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Total pages: 42
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13
OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 1999
Commission file number 000-16757
CONCORD MILESTONE PLUS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 52-1494615
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
150 EAST PALMETTO PARK ROAD, 4TH FLOOR
BOCA RATON, FLORIDA 33432
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (561) 394-9260
---------------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Class A Interests ("Class A Interests"), each such interest representing an
assignment of one Class A Limited Partnership Interest held by CMP Beneficial
Corp., a Delaware corporation (the "Assignor"), under the Amended and Restated
Agreement of Limited Partnership (the "Partnership Agreement") of Concord
Milestone Plus, L.P.
(Title of Class)
Class B Interests ("Class B Interests"), each such interest representing an
assignment of one Class B Limited Partnership Interest held by the Assignor
under the Partnership Agreement.
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
The Class A and Class B Interests are not traded on any established public
trading market.
DOCUMENTS INCORPORATED BY REFERENCE NONE
PART I
This Form 10-K and any 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, among other things, 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. Unless required by law, the Partnership undertakes no obligation to
update publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
Item 1. Business.
(a) General Development of Business.
Concord Milestone Plus, L.P. (the "Partnership") was organized
as a Delaware limited partnership on December 12, 1986 with CM Plus Corporation,
a Delaware corporation (the "General Partner"), as its general partner. The
General Partner is wholly owned by Concord Assets Group, Inc. ("Concord"). The
Partnership is engaged in the business of owning and operating three shopping
centers. CMP Beneficial Corp., a wholly owned subsidiary of Concord, was
organized under Delaware law in December 1986 for the sole purpose of holding
limited partnership interests in the Partnership for the benefit of holders of
the Class A Interests and Class B Interests and has engaged in no business
activities other than fulfilling its obligations under the Amended and Restated
Agreement of Limited Partnership of the Partnership (the "Partnership
Agreement").
(b) Industry Segment Information.
The Partnership has only one industry segment, commercial real
estate. See Item 6, "Selected Financial Data", of this report for a summary of
the Partnership's operations for the last five fiscal years.
(c) Narrative Description of Business.
The Partnership was formed for the purpose of investing in
existing income-producing commercial and industrial real estate, such as
shopping centers, office buildings, free-standing commercial buildings,
warehouses and distribution centers. The Partnership currently owns and operates
three shopping centers, one located in Searcy, Arkansas (the "Searcy Property"),
one located in Valencia, California (the "Valencia Property") and one located in
Green Valley, Arizona (the "Green Valley Property").
The amount of revenues attributable to the Searcy Property, the
Valencia Property and the Green Valley Property (collectively, the "Properties")
from tenants not affiliated with the Partnership was (i) $441,946, $1,299,922
and $1,228,007, respectively, for the fiscal year ended December 31, 1999; (ii)
$438,026, $1,347,971 and $1,296,987, respectively, for the fiscal year ended
December 31, 1998; and (iii) $457,514, $1,303,348 and $1,262,050, respectively,
for the fiscal year ended December 31, 1997. There are no affiliated tenants.
-1-
See Item 2, "Properties", of this Report for additional
information as to the Properties, including a description of the competitive
conditions affecting them.
Employees
The Partnership employs six people at the Green Valley Property
who provide general maintenance and security services. Milestone Property
Management, Inc., an affiliate of the General Partner, provides all management
services for the Partnership and is reimbursed for its cost of administrative
services provided to the Partnership, including the pro rata cost of personnel.
Aside from its officers, the General Partner has no employees. See Item 11,
"Compensation", of this Report.
Impact of Year 2000
Year 2000 compliance programs and information systems
modifications were initiated by the Partnership's affiliated management company,
Milestone Property Management, Inc. ("MPMI"), in early 1998, in an attempt to
ensure that these systems and key processes will remain functional. This
objective was achieved by modifying present systems using existing internal and
external programming resources and by installing new system hardware and
software, and by monitoring supplier, customer and other third party readiness.
Such modifications were completed by MPMI by September 1999. There have been no
costs charged to the Partnership for the Year 2000 program completed by MPMI.
Neither the Partnership nor MPMI has experienced any Year 2000 problems from any
of its major customers, suppliers or vendors.
Item 2. Properties.
The Properties consist of three shopping centers: the Searcy Property, the
Valencia Property and the Green Valley Property. For the purposes of this
section, the following is a glossary of terms:
a. Occupancy rate - The rate of the actual leased area (square
footage) to gross leaseable area (square footage) as of the
end of the fiscal year (December 31).
b. Leasable area - The area (square footage) for which rent is
charged.
c. Average effective annual rental per square foot - The
average rental rate received per square foot of leased space
taking rental concessions and discounts into consideration.
d. Total rent - Minimum annual base rent plus percentage rental
revenue.
Refinancing of Bonds Payable
As of September 30, 1997, the Partnership, with the assistance
of Tri-Stone Mortgage Company, an affiliate of the General Partner, closed three
fixed rate first mortgage loans (the "Mortgage Loans") from Westco Real Estate
Finance Corp. (the "Lender") in the amounts of $2,865,000, $8,445,000 and
$5,400,000, respectively. Tri-Stone Mortgage Company did not receive any
compensation for its services. All three Mortgage Loans are secured by first
mortgages on all three of the Properties. Prior to September 30, 1997, the
Properties were encumbered by mortgages granted by the Partnership to United
States Trust Company of New York, as trustee for the benefit of the holders of
the Partnership's Escalating Rate Collateralized Mortgage Bonds due November 30,
1997 (the "Bonds"). The Partnership used the proceeds of the Mortgage Loans and
available cash to redeem all of the outstanding Bonds.
-2-
The Mortgage Loans and related terms at December 31, 1999 for the
Properties are summarized as follows:
Principal Monthly
Balance at Payments of
December Interest Principal
Property/Location 31, 1999 Rate % and Interest
----------------- ------------ ------ ------------
Searcy, AR $2,809,172 8.125 $21,640
Valencia, CA 8,221,072 8.125 65,881
Green Valley, AZ 5,297,637 8.250 41,252
--------- ------
Total $16,327,881 $128,773
=========== =======
The Mortgage Loans require payments of principal and interest
through and including September 1, 2007. On October 1, 2007, the balance of
principal and interest is estimated to be $2,505,981, $7,003,227, and $4,738,096
for the Searcy, Valencia and Green Valley Properties, respectively, and will be
due and payable. Subsequent to October 31, 2003 and prior to May 31, 2007, each
Mortgage Loan may be prepaid in whole but not in part on any payment date with a
prepayment penalty equal to the greater of (i) 1% of the outstanding principal
balance at such time, or (ii) the excess, if any, of the present value of the
remaining scheduled principal and interest payments (including any balloon
payment), discounted at the Discount Rate (as defined below), over the amount of
principal being prepaid. The Mortgage Loans may be prepaid without penalty on
any payment date after May 31, 2007. The Discount Rate is a rate determined as
of the week ending prior to the prepayment date and is based on the published
rates of U.S. Government securities having maturities approximating the maturity
date of the Mortgage Loans. The Mortgage Loans are each secured by first
mortgages on all three of the Partnership's Properties and a default under any
of the Mortgage Loans constitutes a default on all of the Mortgage Loans. Each
mortgage may be released at the Partnership's option after the corresponding
Mortgage Loan is fully paid provided that no event of default exists under any
of the Mortgage Loans, the mortgagee has not given the Partnership notice of any
event which, with the passage of time, would constitute an event of default, and
certain other conditions are satisfied.
In connection with the Green Valley Mortgage Loan, the
Partnership has deposited $150,000 into an escrow account (the "Green Valley
Escrow Account") with the Lender. The funds held in the Green Valley Escrow
Account may be released upon the execution of a new lease for the major tenant
space, with a termination date of July 31, 2004 or later, and the satisfaction
of certain other conditions.
CM Plus Corporation, the general partner of the Partnership,
guarantees certain limited recourse obligations under the Mortgage Loans.
The Searcy Property
Searcy, Arkansas
Location. The Searcy Property is situated on an irregularly
shaped parcel of approximately 10.78 acres, which has frontages on Race Avenue
and Frontage Road in the City of Searcy, Arkansas. Searcy, the county seat of
White County, is located in the central portion of the State of Arkansas,
approximately 50 miles northeast of Little Rock, Arkansas. The Searcy Property
is part of a two-mile stretch of commercial development along Race Avenue that
is the main shopping area for the city, county and surrounding areas. Searcy's
marketing area includes all of White County and portions of surrounding
counties.
-3-
The Searcy Property is part of a larger shopping complex known
as the Town and Country Plaza. In addition to the Searcy Property, the Town and
Country Plaza consists of an approximately seven acre parcel (formerly the site
of a free-standing Wal-Mart department store which is now sub-divided into four
retail stores) and five adjacent out parcels totaling 3.86 acres.
Description. The Searcy Property, which was completed in July
1985, is a one-story masonry and steel building whose exterior is painted
concrete block with masonry, brick and glass fronts. The Searcy Property
contains 78,436 gross leasable square feet divided into nine units. The entire
Town and Country Plaza has parking for 970 cars of which approximately 570
parking spaces are allocated to the Searcy Property. In the opinion of the
General Partner, the Searcy Property is adequately insured.
Taxes. The Partnership's adjusted federal income tax basis for
the Searcy Property is approximately $3,106,000, of which $430,000 is allocated
to land and $2,676,000 to the building and improvements. For financial statement
purposes, the Partnership depreciates the cost of the building over 31.5 years
and improvements over 5 to 12 years using the straight-line method of cost
recovery.
Competition. There are three shopping centers within two miles
to the west of the Town and Country Plaza on Race Avenue. The first shopping
center consists of a Goody's department store and a vacant furniture store. The
second shopping center consists of a Fred's discount store, Warehouse Foods, a
Sears catalog store and two satellite stores. The third center consists of a
Kroger food store and a Revco drugstore. Directly across the highway from the
Searcy Property is a Wal-Mart superstore. The Wal-Mart which relocated from the
Town and Country Plaza in 1992, has since vacated and subdivided its superstore.
