U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
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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 0-20273
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1999 Broadway Associates Limited Partnership
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(Exact name of small business issuer as specified in its charter)
Delaware 04-6613783
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
7 Bulfinch Place, Suite 500, P.O. Box 9507, Boston, Massachusetts 02114-9507
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 570-4600
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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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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2004
PART 1 - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 31, DECEMBER 31,
(IN THOUSANDS, EXCEPT UNIT DATA) 2004 2003
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Assets
Real estate, at cost:
Land $ 1,700 $ 1,700
Buildings and improvements, net of accumulated
depreciation of $28,527 (2004) and $28,019 (2003) 26,506 26,828
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28,206 28,528
Other Assets:
Cash and cash equivalents 1,449 1,619
Restricted cash 2,884 2,840
Other assets 494 531
Deferred rent receivable 2,786 2,749
Deferred costs, net of accumulated amortization
of $3,055 (2004) and $2,952 (2003) 2,243 2,345
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Total assets $ 38,062 $ 38,612
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Liabilities and Partners' Deficit
Liabilities:
Mortgage loan payable $ 48,658 $ 48,774
Accrued interest payable 334 335
Accounts payable and accrued expenses 1,120 1,449
Deferred lease termination fee 331 413
Payable to related party 310 301
Security deposits 116 110
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Total liabilities 50,869 51,382
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Partners' Deficit:
Investor limited partners' deficit (460 units
outstanding) (11,123) (11,086)
General partner's deficit (1,684) (1,684)
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Total Partners' Deficit (12,807) (12,770)
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Total Liabilities and Partners' Deficit $ 38,062 $ 38,612
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See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2004
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED
MARCH 31, MARCH 31,
(IN THOUSANDS, EXCEPT UNIT DATA) 2004 2003
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Revenues:
Rental $ 2,914 $ 2,847
Other 63 68
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Total revenues 2,977 2,915
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Expenses:
Real estate taxes 219 210
Payroll and payroll expense reimbursements 174 171
Operating expenses 172 153
Repairs and maintenance 303 280
Utilities 245 229
Management and other fees 205 204
General and administrative costs 49 23
Insurance 58 68
Depreciation 508 517
Amortization 95 90
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Total expenses 2,028 1,945
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Operating income 949 970
Non-operating income (expense):
Interest income 4 7
Interest expense (990) (988)
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Net loss $ (37) $ (11)
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Net loss allocated:
General Partner $ -- $ --
Investor Limited Partners (37) (11)
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$ (37) $ (11)
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Net loss allocated per unit:
Investor Limited Partners $(80.43) $(23.91)
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See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2004
CONSOLIDATED STATEMENT OF PARTNERS' DEFICIT (UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT DATA)
UNITS OF INVESTOR
LIMITED LIMITED GENERAL
PARTNERSHIP PARTNERS' PARTNER'S
INTEREST DEFICIT DEFICIT TOTAL
-------- -------- -------- --------
Balance - December 31, 2003 460 $(11,086) $ (1,684) $(12,770)
Net loss -- (37) -- (37)
-------- -------- -------- --------
Balance - March 31, 2004 460 $(11,123) $ (1,684) $(12,807)
======== ======== ======== ========
See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2004
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
FOR THE THREE MONTHS ENDED
MARCH 31, MARCH 31,
2004 2003
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Cash Flows from Operating Activities:
Net loss $ (37) $ (11)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 611 616
Amortization of deferred lease termination fee (82) (82)
Deferred rent receivable (37) (56)
Changes in assets and liabilities:
Other assets 37 43
Accrued interest payable (1) (1)
Accounts payable, accrued expenses, payable
to related party and security deposits (314) (161)
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Net cash provided by operating activities 177 348
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Cash Flows from Investing Activities:
Additions to buildings and improvements (186) (39)
Additions to restricted cash (534) (620)
Restricted cash released 490 569
Deferred costs (1) (11)
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Net cash used in investing activities (231) (101)
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Cash Flows from Financing Activities:
Principal payments on mortgage loan (116) (118)
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Cash used in financing activities (116) (118)
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Net (Decrease) Increase in Cash and Cash Equivalents (170) 129
Cash and Cash Equivalents, Beginning of Period 1,619 2,292
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Cash and Cash Equivalents, End of Period $ 1,449 $ 2,421
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Supplemental Disclosure of Cash Flow Information:
Cash Paid For Interest $ 983 $ 980
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See notes to consolidated financial statements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2004
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The accompanying financial statements reflect the accounts of 1999
Broadway Associates Limited Partnership (the "Investor Partnership"),
1999 Broadway Partnership (the "Operating Partnership") and 1999
Broadway LLC (the "Operating Company"). The Investor Partnership, the
Operating Partnership and the Operating Company are collectively
referred to as the "Partnerships". These consolidated financial
statements, footnotes and discussions should be read in conjunction
with the consolidated financial statements, related footnotes and
discussions contained in the Investor Partnership's Annual Report on
Form 10-KSB for the year ended December 31, 2003.
