1
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 September 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.
(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 [ ]
Transitional Small Business Disclosure Format: Yes [ ] No [X]
2
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 nine month
periods ended September 30, 1998 are not necessarily indicative of the results
to be expected for the full year.
1
3
CASA MUNRAS HOTEL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
September 30, December 31,
1998 1997
(Unaudited)
----------- -----------
ASSETS
CURRENT ASSETS:
Cash $ 1,238,891 $ 367,327
Accounts receivable 156,689 55,151
Food and beverage inventories 15,844 15,908
Prepaid expenses 40,808 33,566
----------- -----------
Total current assets 1,452,232 471,952
----------- -----------
LAND, PROPERTY AND EQUIPMENT - at cost:
Building and improvements 5,821,036 4,793,731
Hotel furnishings and equipment 1,661,527 1,480,980
Restaurant furnishings and equipment 51,058 37,479
Construction in progress -- 143,435
Less accumulated depreciation (4,103,939) (3,849,939)
----------- -----------
3,429,682 2,605,686
Land 700,000 700,000
----------- -----------
Land, property and equipment - net 4,129,682 3,305,686
----------- -----------
OTHER ASSETS:
Liquor License 40,000 40,000
Loan commitment fees 191,193 172,667
Escrow impound accounts 175,601
----------- -----------
Total other assets 406,794 212,667
----------- -----------
TOTAL $ 5,988,708 $ 3,990,305
=========== ===========
LIABILITIES AND PARTNERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 168,312 $ 58,592
Accounts payable - related parties 70,973 34,712
Accrued incentive management fees - related parties 137,615 144,190
Accrued salaries and wages 50,520 45,923
Accrued room tax and other 75,209 32,937
Current portion of long-term debt 97,926 98,625
Distributions payable 90,000
Note payable - affiliate 366,210
----------- -----------
Total current liabilities 600,555 871,189
LONG-TERM DEBT 6,878,745 172,594
----------- -----------
Total liabilities 7,479,300 1,043,783
----------- -----------
PARTNERS' (DEFICIT) EQUITY:
General Partners (45 units issued and outstanding) (228,412) 29,467
Limited Partners (4,455 units issued and outstanding) (1,262,180) 2,917,055
----------- -----------
Total Partners' (deficit) equity (1,490,592) 2,946,522
----------- -----------
TOTAL $ 5,988,708 $ 3,990,305
=========== ===========
2
4
CASA MUNRAS HOTEL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
REVENUES:
Room $1,302,842 $1,174,146 $2,772,914 $2,545,182
Food and beverage 180,250 173,823 487,558 471,564
Lease 23,006 24,060 68,685 66,586
Telephone 13,637 13,817 37,089 33,699
Other 23,176 6,690 32,772 20,844
---------- ---------- ---------- ----------
Total 1,542,911 1,392,536 3,399,018 3,137,875
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Rooms 276,851 254,651 725,825 666,158
Food and beverage 158,358 142,976 449,174 426,267
Administrative and general 105,025 99,220 288,629 269,202
Management fees 147,092 129,861 271,118 248,011
Depreciation and amortization 97,902 87,000 258,902 261,000
Marketing 74,742 73,730 226,787 200,207
Repairs and maintenance 69,882 61,759 202,781 186,756
Interest 134,601 16,783 201,680 51,061
Energy cost 38,495 39,011 124,019 112,854
Partnership administration
and professional fees 55,264 7,371 103,766 64,554
Property taxes 20,179 19,430 51,827 51,016
Insurance 7,809 12,315 23,427 36,945
Telephone 6,021 7,721 17,033 17,589
---------- ---------- ---------- ----------
Total (including reimbursed
costs and payments for
services to related parties
of $394,602 and $204,100
and $841,767 and $538,908
for the three and nine months
ended September 30, 1998 and
1997, respectively) 1,192,221 951,828 2,944,968 2,591,620
---------- ---------- ---------- ----------
NET INCOME $ 350,690 $ 440,708 $ 454,050 $ 546,255
========== ========== ========== ==========
3
5
CASA MUNRAS HOTEL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
ALLOCATION OF NET INCOME:
General Partners $ 3,507 $ 4,407 $ 4,540 $ 5,463
Limited Partners (4,455 Limited
Partnership units outstanding) 347,183 436,301 449,510 540,792