Books-A-Million, Stage, Hibetts Sports and TSC Tractor Supply currently occupy
this space.
Operating and Tenant Information. As of March 1, 2000, there
were nine tenants, including two anchor tenants, at the Searcy Property. The two
anchor tenants are a J.C. Penney department store and a Stage apparel store
which has vacated the premises. Stage remains responsible under the terms of the
lease through July, 2001. The other seven tenants provide a variety of goods and
services. The occupancy rate was 95.5%, 95.5% and 95.5% in 1999, 1998 and 1997,
respectively.
The tables on pages 7 and 8 further describe and summarize
certain operating data and tenant information for the Property.
Old Orchard Shopping Center
Valencia, California
Location. The Valencia Property is situated on an approximately
9.94-acre parcel that has frontages on Lyons Avenue and Orchard Village Road in
the town of Valencia, California. Valencia is located in the Santa Clarita
Valley in Los Angeles County, approximately 35 miles north of Los Angeles. Old
Orchard Shopping Center is located on the northwest corner of Lyons Avenue and
Orchard Village Road in a heavily developed commercial area. Lyons Avenue is
improved with shopping centers, fast food restaurants, housing developments and
free standing convenience stores. The surrounding area is densely populated with
apartments, condominiums and single family residences.
In 1996, a 78,000 square foot shopping center opened on Old
Orchard Street across from the Valencia Property. This center includes a 46,000
square foot Ralph's Supermarket, a 16,000 square foot drugstore and 16,000
square feet of smaller stores. This shopping center has had an adverse impact on
tenant sales but it has not materially adversely affected the occupancy rate at
the Valencia Property.
-4-
Description. Old Orchard Shopping center is an eight building, one-story
masonry and steel shopping center complex that was originally constructed in
1965. During 1985 and 1986 the shopping center was renovated and enlarged to
103,413 square feet of gross leasable area. The exterior construction is
pre-cast concrete, fluted block and decorative tile. The shopping center has
over 500 parking spaces. In the opinion of the General Partner, the Valencia
Property is adequately insured.
Taxes. The Partnership's adjusted federal income tax basis for
the Valencia Property is $10,793,000, of which $6,500,000 is allocated to land
and $4,293,000 is allocated to the buildings and improvements. For financial
statement purposes the Partnership depreciates the cost of the buildings over
31.5 years and improvements over 5 to 10 years using the straight-line method of
cost recovery.
Competition. Within two miles of the Valencia Property there are
competing shopping facilities at Newhall Plaza with a Von's Food Store and 10
satellite stores, Granary Square with a Hughes Food Market, Long's Drugstore and
26 satellite stores, a Safeway Supermarket complimented by 14 satellite stores
and the Alpha Beta Center with Alpha Beta Food stores and 16 satellite stores.
In 1992, a strip center anchored by a Ralph's Foods opened within a mile of the
Valencia Property.
Operating and Tenant Information. As of March 1, 2000, there
were 21 tenants, including two anchor tenants, at the Valencia Property. The two
anchor tenants are a Lucky Store grocery and a Rite Aid pharmacy. The other 19
tenants provide a variety of goods and services. The occupancy rate was 96.9%,
96.6% and 93.9% in 1999, 1998 and 1997, respectively.
The tables on pages 7 and 8 further describe and summarize
certain operating data and tenant information for the Property.
Green Valley Mall
Green Valley, Arizona
Location. The Green Valley Property, a mall complex known as the
Green Valley Mall, is situated on an approximately 21.31-acre parcel in the Town
of Green Valley, Arizona. It has frontages on Interstate 19 and Esperenza
Boulevard, with additional access from La Canada Road. Green Valley is a planned
adult community located in Pima County in the Santa Cruz River Valley
approximately 25 miles south of Tucson. Green Valley has two hotels and a number
of office buildings, several community centers and six 18 hole golf courses. The
Green Valley Property is located at intersection 65 of Interstate 19 and
Esperenza Boulevard and serves Pima County, as well as Santa Cruz County to the
south.
Description. Green Valley Mall is an open-air shopping complex originally
built in the 1960's and expanded at various times throughout the 1970's and
1980's. The shopping center is comprised of several buildings, including some
that are free standing, totaling 194,750 gross leasable square feet (adjusted by
1,800 square feet representing the mall office). The exterior construction is a
combination of adobe block, split face block and painted concrete block. The
mall has approximately 975 parking spaces. In the opinion of the General
Partner, the Green Valley Property is adequately insured.
Taxes. The Partnership's adjusted federal income tax basis for
the Green Valley Property is $9,226,000, of which $5,100,000 is allocated to
land and $4,126,000 to the buildings and improvements. For financial statement
purposes, the Partnership depreciates the cost of the buildings over 31.5 years
and improvements over 3 to 10 years using the straight-line method of cost
recovery.
-5-
Competition. The Green Valley Property competes directly with
the 142,500 square foot Continental Shopping Plaza located at Continental Road
and Interstate 19 approximately one mile south of the Green Valley Property. The
Continental Shopping Plaza is anchored by a Safeway Supermarket. There is a
shopping center located 3 miles to the north of the Green Valley Property in the
newly incorporated town of Sahuarita. This shopping center includes a 65,000
square foot Wal-Mart Department Store and a 42,000 square foot Bashas' Food
Store as anchor tenants plus 25,000 square feet of space for local tenants.
Another center located to the north of the Green Valley Property, closed during
1995 and was anchored by a 45,000 square foot Kmart and 10,000 square feet of
space for local tenants. A six screen multiplex theater is planned to be built
adjacent to Kmart with a projected opening of mid summer 2000. Since the
incorporation of this town, several large areas have been rezoned for commercial
development. One shopping area located 2.5 miles north of Green Valley, called
"The Quorum", opened within the last two years.
Operating and Tenant Information. As of March 1, 2000, there
were 70 tenants, including two anchor tenants, at the Green Valley Property. The
two anchor tenants include a Beall's outlet store and an Ace Hardware store. The
third anchor tenant space is currently unoccupied. The other 68 tenants provide
a variety of goods and services. The occupancy rate was 70.7%, 86.5% and 89.3%
in 1999, 1998 and 1997, respectively.
During February 1999, the Partnership received notice from Abco,
the 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. No replacement tenant has yet been identified,
however, the Partnership has retained a large regional real estate brokerage
firm to help market the space. The brokerage firm has shown the space to several
qualified prospective tenants. Many of the tenants at the Green Valley Property
have short term leases. It is not possible to determine the long-term effects of
the vacancy of the Abco space. In the short term, however, the vacancy of the
Abco space could have a material adverse effect on the results of operations at
the Green Valley Property by impairing the Partnership's ability to retain other
tenants or to renew their leases on favorable terms, by reducing traffic at the
Property and negatively affecting percentage rents. In addition, the Partnership
will incur expenses in releasing the Abco space and cannot predict how soon such
space will be leased and the terms of such new lease. 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.
The tables on pages 7 and 8 further describe and summarize
certain operating data and tenant information for the Property.
-6-
Table 1. Summary of Operating and Tenant Information
Tenant Occupying Square Occupancy Base Rent Lease Annual
>10% of GLA Feet Rate Sq Ft. Percentage Rent & Other Expiration R/E Taxes
/Nature of
Location Property Business
- ------------ -------------- ------------------- ------ --------- --------- ------------------------- --------- ---------
Searcy, AR Town & Country 78,436 95.46% $5.50 (1) $27,915
Plaza
J.C. Penney 39,396 $5.22 1.5% of Sales in excess 8/31/2007
Department Store of $11,820,004. Pro-rata
Reimbursement for real
estate taxes over the
base year amount. Common
area maintenance reimbursed
at fixed intervals over
the lease term.
Stage 15,600 $5.25 Operation discontinued 7/30/2001
Clothing and Apparel 4/30/98 (2)
Valencia, CA Old Orchard 103,413 96.88% $11.29 (1) $132,460
Shopping
Ctr. Lucky Stores 31,842 $9.42 1.25% of Sales in excess 6/30/2006
Full Service Grocery of $38,000,000 less amounts
paid for property taxes,
assessments and insurance
premiums. (3)
Rite Aid 18,125 $2.48 Rent is payable in an amount 5/31/2005
Pharmacy equal to 3% of the tenant's
gross sales for the previous month,
but not less than $45,000 annually.
Pays no reimbursed expenses.
Green Valley Green Valley None 194,750 70.67% $7.03 (1) $215,623
, AZ Mall
(1) Represents the average rental rate including base and percentage rent per
square foot of leased space taking rental concessions and discounts into
consideration.
(2) Stage discontinued its operations effective April 30, 1998. Stage will still
be responsible for the basic minimum rental and the average of the amounts
actually received each lease year under the provisions for contingent additional
rentals including real estate taxes, common area maintenance and insurance.
(3) Pro-rata reimbursement for real estate taxes, common area maintenance and
insurance.
-7-
Table 2. Summary of Lease Expirations
Year of Number of Gross Leasable Annual % of Total Annual
Location Property Lease Expiration Leases Expiring Area Expiring Minimum Rent Minimum Rent
- ------------- -------------------------- ----------------- --------------- ------------- ------------ ------------
Searcy, AR Town & Country Plaza M-T-M 2 2,760 $18,120 4.4%
2000 1 5,973 (1) -
2001 2 23,147 $155,050 37.7%
2002 1 2,000 $18,000 4.4%
2003 1 1,600 $14,400 3.5%
2007 1 39,396 $205,600 50.0%
Vacancies 1 3,560 - -
- ------ ---------- --------
Total 9 78,436 $411,170 100.0%
===== = ====== ======= ======
Valencia, CA Old Orchard Shopping Center 2000 2 10,680 $91,246 8.6%
2001 2 2,400 $40,500 3.8%
2002 5 9,867 $192,733 18.1%
2003 5 11,272 $190,104 17.8%
2004 2 5,100 $78,360 7.4%
2005 3 27,429 $170,910 16.1%
2006 1 31,842 $300,000 28.2%
Vacancies 4 4,823 - -
-- ------- ----------- --------
Total 24 103,413 $1,063,853 100.0%
===== == ======= ========= ======
Green Valley Green Valley Mall M-T-M 2 600 $2,205 .23%
, AZ 2000 21 34,204 $284,547 29.33%
2001 18 34,065 $255,935 26.38%
2002 15 33,237 $224,164 23.10%
2003 9 20,160 $158,918 16.38%
2004 2 2,400 $20,621 2.13%
2005 1 1,540 $14,245 1.47%
2008 1 11,425 $9,600 .98%
Vacancies 11 57,119 - -
-- ------- ---------- --------
Total 80 194,750 $970,235 100.0%
===== == ======= ======= ======
(1) Tenant currently pays 4% of gross sales in lieu of all rental obligations.
