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, 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 June 30, At December 31,
1996 1995
Assets
Real estate, at cost:
Building $ 47,975,974 $ 47,975,974
Furniture, fixtures and equipment 3,002,886 2,623,827
Leasehold improvements 3,333,141 3,333,141
------------ ------------
54,312,001 53,932,942
Less accumulated depreciation and amortization (11,915,104) (11,006,481)
------------ ------------
42,396,897 42,926,461
Cash and cash equivalents 3,111,436 4,414,032
Restricted cash 186,437 187,464
Accounts receivable 1,480,908 992,941
Prepaid and other assets 570,353 374,304
------------ ------------
Total Assets $ 47,746,031 $ 48,895,202
============ ============
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued liabilities $ 1,191,951 $ 1,309,672
Due to affiliates 2,484,914 2,400,138
Distribution payable 0 1,409,091
------------ ------------
Total Liabilities 3,676,865 5,118,901
------------ ------------
Partners' Capital (Deficit):
General Partner (1,298,793) (1,591,658)
Limited Partners (6,975,000 limited
partnership units authorized, issued
and outstanding) 45,367,959 45,367,959
------------ ------------
Total Partners' Capital 44,069,166 43,776,301
------------ ------------
Total Liabilities and Partners' Capital $ 47,746,031 $ 48,895,202
============ ============
Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1996
Limited General
Partners Partner Total
Balance at December 31, 1995 $ 45,367,959 $ (1,591,658) $ 43,776,301
Net income 0 292,865 292,865
------------ ------------ ------------
Balance at June 30, 1996 $ 45,367,959 $ (1,298,793) $ 44,069,166
============ ============ ============
Statements of Operations
Three months Six months
ended June 30, ended June 30,
1996 1995 1996 1995
Hotel Revenues Rooms $ 2,467,494 $ 2,161,893 $ 4,977,046 $ 4,293,424
Food and beverage 1,210,081 1,139,027 2,281,997 2,109,554
Telephone 167,557 162,464 329,027 317,906
Other 46,886 29,537 86,729 60,957
----------- ----------- ----------- -----------
Total Revenues 3,892,018 3,492,921 7,674,799 6,781,841
Departmental Expenses
Rooms 683,956 606,859 1,351,925 1,227,590
Food and beverage 941,300 895,657 1,844,311 1,770,757
Telephone 86,729 82,907 181,911 162,444
Other 12,136 10,746 22,898 20,748
----------- ----------- ----------- -----------
Total Expenses 1,724,121 1,596,169 3,401,045 3,181,539
----------- ----------- ----------- -----------
Departmental Income 2,167,897 1,896,752 4,273,754 3,600,302
----------- ----------- ----------- -----------
Unallocated Partnership and
Hotel Operating Expenses
Advertising and sales 145,263 132,308 290,537 277,253
General and administrative:
Hotel and other 581,410 511,113 1,195,205 997,426
Partnership 135,123 159,371 260,568 277,185
Utilities and maintenance 281,621 298,039 555,583 576,272
Ground rent 184,474 160,124 365,252 315,111
Management fees 130,468 104,476 248,613 190,166
Property taxes 97,866 89,111 194,529 187,622
Operating leases 23,911 36,786 38,815 74,002
Depreciation and amortization 459,050 434,196 908,623 860,299
----------- ----------- ----------- -----------
2,039,186 1,925,524 4,057,725 3,755,336
----------- ----------- ----------- -----------
Operating Income (Loss) 128,711 (28,772) 216,029 (155,034)
----------- ----------- ----------- -----------
Other Income
Interest income 36,036 40,395 74,886 73,904
Other income 1,190 2,813 1,950 3,513
----------- ----------- ----------- -----------
37,226 43,208 76,836 77,417
----------- ----------- ----------- -----------
Net Income (Loss) $ 165,937 $ 14,436 $ 292,865 $ (77,617)
=========== =========== =========== ===========
Net Income (Loss) Allocated:
To the General Partner $ 165,937 $ 2,165 $ 292,865 $ (11,643)
To the Limited Partners 0 12,271 0 (65,974)
----------- ----------- ----------- -----------
$ 165,937 $ 14,436 $ 292,865 $ (77,617)
=========== =========== =========== ===========
Per limited partnership unit
(6,975,000 outstanding) $.00 $.01 $.00 $(.01)
----------- ----------- ----------- -----------
Statements of Cash Flows
For the six months ended June 30, 1996 1995
Cash Flows From Operating Activities:
Net income (loss) $ 292,865 $ (77,617)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 908,623 860,299
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Restricted cash (378,032) (287,481)
Accounts receivable (487,967) 18,790
Prepaid and other assets (196,049) 21,000
Accounts payable and accrued liabilities (117,721) 98,235
Due to affiliates 84,776 123,659
----------- -----------
Net cash provided by operating activities 106,495 756,885
----------- -----------
Cash Flows From Investing Activities:
Proceeds from restricted cash 379,059 323,725
Additions to real estate (379,059) (323,725)
----------- -----------
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 (1,302,596) 756,885
Cash and cash equivalents, beginning of period 4,414,032 2,797,178
----------- -----------
Cash and cash equivalents, end of period $ 3,111,436 $ 3,554,063
=========== ===========
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 June 30, 1996 and the results of operations and cash flows for
the six months ended June 30, 1996 and 1995 and the statement of partner's
capital (deficit) for the six months ended June 30, 1996. Results of
operations for the periods are not necessarily indicative of the results to be
expected for the full year.
