UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 2001
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 000-16757
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CONCORD MILESTONE PLUS, L.P.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 52-1494615
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
150 EAST PALMETTO PARK ROAD
4TH FLOOR
BOCA RATON, FLORIDA 33432
- ---------------------------------------- ------------
(Address of Principal Executive Offices) (Zip Code)
(561) 394-9260
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Registrant's Telephone Number, Including Area Code
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Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
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
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
JUNE 30, 2001 (UNAUDITED) AND DECEMBER 31, 2000
Assets: June 30, 2001 December 31, 2000
Property: ------------- -----------------
Building and improvements, at cost 16,049,595 $15,911,310
Less: accumulated depreciation 7,506,581 7,201,754
---------- ----------
Building and improvements, net 8,543,014 8,709,556
Land, at cost 10,987,034 10,987,034
---------- ----------
Property, net 19,530,048 19,696,590
Cash and cash equivalents 603,742 625,426
Accounts receivable and other assets 332,805 317,865
Restricted cash 247,818 230,189
Debt financing costs, net 195,836 211,503
---------- ----------
Total assets $20,910,249 $21,081,573
=========== ==========
Liabilities:
Mortgage loans payable 16,022,148 $16,130,734
Accrued interest 109,023 113,424
Deposits 86,626 87,266
Accrued expenses and other liabilities 185,795 159,147
Accrued expenses payable to affiliates 38,653 62,754
---------- -----------
Total liabilities 16,442,245 16,553,325
---------- -----------
Commitments and Contingencies
Partners' capital:
General partner (77,884) (77,282)
Limited partners:
Class A Interests, 1,518,800 4,545,888 4,605,530
Class B Interests, 2,111,072 - -
----------- ----------
Total partners' capital 4,468,004 4,528,248
----------- -----------
Total liabilities and partners' capital $20,910,249 $21,081,573
========== ==========
See Accompanying Notes to Financial Statements
2
CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF REVENUES AND EXPENSES
(UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000
June 30, 2001 June 30,2000
------------- ------------
Revenues:
Rent $683,122 $656,012
Reimbursed expenses 139,009 75,634
Interest and other income 5,665 6,315
-------- --------
Total revenues 827,796 737,961
------- --------
Expenses:
Interest expense 331,067 339,070
Depreciation and amortization 163,945 160,156
Management and property expenses 284,537 224,953
Administrative and management fees to related party 51,336 50,449
Professional and service fees 39,076 25,735
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Total expenses 869,961 800,363
-------- --------
Net loss $(42,165) $(62,402)
====== =======
Net loss attributable to:
Limited partners $(41,744) $(61,778)
General partner (421) (624)
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Net loss $(42,165) $(62,402)
======= =======
Loss per weighted average
Limited Partnership 100 Class A
Interests outstanding, basic & diluted $ (2.78) $ (4.11)
========= =========
Weighted average number of 100
Class A interests outstanding 15,188 15,188
======== =========
See Accompanying Notes to Financial Statements
3
CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF REVENUES AND EXPENSES
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
June 30, 2001 June 30, 2000
------------- -------------
Revenues:
Rent $1,344,764 $1,287,625
Reimbursed expenses 239,049 185,923
Interest and other income 17,595 12,219
--------- ----------
Total revenues 1,601,408 1,485,767
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Expenses:
Interest expense 659,656 671,741
Depreciation and amortization 324,286 316,365
Management and property expenses 520,072 441,062
Administrative and management fees to related party 101,265 98,340
Professional and service fees 56,373 43,592
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Total expenses 1,661,652 1,571,100
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Net loss $(60,244) $(85,333)
======= =======
Net loss attributable to:
Limited partners $(59,642) $(84,480)
General partner (602) (853)
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Net loss $(60,244) $(85,333)
======= =======
Loss per weighted average
Limited Partnership 100 Class A
Interests outstanding, basic & diluted $ (3.97) $ (5.62)
======== =========
Weighted average number of 100
Class A interests outstanding 15,188 15,188
========= =========
See Accompanying Notes to Financial Statements
4
CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2001
General Class A Class B
Total Partner Interests Interests
------- -------- ---------- ----------
PARTNERS' CAPITAL (DEFICIT)
January 1, 2001 $4,528,248 $(77,282) $4,605,530 $0
Net Loss (60,244) (602) (59,642) 0
--------- ---------- ---------- ------
PARTNERS' CAPITAL (DEFICIT)
June 30, 2001 $4,468,004 $ (77,884) $4,545,888 $0
========= ======== ========= ======
See Accompanying Notes to Financial Statements
5
CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
June 30, 2001 June 30, 2000
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(60,244) $(85,333)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 323,606 316,365
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable and other assets (18,052) 21,739
Decrease in accrued interest (4,401) (4,360)
Increase (decrease) in accrued expenses and other liabilities 26,008 (1,436)
(Decrease) increase in accrued expenses payable to affiliates (24,101) 6,366
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Net cash provided by operating activities 242,816 253,341
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CASH FLOWS FROM INVESTING ACTIVITIES:
Property improvements (138,285) (147,552)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in restricted cash (17,629) (2,996)
Principal repayments on mortgage loans payable (108,586) (96,536)
-------- --------
Net cash used in financing activities (126,215) (99,532)
-------- ---------
NET (DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS (21,684) 6,257
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 625,426 561,737
--------- --------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $603,742 $567,994
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for interest $664,057 $676,101
======= =======
See Accompanying Notes to Financial Statements
6
INDEPENDENT ACCOUNTANTS' REPORT
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To the Board of Directors of
Concord Milestone Plus, L.P.