-8-
Commitments and Contingencies
Investments in real property create a potential for
environmental liability on the part of the owner, operator or developer of such
real property. If hazardous substances are discovered on or emanating from any
of the Properties, the Partnership and/or others may be held strictly liable for
all costs and liabilities relating to the clean-up of such hazardous substances,
even if the problem was caused by another party or a tenant. The Partnership is
not aware of any existing environmental conditions that will have a material
effect on the financial statements.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
-9-
PART II
Item 5. Market for Registrant's Units and Related Security Holders Matters.
(a) Class A and Class B Interests are not traded on any
established public trading market and no organized market has developed for the
interests in the Partnership. Sales of the Class A and Class B Interests occur
from time to time through independent broker-dealers, but to the best of the
Partnership's knowledge, there are no market makers for the interests. Recently
published information relating to other real estate limited partnerships (which
may or may not be analogous to the Partnership) indicates that sales of limited
partnership interests in those partnerships occur at substantial discounts from
the amounts of the original investments.
(b) As of March 1, 2000, 1,518,800 Class A Interests and
2,111,072 Class B Interests were held by approximately 1,173 and 1,249 holders,
respectively.
(c) The Partnership is a limited partnership and, accordingly,
does not pay dividends. It does, however, make quarterly distributions of cash
to its partners depending upon distributable cash flow and certain other
conditions. The table on page 11 lists cash distributions.
Pursuant to the Partnership Agreement, distributable cash flow
(as defined), if any, for each fiscal quarter is distributed as follows: (i)
first, 99% to the holders of the Class A Interests as a group and 1% to the
General Partner until the holders of the Class A Interests have received an
amount of cumulative distributions necessary to provide such holders with a
non-compounded 10.5% cumulative annual return (determined in accordance with the
Partnership Agreement); (ii) next, 90% to the holders of the Class A Interests
and 10% to the General Partner until the holders of the Class A Interests have
received distributions of distributable capital proceeds (i.e., net proceeds of
a sale or other disposition or a refinancing of Properties available for
distribution) and uninvested offering proceeds equal to $10.00 for each Class A
Interest plus an amount of cumulative distributions necessary to provide such
holders with a cumulative, non-compounded 12.5% annual return (determined in
accordance with the Partnership Agreement on their Adjusted Priority Base Amount
as defined in the Partnership Agreement) (a "12.5% Priority Return"); and (iii)
thereafter, 85% to the holders of the Class B Interests, 5% to the holders of
the Class A Interests and 10% to the General Partner.
Pursuant to the Partnership Agreement, distributable capital
proceeds are distributed as follows: (i) first, 100% to the holders of the Class
A Interests as a group until they have received distributions of distributable
capital proceeds and uninvested offering proceeds equal to $10.00 for each Class
A Interest plus an amount of cumulative distributions necessary to provide such
holders with a 12.5% Priority Return; and (ii) thereafter, 85% to the holders of
the Class B Interests and 15% to the General Partner.
Distributable cash flow, as defined in the Partnership
Agreement, means, with respect to any period, (i) revenues and payments (which
do not include refundable deposits or unearned rent) of the Partnership received
in cash during such period, and reserves set aside out of revenues during prior
periods and no longer needed for the Partnership's business, but not including
cash proceeds attributable to a capital transaction (as defined), Bond proceeds
or capital contributions (as defined), less (ii) the sum of (A) amounts paid in
cash by the Partnership during such period for operating expenses of the
Partnership (excluding amounts paid from reserves or funds provided by capital
contributions or loans), for debt payments, and for other fees or payments to
the General Partner, (B) any capital expenditures with respect to Properties,
and (C) any amount set aside for the restoration, increase or creation of
reserves. Distributable cash flow is deemed to include the amount of any income
tax withheld with respect to revenues that are includable in distributable cash
flow.
-10-
During its two most recent fiscal years, the Partnership has
made the following cash distributions with respect to the Class A Interests:
Amount of Portion
Distribution Distribution Representing
With Respect Per 100 Class a Return of
To Quarter Ended: A Interests (1) Capital (2)
----------------- --------------- ------------
March 31, 1999 (4) $3.29 $3.29
June 30, 1999 (4) $1.32 $1.32
September 30, 1999 (5) $0 $0
December 31, 1999 (5) $0 $0
March 31, 1998 (3) $0 $0
June 30, 1998 (3) $0 $0
September 30, 1998 (3) $0 $0
December 31, 1998 (4) $3.29 $3.29
- ---------------------------------
(1) The amounts listed represent distributions of distributable
cash flow.
(2) That portion of the total "Amount of Distribution per 100
Class A Interests" which is a return of capital. Return of
capital is defined as distributions in excess of cumulative
net income.
(3) The Partnership suspended making distributions subsequent to
the first quarter of 1997 due to the cost of addressing an
environmental issue identified at the Valencia Property, and
payment of certain expenses relative to the refinancing.
(4) The Partnership resumed making distributions after
determining that unrestricted working capital levels were
adequate. The December 31, 1998 distribution was made during
February 1999.
(5) The Partnership suspended making distributions subsequent to
the second quarter of 1999 after determining that
unrestricted working capital levels were inadequate due to
Abco vacating its space at the Green Valley Property in May,
1999.
There have been no distributions with respect to the Class B Interests.
In general, profits are allocated annually among the holders of
Class A Interests and Class B Interests and the General Partner, first in the
ratio and to the extent that they receive distributions of distributable cash
flow. Profits will next be allocated 100% to holders of Class A Interests until
their capital accounts equal the greater of zero or their Adjusted Priority Base
Amounts (as defined in the Partnership Agreement) plus their 12.5% Priority
Return. Any additional profits will be allocated to the holders of Class B
Interests and the General Partner to increase their capital accounts to reflect
the manner in which they are expected to share in further distributions.
Gain arising upon the sale of a Property or otherwise is
allocated first to holders of Class A Interests and Class B Interests and the
General Partner to eliminate any deficits in their capital accounts, and then to
the holders of the Class A Interests and Class B Interests and the General
Partner to increase their capital accounts to reflect the manner in which they
are expected to share in further distributions.
-11-
In general, losses are allocated first to the holders of Class B
Interests and the General Partner in the ratio and to the extent of any positive
balances in their capital accounts; then, to the holders of Class A Interests to
the extent of any positive balances in their capital accounts; and finally, 100%
to the General Partner.
Item 6. Selected Financial Data.
The following page sets forth a summary of the selected
financial information for the Partnership. The information below should be read
in conjunction with the audited financial statements.
Notes to Selected Financial Data Schedule:
(a) All income allocated with respect to Equity Units was
allocated with respect to the 100 Class A Interests in each such unit. No income
was allocated with respect to Class B Interests.
(b) The net (loss) income per 100 Class A Interests has been
calculated by dividing the net (loss) income for the period by the average
number of Class A Interests outstanding for the period and multiplying that
quotient by 100.
(c) Distributions have been allocated based upon the dates that
Class A Interests were issued. Distributions with respect to each fiscal quarter
of the Partnership are paid 60 days following the end of that fiscal quarter. No
distributions were paid with respect to Class B Interests.
(d) Return of Capital is defined as distributions in excess of
cumulative net income.
-12-
CONCORD MILESTONE PLUS, L.P.
(A Limited Partnership)
Selected Financial Data
For Year Ended For Year Ended For Year Ended For Year Ended For Year Ended
December 31, 1999 December 31, 1998 December 31, 1997 December 31, 1996 December 31, 1995
----------------- ----------------- ----------------- ----------------- -----------------
Operating Statement Data:
Revenue $2,986,502 $3,103,638 $3,046,796 $3,009,663 $3,061,279
Net (loss)income (84,307) 31,270 (271,920) (238,119) (307,810)
Balance Sheet Data:
Total assets 21,423,375 21,841,605 22,051,864 22,086,775 22,537,617
Long term debt 16,327,881 16,513,054 16,683,574 16,473,060 16,425,967
Total liabilities 16,760,632 16,974,551 17,216,080 16,877,282 16,893,481
Statement of Partners'
(Deficit) Capital:
General Partner (75,937) (73,894) (74,207) (70,470) (66,124)
Class A Interests 4,738,680 4,940,948 4,909,991 5,279,963 5,710,260
Class B Interests 0 0 0 0 0
Total 4,662,743 4,867,054 4,835,784 5,209,493 5,644,136
Per 100 Class A Interests (a):
Net (loss)income (b): (5.55) 2.06 (17.90) (15.68) (20.27)
Distributions (c): 4.61 3.29 3.29 12.94 13.15
Return of Capital (d): 4.61 3.29 3.29 12.94 13.15
See Notes to Selected Financial Data
-13-
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Certain statements made in this report may constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. See Part I.
The following discussion and analysis should be read in
conjunction with the Financial Statements of the Partnership and the notes
thereto appearing in Item 14 of this report.
General
The Partnership commenced a public offering of Equity Units and
Bond Units (together, "Units") on April 8, 1987 in order to fund the
Partnership's real property acquisitions. The Partnership terminated the public
offering of Units on April 2, 1988. On April 14, 1988, the Partnership held its
final closing on the sale of Units. The Partnership was fully subscribed to with
a total of 16,452 Bond Units and 15,188 Equity Units from which the Partnership
received aggregate net proceeds (after deduction of sales commissions, discounts
and selling agent's expense otherwise required to be reimbursed to the General
Partner and its Affiliates) of $29,285,960. The Partnership purchased three
shopping centers with the proceeds from this offering. No further acquisitions
are planned and the Partnership has no plans to raise additional capital.
