UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 333-42441
MID-AMERICA CAPITAL PARTNERS, L.P.
(Exact Name of Registrant as Specified in Charter)
TENNESSEE 62-1717980
(State of Incorporation) (I.R.S. Employer Identification Number)
6584 POPLAR AVENUE, SUITE 340
MEMPHIS, TENNESSEE 38138
(Address of principal executive offices)
(901) 682-6600
Registrant's telephone number, including area code
N/A (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 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.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Number of Shares Outstanding
Class July 31, 2000
none
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets of Mid-America Capital Partners, L.P. (the
"Partnership") as of June 30, 2000 (Unaudited) and December 31,
1999
Statements of Operations of the Partnership for the three and six
months ended June 30, 2000 and 1999 (Unaudited)
Statements of Cash Flows of the Partnership for the six months
ended June 30, 2000 and 1999 (Unaudited)
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
PART I. Financial Information
ITEM 1.
Mid-America Capital Partners, L.P.
(a limited partnership)
Balance Sheets
June 30, 2000 (Unaudited) and December 31, 1999
(Dollars in thousands)
2000 1999
---- ----
Assets:
Real estate assets:
Land $ 21,305 $ 21,305
Buildings and improvements 211,004 210,761
Furniture, fixtures and equipment 5,489 5,439
Construction in progress 1,796 814
- ------------------------------------------------------------------------------
239,594 238,319
Less accumulated depreciation (35,911) (31,162)
- ------------------------------------------------------------------------------
Real estate assets, net 203,683 207,157
Cash 6,798 3,667
Restricted cash 34 34
Deferred financing costs, net 2,730 3,258
Other assets 206 79
- ------------------------------------------------------------------------------
Total assets $ 213,451 $ 214,195
==============================================================================
Liabilities and Partners' Capital:
Liabilities:
Bonds payable $ 142,000 $ 142,000
Accounts payable 115 404
Accrued expenses and other liabilities 3,088 2,895
Due to affiliate 1,450 1,499
Security deposits 832 794
- ------------------------------------------------------------------------------
Total liabilities 147,485 147,592
Partners' Capital:
General Partner 2,478 2,453
Limited Partner 82,895 80,402
Due from limited partner (19,407) (16,252)
- ------------------------------------------------------------------------------
Total partners' capital 65,966 66,603
- ------------------------------------------------------------------------------
Total liabilities and partners' capital $ 213,451 $ 214,195
==============================================================================
See accompanying notes to financial statements.
Mid-America Capital Partners, L.P.
(a limited partnership)
Statements of Operations
Three and six months ended June 30, 2000 and 1999
(Dollars in thousands)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
---------------------- ---------------------
2000 1999 2000 1999
----------- ---------- ---------- ----------
Revenues:
Rental $ 10,175 $ 9,770 $ 20,187 $ 19,337
Other 103 104 227 192
- ------------------------------------------------------------------------------------- ---------------------
Total revenues 10,278 9,874 20,414 19,529
- ------------------------------------------------------------------------------------- ---------------------
Expenses:
Personnel 1,061 1,056 2,124 2,101
Building repairs and maintenance 463 495 898 918
Real estate taxes and insurance 1,011 954 2,019 1,919
Utilities 364 353 713 737
Landscaping 293 261 576 518
Other operating 425 412 840 838
Depreciation and amortization real estate assets 2,397 2,206 4,733 4,363
Depreciation and amortization non-real estate assets 8 7 16 15
General and administrative 507 395 912 781
Interest 2,268 2,268 4,537 4,537
Amortization of deferred financing costs 264 247 528 495
- ------------------------------------------------------------------------------------- ---------------------
Total expenses 9,061 8,654 17,896 17,222
- ------------------------------------------------------------------------------------- ---------------------
Net income $ 1,217 $ 1,220 $ 2,518 $ 2,307
===================================================================================== =====================
See accompanying notes to financial statements.
Mid-America Capital Partners, L.P.
