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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1998
[ ] Transition report under Section 13 or 15(d) of the
Exchange Act
For the transition period from ________ to ________
Commission file number 0-8901
CASA MUNRAS HOTEL PARTNERS, L.P.
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(Exact name of small business issuer as specified in its charter)
California 95-3235634
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5525 Oakdale Avenue, Suite 300, Woodland Hills, California 91364
(Address of principal executive offices)
(818) 888-6500
(Issuer's telephone number, including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
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Transitional Small Business Disclosure Format: Yes No X
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited financial statements of Casa Munras Hotel
Partners, L.P. have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB. Accordingly, these statements do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the General
Partners of the Registrant, all adjustments necessary for a fair presentation
have been included. The financial statements presented herein have been prepared
in accordance with the accounting policies described in the Registrant's Annual
Report on Form 10-KSB for the year ended December 31, 1997 and should be read in
connection therewith. The results of operations for the three and six month
periods ended June 30, 1998 are not necessarily indicative of the results to be
expected for the full year.
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CASA MUNRAS HOTEL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
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June 30, December 31,
1998 1997
(Unaudited)
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ASSETS
CURRENT ASSETS:
Cash $ 1,152,625 $ 367,327
Accounts receivable 71,025 55,151
Food and beverage inventories 16,579 15,908
Prepaid expenses 36,668 33,566
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Total current assets 1,276,897 471,952
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LAND, PROPERTY AND EQUIPMENT - at cost:
Building and improvements 4,793,731 4,793,731
Hotel furnishings and equipment 1,514,878 1,480,980
Restaurant furnishings and equipment 39,400 37,479
Construction in progress 1,183,719 143,435
Less accumulated depreciation (4,010,939) (3,849,939)
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3,520,789 2,605,686
Land 700,000 700,000
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Land, property and equipment - net 4,220,789 3,305,686
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OTHER ASSETS:
Liquor License 40,000 40,000
Loan commitment fees 196,095 172,667
Escrow impound accounts 66,550
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Total other assets 302,645 212,667
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TOTAL $ 5,800,331 $ 3,990,305
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LIABILITIES AND PARTNERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 432,086 $ 58,592
Accounts payable - related parties 46,040 34,712
Accrued incentive management fees - related parties 50,910 144,190
Accrued salaries and wages 46,150 45,923
Accrued room tax and other 66,427 32,937
Current portion of long-term debt 96,065 98,625
Distributions payable 90,000
Note payable - affiliate 366,210
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Total current liabilities 737,678 871,189
LONG-TERM DEBT 6,903,935 172,594
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Total liabilities 7,641,613 1,043,783
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PARTNERS' (DEFICIT) EQUITY:
General Partners (45 units issued and outstanding) (231,918) 29,467
Limited Partners (4,455 units issued and outstanding) (1,609,364) 2,917,055
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Total Partners' (deficit) equity (1,841,282) 2,946,522
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TOTAL $ 5,800,331 $ 3,990,305
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CASA MUNRAS HOTEL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
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Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
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REVENUES:
Room $ 925,229 $ 835,189 $1,470,072 $1,371,036
Food and beverage 180,816 175,898 307,308 297,741
Lease 22,586 23,084 45,679 42,526
Telephone 12,357 10,174 23,452 19,882
Other 5,235 5,316 9,596 14,154
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Total 1,146,223 1,049,661 1,856,107 1,745,339
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OPERATING EXPENSES:
Rooms 240,155 225,837 448,974 411,507
Food and beverage 157,174 154,210 290,816 283,291
Administrative and general 99,611 90,069 183,604 169,982
Management fees 91,711 82,349 124,026 118,150
Depreciation and amortization 83,000 87,000 161,000 174,000
Marketing 80,862 66,647 152,045 126,477
Repairs and maintenance 64,724 63,315 132,899 124,997
Interest 51,286 17,093 67,079 34,278
Energy cost 41,761 37,607 85,524 73,843
Partnership administration
and professional fees 16,680 21,100 48,502 57,183
Property taxes 15,793 16,464 31,648 31,586
Insurance 7,809 13,197 15,618 24,630
Telephone 6,705 4,989 11,012 9,868
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Total (including reimbursed
costs and payments for
services to related parties
of $275,743 and $158,890
and $462,165 and $327,704
for the three and six months
ended June 30, 1998 and 1997,
respectively) 957,271 879,877 1,752,747 1,639,792
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NET INCOME $ 188,952 $ 169,784 $ 103,360 $ 105,547
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CASA MUNRAS HOTEL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
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Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
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ALLOCATION OF NET INCOME:
General Partners $ 1,890 $ 1,698 $ 1,034 $ 1,055
Limited Partners (4,455 Limited
Partnership units outstanding) 187,062 168,086 102,326 104,492
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Total $ 188,952 $ 169,784 $ 103,360 $ 105,547
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DISTRIBUTION TO PARTNERS:
Distribution to Partners $4,675,500 $ 90,000 $4,675,500 $ 135,000
Special distribution of refinance
proceeds 215,644 215,644
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Total Distribution to Partners $4,891,144 $ 90,000 $4,891,144 $ 135,000
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PER UNIT INFORMATION (based upon 4,500
total units outstanding):
Net Income $ 41.99 $ 37.73 $ 22.97 $ 23.45