The following significant event has occurred subsequent to fiscal year 1995,
which requires disclosure in this interim report per Regulation S-X, Rule
10-01, Paragraph (a)(5):
A lawsuit related to the replacement of the telephone system at the Radisson
Plaza Hotel and Golf Course ("the Property"), entitled Communication Facility
Management Corporation ("CFMC") vs. Manhattan Beach Hotel Partners, L.P., et
al, was filed in June 1990 in Los Angeles Superior Court (the "Court"), naming
the Partnership, among others, as a defendant. On November 7, 1994, the Court
executed a formal dismissal order. CFMC subsequently filed a motion to vacate
the dismissal which was denied by the Court on February 28, 1995. On
February 16, 1996, CFMC filed an application with the Court for an extension
to file an appellant's opening brief. The Court granted the extension and CFMC
had until April 10, 1996 to file an opening brief to appeal the suit. This
matter has been successfully concluded since CFMC permitted the time period for
the filing of the opening brief to expire.
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 half 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 half of
the year, as compared with the same period in 1995, is largely attributable to
the 7.0% increase in the Hotel's average occupancy level and the 7.7% 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 June 30, 1996, Manhattan Beach Hotel Partners, L.P. (the "Partnership") had
cash and cash equivalents of $3,111,436, including cash held at the Property
for working capital. Cash decreased by $1,302,596 from December 31, 1995,
primarily due to the distribution paid to limited partners on February 1, 1996.
Such cash balances are expected to be sufficient to meet the anticipated cash
requirements for operations of the Partnership. Restricted cash was $186,437 at
June 30, 1996, largely unchanged from $187,464 at December 31, 1995. The
slight decrease during 1996 is due to expenditures exceeding contributions to
the reserve for the six-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 $1,480,908 at June 30, 1996, compared to
$992,941 at December 31, 1995. Accounts payable and accrued liabilities
decreased to $1,191,951 at June 30, 1996, compared to $1,309,672 at
December 31, 1995. The changes in both accounts receivable and accounts
payable and accrued liabilities are due primarily to differences in the timing
of payments. Prepaid and other assets increased to $570,353 at June 30, 1996
from $374,304 at December 31, 1995, primarily due to the prepayment of property
liability insurance. Due to affiliates increased to $2,484,914 at
June 30, 1996 from $2,400,138 at December 31, 1995, primarily due to the
accrual of property management oversight fees for the first half of 1996.
A distribution in the amount of $1,395,000 or $.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 June 30, 1996, the Partnership had net income
of $165,937, compared with net income of $14,436 for the three-month period
ended June 30, 1995. For the six- month period ended June 30, 1996,
the Partnership had net income of $292,865, compared to a net loss of $77,617
for the six-month period ended June 30, 1995. The improvement for the 1996
periods is due primarily to an increase in all Hotel Revenues, comprised of
rooms, food and beverage, telephone and other departmental income, which was
partially offset by an increase in unallocated Hotel and Partnership
operating expenses including depreciation.
For the three and six-month periods ended June 30, 1996, the Hotel generated
departmental income of $2,167,897 and $4,273,754, respectively, compared to
$1,896,752 and $3,600,302 for the three and six-month periods ended June 30,
1995. The increase in departmental income for the 1996 periods 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 an increase in departmental expenses.
For the three and six-month periods ended June 30, 1996, unallocated
Partnership and Hotel operating expenses, including depreciation, were
$2,039,186 and $4,057,725, respectively, compared to $1,925,524 and $3,755,336,
respectively, for the corresponding periods in 1995. The increases are due
primarily to higher Hotel general and administrative expenses in 1996 compared
to 1995. Also contributing to the increases were higher management fees,
ground rent, property insurance premiums, advertising and sales expenses and
depreciation and amortization. Management fees increased due to higher gross
sales on which Interstate 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. Depreciation increased due to an increase in capitalized personal
property. These increases were partially offset by decreases in Partnership
general and administrative expenses, utilities and maintenance costs and
operating leases.
For the three and six-month periods ended June 30, 1996, the Partnership
generated total other income of $37,226, and $76,836, respectively, largely
unchanged from $43,208 and $77,417, respectively, for the three and six-month
periods ended June 30, 1995.
The following summarizes the Hotel's performance for the six-month period ended
June 30 of the indicated years:
1996 1995 % Change
Average Occupancy 86.6% 80.9% 7.0%
Average Room Rate $83.08 $77.13 7.7%
Hotel Sales $7,674,799 $6,781,841 13.2%
Hotel House Profit $2,286,295 $1,805,650 26.6%
Part II Other Information
Item 1 Legal Proceedings.
A lawsuit related to the replacement of the telephone system at the
Property entitled Communication Facility Management Corporation vs.
Manhattan Beach Hotel Partners, L.P., et al, was filed in June 1990
in Los Angeles Superior Court, naming the Partnership, among others,
as a defendant. On November 7, 1994, the Court executed a formal
dismissal order. CFMC subsequently filed a motion to vacate the
dismissal which was denied by the Court on February 28, 1995. On
February 16, 1996, CFMC filed an application with the Court for an
extension to file an appellant's opening brief. The Court granted
the extension and CFMC had until April 10, 1996 to file an opening
brief to appeal the suit. This matter has been successfully concluded
since CFMC permitted the time period for the filing of the opening
brief to expire.
Items 2-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K- No reports on Form 8- K were filed during
the quarter ended June 30, 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: August 13, 1996
BY: /s/ Jeffrey C. Carter
---------------------
President, Director and Chief
Financial Officer