On September 30, 1997, the Partnership closed three fixed rate
first mortgage loans in the amounts of $2,865,000, $8,445,000 and $5,400,000, on
the Searcy, Valencia and Green Valley Properties, respectively. All three
Mortgage Loans are secured by first mortgages on each of the Properties. The
Partnership used the proceeds of the Mortgage Loans and available cash to redeem
all of the outstanding Bonds. The Mortgage Loans are described in further detail
in Item 2. Properties Section.
The Partnership has an agreement with Milestone Property
Management, Inc. ("MPMI"), an affiliate of the General Partner, to provide
management services to the Properties. In addition, MPMI is responsible for
leasing space at the properties and actively monitors all vacancies to ensure
the highest occupancy rate possible. All leasing is performed by MPMI and the
terms of the leases are negotiated on a lease by lease basis.
Impact of Year 2000
Year 2000 compliance programs and information systems
modifications were initiated by the Partnership's affiliated management company,
Milestone Property Management, Inc. ("MPMI"), in early 1998, in an attempt to
ensure that these systems and key processes will remain functional. This
objective was achieved by modifying present systems using existing internal and
external programming resources and by installing new system hardware and
software, and by monitoring supplier, customer and other third party readiness.
Such modifications were completed by MPMI by September 1999. There have been no
costs charged to the Partnership for the Year 2000 program completed by MPMI.
Neither the Partnership nor MPMI has experienced any Year 2000 problems from any
of its major customers, suppliers or vendors.
Competition
Rental property owned by the Partnership will have substantial
competition from similar properties in the vicinity in which such property is
located. Such competition is generally for the retention of existing tenants and
for new tenants upon space becoming vacant. Competition for tenants may result
in the Partnership being unable to quickly re-lease space resulting in a decline
in cash flows. The Partnership believes that the
-14-
profitability of each of the Properties is based, in part, upon its geographic
location, the operations and identity of the property's tenants, the performance
of the property and leasing managers, the maintenance and appearance of the
property, the ease of access to the property and the adequacy of property
related facilities. The Partnership also believes that general economic
circumstances and trends as well as the character and quality of new and
existing properties which may be located in the vicinity of the Properties are
factors that may affect the operation and competitiveness of the property.
Results of Operations
Comparison of Year Ended December 31, 1999 to 1998.
Revenues of the Partnership decreased $117,136, or 3.77%, to $2,986,502 in 1999
from $3,103,638 in 1998 primarily due to the net effect of the following:
(1) Rent - A decrease in base rent of $78,776, or 3.04%,
to $2,509,336 in 1999 from $2,588,112 in 1998 caused
by (i) a decrease in base rent and percentage rent
revenues at the Green Valley Property due to Abco, a
principal anchor tenant, vacating its space during
the year and (ii) two vacancies at the Valencia
Property.
(2) Reimbursed Expenses - A decrease in reimbursed
expenses of $33,879, or 6.85%, to $460,539 in 1999
from $494,418 in 1998 primarily due to a decrease in
the recovery on both common area expenses and real
estate taxes at the Green Valley Property due to Abco
vacating its space during the year.
Management and property expenses increased $60,047, or 7.54%, to
$856,001 in 1999 from $795,954 in 1998 due to increases in real estate taxes,
insurance and common area expenses at the Properties.
Professional fees and other expenses decreased $27,910, or
28.13%, to $71,317 in 1999 from $99,227 in 1998, primarily due to a decrease in
accounting fees due to a change of audit firms in 1998.
Administrative and management fees to a related party decreased
by $3,004 or 1.91% to $153,905 in 1999 from $156,909 in 1998 due to decreases in
both rent revenue and recovery of reimbursed expenses.
Depreciation and amortization expense decreased $15,937, or
2.46%, to $630,782 in 1999 from $646,719 in 1998, primarily due to certain
assets reaching the end of their depreciable lives.
Comparison of Year Ended December 31, 1998 to 1997.
Revenues of the Partnership increased $56,842, or 1.87%, to
$3,103,638 in 1998 from $3,046,796 in 1997 primarily due to the net effect of
the following:
(1) Rent - An increase in base rent of $44,728, or 1.76%,
to $2,588,112 in 1998 from $2,543,384 in 1997 caused
by an increase in base rent revenue at the Valencia
Property due to one new tenant and escalations in the
rental rates of several tenants.
(2) Reimbursed Expenses - An increase in reimbursed
expenses of $17,106 or 3.58%, to $494,418 in 1998
from $477,312 in 1997 primarily due to an increase in
the recovery from tenants on both real estate taxes
and insurance.
-15-
Management and property expenses decreased $20,862, or 2.55%, to
$795,955 in 1998 from $816,817 in 1997 due to concerted efforts by management to
contain operating costs at the Properties.
Professional fees and other expenses decreased $82,771, or
45.48%, to $99,227 in 1998 from $181,998 in 1997, primarily due to the costs
associated with the investigation and subsequent resolution of chemical
contamination in the soil at a site at the Valencia Property which costs were
expensed during 1997.
Administrative and management fees to a related party increased
by $24,184 or 18.2% to $156,909 in 1998 from $132,725 in 1997 due to management
fees being properly calculated in accordance with the management agreement based
on a percentage of gross revenues rather than a percentage of base rents and
percentage rents as had been calculated in prior years.
Interest expense decreased $229,203, or 14.3%, to $1,373,559 in
1998 from $1,602,762 in 1997 due to the interest rates of between 8.125% and
8.25% on mortgage loans payable throughout 1998 versus the 10% interest rate
paid during 1997 on the bonds payable until the September 30, 1997 refinancing.
Depreciation and amortization expense increased $62,304, or
10.66%, to $646,718 in 1998 from $584,414 in 1997, primarily due to a full year
of amortization on the debt financing costs and an increase in property
improvements during 1998.
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
operating requirements for the remainder of the year. 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. No replacement tenant has yet been identified,
however, the Partnership has retained a large regional real estate brokerage
firm to help market the space. The brokerage firm has shown the space to several
qualified prospective tenants. Many of the other tenants at the Green Valley
Property have short term leases. It is not possible to determine the long-term
effects of the vacancy of the Abco space. In the short term, however, the
vacancy of the Abco space could have a material adverse effect on the results of
operations at the Green Valley Property by impairing the Partnership's ability
to retain other tenants or to renew their leases on favorable terms, by reducing
traffic at the Property and negatively affecting percentage rents. In addition,
the Partnership will incur expenses in leasing the space vacated by Abco to a
new tenant, and the Partnership cannot predict how soon such space will be
leased and the terms of such new lease. 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 vacant anchor tenant space created
by the departure of Abco.
The Partnership periodically makes distributions to its owners.
A 1998 fourth quarter distribution of $50,001 was paid during February 1999.
Also, a first quarter distribution of $50,001 was paid during May 1999 and a
second quarter distribution of $20,002 was paid during August 1999.
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. 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.
-16-
The cash on hand at December 31, 1999 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 $528,387 for the
year ended December 31, 1999 was comprised of (i) net loss of $84,307, (ii)
adjustments of $630,782 for depreciation and amortization and (iii) a net change
in operating assets and liabilities of $18,088.
Net cash provided by operating activities of $487,409 for the
year ended December 31, 1998 was comprised of (i) net income of $31,270, (ii)
adjustment of $646,719 for depreciation and amortization, and (iii) a net change
in operating assets and liability of $190,580.
Net cash used in investing activities of $114,259 for the year
ended December 31, 1999 was comprised of capital expenditures for building
improvements.
Net cash used in investing activities of $176,503 for the year
ended December 31, 1998 was comprised of capital expenditures for building
improvements.
Net cash used in financing activities of $288,647 for the year
ended December 31, 1999 included (i) principal repayments on mortgages loans
payable of $185,173, (ii) funds held in escrow of $16,530 and (iii) cash
distributions to partners of $120,004.
Net cash used in financing activities of $132,555 for the year
ended December 31, 1998 included (i) principal repayments on mortgages loans
payable of $170,520 and (ii) funds held in escrow of $37,965.
Item 7A. 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 estimates
the fair value of its long term fixed rate Mortgage Loans generally using
discounted cash flow analysis based on the Partnership's current borrowing rates
for similar types of debt. At December 31, 1999, the fair value of the Mortgage
Loans was estimated to be $16,055,167 compared to a carrying value amount of
$16,327,881.
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.
Item 8. Financial Statements and Supplementary Data.
The financial statements and supplementary data are included
elsewhere in this document, as listing on the accompanying index.
-17-
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
On October 28, 1998, the Partnership dismissed the accounting firm of
Deloitte & Touche LLP as the Partnership's independent auditor. The dismissal of
Deloitte & Touche LLP was not the result of any disagreements between the
Partnership and Deloitte & Touche LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure. On
November 2, 1998, the Partnership retained the accounting firm of Ahearn, Jasco
+ Company, P.A. as its new independent auditor for the fiscal year ending
December 31, 1998. The decision to change accounting firms as the Partnership's
independent auditor was approved by the Audit Committee of CM Plus Corporation,
General Partner of Concord Milestone Plus, L.P., on October 28, 1998.
PART III
Item 10. Directors and Officers of the Registrant.
The names, offices held and the ages of the directors and
executive officers of the General Partner and of CMP Beneficial Corp. are as
follows:
Has Served As a
Director and/or
Name Age Position Held Officer Since (1)
--------------------- --- ------------------ -----------------
Leonard S. Mandor (3) 53 President Inception (2)
and Director
Robert A. Mandor (3) 47 Vice President Inception
and Director
Harvey Shore 54 Vice President December 24, 1987
Joseph P. Otto 46 Vice President October 3, 1997
and Secretary
Patrick Kirse 31 Treasurer and October 3, 1997
Controller
- ----------------------------------
(1) Each director and officer of the General Partner and CMP Beneficial Corp.
will hold office until the next annual meeting of the General Partner and
CMP Beneficial Corp. and until his successor is elected and qualified.
