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, 2001
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, 2001
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, 2001 (Unaudited) and December
31, 2000
Statements of Operations of the Partnership for the three and six
months ended June 30, 2001 and 2000 (Unaudited)
Statements of Cash Flows of the Partnership for the six months
ended June 30, 2001 and 2000 (Unaudited)
Notes to Financial Statements (Unaudited)
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, 2001 (Unaudited) and December 31, 2000
(Dollars in thousands)
2001 2000
- -----------------------------------------------------------------------------------------------------
Assets:
Real estate assets:
Land $ 21,016 $ 21,305
Buildings and improvements 213,294 212,941
Furniture, fixtures and equipment 5,901 5,801
Construction in progress 3,175 1,431
- -----------------------------------------------------------------------------------------------------
243,386 241,478
Less accumulated depreciation (45,307) (40,512)
- -----------------------------------------------------------------------------------------------------
Real estate assets, net 198,079 200,966
Cash and cash equivalents 1,395 859
Restricted cash 36 35
Deferred financing costs, net 1,701 2,202
Other assets 141 501
- -----------------------------------------------------------------------------------------------------
Total assets $ 201,352 $ 204,563
=====================================================================================================
Liabilities and partners' capital:
Liabilities:
Bonds payable $ 142,000 $ 142,000
Accounts payable 84 118
Accrued expenses and other liabilities 3,253 2,652
Due to affiliate 809 1,382
Security deposits 833 803
- -----------------------------------------------------------------------------------------------------
Total liabilities 146,979 146,955
Partners' capital:
General partner 2,519 2,504
Limited partner 88,226 85,412
Due from limited partner (36,372) (30,308)
- -----------------------------------------------------------------------------------------------------
Total partners' capital 54,373 57,608
- -----------------------------------------------------------------------------------------------------
Total liabilities and partners' capital $ 201,352 $ 204,563
=====================================================================================================
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, 2001 and 2000
(Dollars in thousands)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
----------------------------- ------------------------------
2001 2000 2001 2000
--------------- ------------ -------------- --------------
Revenues:
Rental $ 10,320 $ 10,175 $ 20,504 $ 20,187
Other 154 103 302 227
- ----------------------------------------------------------------------------------------------------------------------------------
Total revenues 10,474 10,278 20,806 20,414
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Personnel 1,143 1,061 2,261 2,124
Building repairs and maintenance 474 463 905 898
Real estate taxes and insurance 1,088 1,011 2,164 2,019
Utilities 321 364 680 713
Landscaping 312 293 619 576
Other operating 450 425 910 840
Depreciation and amortization real estate assets 2,363 2,397 4,755 4,733
Depreciation and amortization non-real estate assets 8 8 16 16
General and administrative 425 507 859 912
Interest 2,268 2,268 4,537 4,537
Amortization of deferred financing costs 243 264 500 528
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses 9,095 9,061 18,206 17,896
Gain (loss) on disposition, net (8) - 229 -
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 1,371 $ 1,217 $ 2,829 $ 2,518
==================================================================================================================================
See accompanying notes to financial statements.
Mid-America Capital Partners, L.P.
(a limited partnership)
Statements of Cash Flows
Six months ended June 30, 2001 and 2000
(Dollars in thousands)
(Unaudited)
2001 2000
------------- ------------
Cash flows from operating activities:
Net income $ 2,829 $ 2,518
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 5,271 5,277
Gain on disposition of assets (229) -
Changes in assets and liabilities:
Restricted cash (1) -
Other assets 360 (49)
Accounts payable (34) (127)
Accrued expenses and other liabilities 626 (289)
Due to affiliate (573) 193
Security deposits 30 38
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 8,279 7,561
Cash flows from investing activities:
Proceeds from disposition of real estate 600 -
Improvements to properties (2,279) (1,275)
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (1,679) (1,275)
- ---------------------------------------------------------------------------------------------------------------------------------
Cash used in financing activities - due from limited partner (6,064) (3,155)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 536 3,131
- ---------------------------------------------------------------------------------------------------------------------------------
Cash, beginning of period 859 3,667
- ---------------------------------------------------------------------------------------------------------------------------------
Cash, end of period $ 1,395 $ 6,798
=================================================================================================================================
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, 2001 and 2000
(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, 2000, 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, 2001 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 Partnership has only limited involvement with
derivative financial instruments, and does not use them for trading purposes.
