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 March 31, 1996
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: 33-17274
MANHATTAN BEACH HOTEL PARTNERS, L.P.
Exact Name of Registrant as Specified in its Charter
Delaware 95-4201183
State or Other Jurisdiction of
Incorporation or Organization I.R.S. Employer Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn: 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 ____
Balance Sheets At March 31, At December 31,
1996 1995
Assets
Real estate, at cost:
Building $ 47,975,974 $ 47,975,974
Furniture, fixtures and equipment 2,780,553 2,623,827
Leasehold improvements 3,333,141 3,333,141
---------- ----------
54,089,668 53,932,942
Less accumulated depreciation
and amortization (11,456,054) (11,006,481)
---------- ----------
42,633,614 42,926,461
Cash and cash equivalents 2,767,446 4,414,032
Restricted cash 238,436 187,464
Accounts receivable 1,415,094 992,941
Prepaid and other assets 335,923 374,304
---------- ----------
Total Assets $ 47,390,513 $ 48,895,202
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued liabilities $ 1,065,380 $ 1,309,672
Due to affiliates 2,421,904 2,400,138
Distribution payable 0 1,409,091
--------- ---------
Total Liabilities 3,487,284 5,118,901
--------- ---------
Partners' Capital (Deficit):
General Partner (1,464,730) (1,591,658)
Limited Partners (6,975,000 limited
partnership units authorized, issued
and outstanding) 45,367,959 45,367,959
---------- ----------
Total Partners' Capital 43,903,229 43,776,301
---------- ----------
Total Liabilities and Partners' Capital $ 47,390,513 $ 48,895,202
========== ==========
Statement of Partners' Capital (Deficit)
For the three months ended March 31, 1996
Limited General
Partners Partner Total
Balance at December 31, 1995 $ 45,367,959 $ (1,591,658) $ 43,776,301
Net income 0 126,928 126,928
---------- ---------- ----------
Balance at March 31, 1996 $ 45,367,959 $ (1,464,730) $ 43,903,229
========== ========== ==========
Statements of Operations
For the three months ended March 31, 1996 1995
Hotel Revenues
Rooms $ 2,509,552 $ 2,131,531
Food and beverage 1,071,916 970,527
Telephone 161,470 155,442
Other 39,843 31,420
--------- ---------
Total Revenues 3,782,781 3,288,920
--------- ---------
Departmental Expenses
Rooms 667,969 620,731
Food and beverage 903,011 875,100
Telephone 95,182 79,537
Other 10,762 10,002
--------- ---------
Total Expenses 1,676,924 1,585,370
--------- ---------
Departmental Income 2,105,857 1,703,550
--------- ---------
Unallocated Partnership and Hotel Operating Expenses
Advertising and sales 145,274 144,945
General and administrative:
Hotel and other 613,795 486,313
Partnership 125,445 117,814
Utilities and maintenance 273,962 278,233
Ground rent 180,778 154,987
Management fees 118,145 85,690
Property taxes 96,663 98,511
Operating leases 14,904 37,216
Depreciation and amortization 449,573 426,103
--------- ---------
2,018,539 1,829,812
--------- ---------
Operating Income (Loss) 87,318 (126,262)
--------- ---------
Other Income
Interest income 38,850 33,509
Other income 760 700
--------- ---------
39,610 34,209
--------- ---------
Net Income (Loss) $ 126,928 $ (92,053)
============ ===========
Net Income ( Loss) Allocated:
To the General Partner $ 126,928 $ (13,808)
To the Limited Partners 0 (78,245)
------------ -----------
$ 126,928 $ (92,053)
============ ===========
Per limited partnership unit
(6,975,000 outstanding) $ 0 $ (.01)
------------ -----------
Statements of Cash Flows
For the three months ended March 31, 1996 1995
Cash Flows From Operating Activities
Net income (loss) $ 126,928 $ (92,053)
Adjustments to reconcile net income (loss)
to net cash provided by (used for)
operating activities:
Depreciation and amortization 449,573 426,103
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Restricted cash (207,698) (135,791)
Accounts receivable (422,153) (110,640)
Prepaid and other assets 38,381 (1,868)
Accounts payable and accrued liabilities (244,292) (4,611)
Due to affiliates 21,766 60,961
-------- -------
Net cash provided by (used for) operating activities (237,495) 142,101
Cash Flows From Investing Activities
Proceeds from restricted cash 156,726 (78,862)
Additions to real estate (156,726) (78,862)
------- ------
Net cash used for investing activities 0 0
------- ------
Cash Flows From Financing Activities
Distributions (1,409,091) 0
--------- ------
Net cash used for financing activities (1,409,091) 0
Net increase (decrease) in cash and
cash equivalents (1,646,586) 142,101
Cash and cash equivalents, beginning of period 4,414,032 2,797,178
------------ ------------
Cash and cash equivalents, end of period $ 2,767,446 $ 2,939,279
============ ============
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1995 audited financial statements within Form 10-K .
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of March 31, 1996 and the results of operations and cash flows for
the three months ended March 31, 1996 and 1995 and the statement of
partner's capital (deficit) for the three months ended March 31, 1996. Results
of operations for the periods are not necessarily indicative of the results to
be expected for the full year.
Certain prior year amounts have been reclassified in order to conform to the
current year's presentation.
No significant events have occurred subsequent to fiscal year 1995, and no
material contingencies exist which would require disclosure in this interim
report per Regulation S-X, Rule 10- 01, Paragraph (a)(5).
