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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, 2000
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
incorporation or organization) (IRS Employer Identification No.)
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:
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
As of March 1, 2001, 1,518,800 Class A Interests and 2,111,072 Class B Interest
were outstanding.
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, 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) $415,505, $1,336,478,
$1,299,161 respectively, for the fiscal year ended December 31, 2000 (ii)
$441,946, $1,299,922 and $1,228,007, respectively, for the fiscal year ended
December 31, 1999; and (iii) $438,026, $1,347,971 and $1,296,987, respectively,
for the fiscal year ended December 31, 1998. 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.
(d) 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.
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.
Mortgage Loans
As of September 30, 1997, the Partnership closed on new mortgage
loans (the "Mortgage Loans") for the Properties in the amounts of $2,865,000,
$8,445,000 and $5,400,000, respectively. All three Mortgage Loans are secured by
first mortgages. Prior to September 30, 1997, the Properties were encumbered by
mortgages granted by the Partnership to 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.
The Mortgage Loans and related terms at December 31, 2000 for the
Properties are summarized as follows:
Principal Monthly
Balance at Payments of
December Interest Principal
Property/Location 31, 2000 Rate % and Interest
- ----------------- -------------- ------ ------------
Searcy, AR $2,780,475 8.125 $21,640
Valencia, CA 8,105,294 8.125 65,881
Green Valley, AZ 5,244,964 8.250 41,252
----------- ------
Total $16,130,733 $128,773
=========== =======
-2-
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.
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 eleven 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.
-3-
Taxes. The Partnership's adjusted federal income tax basis for
the Searcy Property is approximately $2,983,000, of which $430,000 is allocated
to land and $2,553,000 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 10 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. This Wal-Mart, relocated from the Town
and Country Plaza in 1992. Books-A-Million, Big Lots, Hibetts Sports and TSC
Tractor Supply currently occupy Wal-Mart's former space in the Town and Country
Plaza.
Operating and Tenant Information. As of March 1, 2001, there
were ten tenants, including two anchor tenants, at the Searcy Property. The
anchor tenants are J.C. Penney department store and Dunlap Co. The other eight
tenants provide a variety of goods and services. The occupancy rate was 78.8%,
95.5% and 95.5% as of December 31, 2000, 1999 and 1998, respectively. Dunlap
entered into a lease of a 15,600 square foot store space, raising the occupancy
rate to 98.7% as of March 1, 2001.
The tables on pages 7 and 8 further describe and summarize
certain operating data and tenant information for the Property as of December
31, 2000.
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.
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 $10,628,000, of which $6,500,000 is allocated to land
and $4,128,000 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. 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-
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, 2001, there
were 22 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 20
tenants provide a variety of goods and services. The occupancy rate was 99.50%,
96.9%, and 96.6% in 2000, 1999, and 1998, respectively.
The tables on pages 7 and 8 further describe and summarize
certain operating data and tenant information for the Property as of December
31, 2000.
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. 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 with additional access
from La Canada Road.
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 $9,174,000, of which $5,100,000 is allocated to
land and $4,074,000 to the buildings and improvements. For financial statement
purposes, the Partnership depreciates the cost of the buildings over 31.5 years
and improvements over 5 to 10 years using the straight-line method of cost
recovery.
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. In mid summer 2000, a six screen multiplex theater
opened adjacent to Kmart. 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. Also in 2002 a Safeway Supermarket is planned to be built 2 miles north
of the Green Valley property.
-5-
Operating and Tenant Information. As of March 1, 2001, there
were 71 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 69 tenants provide
a variety of goods and services. The occupancy rate was 70.73%, 70.7%, and 86.5%
in 2000, 1999, and 1998, 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 term on July 31, 1999. Abco vacated
its space in May, 1999. The Partnership retained a large regional real estate
brokerage firm to help market the space. Such brokerage firm was replaced in
2000 by another large regional brokerage firm. Each of the brokerage firms have
shown the space to several qualified prospective tenants. No replacement tenant
has yet been identified. The plan to build Safeway Supermarket in the year 2002
near Green Valley Mall will also have an adverse effect on subleasing the Abco
space. 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. Currently, however, the vacancy of the Abco space did not 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 as of December
31, 2000.
-6-
Table 1. Summary of Operating and Tenant Information
Tenant Occupying Percentage
>10% of GLA / Square Occupancy Base Rent Rent & Lease Annual
Location Property Nature of Business Feet Rate R/E TaxesFt. Other Expiration R/E Taxes
- ----------- --------------------- ------------------- ------ ---------- ------------- ------------ ---------- ---------
Searcy, AR Town & Country Plaza 78,436 78.82% $6.87 (1) $27,915
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.
Valencia, Old Orchard Shopping Ctr. 103,413 99.50% $11.85 (1) $132,460
CA
Lucky Stores 31,842 $9.42 1.25% of Sales in excess 6/30/2006
Full Service Grocer of $38,000,000 less amounts
paid for property taxes,
assessments and insurance
premiums. (2)
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 Mall None (3) 194,750 70.73% $7.30 (1) $222,632
AZ
(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) Pro-rata reimbursement for real estate taxes, common area maintenance and insurance.