This new accounting statement did not have any impact on the Partnership's
financial statements.
3. Real Estate Transactions
Property Dispositions
In March 2001, the Company sold a tract of surplus land adjacent to one of its
operating communities for approximately $600,000. The Company recorded a gain
for financial reporting purposes of approximately $229,000, which comprises the
majority of the caption "gain on dispositions, net" in the accompanying
financial statements.
4. Segment Information
At June 30, 2001, 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,
------------------------------- -------------------------------
2001 2000 2001 2000
-------------- --------------- --------------- --------------
Rental revenues $ 10,320 $ 10,175 $ 20,504 $ 20,187
Other property revenues 154 103 302 227
------------------------------- -------------------------------
Total Revenues 10,474 10,278 20,806 20,414
------------------------------- -------------------------------
Property net operating income 6,686 6,661 13,267 13,244
Interest expense 2,268 2,268 4,537 4,537
General and administrative expenses 425 507 859 912
Amortization of deferred financing costs 243 264 500 528
Depreciation and amortization 2,371 2,405 4,771 4,749
Gain on disposition of assets (8) - 229 -
------------------------------- -------------------------------
Net income $ 1,371 $ 1,217 $ 2,829 $ 2,518
=============================== ===============================
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, 2001
and 2000. 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, 2001 and 2000 was 5,948 in
26 apartment communities. Average monthly rental per apartment unit increased to
$613 at June 30, 2001 from $596 at June 30, 2000. Overall occupancy was 95.6%
and 95.9% at June 30, 2001 and 2000, respectively.
RESULTS OF OPERATIONS (Dollars in 000's)
COMPARISON OF THE PARTNERSHIP'S THREE MONTHS ENDED JUNE 30, 2001 TO THE THREE
MONTHS ENDED JUNE 30, 2000
Total revenues for the three months ended June 30, 2001 increased 1.9% from the
three months ended June 30, 2000. This increase is due to the increases in the
average rental rate as compared to the same period a year ago.
Property operating expenses for the three months ended June 30, 2001 increased
by 4.7% as compared to the same period a year ago. Increases in personnel, real
estate taxes and insurance, and other operating costs represented the majority
of the increase.
COMPARISON OF THE PARTNERSHIP'S SIX MONTHS ENDED JUNE 30, 2001 TO THE SIX MONTHS
ENDED JUNE 30, 2000
Total revenues for the six months ended June 30, 2001 increased 1.9% from the
six months ended June 30, 2000. This increase is due to the increases in the
average rental rate as compared to the same period a year ago.
Property operating expenses for the six months ended June 30, 2001 increased by
5.1% as compared to the same period a year ago. Increases in personnel, real
estate taxes and insurance, and other operating costs represented the majority
of the increase.
LIQUIDITY AND CAPITAL RESOURCES
Net cash flow provided by operating activities increased to $8,279 for the six
months ended June 30, 2001 from $7,561 for the six months ended June 30, 2000
mainly related to changes in operating assets and liabilities.
Net cash flow used in investing activities increased by $404 for the six months
ended June 30, 2001 as compared to the same period a year earlier entirely due
to increased capital improvements to 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 2000 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
None.
(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: 8/14/2001 /s/Simon R.C. Wadsworth
Simon R.C. Wadsworth
President and Director
(Principal Executive Officer)
Date: 8/14/2001 /s/Mark S. Martini
Mark S. Martini
Director
(Principal Financial and Accounting Officer)