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: 0-10223
HUTTON/CONAM REALTY INVESTORS 81
Exact Name of Registrant as Specified in its Charter
California 13-3069026
State or Other Jurisdiction
of Incorporation or Organization I.R.S. Employer Identification No.
3 World Financial Center, 29th Floor, 10285
New York, NY Attn: Andre Anderson Zip Code
Address of Principal Executive Offices
(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 At June 30, At December 31,
1996 1995
Assets
Investments in real estate:
Land $3,944,195 $3,944,195
Buildings and improvements 21,299,382 21,299,382
25,243,577 25,243,577
Less accumulated depreciation (11,796,283) (11,370,295)
13,447,294 13,873,282
Cash and cash equivalents 1,502,094 1,499,119
Restricted cash 388,935 394,147
Mortgage fees, net of accumulated amortization
of $240,558 in 1996 and $209,153 in 1995 199,114 230,519
Other assets 6,236 24,946
Total Assets $15,543,673 $16,022,013
Liabilities and Partners' Capital
Liabilities:
Mortgage payable $11,893,417 $11,954,188
Distribution payable 173,978 173,978
Accounts payable and accrued expenses 203,822 210,876
Security deposits 82,327 77,433
Due to general partners and affiliates 27,182 30,138
Total Liabilities 12,380,726 12,446,613
Partners' Capital (Deficit):
General Partners (223,654) (188,213)
Limited Partners 3,386,601 3,763,613
Total Partners' Capital 3,162,947 3,575,400
Total Liabilities and Partners' Capital $15,543,673 $16,022,013
Consolidated Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1996
Limited General
Partners Partners Total
Balance at January 1, 1996 $3,763,613 $(188,213) $3,575,400
Net loss (63,852) (645) (64,497)
Distributions (313,160) (34,796) (347,956)
Balance at June 30, 1996 $3,386,601 $(223,654) $3,162,947
Consolidated Statements of Operations
Three months ended June 30, Six months ended June 30,
1996 1995 1996 1995
Income
Rental $921,287 $1,203,702 $1,842,392 $2,432,492
Interest 18,109 24,506 33,989 48,313
Total Income 939,396 1,228,208 1,876,381 2,480,805
Expenses
Property operating $414,526 $657,315 $880,696 $1,247,729
Interest 251,983 329,307 504,606 659,374
Depreciation and amortization 228,696 306,552 457,393 613,101
General and administrative 51,543 43,431 98,183 82,203
Total Expenses 946,748 1,336,605 1,940,878 2,602,407
Net Loss $(7,352) $(108,397) $(64,497) $(121,602)
Net Loss Allocated:
To the General Partners $ (74) $(1,084) $ (645) $(1,216)
To the Limited Partners (7,278) (107,313) (63,852) (120,386)
$(7,352) $(108,397) $(64,497) $(121,602)
Per limited partnership unit
(78,290 outstanding) $(.09) $(1.37) $(.82) $(1.54)
Consolidated Statements of Cash Flows
For the six months ended June 30, 1996 1995
Cash Flows From Operating Activities:
Net loss $(64,497) $(121,602)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 457,393 613,101
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Fundings to restricted cash (225,961) (319,266)
Release of restricted cash to property operations 231,173 394,030
Other assets 18,710 30,791
Accounts payable and accrued expenses (7,054) 45,136
Security deposits 4,894 (16,285)
Due to general partners and affiliates (2,956) 591
Net cash provided by operating activities 411,702 626,496
Cash Flows From Financing Activities:
Distributions (347,956) (347,956)
Mortgage principal payments (60,771) (72,089)
Net cash used for financing activities (408,727) (420,045)
Net increase in cash and cash equivalents 2,975 206,451
Cash and cash equivalents, beginning of period 1,499,119 1,535,391
Cash and cash equivalents, end of period $1,502,094 $1,741,842
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $504,606 $659,374
Notes to the Consolidated Financial Statements
The unaudited interim consolidated financial statements should be
read in conjunction with the Partnership's annual 1995 audited
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, 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 period are not necessarily indicative of the
results to be expected for the full year.
No significant events have occurred subsequent to fiscal year
1995, and no material contingencies exist which 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
At June 30, 1996, the Partnership had cash and cash equivalents
of $1,502,094, which were invested in unaffiliated money market
funds, relatively unchanged from the balance at December 31, 1995.
The Partnership also maintains a restricted cash balance,
which totaled $388,935 at June 30, 1996, representing escrows for
insurance, real estate taxes, and property replacements and
repairs, required under the terms of the current mortgage loans.
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 Partnership expects
sufficient cash to be generated from operations to meet its
current operating expenses and debt service requirements.
The General Partners continue to perform various improvements at
the properties. These improvements include landscaping work at
Tierra Catalina and roof repairs at Las Colinas as well as
interior repairs at both properties. The improvements are
currently underway and are expected to be finished by the end of
the year.
The General Partners declared a cash distribution of $2.00 per
Unit for the quarter ended June 30, 1996 which will be paid to
investors on or about August 15, 1996. The level of future
distributions will be evaluated on a quarterly basis and will
depend on the Partnership's operating results and future cash
needs.
Given favorable market conditions in the Tulsa, Oklahoma area the
General Partners have engaged a commercial real estate broker to
market Ridge Park for sale. There can be no assurances that a
sale will be completed or that any particular price for the
property will be obtained. In the event that a sale is not
consummated, the Partnership will continue to hold the property
as an investment.
Results of Operations
Partnership operations for the three and six months ended
June 30, 1996, resulted in net losses of $7,352 and $64,497,
respectively, compared with net losses of $108,397 and $121,602,
respectively, for the same periods in 1995. The decrease in net
loss is due primarily to a decrease in property operating
expenses, interest expense, and depreciation and amortization
expense, partially offset by a decrease in rental income
resulting from the sale of Kingston Village and Cedar Bay Village
in July 1995. Net cash provided by operating activities was
$411,702 for the six months ended June 30,1996, compared to
$626,496, for the same period in 1995. The decreases in net cash
provided by operating activities from the 1995 to 1996 period is
primarily due to the decrease in the release of restricted cash
to property operations, and the sale of Kingston Village and
Cedar Bay Village.
Rental income for the three and six months ended June 30, 1996
was $921,287 and $1,842,392, respectively, compared with
$1,203,702 and $2,432,492 for the same periods in 1995. The
decreases reflect the sale of Kingston Village and Cedar Bay
Village and a decline in occupancy at Tierra Catalina, partially
offset by increases in rental income at Las Colinas and Ridge
Park as a result of increased rental rates.
Property operating expenses were lower for the three and six
months ended June 30, 1996 compared to the same periods in 1995
due to the July 1995 sale of Kingston Village and Cedar Bay
Village. The decreases for each period were partially offset by
increases in repairs and maintenance expenses at Las Colinas
primarily due to asphalt repairs. Interest expense and
depreciation and amortization also declined primarily due to the
sale of the two properties. During the six months ended June 30,
1996 and 1995, average occupancy levels at each of the properties
were as follows:
Property 1996 1995
Las Colinas I & II 96% 93%
Ridge Park 95% 96%
Tierra Catalina 89% 93%
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 - 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.
HUTTON/CONAM REALTY INVESTORS 81
BY: RI81 REAL ESTATE SERVICES INC.
General Partner
Date: August 13, 1996 BY: /s/ Paul L. Abbott
Director, President, Chief
Executive Officer and Chief
Financial Officer