We have reviewed the accompanying balance sheet of Concord Milestone Plus, L.P.
(the "Partnership") as of June 30, 2001, and the related statements of revenues
and expenses, changes in partners' capital, and cash flows for the three month
and six month periods then ended. These financial statements are the
responsibility of the management of the Partnership.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying June 30, 2001 financial statements for them to be in
conformity with generally accepted accounting principles.
/s/ Ahearn, Jasco + Company, P.A.
AHEARN, JASCO + COMPANY, P.A.
Certified Public Accountants
Pompano Beach, Florida
August 3, 2001
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CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2001
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. The
financial statements as of and for the periods ended June 30, 2001 and 2000 are
unaudited. The financial statements for the periods ended June 30, 2001 and 2000
have been reviewed by an independent public accountant pursuant to Rule 10-01(d)
of Regulation S-X and following applicable standards for conducting such
reviews, and the report of the accountant is included as part of this filing.
The results of operations for the interim periods shown in this report are not
necessarily indicative of the results of operations for the fiscal year. Certain
information for 2000 has been reclassified to conform to the 2001 presentation.
These interim financial statements should be read in conjunction with the annual
financial statements and footnotes included in the Partnership's financial
statements filed on Form 10-K for the year ended December 31, 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
This Form 10-Q and documents incorporated herein by reference, if any,
contain forward-looking statements that have been made within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking statements are
based on current expectations, estimates and projections about the Partnership's
(as defined below) industry, management beliefs, and certain assumptions made by
the Partnership's management and involve known and unknown risks, uncertainties
and other factors. Such factors include the following: general economic and
business conditions, which will, among other things, affect the demand for
retail space or retail goods, availability and creditworthiness of prospective
tenants, lease rents and the terms and availability of financing; risks of real
estate development and acquisition; governmental actions and initiatives; and
environmental and safety requirements. These statements are not guarantees of
future performance and are subject to certain risks, uncertainties and
assumptions that are difficult to predict; therefore, actual results may differ
materially from those expressed or forecasted in any such forward-looking
statements.
8
ORGANIZATION AND CAPITALIZATION
Concord Milestone Plus, L.P., a Delaware limited partnership (the
"Partnership"), was formed on December 12, 1986, for the purpose of investing in
existing income_producing commercial and industrial real estate. The Partnership
began operations on August 20, 1987, and currently owns and operates three
shopping centers located in Searcy, Arkansas; Valencia, California; and Green
Valley, Arizona.
The Partnership commenced a public offering on April 8, 1987 in order to
fund the Partnership's real property acquisitions. The Partnership terminated
its public offering on April 2, 1988 and was fully subscribed to with a total of
16,452 Bond Units and 15,188 Equity Units issued. Each Bond Unit consisted of
$1,000 principal amount of Bonds and 36 Class B Interests. The Partnership
redeemed all of the outstanding Bonds as of September 30, 1997 with the proceeds
of three new fixed rate mortgage loans. Each Equity Unit consists of 100 Class A
Interests and 100 Class B Interests. Capital contributions to the Partnership
consisted of $15,187,840 from the sale of the Equity Units and $592,272 which
represent the Class B Interests from the sale of the Bond Units.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED JUNE 30, 2001 TO THREE MONTHS ENDED JUNE 30,
2000
The Partnership recognized a net loss of $42,165 for the three months ended
June 30, 2001 as compared to a net loss of $62,402 for the same period in 2000.