(a limited partnership)
Statements of Cash Flows
Six months ended June 30, 2000 and 1999
(Dollars in thousands)
(Unaudited)
2000 1999
---------- ----------
Cash flows from operating activities:
Net income $ 2,518 $ 2,307
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 5,277 4,873
Changes in assets and liabilities:
Restricted cash - 373
Due to affiliate (49) (510)
Other assets (127) 104
Accounts payable (289) (321)
Accrued expenses and other liabilities 193 1,093
Security deposits 38 54
- -----------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 7,561 7,973
Cash used in investing activities - improvements to properties (1,275) (2,616)
Cash flows from financing activities:
Repayment of bank overdraft - (667)
Due from limited partner (3,155) (3,118)
- -----------------------------------------------------------------------------------------------------------
Net cash used in financing activities (3,155) (3,785)
- -----------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 3,131 1,572
- -----------------------------------------------------------------------------------------------------------
Cash, beginning of period 3,667 -
- -----------------------------------------------------------------------------------------------------------
Cash, end of period $ 6,798 $ 1,572
===========================================================================================================
Supplemental disclosure of cash flow information:
Interest paid $ 4,537 $ 4,537
===========================================================================================================
See accompanying notes to financial statements.
MID-AMERICA CAPITAL PARTNERS, L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 and 1999
(Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with the accounting policies in effect as of December 31, 1999, as set forth in
the annual financial statements of Mid-America Capital Partners, L.P. (the
"Partnership"), as of such date. In the opinion of management, all adjustments
necessary for a fair presentation of the financial statements have been included
and all such adjustments were of a normal recurring nature. The results of
operations for the three and six months ended June 30, 2000 are not necessarily
indicative of the results to be expected for the full year.
The Partnership is a special purpose Delaware limited partnership. The
Partnership was formed on November 24, 1997 for the sole purpose to own 26
apartment communities (the Mortgaged Properties) and manage, renovate, improve,
lease, sell, transfer, exchange, mortgage and otherwise deal with the Mortgaged
Properties. The sole limited partner of the Partnership is Mid-America
Apartments, L.P., a Tennessee limited partnership (MAALP), which is a majority
owned subsidiary of Mid-America Apartment Communities, Inc. (MAAC). MAAC owns,
directly or through its subsidiaries, all of the outstanding units of
partnership interest. MAAC is a self-administered and self-managed umbrella
partnership real estate investment trust (REIT). MAAC conducts a substantial
portion of its operations through MAALP and subsidiaries of MAALP. The sole
general partner of the Partnership is MAACP, Inc., a Tennessee corporation
(MAACP), a wholly-owned subsidiary of MAAC. The term of the Partnership shall be
to December 31, 2020, unless terminated earlier as provided in the Partnership
Agreement or as otherwise provided by law.
2. Segment Information
At June 30, 2000, the Partnership owned and operated 26 apartment communities
from which it derives all significant sources of earnings and operating cash
flows. The Partnership's operational structure is organized on a decentralized
basis, with individual property managers having overall responsibility and
authority regarding the operations of their respective properties. Each property
manager individually monitors local and area trends in rental rates, occupancy
percentages, and operating costs. Property managers are given the on-site
responsibility and discretion to react to such trends in the best interest of
the Partnership. Management evaluates the performance of each individual
property based on its contribution of revenues and net operating income ("NOI"),
which is composed of property revenues less all operating costs including
insurance and real estate taxes. The Partnership's reportable segments are its
individual properties because each is managed separately and requires different
operating strategy and expertise based on the geographic location, community
structure and quality, population mix and numerous other factors unique to each
community.
The revenues and profits for the aggregated communities are summarized as
follows (Dollars in thousands):
Three months ended Six months ended
June 30, June 30,
--------------------- ----------------------
2000 1999 2000 1999
--------- ---------- ---------- ----------
Rental revenues $ 10,175 $ 9,770 $ 20,187 $ 19,337
Other property revenues 103 104 227 192
--------------------------------------------
Total Revenues 10,278 9,874 20,414 19,529
--------------------------------------------
Property net operating income 6,661 6,343 13,244 12,498
Interest expense 2,268 2,268 4,537 4,537
General and administrative expenses 507 395 912 781
Amortization of deferred financing costs 264 247 528 495
Depreciation and amortization 2,405 2,213 4,749 4,378
--------------------------------------------
Net income $ 1,217 $ 1,220 $ 2,518 $ 2,307
============================================
There have been no material changes in segment assets during the period.
PART I. Financial Information
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The following is a discussion of the financial condition and results of
operations of the Partnership for the three and six months ended June 30, 2000
and 1999. This discussion should be read in conjunction with the financial
statements included in this report. These financial statements include all
adjustments, which are, in the opinion of management, necessary to reflect a
fair statement of the results for the interim periods presented, and all such
adjustments are of a normal recurring nature.
