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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 Quarter Ended September 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: 0-18444
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
North Carolina 56-1560476
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
12201 Steele Creek Road Charlotte, North Carolina 28273
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(Address of principal executive office) (Zip code)
(704) 588-4074
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(Registrant's telephone number, including area code)
(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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PAST FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
This document contains 16 pages. The Exhibit Index is located on page 7.
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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
September 30, December 31,
1997 1996
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(Unaudited) (Note)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 85,186 $ 103,036
Accounts receivable, tenant 44,347 91,224
Prepaid expenses 4,326 2,200
Securities available for sale 230,916 190,380
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Total current assets 364,775 386,840
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INVESTMENTS AND NONCURRENT RECEIVABLES
Properties on operating leases and properties held
for lease, net of accumulated depreciation
1997 $1,422,409; 1996 $1,244,020 7,214,338 7,371,229
Accrued rent receivable 34,370 44,785
OTHER ASSETS
Deferred charges, net of accumulated amortization
1997 $17,732; 1996 $11,282 4,368 10,818
Deferred leasing commissions, net of accumulated
amortization 1997 $42,042; 1996 $31,476 43,876 50,435
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$7,661,727 $7,864,107
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LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Note payable, bank $1,000,000 $ 942,483
Current maturities of long-term debt 59,049 68,868
Accounts payable 40,604 109,107
Accrued expenses 105,591 131,312
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Total current liabilities 1,205,244 1,251,770
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LONG-TERM DEBT, less current maturities 3,949,835 4,059,909
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COMMITMENT AND CONTINGENCY (Note 4)
PARTNERS' EQUITY
General partners 1,735 2,199
Limited partners 2,499,454 2,545,393
Unrealized gain on investment securities 5,459 4,836
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2,506,648 2,552,428
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$7,661,727 $7,864,107
========== ==========
Note: The Condensed Balance Sheet at December 31, 1996 has been taken from
the audited financial statements at that date. See Notes to Condensed
Financial Statements.
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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
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1997 1996 1997 1996
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Rental income $ 288,726 $ 276,205 $ 868,308 $ 874,005
Operating expenses:
Wages and contract labor 3,300 4,008 23,953 12,881
Depreciation and amortization 65,145 45,851 195,405 136,987
Repairs and maintenance 44,069 35,378 124,938 100,066
Management fees 8,760 12,783 31,323 35,310
Utilities 46,433 43,247 120,730 114,820
Professional fees 11,990 5,675 31,947 28,089
Property taxes 22,095 22,020 66,285 66,060
Miscellaneous 3,648 3,366 14,212 13,205
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205,440 172,328 608,793 507,418
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Operating income 83,286 103,877 259,515 366,587
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Nonoperating income (expense):
Interest and dividend income 5,439 4,396 12,452 11,092
Interest expense (107,477) (102,306) (319,757) (309,606)
Other 502 1,885 1,387 1,885
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(101,536) (96,025) (305,918) (296,629)
--------- --------- --------- ---------
Net income $ (18,250) $ 7,852 $ (46,403) $ 69,958
========= ========= ========= =========
Net income per limited
partnership unit $ (2.87) $ 1.23 $ (7.28) $ 10.98
========= ========= ========= =========
See Notes to Condensed Financial Statements.
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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
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1997 1996
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(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ (46,403) $ 69,958
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 195,405 136,987
Gain on sale of securities available for sale (1,387) (1,884)
Change in assets and liabilities:
Decrease in prepaids, deferrals and 55,166 6,460
other receivables
(Decrease) in accounts payable and accrued expenses (94,224) (1,785)
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Net cash provided by operating activities 108,557 209,736
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CASH FLOWS FROM INVESTING ACTIVITIES
Sale of securities available for sale 170,881 15,685
Purchase of securities available for sale (209,408) (59,759)
Improvements in investment property (21,497) (840,509)
Disbursements for deferred leasing commissions (4,007) --
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Net cash (used) in investing activities (64,031) (884,583)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term borrowings (119,893) (93,261)
Proceeds from note payable 57,517 722,700
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Net cash (used) provided in financing activities (62,376) 629,439
Net (decrease) in cash and cash equivalents (17,850) (45,408)
Cash and cash equivalents:
Beginning 103,036 139,930
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Ending $ 85,186 $ 94,522
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See Notes to Condensed Financial Statements.
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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Nature of Business:
The Partnership was formed in July 1986 to acquire, operate, hold for
investment and sell real estate. The two properties currently owned are
the BB&T Building (formerly the UCB building) in Greenville, South
Carolina, and the EastPark Executive Center in Charlotte, North Carolina.
2. Opinion of Management:
In the opinion of management, the accompanying unaudited condensed
financial statements contain all adjustments (all which were normal
recurring accruals) necessary for a fair presentation. The results of
operations for the interim periods are not necessarily indicative of the
results which may be expected for an entire year.