The change is primarily due to the following factors:
(i) An increase in revenue of $89,835 or 12.17% to $827,796 for the three
months ended June 30, 2001 as compared to $737,961 for the three months ended
June 30, 2000. This increase is due to the following: (a) a decrease in
vacancies at the Valencia and Searcy Properties, and (b) an increase in accrued
common area maintenance and insurance reimbursed expense revenues.
(ii) An increase in management and property expenses of $59,584 or 26.49% to
$284,537 for the three months ended June 30, 2001 as compared to $224,953 for
the three months ended June 30, 2000. This increase is primarily due to: (a) an
increase in real estate taxes at the Green Valley Property and the payment of
real estate taxes for a parcel formerly paid by Abco, and (b) repair and
maintenance expenses were incurred for all three properties in 2001 that were
not incurred in 2000. The timing of these expenses varies from year to year.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 2001 TO SIX MONTHS ENDED JUNE 30, 2000
The Partnership recognized a net loss of $60,244 for the six months ended
June 30, 2001 as compared to net loss of $85,333 for the same period in 2000.
The change is due to the following factors:
9
An increase in revenues of $115,641 or 7.78%, to $1,601,408 for the six
months ended June 30, 2001 as compared to $1,485,767 for the six months ended
June 30, 2000. This increase is due to the following: (a) a decrease in
vacancies at the Valencia and Searcy Properties, and (b) an increase in accrued
common area maintenance and insurance reimbursed expenses revenues.
An increase in management and property expenses of $79,010, or 17.91%, to
$520,072 for the six months ended June 30, 2001 as compared to $441,062 for the
six months ended June 30, 2000. This increase is primarily due to: (a) an
increase in real estate taxes at the Green Valley Property and the payment of
real estate taxes for a parcel formerly paid by Abco, and (b) repairs and
maintenance expenses were incurred for all three properties in 2001 that were
not incurred in 2000. The timing of these expenses varies from year to year.
LIQUIDITY AND CAPITAL RESOURCES
The General Partner believes that the Partnership's expected revenue and
working capital is sufficient to meet the Partnership's current and future
operating requirements for the next 12 months. Nevertheless, because the cash
revenues and expenses of the Partnership will depend on future facts and
circumstances relating to the Partnership's properties, as well as market and
other conditions beyond the control of the Partnership, a possibility exists
that cash flow deficiencies may occur.
During February 1999, the Partnership received notice from Abco, a principal
anchor tenant at the Green Valley Property, that Abco would not be renewing its
lease at the expiration of its current term on July 31, 1999. Abco vacated its
space in May, 1999. The Partnership retained a large regional real estate
brokerage firm to help market the space and has shown the space to several
qualified prospective tenants. No replacement tenant has yet been identified.
The plan to build a Safeway Supermarket in the year 2002 near Green Valley Mall
will also have the adverse effect of reducing the likelihood of replacing Abco
with another supermarket. A supermarket is considered the best potential anchor
tenant because of the increased daily traffic it would generate at the property.
Additionally, the store space is configured for a supermarket use and the costs
of re-demising the space for another user (or users) could be substantial.
Currently, approximately $150,000 of the Partnership's working capital is being
held in escrow in connection with the refinancing by the holder of the first
mortgage on the Green Valley Property (the "Lender") pending the resolution of
the vacancy in this unoccupied anchor tenant space. It is not possible to
determine the long-term effects of the vacancy of the Abco space. Many of the
tenants at the Green Valley Property have short term leases. Currently, however,
the vacancy of the Abco space has not had a material adverse effect on the
leasing of store spaces on favorable terms.
The Partnership has made distributions to its partners in the past.
Distributions were suspended after the second quarter of 1999 following the
departure of Abco from the Green Valley Property, which created vacant anchor
tenant space. Additionally, several capital projects were undertaken and
completed at the Properties. The Partnership will evaluate the amount of future
distributions, if any, on a quarter by quarter basis. No assurances can be given
as to the timing or amount of any future distributions by the Partnership.
