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, 1997
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 OrganizationI.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 1997
Assets
Property held for disposition $36,800,000 $36,800,000
Cash and cash equivalents 3,430,061 2,100,400
Restricted cash 500,270 413,229
Accounts receivable 1,240,004 1,386,303
Prepaid and other assets 398,988 382,225
Total Assets $42,369,323 $41,082,157
Liabilities and Partners' Capital
Liabilities:
Accounts payable
and accrued liabilities $ 1,576,939 $ 1,549,286
Due to affiliates 62,746 63,495
Total Liabilities 1,639,685 1,612,781
Partners' Capital (Deficit):
General Partner (374,465) (1,634,727)
Limited Partners (6,975,000
limited partnership units
authorized, issued and outstanding) 41,104,103 41,104,103
Total Partners' Capital 40,729,638 39,469,376
Total Liabilities and Partners' Capital $42,369,323 $41,082,157
Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1997
General Limited
Partner Partners
Total
Balance at December 31, 1996 $(1,634,727) $41,104,103 $39,469,376
Net income 1,260,262 _ 1,260,262
Balance at June 30, 1997 $(374,465) $41,104,103 $40,729,638
Statements of Operations Three months Six months
ended June 30, ended June 30,
1997 1996 1997 1996
Hotel Revenues
Rooms $2,739,809 $2,467,494 $5,337,426 $4,977,046
Food and beverage 1,501,054 1,210,081 2,625,456 2,281,997
Telephone 162,857 167,557 329,744 329,027
Other 88,567 46,886 164,060 86,729
Total Revenues 4,492,287 3,892,018 8,456,686 7,674,799
Departmental Expenses
Rooms 711,304 683,956 1,419,670 1,351,925
Food and beverage 1,058,029 941,300 1,991,978 1,844,311
Telephone 65,569 86,729 143,967 181,911
Other 20,129 12,136 38,584 22,898
Total Expenses 1,855,031 1,724,121 3,594,199 3,401,045
Departmental Income 2,637,256 2,167,897 4,862,487 4,273,754
Unallocated Partnership and
Hotel Operating Expenses
Advertising and sales 166,540 145,263 340,413 290,537
General and administrative:
Hotel and other 627,815 581,410 1,253,447 1,195,205
Partnership 125,337 135,123 277,570 260,568
Utilities and maintenance 285,264 281,621 556,334 555,583
Ground rent 209,892 184,474 399,879 365,252
Management fees 169,730 130,468 295,242 248,613
Property taxes 101,058 97,866 202,120 194,529
Operating leases 32,355 23,911 67,011 38,815
Depreciation and amortization _ 459,050 _ 908,623
Loss on real estate assets
held for disposition 106,981 _ 271,785 _
1,824,972 2,039,186 3,663,801 4,057,725
Operating Income 812,284 128,711 1,198,686 216,029
Other Income
Interest income 32,744 36,036 58,011 74,886
Other income 2,430 1,190 3,565 1,950
35,174 37,226 61,576 76,836
Net Income $847,458 $165,937 $1,260,262 $ 292,865
Net Income Allocated:
To the General Partner $847,458 $165,937 $1,260,262 $ 292,865
To the Limited Partners _ _ _ _
$847,458 $165,937 $1,260,262 $ 292,865
Net Income per limited
partnership unit
(6,975,000 outstanding) $ _ $ _ $ _ $ _
Statements of Cash Flows
For the six months ended June 30, 1997 1996
Cash Flows From Operating Activities:
Net income $1,260,262 $ 292,865
Adjustments to reconcile
net income to net cash
provided by operating activities:
Depreciation and amortization _ 908,623
Loss on real estate assets held for
disposition 271,785 _
Increase (decrease) in cash arising
from changes
in operating assets and liabilities:
Fundings of restricted cash (358,826) (378,032)
Accounts receivable 146,299 (487,967)
Prepaid and other assets (16,763) (196,049)
Accounts payable and accrued liabilities 27,653 (117,721)
Due to affiliates (749) 84,776
Net cash provided by operating
activities 1,329,661 106,495
Cash Flows From Investing Activities:
Proceeds from restricted cash 271,785 379,059
Additions to real estate (271,785) (379,059)
Net cash used for investing activities _ _
Cash Flows From Financing Activities:
Distributions _ (1,409,091)
Net cash used for financing activities _ (1,409,091)
Net increase (decrease) in
cash and cash equivalents
1,329,661 (1,302,596)
Cash and cash equivalents,
beginning of period 2,100,400 4,414,032
Cash and cash equivalents,
end of period $3,430,061 $3,111,436
Notes to the Financial Statements
The unaudited interim financial statements should be read in
conjunction with the Partnership's annual 1996 audited
financial statements within Form 10-K.
