UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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: 0-10223
HUTTON/CONAM REALTY INVESTORS 81
(Exact name of registrant as specified in its charter)
California 13-3069026
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 World Financial Center, 29th Floor, New York, NY
Attention: Andre Anderson 10285
(Address of principal executive offices) (Zip Code)
(212) 526-3237
(Registrant's telephone number, including area code)
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
Consolidated Balance Sheets
June 30, December 31,
Assets 1995 1994
Investments in real estate:
Land $ 5,255,820 $ 5,255,820
Buildings and improvements 28,473,477 28,473,477
---------- ----------
33,729,297 33,729,297
Less accumulated depreciation (14,445,021) (13,875,550)
---------- ----------
19,284,276 19,853,747
Cash and cash equivalents 1,741,842 1,535,391
Restricted cash 584,312 659,076
Mortgage fees, net of accumulated amortization
of $246,427 in 1995 and $202,797 in 1994 364,384 408,014
Other assets 10,264 41,055
---------- -----------
Total Assets $ 21,985,078 $ 22,497,283
========== ==========
Liabilities and Partners' Capital
Liabilities:
Mortgages payable $ 15,528,942 $ 15,601,031
Distribution payable 173,978 173,978
Accounts payable and accrued expenses 229,005 183,869
Security deposits 125,123 141,408
Due to general partners and affiliates 45,405 44,814
---------- ----------
Total Liabilities 16,102,453 16,145,100
---------- ----------
Partners' Capital (Deficit):
General Partners (1,352,927) (1,316,915)
Limited Partners 7,235,552 7,669,098
---------- ----------
Total Partners' Capital 5,882,625 6,352,183
---------- ----------
Total Liabilities and Partners' Capital $ 21,985,078 $ 22,497,283
========== ==========
Consolidated Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1995
General Limited
Partners Partners Total
Balance at January 1, 1995 $ (1,316,915) $ 7,669,098 $ 6,352,183
Net loss (1,216) (120,386) (121,602)
Cash distributions (34,796) (313,160) (347,956)
--------- --------- ---------
Balance at June 30, 1995 $ (1,352,927) $ 7,235,552 $ 5,882,625
========= ========= =========
Consolidated Statements of Operations
Three months ended Six months ended
June 30, June 30,
Income 1995 1994 1995 1994
Rental $ 1,203,702 $ 1,160,619 $ 2,432,492 $ 2,322,723
Interest 24,506 10,774 48,313 22,181
--------- --------- --------- ---------
Total Income 1,228,208 1,171,393 2,480,805 2,344,904
--------- --------- --------- ---------
Expenses
Property operating 657,315 529,319 1,247,729 1,075,358
Interest 329,307 332,255 659,374 665,208
Depreciation and amortization 306,552 306,795 613,101 613,591
General and administrative 43,431 35,148 82,203 81,400
--------- --------- --------- ---------
Total Expenses 1,336,605 1,203,517 2,602,407 2,435,557
--------- --------- --------- ---------
Net Loss $ (108,397) $ (32,124) $ (121,602) $ (90,653)
========= ========= ========= =========
Net Loss Allocated:
To the General Partners (1,084) (322) (1,216) (907)
To the Limited Partners (107,313) (31,802) (120,386) (89,746)
------- ------ ------- ------
$ (108,397) $ (32,124) $ (121,602) $ (90,653)
Per limited partnership unit
(78,290 outstanding) $(1.37) $(.41) $(1.54) $(1.15)
Consolidated Statements of Cash Flows
For the six months ended June 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net loss $ (121,602) $ (90,653)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 613,101 613,591
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Fundings to restricted cash (319,266) (286,549)
Release of restricted cash to
property operations 394,030 176,571
Other assets 30,791 28,084
Accounts payable and accrued expenses 45,136 41,292
Security deposits (16,285) 1,684
Due to general partners and affiliates 591 2,925
------- -------
Net cash provided by operating activities 626,496 486,945
------- -------
Cash Flows from Financing Activities:
Distributions (347,956) (347,956)
Mortgage principal payments (72,089) (66,255)
------- -------
Net cash used for financing activities (420,045) (414,211)
------- -------
Net increase in cash and cash equivalents 206,451 72,734
Cash and cash equivalents at beginning of period 1,535,391 1,418,054
Cash and cash equivalents at end of period $ 1,741,842 $ 1,490,788
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 659,374 $ 665,208
======= =======
Notes to the Consolidated Financial Statements
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1994 consolidated financial
statements within Form 10-K.
The unaudited consolidated financial statements include all adjustments which
are, in the opinion of management, necessary to present a fair statement of
financial position as of June 30, 1995 and the results of operations and cash
flows for the six months ended June 30, 1995 and 1994 and the statement of
changes in partners' capital (deficit) for the six months ended June 30, 1995.
Results of operations for the periods are not necessarily indicative of the
results to be expected for the full year.
