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 September 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:
Class Number of Shares Outstanding
October 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 September 30, 2000 (Unaudited) and December
31, 1999
Statements of Operations of the Partnership for the three and
nine months ended September 30, 2000 and 1999 (Unaudited)
Statements of Cash Flows of the Partnership for the nine months
ended September 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
September 30, 2000 (Unaudited) and December 31, 1999
(Dollars in thousands)
2000 1999
---------- ----------
Assets:
Real estate assets:
Land $ 21,305 $ 21,305
Buildings and improvements 211,126 210,761
Furniture, fixtures and equipment 5,530 5,439
Construction in progress 2,494 814
- ------------------------------------------------------------------------------
240,455 238,319
Less accumulated depreciation (38,228) (31,162)
- ------------------------------------------------------------------------------
Real estate assets, net 202,227 207,157
Cash and cash equivalents 1,045 3,667
Restricted cash 35 34
Deferred financing costs, net 2,466 3,258
Other assets 784 79
- ------------------------------------------------------------------------------
Total assets $206,557 $214,195
==============================================================================
Liabilities and Partners' Capital:
Liabilities:
Bonds payable $142,000 $142,000
Accounts payable 216 404
Accrued expenses and other liabilities 3,264 2,895
Due to affiliate 1,377 1,499
Security deposits 826 794
- ------------------------------------------------------------------------------
Total liabilities 147,683 147,592
Partners' Capital:
General Partner 2,490 2,453
Limited Partner 84,146 80,402
Due from limited partner (27,762) (16,252)
- ------------------------------------------------------------------------------
Total partners' capital 58,874 66,603
- ------------------------------------------------------------------------------
Total liabilities and partners' capital $206,557 $214,195
==============================================================================
See accompanying notes to financial statements.
Mid-America Capital Partners, L.P.
(a limited partnership)
Statements of Operations
Three and nine months ended September 30, 2000 and 1999
(Dollars in thousands)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
---------------------- ---------------------
2000 1999 2000 1999
----------- ---------- ---------- ----------
Revenues:
Rental $10,270 $ 9,969 $30,457 $29,306
Other 95 94 322 286
- -----------------------------------------------------------------------------------------------------
Total revenues 10,365 10,063 30,779 29,592
- -----------------------------------------------------------------------------------------------------
Expenses:
Personnel 1,124 1,084 3,249 3,185
Building repairs and maintenance 556 584 1,453 1,503
Real estate taxes and insurance 992 1,038 3,011 2,957
Utilities 389 428 1,102 1,164
Landscaping 296 271 872 789
Other operating 461 389 1,301 1,227
Depreciation and amortization real estate assets 2,308 2,224 7,041 6,587
Depreciation and amortization non-real estate assets 8 8 24 23
General and administrative 431 408 1,343 1,188
Interest 2,272 2,278 6,809 6,815
Amortization of deferred financing costs 264 247 793 742
- -----------------------------------------------------------------------------------------------------
Total expenses 9,101 8,959 26,998 26,180
- -----------------------------------------------------------------------------------------------------
Net income $ 1,264 $ 1,104 $ 3,781 $ 3,412
=====================================================================================================
See accompanying notes to financial statements.
Mid-America Capital Partners, L.P.
(a limited partnership)
Statements of Cash Flows
Nine months ended September 30, 2000 and 1999
(Dollars in thousands)
(Unaudited)
2000 1999
---------- ----------
Cash flows from operating activities:
Net income $ 3,781 $ 3,412
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 7,858 7,352
Changes in assets and liabilities:
Restricted cash (1) 373
Other assets (705) (68)
Accounts payable (188) 165
Accrued expenses and other liabilities 369 1,621
Due to affiliate (122) 851
Security deposits 32 78
- ---------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 11,024 13,784
- ---------------------------------------------------------------------------------------------------------
Cash used in investing activities - improvements to properties (2,136) (3,996)
- ---------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Repayment of bank overdraft - (667)
Due from limited partner (11,510) (7,179)
- ---------------------------------------------------------------------------------------------------------
Net cash used in financing activities (11,510) (7,846)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (2,622) 1,942
- ---------------------------------------------------------------------------------------------------------
Cash, beginning of period 3,667 -
- ---------------------------------------------------------------------------------------------------------
Cash, end of period $ 1,045 $ 1,942
=========================================================================================================
Supplemental disclosure of cash flow information:
Interest paid $ 6,809 $ 6,815
=========================================================================================================
See accompanying notes to financial statements.