The financial information contained herein is unaudited. In the opinion
of management, all adjustments necessary for a fair presentation of
such financial information have been included. All adjustments are of a
normal recurring nature. The balance sheet at December 31, 2003 was
derived from audited financial statements at such date.
The results of operations for the three months ended March 31, 2004 and
2003 are not necessarily indicative of the results to be expected for
the full year.
2. RELATED PARTY TRANSACTIONS
The Partnership has incurred charges and made commitments to companies
affiliated by common ownership and management with Winthrop Financial
Associates, A Limited Partnership, the managing general partner of the
Investor Partnership (the "General Partner"). Related party
transactions with the General Partner and its affiliates include the
following:
a. The Partnership accrues to an affiliate of the General Partner
an annual property management fee equal to 5% of cash
receipts. For the three months ended March 31, 2004 and 2003,
management fees of $145,000 and $147,000, respectively, were
incurred.
b. The Partnership pays or accrues to the General Partner an
annual partnership administration and investor service fee, as
provided for in the partnership agreement, of $100,000, which,
since 1990, has been increased annually by 6% to its present
level of approximately $240,000 per annum. Fees of $60,000 and
$57,000 were paid or accrued during the periods ended March
31, 2004 and 2003, respectively.
c. The Partnership pays or accrues to an affiliate of the General
Partner a construction management fee equal to 5% of the
aggregate cost of each applicable construction project. Fees
of $10,000 and $3,000 were incurred during the three months
ended March 31, 2004 and 2003, respectively, and have been
capitalized to the cost of buildings and improvements.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2004
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. ALLOCATION OF LOSS AND DISTRIBUTION OF CASH FLOW
In accordance with the partnership agreement losses are allocated 1% to
the General Partner and 99% to the Limited Partners. Net income is
allocated 3% to the General Partner and 97% to the limited partners.
Cash flow is distributed 99% to the limited partners and 1% to the
General Partner until the limited partners have received an amount
equal to an annual 6% per annum noncumulative, noncompounded return on
their invested capital and the balance, if any, 97% to the limited
partners, and 3% to the General Partner.
4. SEGMENT INFORMATION
The Partnership has two reportable segments, the Office Tower and the
Garage. The Partnership evaluates performance based on net operating
income, which is income before depreciation, amortization, interest and
non-operating items.
Segment information for the three months ended March 31, 2004 and 2003
is shown in the tables below (in thousands). The "Other" column
includes partnership administrative items and income and expense not
allocated to a reportable segment.