Management is not aware of any other significant trends, events, commitments
or uncertainties that will or are likely to materially impact the Partnership's
liquidity.
10
The cash on hand at June 30, 2001 may be used to fund (a) costs associated
with releasing the Abco space should the costs of releasing exceed the $150,000
already held in escrow by the Lender for this purpose and (b) other general
Partnership purposes.
Net cash provided by operating activities of $242,816 for the six months
ended June 30, 2001 included (i) net loss of $60,244, (ii) non-cash adjustments
of $323,606 for depreciation and amortization expense and (iii) a net change in
operating assets and liabilities of $20,546.
Net cash provided by operating activities of $253,341 for the six months
ended June 30, 2000 included (i) net loss of $85,333, (ii) non-cash adjustments
of $316,365 for depreciation and amortization expense and (iii) a net change in
operating assets and liabilities of $22,309.
Net cash used in investing activities of $138,285 for the six months ended
June 30, 2001 was for capital expenditures for property improvements.
Net cash used in investing activities of $147,552 for the six months ended
June 30, 2000 was for capital expenditure for property improvements.
Net cash used in financing activities of $126,215 for the six months ended
June 30, 2001 included(i) principal repayments on mortgage loans payable of
$108,586 and (ii) an increase in restricted cash of $17,629.
Net cash used in financing activities of $99,532 for the six months ended
June 30, 2000 included (i) principal repayments on mortgage loans payable of
$96,536, and (ii) an increase in restricted cash of $2,996.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Partnership, in its normal course of business, is theoretically exposed to
interest rate changes as they relate to real estate mortgages and the effect of
such mortgage rate changes on the values of real estate. However, for the
Partnership, all of its mortgage debt is at fixed rates, is for extended terms,
and would be unaffected by any sudden change in interest rates. The
Partnership's possible risk is from increases in long-term real estate mortgage
rates that may occur over a decade or more, as this may decrease the overall
value of real estate. Since the Partnership has the intent to hold its existing
mortgages to maturity (or until the sale of a Property), there is believed to be
no interest rate market risk on the Partnership's results of operations or its
working capital position.
The Partnership's cash equivalents and short-term investments, if any,
generally bear variable interest rates. Changes in the market rates of interest
available will affect from time-to-time the interest earned by the Partnership.
Since the Partnership does not rely on its interest earnings to fund working
capital needs, changes in these interest rates will not have an impact on the
Partnership's results of operations or working capital position.
11
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBIT:
Number Description of Document
------ -----------------------
3.1 Amended and Restated Agreement of Limited Partnership of Concord
Milestone Plus, L.P. Incorporated herein by reference to Exhibit A to
the Registrant's Prospectus included as Part I of the Registrant's
Post-Effective Amendment No. 3 to the Registrant's Registration
Statement on Form S-11 (the "Registration Statement") which was
declared effective on April 3, 1987.
3.2 Amendment No. 1 to Amended and Restated Agreement of Limited
Partnership of Concord Milestone Plus, L.P., included as Exhibit 3.2
to Registrant's Form 10-K for the fiscal year ended December 31, 1987
("1987 Form 10-K"), which is incorporated herein by reference.
3.3 Amendment No. 2 to Amended and Restated Agreement of Limited
Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.3 to
the 1987 form 10-K, which is incorporated herein by reference.
3.4 Amendment No. 3 to Amended and Restated Agreement of Limited
Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.4 to
the 1987 Form 10-K, which is incorporated herein by reference.
3.5 Amendment No. 4 to Amended and Restated Agreement of Limited
Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.5 to
the 1987 Form 10-K, which is incorporated herein by reference.
3.6 Amendment No. 5 to Amended and Restated Agreement of Limited
Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.6 to
Registrant's Form 10-K for the fiscal year ended December 31, 1988,
which is incorporated herein by reference.
27 Financial Data Schedule is included.
(b) REPORTS:
No reports on form 8-K were filed during the quarter covered by this Report.
12
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.
DATE: CONCORD MILESTONE PLUS, L.P.
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(Registrant)
BY: CM PLUS CORPORATION
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General Partner
By: /S/ Robert Mandor
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Robert Mandor
Director and Vice President
By: /S/ Patrick Kirse
-------------------------
Patrick Kirse
Treasurer and Controller
13