Property taxes and insurance 209 202 60 70
Property general and administrative 380 316 102 111
Sales and marketing 413 351 129 116
Property operation and maintenance 299 224 111 77
Depreciation and amortization 504 486 168 170
Other general and administrative
(including $113 and $114 paid to an
affiliate in the nine months ended
September 30, 1995 and 1994,
respectively) 156 157 64 48
------ ------ ------ ------
Total operating costs and expenses 3,356 2,984 1,105 1,021
------ ------ ------ ------
Net income $ 599 $ 651 $ 21 $ 66
====== ====== ====== ======
Net income per limited partnership unit $ 0.25 $ 0.27 $ 0.01 $ 0.03
====== ====== ====== ======
Distributions per limited partnership unit:
Net income $ - $ - $ - $ -
====== ====== ====== ======
Return of capital $ 0.25 $ 0.23 $ 0.09 $ 0.08
====== ====== ====== ======
See accompanying notes to financial statements.
Page 3 of 11
GLENBOROUGH ALL SUITE HOTELS L.P.,
Statements of Partners' Equity (Deficit)
(in thousands)
For the nine months ended September 30, 1995 and 1994
(Unaudited)
Total
General Limited Partners'
Partner Partners Equity
--------- --------- ---------
Balance at December 31, 1993 $ (1,790) $ 13,070 $ 11,280
Distributions (6) (561) (567)
Net income 7 644 651
--------- --------- ---------
Balance at September 30, 1994 $ (1,789) $ 13,153 $ 11,364
========= ========= =========
Balance at December 31, 1994 $ (1,790) $ 13,058 $ 11,268
Distributions (6) (594) (600)
Net income 6 593 599
--------- --------- ---------
Balance at September 30, 1995 $ (1,790) $ 13,057 $ 11,267
========= ========= =========
See accompanying notes to financial statements.
Page 4 of 11
GLENBOROUGH ALL SUITE HOTELS L.P.,
Statements of Cash Flows
(in thousands)
(Unaudited)
Nine months ended
September 30,
------------------
1995 1994
------ ------
Cash flows from operating activities:
Net income $ 599 $ 651
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 504 486
Changes in assets and liabilities:
Accounts receivable (19) 3
Prepaid expenses and other assets (311) (141)
Accounts payable 7 57
Due to affiliate 31 -
Accrued expenses 159 36
------- -------
Net cash provided by operating activities 970 1,092
------- -------
Cash flows used in investing activities:
Additions to real estate investments (216) (176)
------- -------
Cash used in investing activities (216) (176)
------- -------
Cash flows used in financing activities:
Distributions to partners (600) (567)
------- -------
Cash used in financing activities (600) (567)
------- -------
Net increase in cash and cash equivalents 154 349
Cash and cash equivalents at
beginning of period 369 243
------- -------
Cash and cash equivalents at
end of period $ 523 $ 592
======= =======
See accompanying notes to financial statements.
Page 5 of 11
GLENBOROUGH ALL SUITE HOTELS, L.P.
Notes to Financial Statements
September 30, 1995
(Unaudited)
Note 1. SIGNIFICANT ACCOUNTING POLICY
------------------------------
In the opinion of Glenborough Realty Corporation, the General
Partner, the accompanying unaudited financial statements contain
all adjustments (consisting of only normal accruals) necessary to
present fairly the financial position of Glenborough All Suite
Hotels, L.P. (the "Partnership"), at September 30, 1995 and
December 31, 1994, and the related statements of operations for
the three and nine months ended September 30, 1995 and 1994, and
the changes in partners' equity (deficit) and cash flows for the
nine months ended September 30, 1995 and 1994.
Certain items in the 1994 financial statements have been
reclassified to conform to the 1995 financial statement
presentation.
Note 2. REFERENCE TO 1994 AUDITED FINANCIAL STATEMENTS
----------------------------------------------
These unaudited financial statements should be read in
conjunction with the Notes to Financial Statements included in
the 1994 audited financial statements.
Note 3. TRANSACTIONS WITH AFFILIATES
----------------------------
In accordance with the limited partnership agreement, the
Partnership paid the General Partner and its affiliates
compensation for services provided to the Partnership.
Glenborough Hotel Group provided services relating to the
management and operation of the hotels and was compensated
$197,000 and $181,000 for management fees for the nine months
ended September 30, 1995 and 1994, respectively. In addition,
Glenborough Hotel Group was reimbursed for salaries related to
the management and operations of the hotels in the amounts of
$942,000 and $830,000 for the nine months ended September 30,
1995 and 1994, respectively. These costs are included in
operating costs and expenses on the statements of operations.
The Partnership pays Glenborough Corporation for direct expenses
plus a fee of 1% of assets for asset management services, general
and administrative costs and services including accounting,
investor relations, office supplies, and other services. The
Partnership also pays Glenborough Corporation for legal costs.
Glenborough Corporation was paid $113,000 and $114,000 for these
costs and services for the nine months ended September 30, 1995
and 1994, respectively.
Page 6 of 11
GLENBOROUGH ALL SUITE HOTELS, L.P.