Office Parking
Tower Garage Other Total
2004
Rental income $ 2,914 $ -- $ -- $ 2,914
Other income 5 58 -- 63
Interest income 3 -- 1 4
Interest expense 959 31 -- 990
Depreciation and amortization 591 12 -- 603
Segment profit (loss) 16 15 (68) (37)
Total assets 37,159 903 -- 38,062
Capital expenditures 186 -- -- 186
2003
Rental income $ 2,847 $ -- $ -- $ 2,847
Other income 8 60 -- 68
Interest income 6 -- 1 7
Interest expense 956 32 -- 988
Depreciation and amortization 595 12 -- 607
Segment profit (loss) 36 16 (63) (11)
Total assets 36,981 949 1,087 39,017
Capital expenditures 39 -- -- 39
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2004
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain
forward-looking statements and involve risks and uncertainties
(including changing market conditions, competitive and regulatory
matters, etc.) detailed in the disclosures contained in this Form
10-QSB and other filings with the Securities and Exchange
Commission made by the Registrant from time to time. The
discussion of the Registrant's liquidity, capital resources and
results of operations, including forward-looking statements
pertaining to such matters, does not take into account the effects
of any changes to the Registrant's operations. Accordingly, actual
results could differ materially from those projected in the
forward-looking statements as a result of a number of factors,
including those identified herein.
Liquidity and Capital Resources
The Registrant, through its effectively 99.9% ownership interest
in 1999 Broadway LLC (the "Operating Company"), owns a 42-story
office tower located in Denver, Colorado together with a parking
garage located one and one-half blocks northeast of the office
tower (collectively, the "Property"). The Operating Company
generates rental revenue from the Property and is responsible for
the Property's operating expenses as well as its administrative
costs.
The Registrant's level of liquidity based on cash and cash
equivalents decreased by $170,000 for the three months ended March
31, 2004, as compared to December 31, 2003. The decrease is due to
$231,000 of cash used in investing activities and $116,000 of cash
used for principal payments on mortgage loan (financing
activities), which were partially offset by $177,000 of cash
provided by operating activities. Net cash used in investing
activities consisted of $186,000 of cash used for improvements to
real estate, primarily tenant improvements, $1,000 of cash
expended on leasing costs and commissions and a net increase of
$44,000 in restricted cash. The Property is approximately 93%
leased as of March 31, 2004 as compared to 86% at March 31, 2003.
At March 31, 2004, the Registrant had $1,449,000 in cash and cash
equivalents, which was invested primarily in money market mutual
funds.
The Property has a heavy concentration of tenants in the
technology and telecommunications industries, both of which have
been experiencing severe decline. Notably, Lucent Technologies,
which leases in excess of 10% of the Property, has vacated its
space and is marketing it for sublease. Lucent's lease expires on
December 31, 2005 and Lucent continues to make required lease
payments. Lucent has been experiencing financial difficulties for
the past few years and it is possible that if these financial
difficulties continue Lucent could stop making lease payments.
Further, Encoda (formerly JDS Columbine) has placed five floors of
its space in the sublease market, which accounts for approximately
14% of the property. Encoda's lease expires in 2008 and Encoda
continues to make required lease payments. Because of the recent
decline in the Denver real estate market, the Registrant may be
unable to find a new tenant or tenants at rental rates sufficient
to generate cash flow in excess of its debt service obligations.
The Registrant's only significant critical accounting policy
relates to the evaluation of the fair value of real estate. The
Registrant evaluates the need for an impairment loss on its real
estate assets when indicators of impairment are present and the
undiscounted cash flows are not sufficient to recover the asset's
carrying amount. The impairment loss is measured by comparing the
fair value of the asset to its carrying amount. The evaluation of
the fair value of real estate is an estimate that is susceptible
to change and actual results could differ from those estimates.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2004
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(CONTINUED)
Liquidity and Capital Resources (Continued)
The sufficiency of existing liquid assets to meet future liquidity
and capital expenditure requirements is directly related to the
level of capital expenditures required at the Property to
adequately maintain the physical assets and the other operating
needs of the Operating Company. Such assets are currently thought
to be sufficient for any near-term needs of the Operating Company.