MID-AMERICA CAPITAL PARTNERS, L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
September 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 nine months ended September 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. Recent Accounting Pronouncements
In June 2000, FASB Statement 138, "Accounting for Derivative Instruments and
Hedging Activity-Deferral of Effective Date of FASB Statement 133", was issued.
This Statement shall be effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000. The Company has only limited involvement with
derivative financial instruments, and does not use them for trading purposes.
This new accounting statement is not expected to have a material impact on the
Company's financial statements.
3. Segment Information
At September 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 Nine months ended
September 30, September 30,
--------------------- ---------------------
2000 1999 2000 1999
---------- ---------- --------- ----------
Rental revenues $10,270 $ 9,969 $30,457 $29,306
Other property revenues 95 94 322 286
--------------------------------------------
Total Revenues 10,365 10,063 30,779 29,592
--------------------------------------------
Property net operating income 6,547 6,269 19,791 18,767
Interest expense 2,272 2,278 6,809 6,815
General and administrative expenses 431 408 1,343 1,188
Amortization of deferred financing costs 264 247 793 742
Depreciation and amortization 2,316 2,232 7,065 6,610
--------------------------------------------
Net income $ 1,264 $ 1,104 $ 3,781 $ 3,412
============================================
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 nine months ended September 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 September 30, 2000 and 1999 was
5,948 in 26 apartment communities. Average monthly rental per apartment unit
increased to $602 at September 30, 2000 from $578 at September 30, 1999. Overall
occupancy was 96.3% and 95.1% at September 30, 2000 and 1999, respectively.
RESULTS OF OPERATIONS (Dollars in 000's)
COMPARISON OF THE PARTNERSHIP'S THREE MONTHS ENDED SEPTEMBER 30, 2000 TO THE
THREE MONTHS ENDED SEPTEMBER 30, 1999
Total revenues for the three months ended September 30, 2000 increased 3.0% from
the three months ended September 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 September 30, 2000
increased by .6% as compared to the same period a year ago. Reductions in
building repairs and maintenance, real estate taxes and insurance, and utilities
were more than offset by increases in personnel, landscaping and other operating
costs.
Depreciation and amortization expense also increased from $2,232 to $2,316
primarily due to additional depreciation related to normal capital additions to
maintain the properties within the increasingly competitive markets.
COMPARISON OF THE PARTNERSHIP'S NINE MONTHS ENDED SEPTEMBER 30, 2000 TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1999
Total revenues for the nine months ended September 30, 2000 increased by 4.0%
due primarily to the increases in the average rental rate and occupancy rate as
compared to the same nine month period a year ago.
Property operating expenses for the nine months ended September 30, 2000
increased 1.5% 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, personnel, landscaping, and other operating
costs.
Depreciation and amortization expense also increased from $6,610 to $7,065
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 $11,024 for the nine
months ended September 30, 2000 from $13,784 for the nine months ended September
30, 1999 mainly related to changes in operating assets and liabilities.
Net cash flow used in investing activities decreased by $1,860 for the nine
months ended September 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 increased during the period due to
intercompany cash payments to the limited partner.
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. 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 9/30/00.
(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: 11/14/2000 /s/Simon R.C. Wadsworth
Simon R.C. Wadsworth
President and Director
(Principal Executive Officer)
Date: 11/14/2000 /s/Mark S. Martini
Mark S. Martini
Director
(Principal Financial and Accounting Officer)