The unaudited interim financial statements include all normal
and reoccurring adjustments which are, in the opinion of
management, necessary to present a fair statement of financial
position as of June 30, 1997 and the results of operations for
the three and six months ended June 30, 1997 and 1996, cash
flows for the six months ended June 30, 1997 and 1996, and the
statement of partners' capital (deficit) for the six months
ended June 30, 1997. 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 1996, which require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5):
On March 20, 1997, the Partnership executed a letter of intent
to sell the Radisson Plaza Hotel and Golf Course (the "Hotel")
to a joint venture of Host Marriott Corporation and Interstate
Hotels Corporation for a cash purchase price of $38,250,000,
subject to closing adjustments (the "Marriott/Interstate
Sale"). Interstate Hotels Corporation currently manages the
Hotel and has done so with its wholly-owned subsidiary for more
than five years. On July 15, 1997, the Partnership executed a
formal purchase and sale contract with a partnership comprised
of affiliates of Host Marriott Corporation and Interstate
Hotels Corporation to sell the Hotel. It is currently
anticipated that the closing of the Marriott/Interstate Sale
will take place in August 1997, following the satisfaction of
certain requirements to closing.
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 1997 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 year is largely
attributable to the 12.6% increase in the Hotel's 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.
In view of the recently improved operating results of the Hotel
and the strengthening hotel market, the General Partner decided
to market the Hotel for sale during the fourth quarter of 1996.
The General Partner subsequently retained the services of
Eastdil Realty Company ("Eastdil"), a nationally-recognized
real estate firm, to market the Hotel for sale with the goal of
maximizing the selling price of the Hotel and ultimately
distributing the net sales proceeds to partners. On March 20,
1997, the Partnership executed a Letter of Intent to sell the
Hotel to a joint venture of Host Marriott Corporation and
Interstate Hotels Corporation for a cash purchase price of
$38,250,000, subject to closing adjustments (the
"Marriott/Interstate Sale"). Interstate Hotels Corporation
("Interstate") currently manages the Hotel and has done so with
its wholly-owned subsidiary for more than five years. On July
15, 1997, the Partnership executed a formal purchase and sale
contract with a partnership comprised of affiliates of Host
Marriott Corporation and Interstate Hotels Corporation to sell
the Hotel. It is currently anticipated that the closing of the
Marriott/Interstate Sale will take place in August 1997,
following the satisfaction of certain requirements to closing.
After consummating the Marriott/Interstate Sale, the General
Partner intends to make one or more liquidating distributions
to Partners. The General Partner currently estimates that the
distributable cash will be approximately $5.50 per Unit.
However, the final amount will be dependent on Hotel and
Partnership operations until closing, the timing of the
closing, closing adjustments and other factors, all of which
are uncertain at this time.
In view of the anticipated sale of the Hotel in 1997, the
Partnership's real estate has been recorded on the
Partnership's Balance Sheet as "Property held for disposition."
Property held for disposition at June 30, 1997 was $36,800,000.
At June 30, 1997, the Partnership had cash and cash equivalents
of $3,430,061, including cash held at the Hotel for working
capital, compared to $2,100,400 at December 31, 1996. The
increase is due to net cash provided by operating activities.
Such cash balances are expected to be sufficient to meet the
anticipated cash requirements for operations of the
Partnership. Pursuant to the management agreement for the
Hotel, contributions to the account for furniture, fixtures and
equipment ("FF&E reserve account") are to be made over time to
protect and maintain the value of the Hotel. Restricted cash
was $500,270 at June 30, 1997, compared to $413,229 at December
31, 1996. The increase is due to contributions to the FF&E
reserve account exceeding expenditures.