The Registrant has budgeted approximately $3,000,000 on capital
improvements to the Property in 2004. As of March 31, 2004, the
Registrant made no distributions to the partners.
The Registrant could be affected by declining economic conditions
as a result of various factors that affect the real estate
business including the financial condition of tenants,
competition, and increased operating costs, including insurance
costs.
At this time, it appears that the original investment objective of
capital growth from the inception of the Registrant will not be
attained and that the limited partners will not receive a complete
return of their invested capital. The extent to which invested
capital is refunded to the limited partners is dependent upon the
performance of the Property and the market in which it is located.
None of the recently issued accounting standards had an effect on
the Registrant's consolidated financial statements.
Results of Operations
Net loss for the three months ended March 31, 2004 was $37,000 as
compared to a net loss of $11,000 for the three months ended March
31, 2003. The increase in net loss was due to a decrease in
operating income, a decrease in interest income, and an increase
in interest expense. Operating results, before non-operating
income (expense) decreased by $21,000 for the three months ended
March 31, 2004, as compared to 2003, due to an increase in
expenses of $83,000, which was partially offset by increases in
revenue of $62,000.
Revenue increased by $62,000 for the three months ended March 31,
2004, as compared to 2003, due to an increase in rental income of
$67,000, which was partially offset by a decrease in other income
of $5,000. Rental income increased due to an increase in
occupancy. Other income decreased due to a decrease in volume of
other billable services provided by the Property, including the
Garage operation.
Expenses increased by $83,000 for the three months ended March 31,
2004, as compared to 2003, primarily due to increases in repairs
and maintenance ($23,000), real estate taxes ($9,000), operating
expenses ($19,000), payroll and payroll expense reimbursements
($3,000), general and administrative costs ($26,000), amortization
($5,000), utilities ($16,000) and management and other fees
($1,000). These increases were slightly offset by decreases in
insurance ($10,000) and depreciation ($9,000).
Interest income decreased primarily due to a decline in interest
rates and lower cash balances available for investments.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2004
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(CONTINUED)
Quantitative and Qualitative Disclosures of Market Risk
The Registrant does not have any financial instruments that would
expose it to market risk associated with the risk of loss arising
from adverse changes in market rates and prices. The Registrant's
mortgage note payable at March 31, 2004 is at a fixed rate of
interest.
ITEM 3. CONTROLS AND PROCEDURES
The Registrant's management, with the participation of the
Registrant's Chief Executive Officer and Chief Financial Officer,
has evaluated the effectiveness of the Registrant's disclosure
controls and procedures (as such term is defined in Rules
13a-15(e) under the Securities Exchange Act of 1934, as amended)
as of the end of the period covered by this report. Based on such
evaluation, the Registrant's Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of such
period, the Registrant's disclosure controls and procedures are
effective.
There have not been any changes in the Registrant's internal
control over financial reporting (as defined in Rule 13a-15(f)
under the Securities and Exchange Act of 1934, as amended) during
the fiscal quarter to which this report relates that have
materially affected, or are reasonably likely to materially
affect, the Registrant's internal control over financial
reporting.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2004
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibits required by Item 601 of Regulation S-B are filed
herewith and are listed in the attached Exhibit Index.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the period ended
March 31, 2004.
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2004
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
BY: WINTHROP FINANCIAL ASSOCIATES, A LIMITED PARTNERSHIP
MANAGING GENERAL PARTNER
BY: /s/ Michael L. Ashner
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Michael L. Ashner
Chief Executive Officer
BY: /s/ Thomas Staples
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Thomas Staples
Chief Financial Officer
DATED: May 14, 2004
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1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 2004
Exhibit Index
Exhibit Page No.
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31.1 Chief Executive Officer's Certification, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. 14 - 15
31.2 Chief Financial Officer's Certification, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. 16 - 17
32 Certification of Chief Executive Officer and Chief Financial Officer,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002. 18
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