(2) The General Partner was incorporated on December 12, 1986 and CMP
Beneficial Corp. was incorporated on December 18,1986.
(3) Robert A. Mandor and Leonard S. Mandor are brothers.
LEONARD S. MANDOR is the Chief Executive Officer and a Director of Concord.
Mr. Mandor is the Chairman of the Board, Chief Executive Officer and a Director
of Milestone Properties, Inc. Mr. Mandor has been associated with Concord since
its inception in 1981.
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ROBERT A. MANDOR is the President and a Director of Concord. For at least
the past five years he has served as the President, Chief Financial Officer, and
a Director of Milestone Properties, Inc. Mr. Mandor has been associated with
Concord since its inception.
HARVEY SHORE joined Concord in 1983 and is a Senior Vice President. He also
serves as a Senior Vice President and Secretary of Milestone Properties, Inc.
Before joining Concord he worked at Chase Manhattan Bank as a Vice President.
JOSEPH P. OTTO was appointed Vice President and Secretary of CM Plus
Corporation, the General Partner of Concord Milestone Plus, L.P. in October 1997
to fill a vacancy. Mr. Otto is also a Vice President of Concord and has been
associated with Concord since 1984. Mr. Otto is also a Vice President and
Director of Milestone Properties, Inc.
PATRICK KIRSE was appointed Treasurer and Controller of CM Plus
Corporation, the General Partner of Concord Milestone Plus, L.P. in October 1997
to fill a vacancy. Mr. Kirse also serves as a Vice President of Milestone
Properties, Inc. He is a CPA licensed in the state of Missouri. Before joining
Milestone in 1995 he worked as a senior auditor with Deloitte & Touche LLP since
1991.
On February 2, 1995, the Securities and Exchange Commission
filed a civil complaint against Concord in the United States District Court for
the District of Columbia in connection with the proxy solicitation conducted
with respect to the merger of Concord Milestone Income Fund, L.P. and Concord
Milestone Income Fund II, L.P. into a publicly held corporation, Milestone
Properties, Inc., in 1990. The complaint alleged that Concord violated the
anti-fraud provisions of the Securities Exchange Act of 1934 through the forgery
of investors' signatures on proxy cards and further alleged that Concord failed
to provide certain investors in the affected partnerships with lists of
partners, as required under the proxy rules. In April, 1995, Concord consented,
without admitting or denying the Commission's allegations, to the entry of a
final judgment ordering it to pay a civil penalty of $500,000 and enjoining it
from violating Section 17(a) of the Securities Act of 1933 and Sections 10(b)
and 14(a) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14a-7
thereafter.
Compliance with Section 16(a) of the Exchange Act.
Based on the General Partner's review of Forms 3, 4 and 5
furnished to the Partnership, there were no late reports filed during 1999.
Item 11. Compensation.
During 1999, the Partnership paid or accrued:
(i) $25,000 to Milestone Property Management, Inc. ("MPMI"), an
affiliate of the General Partner, for administrative
services rendered to the Partnership. Pursuant to an
agreement between MPMI and the Partnership, the Partnership
reimburses MPMI for administrative services provided to the
Partnership, such as payroll, investor services and supplies
in an amount equal to $25,000 per year.
(ii)$128,904 to MPMI for property management fees for the
fiscal year ended December 31, 1999. Pursuant to the
management agreement between the Partnership and MPMI,
property management fees are equal to a percentage of gross
revenues not to exceed 5 percent for multiple tenant
property for which MPMI performs leasing services, 3 percent
for multiple tenant property for which MPMI does not perform
leasing services and 1 percent for single
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tenant property. The management fees are 3 percent for the
Searcy Property, 4 percent for the Valencia Property and 5
percent for the Green Valley Property. The management fee
for any Property may not exceed competitive fees for
comparable services reasonably available to the Partnership
in the same geographic area as the property in question.
Gross revenues are defined in the management agreement to
mean, with respect to each Property, all base, additional
and percentage rents collected from the Property but exclude
all other receipts or income with respect to that Property,
such as, (i) receipts arising out of any sale of assets or
of all or part of the Property, condemnation proceeds and
other items of a similar nature; (ii) payments made by
tenants for over-standard finish out improvements or other
amortization; (iii) income derived from interest on
investments, security deposits utility deposits; (iv)
proceeds of claims under insurance policies; (v) abatements
or reductions of taxes; (vi) security deposits made by
tenants; or (vii) any portions of rentals which are
specifically designated as amortization of, or interest on,
tenant moving expenses, takeover expenses or similar items
in the nature of advances by the Partnership.
No officer, director, or employee of the General Partner
received any direct compensation from the Partnership during the fiscal year
ended December 31, 1999.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) The General Partner knows of only one beneficial owner of
five percent or more of the issued and outstanding Class A Interests. The
General Partner knows of only two owners of five percent or more of the issued
and outstanding Class B Interests, the information as to which is set forth
below as of March 1, 2000:
Amount and
Nature of Percent
Title Name and Address of Beneficial of
of Class Beneficial Owner Ownership Class
- --------- ------------------- ------------ -------
Class A KM Investments, LLC 96,068* 6.33%
Interests 199 South Los Robles
Suite #440
Pasadena, CA 91101
Class B The Guardian Life 572,292* 27.11%
Interests Insurance Company
of America
203 Park Avenue South
New York, NY 10003
Class B KM Investments, LLC 96,368* 4.56%
Interests 199 South Los Robles
Suite #440
Pasadena, CA 91101
- -----------------------
* To the best of the Partnership's knowledge, both The Guardian Life
Insurance Company of America and KM Investments, LLC have sole voting power
and investment power with respect to these securities.
-20-
(b) The General Partner, together with its affiliates and the
officers and directors of the General Partner, own less than 1% of the issued
and outstanding Class A Interests and less than 1% of the issued and outstanding
Class B Interests.
The number of shares of stock, no par value, of Concord (which
is the parent of the General Partner) beneficially owned by all directors of the
General Partner and CMP Beneficial Corp. and all directors and officers of the
General Partner and CMP Beneficial Corp. as a group as of March 1, 2000 is set
forth in the following table:
Amount and
Nature of Percent
Name of Beneficial of
Beneficial Owner Ownership Class
------------------ ------------- -------
Leonard S. Mandor 267 67%
Robert A. Mandor 133 33%
Item 13. Certain Relationships and Related Transactions.
See Item 1, "Business," Item 5, "Market for Registrant's Units
and Related Security Holders Matters," Item 10, "Directors and Officers of the
Registrant," and Item 11, "Compensation," of this Report for details. See also
Note 5 of the Notes to Financial Statements of the Partnership's Financial
Statements included in this Report.
PART IV
Item 14. Exhibits, Financial Statements, Financial Schedule, and Reports on Form
8-K.
(a) Financial Statements and Financial Schedule
See Index to Financial Statements and Financial Schedule
included elsewhere in this Report.
(b) Exhibits:
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.
-21-
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.
4. Form of Indenture relating to Escalating Rate Collateralized
Mortgage Bonds due November 30, 1997 between Concord Milestone
Plus, L.P. and United States Trust Company of New York, as
Trustee. Incorporated herein by reference to Exhibit 4 to the
Registration Statement.
4.1 Form of Supplemental Indenture. Incorporated herein
by reference to Exhibit 4.7 to the Registrant's
Post-Effective Amendment No. 1 ("Post-Effective
Amendment No. 1") to the Registration Statement.
4.2 Form of Escalating Rate Collateralized Mortgage Bond
due November 30, 1997 included as Exhibit 4.2 to the
1987 Form 10-K, which is incorporated herein by
reference.
4.3 Form of certificate evidencing Class A Interests
included as Exhibit 4.3 to the 1987 Form 10-K,
which is incorporated herein by reference.
4.4 Form of certificate evidencing Class B Interests
included as Exhibit 4.4 to the 1987 Form 10-K,
which is incorporated herein by reference.
10.1 Property purchase agreements. Incorporated herein by
reference to Exhibit 10.1 to the Registration
Statement.
-22-
10.2 Form of property management agreement. Incorporated
herein by reference to Exhibit 10.2 of the
Registration Statement.
10.3 First Amendment to Management Agreement by and between
Concord Milestone Plus, L.P. and Concord Assets
Management, Inc. Incorporated herein by reference to
Exhibit 10.3 of the 1988 Form 10-K.
10.4 Second Amendment to Management Agreement by and
between Concord Milestone Plus, L.P. and Concord Assets
Management, Inc. Incorporated herein by reference to
Exhibit 10.4 of the 1988 Form 10-K.
10.5 Omitted intentionally.
10.6 Omitted intentionally.
10.7 Mortgage Promissory Note executed by Concord Milestone
Plus, L.P. in favor of United States Trust Company of
New York, as trustee, in the principal amount of
$7,523,500 and secured by a mortgage on certain
property located in Valencia, California.
Incorporated herein by reference to Exhibit 10.5 to
the 1987 Form 10-K.
10.8 Mortgage Promissory Note executed by Concord Milestone
Plus, L.P. in favor of United States Trust Company as
trustee, in the principal amount of $6,296,000 and
secured by a mortgage on a certain property located in
Green Valley, Arizona. Incorporated herein by
reference to Exhibit 10.8 to the 1988 Form 10-K.
10.9 Deed of Trust and Uniform Commercial Code Security
Agreement and Financing Statement with Assignment of
Leases, Rents and Profits executed by Concord
Milestone Plus, L.P. in favor of United States Trust
Company of New York, as trustee, with respect to
property located in Valencia, California.
Incorporated herein by reference to Exhibit 10.6 to
the 1987 Form 10-K.
10.10 Mortgage Deed of Trust and Uniform Commercial Code
Security Agreement and Financing Statement with
Assignment of Leases, Rents and Profits, in favor of
United States Trust Company of New York, as trustee,
with respect to certain property located in Green
Valley, Arizona. Incorporated herein by reference to
Exhibit 10.10 to the 1988 Form 10-K.
-23-
10.11 Amended and Restated Mortgage Promissory Note executed
by Concord Milestone Plus, L.P. in favor of United
States Trust Company of New York, as trustee, in the
principal amount of $2,632,500 and secured by a
mortgage on certain property located in Searcy,
Arkansas. Incorporated herein by reference to Exhibit
10.7 of the 1987 Form 10-K.