Accounts receivable decreased to $1,240,004 at June 30, 1997,
compared to $1,386,303 at December 31, 1996. Accounts payable
and accrued liabilities increased to $1,576,939 at June 30,
1997, compared to $1,549,286 at December 31, 1996. The changes
in accounts receivable and accounts payable and accrued
liabilities are due primarily to differences in the timing of
payments. Prepaid and other assets increased to $398,988 at
June 30, 1997, compared to $382,225 at December 31, 1996,
primarily due to
professional fees incurred in connection with the retention of
Eastdil, which were partially offset by a decrease in prepaid
inventory and other property expenses. Due to affiliates was
$62,746 at June 30, 1997, largely unchanged from $63,495 at
December 31, 1996.
Assuming the pending sale of the Hotel is consummated, the
General Partner intends to make one or more liquidating
distributions in 1997. Unless the Hotel is sold, the ability
of the Partnership to make future distributions is dependent
upon various factors, including the cash flow generated from
Hotel operations, the adequacy of cash reserves, and the
outcome of the Partnership's marketing efforts. There can be
no assurance that future cash flow will be sufficient to fund
any such distributions.
Results of Operations
For the three- and six-month periods ended June 30, 1997, the
Partnership had net income of $847,458 and $1,260,262,
respectively, compared with net income of $165,937 and
$292,865, respectively, for the three- and six-month periods
ended June 30, 1996. The increases are primarily due to increases in
Hotel revenues, comprised of rooms, food and beverage,
telephone and other departmental income, and also due to the
cessation of depreciation and amortization expenses.
For the three- and six-month periods ended June 30, 1997, the
Hotel generated departmental income of $2,637,256 and
$4,862,487, respectively, compared to $2,167,897 and
$4,273,754, respectively, for the three- and six-month periods
ended June 30, 1996. The increases in departmental income for the
1997 periods are due to increases in total Hotel revenues as a
result of higher room rates, and higher food and beverage and
other revenues, which were partially offset by increases in
departmental expenses.
For the three- and six-month periods ended June 30, 1997,
unallocated Partnership and Hotel operating expenses were
$1,824,972 and $3,663,801, respectively, compared to $2,039,186
and $4,057,725, respectively, for the corresponding periods in
1996. The 1996 balances include depreciation and amortization.
The decreases for the 1997 periods primarily are due to the
Hotel no longer being depreciated as a result of it being
reclassified as "Property held for disposition". These
decreases were partially offset by Loss on real estate assets
held for disposition, primarily due to FF&E additions being
expensed as a result of the reclassification of the
Partnership's real estate to "Property held for disposition".
To a lesser extent, the decreases in unallocated Partnership
and Hotel operating expenses were partially offset by increases
in advertising and sales expenses, Hotel and other general and
administrative expenses, ground rent and management fees.
Advertising and sales expense increased due to an increase in
administrative costs related to the advertising and sales
department. Hotel and other general and administrative
expenses increased primarily due to an increase in the
franchise fee, which is applied to the Hotel's total room
sales. Ground rent, which is based on total revenues,
increased due to higher total revenues for the 1997 periods.
Management fees increased due to higher gross sales on which
the Hotel manager, Interstate, receives a base percentage fee
and higher profits on which Interstate's incentive management
fee is based.
For the three-month period ended June 30, 1997, the Partnership
generated total other income of $35,174, largely unchanged from
$37,226 for the three-month period ended June 30, 1996. For
the six-month period ended June 30, 1997, the Partnership
generated total other income of $61,576, compared to $76,836 for the six-
month period ended June 30, 1996. The decrease for the
six-month period is due primarily to a decrease in interest
income as a result of lower cash balances being maintained by
the Partnership during 1997.
The following summarizes the Hotel's performance for the six-
month period ended June 30 of the indicated years:
1997 1996% Change
Average Occupancy 83.2% 86.4% (3.7%)
Average Room Rate $93.31 $82.89 12.6%
Hotel Sales $8,456,686 $7,674,799 10.2%
Hotel House Profit $2,740,125 $2,286,295 19.9%
Part II Other Information
Item 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, 1997.
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 14, 1997
BY: /s/ Jeffrey C. Carter
President, Director and
Chief Financial Officer