Part I, Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Hotel's operations improved during the first quarter of 1996 principally as
a result of strengthening conditions in the Los Angeles Airport hotel market
and management's efforts to diversify the Hotel's customer base. The Hotel is
dependent primarily on business, group, contract and leisure travel for its
revenues. The improved profitability of the Hotel during the first quarter of
the year, as compared with the same period in 1995, is largely attributable to
the 7.1% increase in the Hotel's average occupancy level and the 8.6% increase
in the average room rate, which was achieved as a result of management's
efforts to reduce the volume of airline contracts and increase the number of
business and group guests at higher rates.
At March 31, 1996, Manhattan Beach Hotel Partners, L.P. (the "Partnership") had
cash and cash equivalents of $2,767,446, including cash held at the Property
for working capital. Cash decreased by $1,646,586 from December 31, 1995,
primarily due to the distribution paid to limited partners on February 1, 1996
and cash used for operating activities. Such cash balances are expected to be
sufficient to meet the anticipated cash requirements for operations of the
Partnership. Restricted cash increased to $238,436 at March 31, 1996, compared
to $187,464 at December 31, 1995. The increase is due to contributions to the
reserve exceeding expenditures for the three-month period. Pursuant to the
management agreement (the "Management Agreement") with Manhattan Beach
Management Company, an affiliate of Interstate Hotel Corporation
("Interstate"), contributions to the account for furniture, fixtures and
equipment ("FF&E reserve account") will be made over time to protect and
maintain the value of the Hotel.
Accounts receivable increased to $1,415,094 at March 31, 1996, compared to
$992,941 at December 31, 1995. Accounts payable and accrued liabilities
decreased to $1,065,380 at March 31, 1996, compared to $1,309,672 at
December 31, 1995. The changes in both accounts receivable and accounts
payable and accrued liabilities primarily are due to differences in the timing
of payments. The change in accounts receivable is also attributable to the
change in the mix of corporate guests. Due to affiliates increased to
$2,421,904 at March 31, 1996 from $2,400,138 at December 31, 1995, primarily
due to the accrual of property management oversight fees for the first quarter
of 1996.
A distribution in the amount of $1,395,000 or $0.20 per Unit was paid to
limited partners on February 1, 1996. This distribution represented a one-time
distribution of 1995 annual cash flow and surplus Partnership reserves, and did
not indicate the reinstatement of regular cash distributions. The ability of
the Partnership to make future distributions will be dependent upon the cash
flow generated from Hotel operations and the adequacy of cash reserves which,
in the future, will be evaluated on an annual basis. There can be no assurance
that future cash flow will be sufficient to fund additional distributions.
Results of Operations
For the three-month period ended March 31, 1996, the Partnership had net income
of $126,928, compared to a net loss of $92,053 for the three-month period ended
March 31, 1995. The improvement in 1996 primarily is due to an increase in all
Hotel Revenues, comprised of rooms, food and beverage, telephone and other
departmental income and Partnership interest income which was partially offset
by an increase in unallocated Hotel and Partnership operating expenses
including depreciation.
For the three-month period ended March 31, 1996, the Hotel generated
departmental income of $2,105,857, compared to $1,703,550 for the three-month
period ended March 31, 1995. The 23.6% increase in departmental income for the
1996 period is due to an increase in total Hotel Revenues as a result of higher
occupancy levels and room rates, and higher food and beverage, telephone and
other revenues, which was partially offset by a slight increase in departmental
expenses.
For the three-month period ended March 31, 1996, unallocated Partnership and
Hotel operating expenses, including depreciation, were $2,018,539 compared to
$1,829,812 for the corresponding period in 1995. The increase primarily is due
to an increase in Hotel general and administrative expenses and higher property
insurance premiums at the Hotel in 1996 compared to 1995. Also contributing to
the increase were higher management fees, ground rent, Partnership general and
administrative expenses and depreciation and amortization costs. Management
fees increased due to higher gross sales on which management receives a base
percentage fee and higher incentive management fees associated with the Hotel's
improved performance. Ground rent, which is based on total revenues, increased
due to higher total revenues for the period. Partnership general and
administrative expenses increased primarily due to professional expenses
associated with some of the recent renovation work. Depreciation increased due
to an increase in capitalized personal property.
Total other income for the three-month period ended March 31, 1996 increased
to $39,610 from $34,209 for the three-month period ended March 31, 1995,
primarily due to higher interest income attributable to higher cash balances
maintained by the Partnership.
The following summarizes the Hotel's performance for the three-month period
ended March 31 of the indicated years:
1996 1995 % Change
Average Occupancy 87.0% 81.2% 7.1%
Average Room Rate $83.38 $76.80 8.6%
Hotel Sales $3,782,781 $3,288,920 15.0%
Hotel House Profit $1,105,227 $823,993 34.1%
Partnership Net Income (Loss) $126,928 $(92,053) *
* This percentage change is not relevant since the Partnership recognized net
income in 1996 compared to a net loss in 1995.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K -
On February 13, 1996, based upon, among other things, the advice of
Partnership counsel, Skadden, Arps, Slate, Meagher & Flom, the
General Partner adopted a resolution that states, among other things,
if a Change of Control (as defined below) occurs, the General Partner
may distribute the Partnership's cash balances not required for its
ordinary course day-to- day operations. "Change of Control" means
any purchase or offer to purchase more than 10% of the Units that is
not approved in advance by the General Partner. In determining the
amount of the distribution, the General Partner may take into account
all material factors. In addition, the Partnership will not be
obligated to make any distribution to any partner, and no partner
will be entitled to receive any distribution, until the General
Partner has declared the distribution and established a record date
and distribution date. The Partnership filed a Form 8-K disclosing
this resolution on February 26, 1996.
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.
MANHATTAN BEACH HOTEL PARTNERS, L.P.
BY: MANHATTAN BEACH COMMERCIAL PROPERTIES III INC.
General Partner
Date: May 13, 1996
BY: /s/ Jeffrey C. Carter
President, Director and
Chief Financial Officer