10.12 Mortgage, Deed of Trust and Uniform Commercial Code
Security Agreement and Financing Statement with
Assignment of Leases, Rents and profits by Concord
Milestone Plus, L.P. in favor of United States Trust
Company of New York, as trustee, with respect to
property located in Searcy, Arkansas. Incorporated
herein by reference to Exhibit 10.8 of the 1987
Form 10-K.
10.13 Modification of Mortgage, Deed of Trust and Uniform
Commercial Code Security Agreement and Financing
statement with Assignment of Leases, Rents and Profits
by Concord Milestone Plus, L.P. in favor of United
States Trust Company of New York, as trustee, with
respect to property located in Searcy, Arkansas.
Incorporated herein by reference to Exhibit 10.9 of
the 1987 Form 10-K.
10.14 Second Modification to Mortgage, Deed of Trust and
Uniform Commercial Code Security Agreement and
Financing Statement with Assignment of Leases, Rents
and Profits by Concord Milestone Plus, L.P. in favor
of United States Trust Company of New York, as
trustee, with respect to property located in Searcy,
Arkansas. Incorporated herein by reference to Exhibit
10.10 of the 1987 Form 10-K.
10.15 Fixed Rate Note, dated September 23, 1997, executed
by the Partnership in favor of Lender, relating to the
property located in Green Valley, Arizona. Incorporated
herein by reference to Exhibit 10.1 of the Partnership's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997 (the "September 1997 10-Q").
10.16 Mortgage, Deed of Trust, Assignment of Leases and Rents,
Security Agreement and Fixture Filing, dated September
23, 1997, executed by the Partnership for the benefit of
Lender, relating to the property located in Green Valley,
Arizona. Incorporated herein by reference to Exhibit
10.2 of the September 1997 10-Q.
-24-
10.17 Assignment of Leases and Rents, dated September 23, 1997,
executed by the Partnership for the benefit of Lender,
relating to the property located in Green Valley, Arizona.
Incorporated herein by reference to Exhibit 10.3 of the
September 1997 10-Q.
10.18 Environmental Liabilities Agreement, dated September 23,
1997, executed by the Partnership and CM Plus Corporation
for the benefit of Lender, relating to the property located in
Green Valley, Arizona. Incorporated herein by reference to
Exhibit 10.4 of the September 1997 10-Q.
10.19 Tenant Occupancy Escrow and Security Agreement, dated
September 23, 1997, by and between the Partnership and
the Lender, relating to the property located in Green Valley,
Arizona. Incorporated herein by reference to Exhibit
10.5 of the September 1997 10-Q.
10.20 Fixed Rate Note, dated September 23, 1997, executed by the
Partnership in favor of Lender, relating to the property located
in Searcy, Arkansas. Incorporated herein by reference to Exhibit
10.6 of the September 1997 10-Q.
10.21 Mortgage, Deed of Trust and Security Agreement, dated September
23, 1997, executed by the Partnership for the benefit of Lender,
relating to the property located in Searcy, Arkansas.
Incorporated herein by reference to Exhibit 10.7 of the September
1997 10-Q.
10.22 Assignment of Leases and Rents, dated September 23, 1997,
executed by the Partnership for the benefit of Lender, relating
to the property located in Searcy, Arkansas. Incorporated
herein by reference to Exhibit 10.8 of the September 1997 10-Q.
10.23 Environmental Liabilities Agreement, dated September 23, 1997,
executed by the Partnership and CM Plus Corporation for the
benefit of Lender, relating to the property located in Searcy,
Arkansas. Incorporated herein by reference to Exhibit 10.9 of
the September 1997 10-Q.
10.24 Fixed Rate Note, dated September 23, 1997, executed by the
Partnership in favor of Lender, relating to the property located
in Valencia, California. Incorporated herein by reference to
Exhibit 10.10 of the September 1997 10-Q.
10.25 Deed of Trust, Assignment of leases, and Rents, Security
Agreement and Fixture Filing, dated September 23, 1997, executed
by the Partnership for the benefit of Lender, relating to the
property located in Valencia, California. Incorporated herein by
reference to
-25-
Exhibit 10.11 of the September 1997 10-Q.
10.26 Assignment of Leases and Rents, dated September 23, 1997, executed by the
Partnership for the benefit of Lender, relating to the property located in
Valencia, California. Incorporated herein by reference to Exhibit 10.12 of the
September 1997 10-Q.
10.27 Environmental Liabilities Agreement, dated September 23, 1997,
executed by the Partnership and CM Plus Corporation for the
benefit of Lender, relating to the property located in Valencia,
California. Incorporated herein by reference to Exhibit 10.13
of the September 1997 10-Q.
10.28 Environmental Escrow and Security Agreement, dated September 23, 1997, by
and between the Partnership and the Lender, relating to the property located in
Valencia, California. Incorporated herein by reference to Exhibit 10.14 of the
September 1997 10-Q.
27. Financial Data Schedule Article 5 included for Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) purposes only. This Schedule contains summary
financial information extracted from the consolidated balance sheets and
consolidated statements of revenues and expenses of the Company as of and for
the fiscal year ended December 31, 1999, and is qualified in its entirety by
reference to such financial statements.
-26-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunder duly authorized on March 21, 2000.
CONCORD MILESTONE PLUS, L.P.
By: CM PLUS CORPORATION,
General Partner
By: /s/ Leonard S. Mandor
Leonard S. Mandor, President
CMP BENEFICIAL CORP.
(Registrant of Beneficial Interests)
By: /s/ Leonard S. Mandor
Leonard S. Mandor, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed by the following persons in the capacities and on the dates
indicated.
By: /s/ Leonard S. Mandor March 21, 2000
-----------------------------------------
Leonard S. Mandor
President (Principal Executive Officer)
and Director of CM Plus
Corporation and CMP Beneficial Corp.
By: /s/ Robert A. Mandor March 21, 2000
-----------------------------------------
Robert A. Mandor
Vice President and Director of CM Plus
Corporation and CMP Beneficial Corp.
By: /s/ Patrick Kirse March 21, 2000
-----------------------------------------
Patrick Kirse
Treasurer and Controller (Principal
Accounting Officer) of CM Plus
Corporation and CMP Beneficial Corp.
-27-
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-28-
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL SCHEDULE
Page No.
1. Financial Statements:
a. Concord Milestone Plus, L.P.
1. Independent Auditors' Reports ........................... 30
2. Balance Sheets, December 31, 1999 and December 31, 1998.. 32
3. Statements of Revenues and Expenses for the Years Ended
December 31, 1999, 1998 and 1997 ........................ 33
4. Statements of Changes in Partners' Capital for the Years
Ended December 31, 1999, 1998 and 1997 .................. 34
5. Statements of Cash Flows for the Years Ended December
31, 1999, 1998 and 1997 ................................ 35
6. Notes to Financial Statements ........................... 36
2. Financial Schedule:
a. Real Estate and Accumulated Depreciation (Schedule III) . 42
This financial statement schedule of the Partnership for each of
the years ended December 31, 1999, 1998 and 1997 is filed as part of this Form
10-K and should be read in conjunction with the Financial Statements, and
related notes thereto, of the Partnership. All other financial statement
schedules have been omitted because the required information is not present or
not present in amounts sufficient to require submission of the schedule or
because the information required is included in the financial statements or
notes thereto.
-29-
INDEPENDENT AUDITORS' REPORT
Concord Milestone Plus, L.P.
We have audited the accompanying balance sheets of Concord Milestone Plus, L.P.
(the "Partnership") as of December 31, 1999 and 1998, and the related statements
of revenues and expenses, changes in partners' capital, and cash flows for the
years then ended. Our audits also included the information pertaining to 1999
and 1998 contained in the financial statement schedule of real estate and
accumulated depreciation. These financial statements and the financial statement
schedule of real estate and accumulated depreciation are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on the
financial statements and the financial statement schedule of real estate and
accumulated depreciation based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Concord Milestone Plus, L.P. as
of December 31, 1999 and 1998, and the results of its operations, changes in
partners' capital and its cash flows for the years then ended in conformity with
generally accepted accounting principles. Also, in our opinion, the information
pertaining to 1999 and 1998 contained in the financial statement schedule of
real estate and accumulated depreciation, when considered in relation to the
basic financial statements, presents fairly, in all material respects, the
information set forth therein.
/s/ Ahearn, Jasco + Company, P.A.
Pompano Beach, Florida
February 26, 2000
-30-
INDEPENDENT AUDITORS' REPORT
Concord Milestone Plus, L.P.
We have audited the accompanying statements of revenues and expenses, changes in
partners' capital and cash flows of Concord Milestone Plus, L.P. (the
"Partnership") for the year ended December 31, 1997. Our audit also included the
information pertaining to 1997 contained in the financial statement schedule of
real estate and accumulated depreciation. These financial statements and the
financial statement schedule are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on the financial
statements and financial statement schedule information based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and changes in partners'
capital and cash flows of Concord Milestone Plus L.P. for the year ended
December 31, 1997 in conformity with general accepted accounting principles.