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Distribution $ 1,039.00 $ 20.00 $ 1,039.00 $ 30.00
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CASA MUNRAS HOTEL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
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1998 1997
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OPERATING ACTIVITIES:
Net income $ 103,360 $ 105,547
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 161,000 174,000
Change in assets and liabilities:
Accounts receivable (15,874) (15,991)
Food and beverage inventories (671) 4,258
Prepaid expenses (3,102) (3,737)
Account payable an accrued expenses 235,259 (25,977)
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Net cash provided by operating activities 479,972 238,100
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INVESTING ACTIVITIES:
Acquisition of property and equipment (1,076,103) (187,505)
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FINANCING ACTIVITIES:
Borrowings from affiliates 222,210 16,924
Payments on notes from affiliates (588,420)
Distributions paid to Partners (4,891,164) (216,000)
Long-term borrowings 7,250,000
Payment of long-term debt (521,219) (49,313)
Loan commitment fee (23,428)
Impound escrow accounts (66,550)
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Net cash (used in) provided by financing activities 1,381,429 (248,389)
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NET (DECREASE) INCREASE IN CASH 785,298 (197,794)
CASH AT BEGINNING OF PERIOD 367,327 569,371
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CASH AT END OF PERIOD $ 1,152,625 $ 371,577
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations for the Three and Six Months Ended June 30, 1998 and 1997
For the three and six months ended June 30, 1998 as compared to the same
period of the prior year, occupancy rates at the Registrant's hotel were 75% and
63% versus 72% and 61% and average room rates were $88.37 and $84.99 versus
$84.12 and $81.29, resulting in an increase in room revenue totaling $90,040 and
$99,036 for the three and six months ended June 30, 1998 as compared to the
comparable periods in 1997, respectively. Food and beverage revenues increased
$4,918 and $9,567 for the three and six months ended June 30, 1998 as compared
to 1997, respectively. The increase in room rates reflects management's decision
to charge more for rooms as a result of the capital improvements program. The
increase in occupancy is attributed to increased leisure travel in the second
quarter of 1998 as compared to 1997.
Operating expenses totaled $957,271 and $1,752,747 for the for the three
and six months ended June 30, 1998 as compared to $879,877 and $1,639,792 for
the three and six months ended June 30, 1997. The principal reason for the
increase in rooms, marketing and interest expenses is due to improved occupancy
with additional costs directly related to occupancy increases, additional
expenditures to promote the hotel, and increased interest expense as a result of
the new first mortgage, respectively.
Net income increased (decreased) $19,169 and $(2,187) to $188,952 and
$103,360 for the three and six months ended June 30, 1998 as compared to 1997,
respectively, principally due to increased revenue during the periods partially
offset by the increases in operating expenses described above.
Liquidity and Capital Resources
The Registrant's primary source of cash is revenues from the operation
and leasing of the hotel facility. The Registrant's primary uses of cash are to
fund hotel operating expenses, payments on the first mortgage, renovations and
to pay distributions to Partners.
During the six months ended June 30 1998, the Registrant generated
$479,972 in net cash provided by operating activities.
In June 1998, the Partnership obtained a First Mortgage payable for
$7,000,000 at 7.7% interest, secured by the Casa Munras, with a ten year term;
subject to certain conditions, the principal may be amortizable for 25 years.
Monthly principal and interest payments totaling $52,643 are due beginning
August 1, 1998. The terms and conditions of the loan also require that certain
amounts be held in escrow for property taxes, insurance and repairs, which
amounts are required to be deposited monthly.
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From the proceeds of the first mortgage payable of $7,000,000, the
Registrant paid loan fees of $196,095, notes payable to affiliates of $588,420,
the notes due the bank of $480,125, a distribution to the general and limited
partners totaling $4,891,164 and the balance of $844,195 to fund the
construction of the 14 additional guest rooms. The distribution paid from
refinancing proceeds includes $215,664 paid to the General Partners as their 25%
share of the refinancing proceeds in excess of the return to the general and
limited partners of their original investment plus a 12% per year return from
the Partnership inception (partial year pro-rated) less previous distributions
from the Partnerships inception paid to date.
The Partnership has substantially completed construction of the 14
additional guest rooms at an approximate cost of $1,185,000.
Acquisition of property and equipment during the six months ended June
30, 1998 totaled $1,076,103 ($1,040,283 related to the 14 additional guest
rooms). It is estimated that approximately $150,000 more will be expended in
1998 for ongoing renovations of existing assets.
The General Partners intend, to the extent cash is available upon
completion of the 14 additional guest rooms, upon repayment of current long-term
debt outstanding or other obligations under the first mortgage payable and after
necessary cash reserves are determined by the General Partners, to distribute
remaining cash to the Limited and General Partners in accordance with the
Partnership Agreement at amounts approximating the Registrant's net income.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.9 Fixed Rate Note dated June 12, 1998, executed by Casa Munras
Hotel Partners, L.P. and Amresco Capital, L.P..
27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
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SIGNATURE
In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CASA MUNRAS HOTEL PARTNERS, L.P.
By JOHN F. ROTHMAN
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John F. Rothman
General Partner
Dated: August 10, 1998
By RONALD A. YOUNG
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Ronald A. Young
General partner
Dated: August 10, 1998
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EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Description Page
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27 Financial Data Schedule
10.9 Fixed Rate Note dated June 12, 1998,
executed by Casa Munras Hotel Partners, L.P.
and Amresco Capital, L.P..