---------- ---------- ---------- ----------
Total $ 350,690 $ 440,708 $ 454,050 $ 546,255
========== ========== ========== ==========
DISTRIBUTION TO PARTNERS:
Distribution to Partners -- $ 315,000 $4,675,500 $ 450,000
Special distribution of refinance proceeds -- -- 215,664 --
---------- ---------- ---------- ----------
Total Distribution to Partners $ 0 $ 315,000 $4,891,164 $ 450,000
========== ========== ========== ==========
PER UNIT INFORMATION
(based upon 4,500 total
units outstanding):
Net Income $ 77.93 $ 97.94 $ 100.90 $ 121.39
========== ========== ========== ==========
Distribution $ 0.00 $ 70.00 $ 1,039.00 $ 100.00
========== ========== ========== ==========
4
6
CASA MUNRAS HOTEL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
----------- -----------
OPERATING ACTIVITIES:
Net income $ 454,050 $ 546,255
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 258,902 261,000
Change in assets and liabilities:
Accounts receivable (101,538) (114,413)
Food and beverage inventories 64 5,268
Prepaid expenses (7,242) 3,208
Accounts payable and accrued expenses 186,275 57,946
----------- -----------
Net cash provided by operating activities 790,511 759,264
----------- -----------
INVESTING ACTIVITIES:
Acquisition of property and equipment (1,077,996) (274,124)
----------- -----------
FINANCING ACTIVITIES:
Borrowings from affiliates 222,210 25,708
Payments on notes from affiliates (588,420)
Distributions paid to Partners (4,981,164) (306,000)
Long-term borrowings 7,250,000
Payment of long-term debt (544,548) (73,969)
Loan commitment fee (23,428) (17,000)
Impound escrow accounts (175,601)
----------- -----------
Net cash provided by (used in) financing activities 1,159,049 (371,261)
----------- -----------
NET INCREASE IN CASH 871,564 113,879
CASH AT BEGINNING OF PERIOD 367,327 569,371
----------- -----------
CASH AT END OF PERIOD $ 1,238,891 $ 683,250
=========== ===========
5
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations for the Three and Nine Months Ended September 30, 1998 and
1997
For the three and nine months ended September 30, 1998 as compared to
the same period of the prior year, occupancy rates at the Registrant's hotel
were 83% and 70% versus 85% and 69% and average room rates were $103.38 and
$92.74 versus $98.49 and $88.41, resulting in an increase in room revenue
totaling $128,696 and $227,732 for the three and nine months ended September 30,
1998 as compared to the comparable periods in 1997, respectively. Food and
beverage revenues increased $6,427 and $15,994 for the three and nine months
ended September 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 and third quarters of 1998 as compared to
1997.
Operating expenses totaled $1,192,221 and $2,944,968 for the for the
three and nine months ended September 30, 1998 as compared to $951,828 and
$2,591,620 for the three and nine months ended September 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 decreased $90,018 and $92,205 to $350,690 and $454,050 for
the three and nine months ended September 30, 1998 as compared to 1997,
respectively, principally due to the increases in operating expenses described
above, partially offset by increased revenue during the periods.
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 nine months ended September 30 1998, the Registrant
generated $790,511 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
6
8
are required to be deposited monthly.
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 $1,163,000.
Acquisition of property and equipment during the nine months ended
September 30, 1998 totaled $1,077,996 ($1,020,275 related to the 14 additional
guest rooms). It is estimated that approximately $25,000 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:
27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
7
9
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 /s/ JOHN F. ROTHMAN
---------------------------------
John F. Rothman
General Partner
Dated: November 11, 1998
By /s/ RONALD A. YOUNG
---------------------------------
Ronald A. Young
General Partner
Dated: November 11, 1998
8
10
EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ------------
27 Financial Data Schedule