Also, in our opinion, the information pertaining to 1997 contained in such
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
/s/ Deloitte & Touche LLP
New York, New York
March 20, 1998
-31-
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1999 and 1998
December 31, December 31,
1999 1998
Property:
Building and improvements, at cost $ 15,744,707 $15,630,448
Less: accumulated depreciation 6,605,544 6,017,284
------------ ------------
Building and improvements, net 9,139,163 9,613,164
Land, at cost 10,987,034 10,987,034
----------- -----------
Property, net 20,126,197 20,600,198
Cash and cash equivalents 561,737 436,256
Accounts receivable 209,899 224,272
Restricted cash 215,400 231,930
Debt financing costs, net 242,836 274,170
Prepaid expenses and other assets, net 67,306 74,779
------------- -------------
Total assets $ 21,423,375 $ 21,841,605
=========== ===========
Liabilities:
Mortgage loans payable $16,327,881 $16,513,054
Accrued interest 114,809 116,110
Accrued expenses and other liabilities 265,943 299,746
Accrued expenses payable to affiliates 51,999 45,641
------------- -------------
Total liabilities 16,760,632 16,974,551
----------- -----------
Partners' capital:
General partner (75,937) (73,894)
Limited partners:
Class A Interests, 1,518,800 4,738,680 4,940,948
Class B Interests, 2,111,072 - -
----------------- -----------------
Total partners' capital 4,662,743 4,867,054
------------ -----------
Total liabilities and partners' capital $ 21,423,375 $21,841,605
=========== ==========
See Accompanying Notes to Financial Statements
-32-
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF REVENUES AND EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
December 31, December 31, December 31,
1999 1998 1997
Revenues:
Rent $2,509,336 $2,588,112 $2,543,384
Reimbursed expenses 460,539 494,418 477,312
Interest and other income 16,627 21,108 26,100
----------- ----------- ---------
Total revenues 2,986,502 3,103,638 3,046,796
--------- --------- ---------
Expenses:
Interest expense 1,358,804 1,373,559 1,602,762
Depreciation and amortization 630,782 646,719 584,414
Management and property expenses 856,001 795,954 816,817
Administrative and management fees
to related party 153,905 156,909 132,725
Professional fees and other expenses 71,317 99,227 181,998
----------- ----------- ----------
Total expenses 3,070,809 3,072,368 3,318,716
--------- --------- ---------
Net (loss) income $ (84,307) $ 31,270 $(271,920)
=-------- ========== ========
Net (loss) income attributable to:
Limited partners $(83,464) $30,957 $(269,201)
General partner (843) 313 (2,719)
----------- ------------ -----------
Net (loss)income $(84,307) $31,270 $(271,920)
======== ========= =========
(Loss)income per weighted average
Limited Partnership 100 Class A
Interests outstanding $ (5.55) $2.06 $ (17.90)
========== ========== =========
Weighted average number of 100
Class A interests outstanding 15,188 15,188 15,188
========= ========= =========
See Accompanying Notes to Financial Statements
-33-
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, and 1997
General Class A Class B
Total Partner Interests Interests
PARTNERS' CAPITAL (DEFICIT)
January 1, 1997 $5,209,493 ($70,470) $5,279,963 -
Distributions (101,789) (1,018) (100,771) -
Net Loss for 1997 (271,920) (2,719) (269,201) -
---------- -------- ---------- --------------
PARTNERS' CAPITAL (DEFICIT)
December 31, 1997 4,835,784 (74,207) 4,909,991 -
--------- -------- ---------- --------------
Net Income for 1998 31,270 313 30,957 -
----------- --------- ----------- --------------
PARTNERS' CAPITAL (DEFICIT)
December 31, 1998 4,867,054 (73,894) 4,940,948 -
--------- -------- --------- --------------
Distributions (120,004) (1,200) (118,804) -
Net Loss for 1999 (84,307) (843) (83,464) -
---------- --------- ---------- --------------
PARTNERS' CAPITAL (DEFICIT)
December 31, 1999 $4,662,743 ($75,937) $4,738,680 -
========== ========== ========== ==========
See Accompanying Notes to Financial Statements
-34-
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
December 31, December 31, December 31,
1999 1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $(84,307) $31,270 $(271,920)
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation and amortization 630,782 646,719 584,414
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable 14,373 (101,120) 23,576
(Increase) decrease in prepaid expenses
and other assets, net (3,715) (18,451) 15,364
Decrease in accrued interest (1,301) (1,198) (19,792)
(Decrease) increase in accrued expenses and other liabilities (33,803) (41,517) 86,126
Increase (decrease) in accrued expenses payable to affiliates 6,358 (28,294) 61,950
----------- ------------ -------------
Net cash provided by operating activities 528,387 487,409 479,718
---------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property improvements (114,259) (176,503) (94,486)
-------- ---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of bonds payable - - (16,452,000)
Decrease (increase) in restricted cash 16,530 37,965 (269,895)
Debt financing costs - - (313,337)
Proceeds from mortgage loans payable - - 16,710,000
Principal repayments on mortgage loans payable (185,173) (170,520) (26,426)
Cash distributions to partners (120,004) - (101,789)
-------- ---------------- -----------
Net cash used in financing activities (288,647) (132,555) (453,447)
-------- ---------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 125,481 178,351 (68,215)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 436,256 257,905 326,120
-------- ---------- -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $561,737 $ 436,256 $ 257,905
======= ========= ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for interest $1,360,105 $1,374,757 $1,622,554
========= ========= ==========
See Accompanying Notes to Financial Statements
-35-
CONCORD MILESTONE PLUS, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
1. Organization and Capitalization
Concord Milestone Plus, L.P., a Delaware limited partnership (the
"Partnership"), was formed on December 12, 1986, to invest in existing
income-producing commercial and industrial real estate, such as shopping
centers, office buildings, free-standing commercial warehouses and distribution
centers. Currently, the Partnership owns and operates three shopping centers
(the "Properties"), one located in Searcy, Arkansas (the "Searcy Property"), one
located in Valencia, California (the "Valencia Property") and one located in
Green Valley, Arizona (the "Green Valley Property").
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 the Partnership's Escalating Rate Collateralized
Mortgage Bonds (the "Bonds") due November 30, 1997 and 36 Class B Interests
("Class B Interests"), each such interest representing an assignment of one
Class B Limited Partnership Interest held by CMP Benefit Corp., a Delaware
corporation (the "Assignor"), under the Amended and Restated Agreement of
Limited Partnership of the Partnership Agreement (the "Partnership Agreement").
Each Equity Unit consisted of 100 Class A Interests ("Class A Interests"), each
interest representing an assignment of one Class A Limited Partnership Interest
held by the Assignor under the Partnership Agreement, and 100 Class B Interests.
2. Summary of Significant Accounting Policies
Basis of Accounting, Fiscal Year
The Partnership's records are maintained on the accrual basis of accounting for
both financial and tax purposes. Its fiscal year is the calendar year.
Cash and Cash Equivalents
The Partnership considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. The Partnership
occasionally maintains cash balances in financial institutions in excess of the
federally insured limits.
Restricted Cash
Restricted cash consists of escrow deposits held by the lender for payment of
property taxes and an amount held pending the execution of a new lease of the
space formerly leased to Abco at the Green Valley property and satisfaction of
certain other conditions related thereto.
Base Rents
Base rents are recognized on a straight-line basis over the terms of the related
leases, including free rent, if any, and lease step ups.
-36-
Property
Property is carried at cost, and depreciated on a straight-line basis over the
estimated useful life of 31.5 years. Building improvements and other depreciable
assets are carried at cost, and depreciated on a straight-line basis using an
estimate useful life of 3 to 10 years. Leasehold improvements are amortized on a
straight-line basis over the lesser of the estimated useful life or the
remaining term of the lease. Total depreciation expense was $593,225, $609,161,
$588,520 in 1999, 1998 and 1997, respectively.
The Partnership's policy is to quarterly assess any impairment in value by
making a comparison of the current and projected operating cash flows of each of
its properties over its remaining useful life, on an undiscounted basis, to the
carrying amount of such property. Such carrying amount would be adjusted, if
necessary, to the estimated fair value to reflect an impairment in the value of
the asset. The Partnership determined that an adjustment to the carrying amount
of its properties was not necessary in 1999, 1998, and 1997.
Income Taxes
The Partnership makes no provision for income taxes because all income and
losses are allocated to the partners and holders of Class A Interests and Class
B Interests for inclusion in their respective tax returns. The tax bases of the
Partnership's net assets and liabilities are $2,996,877 and $2,904,634 higher
than the amounts reported for financial statement purposes at December 31, 1999
and 1998, respectively, due to the utilization of different estimated useful
lives for the depreciation of property for tax and financial reporting purposes
and the write-down of property during 1993 and 1994 for financial reporting
purposes.
Discount on Bonds Payable and Debt Financing Costs
The Partnership amortized the original issue discount on bonds payable using the
effective interest method over the term of the Bonds. The costs to obtain the
new Mortgage Loans (see Note 6) were capitalized and are being amortized over
the term of such mortgages using the effective interest method.
Income (loss) Per Class A Interest
The Partneship follows the provisions of Statement of Financial Accounting
Standards ("SFAS") No.128, "Earnings per Share". SFAS No.128 requires a
presentation of basic earnings per share and also requires dual presentation of
basic and diluted earnings per share on the face of the statement of operations
for all entities with complex capital structures. The Partnership has no
dilutive interests. Income (loss) per Class A interest amounts are computed by
dividing net income (loss) allocable to the limited partners by the weighted
average number of 100 Class A Interests outstanding during the year.
Statement of Comprehensive Income
A statement of comprehensive income has not been included per SFAS 130,
"Reporting Comprehensive Income", as the Partnership has no items of other
comprehensive income.
Statement of Disclosures about Segments of an Enterprise and Related Information
In June 1997, the Financial Accounting Standards Board issued SFAS 131,
"Disclosures about Segments of an Enterprise and Related Information," which
establishes annual and interim reporting standards for an enterprise's operating
segments and related disclosures about its products, services, geographic areas
and major customers.
The Partnership's operations are within one reportable segment.
-37-
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Reclassifications
Certain reclassifications were made to the accompanying 1997 and 1998 financial
statements to conform with the 1999 presentation.
3. Partnership Agreement
Pursuant to the terms of the Partnership Agreement, the general partner of the
Partnership, CM Plus Corporation, a Delaware corporation (the "General
Partner"), is liable for all general obligations of the Partnership to the
extent not paid by the Partnership.
Holders of Class A Interests and Class B Interests are not liable for expenses,
liabilities or obligations of the Partnership beyond the amount of their
contributed capital.
All distributable cash, capital proceeds, profit, gain or loss from Partnership
operations are generally allocated 1 percent to the General Partner and 99
percent to the holders of Class A Interests. The holders of Class B Interests
were specifically allocated certain organization and offering expenses to the
extent of their positive capital account balances, thus reducing their account
balance to zero. After the holders of Class A Interests have received the 12.5
percent Priority Return (as defined in the Partnership Agreement) all
distributable cash is allocated in a ratio of 85 percent to the holders of Class
B Interests, 5 percent to the holders of Class A Interests and 10 percent to the
General Partner.