The following significant events have occurred subsequent to fiscal year 1994,
which require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5):
On July 20, 1995, the Partnership closed on the sale of Kingston Village and
Cedar Bay Village to an institutional buyer, which is unaffiliated with the
Partnership. Kingston Village and Cedar Bay Village were sold for $5,370,000
and $1,410,000, respectively. The transaction resulted in a gain on sale for
Kingston Village and Cedar Bay Village of approximately $1,609,000 and $99,000,
respectively which will be reflected in the Partnership's Form 10-Q for the
period ended September 30, 1995.
The Partnership used a portion of the sale proceeds to pay off the remaining
principal balances on the Kingston Village and Cedar Bay Village mortgage
payables in the amount of $2,832,729 and $683,762, respectively. The
Partnership incurred prepayment penalties for early retirement of the Kingston
Village and Cedar Bay Village mortgage payables in the amount of $97,412 and
$23,513, respectively.
Part 1, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
- -------------------------------
At June 30, 1995, the Partnership had cash and cash equivalents of $1,741,842,
which were invested in unaffiliated money market funds. The $206,451 increase
in the cash balance from December 31, 1994 was the result of the Partnership's
generating cash flow from operations in excess of cash distributions and
mortgage principal payments. The Partnership also maintains a restricted cash
balance, which totaled $584,312 at June 30, 1995, composed of escrows required
by the lender for property improvements, real estate taxes, and insurance.
Pursuant to the terms of the loans, as costs are incurred for property
improvements or when real estate taxes and insurance are due, reimbursements
are made from the escrow accounts maintained by the lender to the Partnership.
The General Partners expect sufficient cash to be generated from operations to
meet the Partnership's current operating expenses and debt service
requirements.
Accounts payable and accrued expenses were $229,005 at June 30, 1995 compared
to $183,869 at December 31, 1994. The increase is primarily due to the accrual
of real estate taxes for the first and second quarters of 1995.
The sales of Kingston Village and Cedar Bay Village were completed on July 20,
1995. The Partnership received gross sales proceeds of $6,780,000 and will
recognize a gain on sale of approximately $1,708,000 in the third quarter. A
portion of the sale proceeds was used to prepay the mortgages, totalling
$3,516,491, collateralized by each property. Net sale proceeds received by the
Partnership were approximately $3,010,000. Following an analysis of the
Partnership's projected capital requirements, the General Partners intend to
distribute the remaining sales proceeds to the Limited Partners as a return of
capital.
The Partnership's 1995 second quarter distribution, in the amount of $2.00 per
Unit, will be paid on August 15, 1995. The General Partners currently
anticipate that the current level of distributions will be maintained through
year end. Cash distributions, however, will be determined on a quarterly basis
and will be based on cash flow generated by the Partnership.
Results of Operations
- ---------------------
Partnership operations for the three and six months ended June 30, 1995
resulted in net losses of $108,397 and $121,602, respectively, compared with
net losses of $32,124 and $90,653 for the three and six months ended June 30,
1994. After adding back depreciation and amortization, both noncash expenses,
and subtracting mortgage amortization, operations generated cash flow of
$161,730 and $419,410, respectively, for the three and six months ended June
30, 1995, compared with cash flow of $241,194 and $456,683 for the
corresponding periods in 1994. The increased net losses and reduced cash flow
in 1995 are primarily attributable to an increase in property operating
expense.
Rental income for the three and six months ended June 30, 1995, was $1,203,702
and $2,432,492, respectively, compared with $1,160,619 and $2,322,723 for the
corresponding periods in 1994. The increases in 1995 reflect higher rental
income at all the Partnership's properties, particularly at the Las Colinas
property, due primarily to rental rate increases implemented over the past
year, partially offset by lower occupancy rates at the Arizona properties.
Interest income totaled $24,506 and $48,313, respectively, for the three and
six months ended June 30, 1995 compared with $10,774 and $22,181 for the
corresponding periods in 1994. The increases are due to the Partnership's
higher cash balance and higher interest rates in 1995.
Total expenses for the three and six months ended June 30, 1995 were $1,336,605
and $2,602,407, respectively, compared with $1,203,517 and $2,435,557 for the
corresponding periods in 1994. Property operating expenses increased from
$529,319 and $1,075,358 respectively in 1994, to $657,315 and $1,247,729 in the
corresponding periods in 1995, reflecting higher repair and maintenance
expenses primarily at the Las Colinas property. All other major expense
components remained in line with 1994 levels.
For the three and six month periods ended June 30, 1995 and 1994, average
occupancy levels at each of the properties were as follows:
Three Months Ended Six Months Ended
June 30, June 30,
Property 1995 1994 1995 1994
Cedar Bay Village 93% 91% 95% 94%
Tierra Catalina 91% 97% 93% 96%
Las Colinas I & II 91% 97% 93% 96%
Ridge Park 98% 94% 96% 96%
Kingston Village 97% 96% 97% 96%
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and Reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the three months ended June 30, 1995.
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.
HUTTON/CONAM REALTY INVESTORS 81
BY: RI81 REAL ESTATE SERVICES INC.
General Partner
Date: August 11, 1995
BY: /s/Paul L. Abbott
-------------------------
Name: Paul L. Abbott
Title: Director, President, Chief
Executive Officer and Chief
Financial Officer