The total number of apartment units owned at June 30, 2000 and 1999 was 5,948 in
26 apartment communities. Average monthly rental per apartment unit increased to
$596 at June 30, 2000 from $578 at June 30, 1999. Overall occupancy was 95.9%
and 95.1% at June 30, 2000 and 1999, respectively.
RESULTS OF OPERATIONS (Dollars in 000's)
COMPARISON OF THE PARTNERSHIP'S THREE MONTHS ENDED JUNE 30, 2000 TO THE
THREE MONTHS ENDED JUNE 30, 1999
Total revenues for the three months ended June 30, 2000 increased 4.1% from the
three months ended June 30, 1999. This increase is due to the increases in the
average rental rate and occupancy rate as compared to the same period a year
ago.
Property operating expenses for the three months ended June 30, 2000 increased
by 2.4% as compared to the same period a year ago. Reductions in building
repairs and maintenance were more than offset by increases in real estate taxes
and landscaping costs.
Depreciation and amortization expense also increased from $2,213 to $2,405
primarily due to additional depreciation related to normal capital additions to
maintain the properties within the increasingly competitive markets.
COMPARISON OF THE PARTNERSHIP'S SIX MONTHS ENDED JUNE 30, 2000 TO THE
SIX MONTHS ENDED JUNE 30, 1999
Total revenues for the six months ended June 30, 2000 increased by 4.5% due
primarily to the increase in average rental rate and a slight increase in
occupancy percentage as compared to the same six month period a year ago.
Property operating expenses for the six months ended June 30, 2000 increased
1.9% as compared to the same period a year ago. Reductions in building repairs
and maintenance, and utilities were more than offset by increases in real estate
taxes and insurance, and landscaping.
Depreciation and amortization expense also increased from $4,378 to $4,749
primarily due to additional depreciation related to normal capital additions to
maintain the properties within the increasingly competitive markets.
LIQUIDITY AND CAPITAL RESOURCES
Net cash flow provided by operating activities decreased to $7,561 for the six
months ended June 30, 2000 from $7,973 for the six months ended June 30, 1999
mainly related to changes in operating assets and liabilities.
Net cash flow used in investing activities decreased by $1,341 for the six
months ended June 30, 2000 as compared to the same period a year earlier
entirely due to reduced capital improvements to the properties. During 1999,
significant improvements were made on the Mortgaged Properties in order to
increase the quality and curb appeal of the properties.
Net cash used in financing activities decreased during the period primarily due
to the settlement of a bank overdraft in 1999.
The Partnership believes that cash provided by operations is adequate and
anticipates that it will continue to be adequate in both the short and long-term
to meet operating requirements (including recurring capital expenditures at the
communities).
INSURANCE
In the opinion of management, property and casualty insurance is in place which
provides adequate coverage to provide financial protection against normal
insurable risks such that it believes that any loss experienced would not have a
significant impact on the Partnership's liquidity, financial position, or
results of operations.
INFLATION
Substantially all of the resident leases at the communities allow, at the time
of renewal, for adjustments in the rent payable thereunder, and thus may enable
the Partnership to seek rent increases. The substantial majority of these leases
are for one year or less. The short-term nature of these leases generally serves
to reduce the risk to the Partnership of the adverse effects of inflation.
RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS
The Management's Discussion and Analysis of Financial Condition and Results of
Operations contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the safe harbors created thereby. These statements include the plans and
objectives of management for future operations, including plans and objectives
relating to capital expenditures and rehabilitation costs on the apartment
communities. The forward-looking statements included herein are based on current
expectations that involve numerous risks and uncertainties which are discussed
in "Risk Factors" in this report. Although the Partnership believes that the
assumptions underlying the forward-looking statements are reasonable, any of the
assumptions could be inaccurate and, therefore, there can be no assurance that
the forward-looking statements included in this report will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Partnership or any other
person that the objectives and plans of the Partnership will be achieved.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
This information has been omitted as there have been no material changes in the
Partnership's market risk as disclosed in the 1999 Annual Report on Form 10-K.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits or Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule for the period ended 6/30/00.
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
MID-AMERICA CAPITAL PARTNERS, L.P.
Date: 8/14/00 /s/Simon R.C. Wadsworth
Simon R.C. Wadsworth
President and Director
(Principal Executive Officer)
Date: 8/14/00 /s/Mark S.Martini
Mark S. Martini
Director
Principal Financial and Accounting Officer)