(3) The sole space greater than 10% of GLA is currently vacant. Abco vacated this space in May, 1999.
-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 4.7%
2001 2 7,547 $73,900 19.0%
2002 1 2,000 $18,000 4.6%
2003 1 1,600 $14,400 3.7%
2004 2 8,528 $58,110 15.0%
2007 1 39,396 $205,600 53.0%
Vacancies 2 16,605 - -
- ------ ---------- -----------
Total 11 78,436 $388,130 100.0%
===== == ====== ======= ======
Valencia, Old Orchard Shopping 2001 3 4,680 $75,794 6.6%
CA Center 2002 5 9,867 $197,685 17.3%
2003 7 20,572 $265,771 23.4%
2004 2 5,100 $78,830 6.8%
2005 3 27,429 $173,938 15.2%
2006 2 35,242 $351,000 30.7%
Vacancies 1 523 - -
-- -------- ---------- -----------
Total 23 103,413 $1,143,018 100.0%
===== == ======= ========= ======
Green Valley, Green Valley Mall 2001 27 37,990 $262,257 26.7%
AZ 2002 19 37,168 $276,290 28.1%
2003 16 29,897 $256,439 26.1%
2004 4 4,775 $48,349 4.9%
2005 3 15,595 $124,635 12.7%
2006 1 600 $5,400 0.5%
2008 1 11,425 $9,600 1.0%
Vacancies 12 57,300 - -
-- ------- ----------- -----------
Total 83 194,750 $982,970 100.0%
===== == ======= ======= ======
-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, 2001, the 1,518,800 Class A Interests and
2,111,072 Class B Interests outstanding were held by approximately 1,140 and
1,216 holders, respectively.
(c) The Partnership is a limited partnership and, accordingly,
does not pay dividends. Quarterly distributions of cash are made to its
partners, from time to time, 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 (1)
- ----------------- --------------- --------------
March 31, 2000 (1) $0 $0
June 30, 2000 (1) $0 $0
September 30, 2000 (1) $0 $0
December 31, 2000 (1) $0 $0
March 31, 1999 $3.29 $3.29
June 30, 1999 $1.32 $1.32
September 30, 1999 (1) $0 $0
December 31, 1999 (1) $0 $0
- ---------------------------------
(1) The Partnership suspended making distributions subsequent to
the second quarter of 1999 after determining that
unrestricted working capital levels were inadequate due to
(1) Abco vacating its space at the Green Valley Property in
May, 1999 (2) several capital outlays for work performed at
the Properties, and (3) the bankruptcy and subsequent
vacancy of its 15,600 square feet store space by one of the
major tenants at the Searcy Property.
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.
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.
-11-
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 and with the information
presented in Item 7, Management's Discussion & Analysis of Financial Condition
and Results of Operations.
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, 2000 December 31, 1999 December 31, 1998 December 31, 1997 December 31, 1996
----------------- ----------------- ----------------- ----------------- -----------------
Operating Statement Data:
Revenue $3,079,207 $2,986,502 $3,103,638 $3,046,796 $3,009,663
Net (loss) income (134,495) (84,307) 31,270 (271,920) (238,119)
Balance Sheet Data:
Total assets 21,081,573 21,423,375 21,841,605 22,051,864 22,086,775
Long term debt 16,130,734 16,327,881 16,513,054 16,683,574 16,473,060
Total liabilities 16,553,325 16,760,632 16,974,551 17,216,080 16,877,282
Statement of Partners'
(Deficit) Capital:
General Partner (77,282) (75,937) (73,894) (74,207) (70,470)
Class A Interests 4,605,530 4,738,680 4,940,948 4,909,991 5,279,963
Class B Interests 0 0 0 0 0
Total 4,528,248 4,662,743 4,867,054 4,835,784 5,209,493
Per 100 Class A Interests (a):
Net (loss) income, basic
& diluted (b): (8.86) (5.55) 2.06 (17.90) (15.68)
Distributions (c): 0 4.61 3.29 3.29 12.94
Return of Capital (d): 0 4.61 3.29 3.29 12.94
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.
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 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.
-14-
Results of Operations
Comparison of Year Ended December 31, 2000 to 1999.
Revenues of the Partnership increased $92,705, or 3.1%, to $3,079,207 in 2000
from $2,986,502 in 1999 primarily due to the net effect of the following:
(1) Rent - An increase in base rent of $51,411, or 2.04%,
to $2,560,747 in 2000 from $2,509,336 in 1999 is due
to a decrease in vacancies and an increase in base
rent at the Valencia and Green Valley properties.
(2) Reimbursed Expenses - An increase in reimbursed
expenses of $29,858, or 6.03%, to $490,397 in 2000
from $460,539 in 1999 primarily due to an increase in
the recovery on both common area expenses and real
estate taxes at the Green Valley Property.
Management and property expenses increased $102,609, or 11.90%,
to $958,610 in 2000 from $856,001 in 1999 due to increases in real estate taxes,
insurance and common area expenses at the Properties.