3. Statement of Cash Flows:
For purposes of reporting the statements of cash flows, the Limited
Partnership includes all cash accounts, which are not subject to
withdrawal restrictions or penalties, and all highly liquid debt
instruments purchased with a maturity of three months or less as cash and
cash equivalents on the accompanying condensed balance sheets.
4. Priority Return:
At December 31, 1996, the cumulative unpaid priority return to the unit
holders was $1,924,049 compared to $1,681,265 one year prior. This
increase resulted from no distributions being made to partners during the
year and the pro rata share due partners pursuant to the Limited
Partnership Agreement. Based on the current and projected commercial real
estate market conditions, the General Partners believe that it is
reasonably unlikely that a sale of the Partnership properties would
produce net sale proceeds sufficient to pay the priority return.
Furthermore, the General Partners believe that it is reasonably unlikely
that the Partnership's operating income or any refinancing of Partnership
debt would generate sufficient funds to pay any portion of the priority
return.
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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Changes in Financial Condition
There have not been any significant changes in financial condition from December
31, 1996 to September 30, 1997. Accounts receivable has decreased since year end
due to the receipt of payment from the GSA for certain reimburseable items on
their upfit at the EastPark facility. Accrued expenses, as well as cash and cash
equivalents, have decreased from year end due to the payment of the 1996 real
property taxes in January 1997. The Partnership continues to accrue monthly for
the 1997 real property taxes to be paid in January 1998; therefore accrued
expenses will continue to increase each quarter of 1997. In the third quarter,
approximately $17,000 was expended for capital improvements. These capital
expenditures included parking lot improvements at both the EastPark and Branch,
Banking & Trust facility (formerly the UCB facility).
Liquidity and Capital Resources
During the quarter ended September 30, 1997, the Partnership continued to fund
working capital requirements, and the working capital deficit was reduced by
approximately $24,000 from December 31, 1996. The $1,000,000 line of credit with
First Union which was due and payable on April 30, 1997, was renewed on similar
terms for an additional year. No distributions were paid to the limited partners
this quarter, resulting in an increase to their cumulative unpaid priority
return. (See note 4 of the condensed consolidated financial statements.)
Results of Operations
Net income from operations for the nine months ended September 30, 1997 is down
approximately $107,000 compared to the same period of the prior year. Net income
from operations for the third quarter is also down as compared to the same
period of the prior year by approximately $20,000. Rental income for the third
quarter is up $12,500 as compared to the same period of the prior year but
overall is down by $5,697 for the year. This decrease is primarily due to the
decrease in common area maintenance ("CAM") charges as provided in the leases at
the BB&T building. Operating expenses for the first nine months of 1997 are up
by approximately $101,000. This is primarily due to the increase in depreciation
expense as a result of the completion and capitalization of the IRS upfit at the
EastPark Executive Center. Expenses relating to repairs and maintenance are also
up for the year. These same factors also accounted for the increase in expenses
for the quarter ended September 30, 1997. Occupancy rate is currently 100% at
the BB&T building and 98% at the EastPark building.
Status of Sales/Leasing Efforts; Future Matters
The General Partners earlier this year decided to focus efforts on lengthening
the leases with the current tenants. To facilitate in these efforts, the General
Partners have executed a one-year listing agreement with a Charlotte-based real
estate broker. The General Partners believe that longer-term leases would
support a higher asking price for the facilities than would be the case with
short-term leases. The Partnership is currently in negotiation with BB&T
(successor to UCB) regarding an extension of the bank's lease at the BB&T
facility.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership is not engaged in any legal
proceedings of a material nature at the present time.
Item 6. Exhibit Index
(a) Exhibits:
Designation
Number Under
Exhibit Item 601 of Page
Number Regulation S-K Exhibit Description Number
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1* 4 Instrument defining rights of security
holders - set forth in the Limited
Partnership Agreement
2* 10 Limited Partnership Agreement
3** 10.1 Exclusive Leasing and Management Agreement
dated October 1, 1994
(EastPark Executive Center)
4** 10.2 Exclusive Leasing and Management Agreement
dated October 1, 1994
(Branch, Banking & Trust Building)
5 10.3 Listing Agreement of Property For Lease
and/or Sale (Branch, Banking & Trust Building) 9
6 10.4 Listing Agreement of Property For Lease
and/or Sale (EastPark Executive Center) 13
7 27 Financial Data Schedule
(for SEC use only)
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the
three months ended September 30, 1997.
* Incorporated by reference to Exhibit A of the Partnership's Prospectus
dated December 1, 1987, Registration Number 33-07056-A.
** Incorporated by reference to Exhibit 3 and 4 of the Partnership's Form
10-K for the year ended December 31, 1995.
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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.
YAGER/KUESTER PUBLIC FUND
LIMITED PARTNERSHIP
(Registrant)
By: DRY Limited Partnership,
General Partner of Registrant
Date 11/12/97 By: /s/ Dexter R. Yager, Sr.
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Dexter R. Yager, Sr.
General Partner
Date 11/12/97 By: /s/ Jerry R. Haynes
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Jerry R. Haynes
Chief Financial Officer
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