Notes to Financial Statements
September 30, 1995
(Unaudited)
Note 4. OTHER INFORMATION
-----------------
The Partnership has been named in a Registration Statement
proposing a consolidation by merger of several entities, which
has been filed with the Securities and Exchange Commission. In that
regard, as of September 30, 1995, the Partnership has advanced
$441,000 (included in prepaid expenses and other assets) toward
their pro rata share of the transaction costs associated with the
consolidation. An additional $129,000 in transaction costs have
been included in prepaid expenses and other assets and was
payable at September 30, 1995. In the event the proposal is not
approved by the Partnership's limited partners, and the
consolidation goes forward with any of the other entities, the
amounts advanced will be fully reimbursed by an affiliate of the
general partners of the Partnership. If the consolidation,
itself, does not go forward with any of the other entities, the
Partnership will bear a proportion of the transaction costs based
upon the number of limited partners who voted for approval of the
transaction as compared to those who dissented or abstained. The
solicitation materials (incorporated by reference to Form S-4,
Registration Statement #33-83506 for Glenborough Realty Trust
Incorporated), were mailed to the investors on October 29, 1995.
The solicitation period will expire in December 1995.
Note 5. NEW ACCOUNTING PRONOUNCEMENT
----------------------------
In March 1995, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standard (SFAS) No. 121,
"Accounting for Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of". This statement requires that
long-lived assets be reported at the lower of carrying amount or
fair value. The Company plans to adopt SFAS No. 121 in 1996 and
believes that the adoption will not have a material impact upon
its financial statements.
Page 7 of 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
From inception through the quarter ended December 31, 1989,
distributions were paid to the limited partners at an 8.5%
annualized rate, supported first by warranty payments received
from the seller of the Partnership's properties and then from
June 1988 through December 1989 by loans provided by the former
general partner, the seller of the hotels and an affiliate of
Shearson Lehman Brothers Inc. (all of which were subsequently
paid off at a discount). For the first three quarters of 1990,
distributions were paid at a 6% annualized rate. No distribution
was paid in the fourth quarter of 1990 to reserve funds necessary
to pay for renovation costs at the Fort Worth property. This
resulted in a distribution rate of 4.5% for 1990. Distributions
were paid at a rate of 5% in 1991, a rate of 3% in 1992, 1993 and
the nine months ended September 30, 1994. The distribution made
for the third quarter of 1994 was increased to a rate of 3.3% and
has remained at that rate since. Based on the projected cash
flow of the Partnership, distributions are expected to continue
at a rate of 3.3% for the remainder of 1995.
Management believes that the Partnership's available cash
together with the cash generated by the operations of the
Partnership's properties, as proven in recent years, will be
sufficient to finance the Partnership's continued operations.
Prepaid expenses and other assets increased approximately
$294,000 from December 31, 1994 to September 30, 1995 primarily
due to advances made by the Partnership toward transaction costs
associated with the proposed consolidation by merger, as
discussed in Note 4 of the Notes to Financial Statements. As
also discussed in Note 4, $129,000 in such costs represents an
accrual and accounts for the increase in accrued expenses as of
September 30, 1995.
RESULTS OF OPERATIONS
Total revenue increased $320,000 or 9% during the nine months
ended September 30, 1995 over the nine months ended September 30,
1994 due to an increase in rooms revenue. This is a result of the
sales and marketing staffs' success at both hotels in attracting
tour group and new commercial contract business, and the greater
role the "Countryline" reservation system has played in the
hotels' increased occupancy which generally yields higher average
daily room rates. To a lesser extent, the total revenue increase
can partially be attributable to the resumption of major league
baseball, where the Arlington hotel is impacted by the influx of
people attracted to the area since the Texas Rangers home stadium
is in close proximity.
Total operating costs and expenses increased $372,000 or 12%
during the nine months ended September 30, 1995 over the same
period in 1994. This increase is primarily due to increases in
Page 8 of 11
variable expenses associated with higher occupancy such as rooms
expense, utilities, property management fees, property operation
and maintenance, and sales and marketing costs (the "Countryline"
reservation system). In addition, the Tucson hotel had filled
its sales director position where this position had been vacant
throughout 1994.
Following are the occupancy percentages and average daily room
rates of each of the hotels for the nine months ended September
30, 1995 and 1994:
For the nine months ended For the nine months ended
September 30, 1995 September 30, 1994
------------------- -------------------
Average Average
room room
Occupancy rate Occupancy rate
--------- ------- --------- -------
Arlington 74% $66.22 66% $64.02
Tucson 78% $60.14 77% $58.49
Page 9 of 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership is not a party to, nor are any of its
assets the subject of any material pending legal
proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
Incorporated by reference to Note 4 of the Notes to
Financial Statements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit #
---------
27 Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were required to be filed during
this reporting period.
Page 10 of 11
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.
GLENBOROUGH ALL SUITE HOTELS L.P.,
By: Glenborough Realty Corporation,
a California corporation
the Managing General Partner
Date: November 6, 1995 By: /s/ ANDREW BATINOVICH
--------------------------------- -
Andrew Batinovich
Executive Vice President,
Chief Financial Officer and Director
Page 11 of 11