Since the inception of the Partnership, all income and distributable cash with
respect to the Equity Units has been allocated to the holders of Class A
Interests because they have not received the 12.5 percent Priority Return.
Therefore, no income has been allocated to the holders of Class B Interests.
4. Properties
On August 20, 1987, the Partnership purchased the Searcy Property, a shopping
center in Searcy, Arkansas from Concord Milestone Plus of Arkansas Limited
Partnership, an affiliated entity, for $4,050,000.
On January 22, 1988, the Partnership purchased the Valencia Property, a shopping
center in Valencia, California from Concord Milestone Plus of California Limited
Partnership, an affiliated entity, for $11,575,000.
On April 15, 1988, the Partnership purchased the Green Valley Property, a
shopping center in Green Valley, Arizona from Concord Milestone Plus of Arizona
Limited Partnership, an affiliated entity, for $9,687,000.
Minimum base rental income under non-cancelable tenant lease agreements, having
lease terms expiring from one to nine years, at December 31, 1999 are as
follows:
-38-
Year Ended
December 31 Amount
- ------------- ----------
2000 $2,249,649
2001 1,868,492
2002 1,395,753
2003 1,005,954
2004 779,548
Thereafter 1,178,060
------------
Total $8,477,456
============
The above table does not include contingent rental amounts. The total contingent
rentals received in 1999, 1998, and 1997, were $142,847, $148,490, and $163,307,
respectively. A majority of the leases contain provisions for additional rent
calculated as a specified percentage of the tenant's gross receipts above fixed
minimum amounts and for reimbursement of all or a portion of the tenant's pro
rata share of real estate taxes, insurance and common area maintenance expenses.
There was no tenant in 1999, 1998 and 1997 whose rents exceed 10% of the
Partnership's total revenue.
5. Related Party Transactions
The Partnership pays fees for customary property management services
("Management Fees") equal to a percentage of gross revenues from the Properties,
not to exceed 5 percent. The Management Fees are 3 percent for the Searcy
Property, 4 percent for the Valencia Property and 5 percent for the Green Valley
Property. Management Fees incurred for the years ended December 31, 1999, 1998,
and 1997, were $128,904, $131,909, and $107,725, respectively. Management Fees
are payable to Milestone Property Management, Inc., a Delaware corporation and
affiliate of the General Partner ("MPMI").
The Partnership also paid $25,000 to MPMI for administrative services for the
years ended December 31, 1999, 1998, and 1997.
As of December 31, 1999 and 1998, the Partnership accrued $51,999 and $45,641,
respectively, payable to Milestone Properties, Inc. ("MPI"), an affiliate of the
General Partner for administrative and management fees and insurance.
Tri-Stone Mortgage Company, an affiliate of the General Partner, assisted the
Partnership in obtaining three fixed rate Mortgage Loans in 1997. No fee was
paid to Tri-Stone for its assistance.
6. Mortgage Loans Payable
As of September 30, 1997, the Partnership, with the assistance of Tri-Stone
Mortgage Company, an affiliate of the General Partner, closed three fixed rate
first mortgage loans (the "Mortgage Loans") from Westco Real Estate Finance
Corp. (the "Lender") in the amounts of $2,865,000, $8,445,000 and $5,400,000,
respectively. All three Mortgage Loans are secured by cross-collateralized first
mortgages on the Partnership's shopping centers. Prior to September 30, 1997,
the shopping centers were encumbered by mortgages granted by the Partnership for
the benefit of the holders of the Partnership's Bonds. The Partnership used the
proceeds of the Mortgage Loans and available cash to redeem all of the
outstanding Bonds. An aggregate of $17,015,650 was paid to the holders of the
Bonds in connection with such redemption, of which $16,452,000 was applied to
prepay the principal of the Bonds and $563,650 was applied to pay interest
accrued on the Bonds through the redemption date.
-39-
The Mortgage Loans and related terms at December 31, 1999 are summarized as
follows:
Principal Monthly
Balance at Payments of
December Interest Principal
Property/Location 31, 1999 Rate % and Interest
- ----------------- -------------- ------ ------------
Searcy, AR $2,809,172 8.125 $21,640
Valencia, CA 8,221,072 8.125 65,881
Green Valley, AZ 5,297,637 8.250 41,252
--------- ------
Total $16,327,881 $128,773
========== =======
The Mortgage Loans require payments of principal and interest through and
including September 1, 2007. On October 1, 2007, the balance of principal and
interest estimated to be $2,505,981, $7,003,227, and $4,738,096 for the Searcy,
Valencia and Green Valley Properties, respectively, will be due and payable.
Subsequent to October 31, 2003 and prior to May 31, 2007 each Mortgage Loan may
be prepaid in whole but not in part on any payment date with a prepayment
penalty equal to the greater of (i) 1% of the outstanding principal balance at
such time, or (ii) the excess, if any, of the present value of the remaining
scheduled principal and interest payments (including any balloon payment) over
the amount of principal being prepaid. The Mortgage Loans may be prepaid without
penalty on any payment date after May 31, 2007.
The scheduled principal payments of the Mortgage Loans at December 31, 1999 are
as follows:
Year Ending
December 31 Amount
------------- ---------
2000 $ 197,149
2001 218,023
2002 236,758
2003 257,101
2004 275,482
Thereafter 15,143,368
----------
Total $16,327,881
==========
The Partnership estimates the fair value of its long term fixed rate Mortgage
Loans generally using discounted cash flow analysis based on the Partnership's
current borrowing rates for similar types of debt. At December 31, 1999, the
fair value of the Mortgage Loans was estimated to be $16,055,167 compared to a
carrying value amount of $16,327,881.
In connection with the Green Valley Mortgage Loan, the Partnership has deposited
$150,000 into an escrow account with the Lender. The funds held in this escrow
account may be released upon the execution of a new lease for specified vacant
anchor tenant space, with a termination date of July 31, 2004 or later, and the
satisfaction of certain other conditions related thereto.
In connection with the Valencia Mortgage Loan, the Partnership deposited $45,000
into an escrow account with the lender. The funds held were released during
February 1998 following the issuance of a No Further Action letter by the
Department of Toxic Substance Control, a branch of the State of California
Environmental Protection Agency (CALEPA).
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CM Plus Corporation, the general partner of the Partnership, guarantees certain
limited recourse obligations under the Mortgage Loans.
7. Commitments and Contingencies
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. No replacement tenant has yet been identified, however, the
Partnership has retained a large regional real estate brokerage firm to help
market the space. The brokerage firm has shown the space to several qualified
prospective tenants. Many of the tenants at the Green Valley Property have short
term leases. It is not possible to determine the long-term effects of the
vacancy of the Abco space. In the short term, however, the vacancy of this
anchor tenant space could have a material adverse effect on the results of
operations at the Green Valley Property by impairing the Partnership's ability
to retain other tenants or to renew their leases on favorable terms, by reducing
traffic at the Property and negatively affecting percentage rents. In addition,
the Partnership will incur expenses in releasing the Abco space and cannot
predict how soon such space will be leased and the terms of such new lease.
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
this anchor space vacancy.
Investments in real property create a potential for environmental liability on
the part of the owner, operator or developer of such real property. If hazardous
substances are discovered on or emanating from any of the Properties, the
Partnership and/or others may be held strictly liable for all costs and
liabilities relating to the clean-up of such hazardous substances, even if the
problem was caused by another party or a tenant. The Partnership is not aware of
any existing environmental conditions that will have a material effect on the
financial statements.
From time to time, the Partnership is exposed to claims, regulatory, and legal
actions in the normal course of business, some of which are initiated by the
Partnership. At December 31, 1999, management believes that any such outstanding
issues will be resolved without significantly impairing the financial condition
of the Partnership.
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CONCORD MILESTONE PLUS, L.P.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
Costs
Capitalized
Subsequent Gross Amount at
Initial Cost to Acquisition which Carried at Close of Period (A)
-------------------------- --------- -----------------------------------------------
Land
Building & Building & Building & Accumulated
Description Encumbrances Land Improvements Improvements Land Improvements Total Depreciation(B)
and Location
- ----------------- ------------ ------------ ------------ ----------- --------- ------------ ---------- ----------------
Town & Country $2,809,172 $430,000 $3,620,000 $455,340 $430,000 $4,146,234 $4,576,234 $1,612,255
Plaza
Searcy, AR
Old Orchard 8,221,072 6,500,000 5,075,000 1,369,256 6,500,000 6,488,082 12,988,082 2,564,096
Shopping Center
Valencia, CA
Green Valley Mall 5,297,637 5,100,000 4,587,000 1,566,818 4,057,034 5,110,391 9,167,425 2,429,193
Green Valley, AZ
--------- --------- --------- --------- --------- --------- --------- ---------
$16,327,881 $12,030,000 $13,282,000 $3,391,414 $10,987,034 $15,744,707 $26,731,741 $6,605,544
========== ========== ========== ========= ========== ========== ========== =========
Date Depreciation
Description Acquired Life
and Location
- ----------------- --------------------------
Town & Country 08/20/87 31.5 years
Plaza
Searcy, AR
Old Orchard 01/22/88 31.5 years
Shopping Center
Valencia, CA
Green Valley Mall 04/15/88 31.5 years
Green Valley, AZ
1999 1998 1997
(A) Reconciliation of investment properties owned:
Beginning balance $26,617,482 $26,440,979 $26,346,493
Property acquisitions/improvements 114,259 176,503 94,486
Write-down of property 0 0 0
---------------------------------------------------------
Balance at end of period $26,731,741 $26,617,482 $26,440,979
========== ========== ==========
(B) Reconciliation of accumulated depreciation:
Beginning balance $6,017,284 $5,413,087 $4,829,534
Depreciation expense 588,260 604,197 583,553
----------- ----------- -----------
Balance at end of period $6,605,544 $6,017,284 $5,413,087
========= ========= =========
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