Administrative and management fees to a related party increased
by $44,264 or 28.76% to $198,169 in 2000 from $153,905 in 1999 due to an
additional professional fee payable to Milestone Property Management, Inc.
("MPMI").
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.
-15-
Liquidity and Capital Resources
The General Partner believes that the Partnership's expected
revenue and working capital is sufficient to meet the Partnership's current and
future operating requirements. Nevertheless, because the cash revenues and
expenses of the Partnership will depend on future facts and circumstances
relating to the Partnership's properties, as well as market and other conditions
beyond the control of the Partnership, a possibility exists that cash flow
deficiencies may occur.
During February 1999, the Partnership received notice from Abco,
a principal anchor tenant at the Green Valley Property, that Abco would not be
renewing its lease at the expiration of its current term on July 31, 1999. Abco
vacated its space in May, 1999. The Partnership retained a large regional real
estate brokerage firm to help market the space. Such brokerage firm was replaced
during 2000 by another large regional brokerage firm. No replacement tenant has
yet been identified. Each of the brokerage firms have 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. Currently, however, the vacancy of the
Abco space did not 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, and 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 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. Additionally, several capital projects were undertaken and
completed at the Properties. Further a 15,600 square feet anchor tenant at the
Searcy Property filed for Chapter 11 bankruptcy protection and vacated its store
space. Finally, the Partnership expects to make extensive roof repairs and/or
replacements at the Valencia Property in fiscal year 2001. 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.
The cash on hand at December 31, 2000 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 $442,228 for the
year ended December 31, 2000 was comprised of (i) net loss of $134,495, (ii)
adjustments of $636,489 for depreciation and amortization and (iii) a net change
in operating assets and liabilities of $59,766.
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.
-16-
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 $166,603 for the year
ended December 31, 2000 was comprised of capital expenditures for building
improvements.
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 $211,936 for the year
ended December 31, 2000 included (i) principal repayments on mortgage loans
payable of $197,147, (ii) funds held in escrow of $14,789.
Net cash used in financing activities of $288,647 for the year
ended December 31, 1999 included (i) principal repayments on mortgage 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 mortgage loans
payable of $170,520 and (ii) funds held in escrow of $37,965.
CURRENT ACCOUNTING ISSUES
SFAS No. 133 and No. 138
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities" and SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities,
an Amendment of FASB 133" establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. It requires an entity to recognize
all derivatives as either assets or liabilities in the statement of financial
position, and measure those instruments at fair value. Changes in the fair value
of those derivatives will be reported in earnings or other comprehensive income
depending on the use of the derivative and whether the derivative qualifies for
hedge accounting. SFAS No. 133 and SFAS No. 138 are effective all fiscal
quarters of all fiscal years beginning after June 30, 2000. The Partnership
adopted SFAS No. 133, as amended by SFAS No. 138, on January 1, 2001.
The Partnership has identified a minimal number of embedded
derivative instruments, and these were evaluated for recording on the
Partnership's balance sheet at January 1, 2001. Within certain of its leases
with tenants in its Properties, the Partnership has embedded derivatives
resulting from possible limitations on scheduled rent increases, based on
changes in CPI. These types of limitations are common in the Partnership's
industry. These embedded derivatives have been valued at an insignificant
amount, so the affect of the recording of this new accounting pronouncement is
inconsequential at January 1, 2001.
-17-
The adoption of SFAS No. 133 resulted in the Partnership
recording a net transition adjustment of an insignificant amount. The
Partnership expects that the adoption of SFAS No. 133 will not increase the
volatility of its reported earnings, as the embedded derivatives have not
resulted in any material change in the Partnership's earnings or cash flows in
the past. The Partnership believes that the impact of its embedded derivatives
are not likely to be material in the future.
SFAS No. 140
Statement of Financial Accounting Standards No. 140, "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities -- a replacement of FASB No. 125," was issued in September 2000. It
revises the standards for accounting for securitizations and other transfers of
financial assets and collateral and requires certain disclosures but will carry
over most of SFAS No. 125's provisions without reconsideration. SFAS 140 is
effective for transfers and servicing of financial assets and extinguishments of
liabilities occurring after March 31, 2001. This statement is effective for
recognition and reclassification of collateral and for disclosures related to
securitization transactions and collateral for fiscal years ending after
December 15, 2000. The adoption of the provisions of SFAS No. 140 is not
expected to have any material impact on the Company.
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, 2000, the fair value of the Mortgage
Loans was estimated to be $15,218,728 compared to a carrying value amount of
$16,130,733.
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 listed on the accompanying index.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
During the last two fiscal years, no changes of accountants and
disagreements with accountants on accounting and financial disclosure occurred.
-18-
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) 54 President Inception (2)
and Director
Robert A. Mandor (3) 48 Vice President Inception
and Director
Joseph P. Otto 47 Vice President October 3, 1997
and Secretary
Patrick Kirse 32 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.
ROBERT A. MANDOR is the President and a Director of Concord. Mr. Mandor is
the President, Chief Financial Officer, and a Director of Milestone Properties,
Inc. Mr. Mandor has been associated with Concord since its inception in 1981.
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. 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. 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.
-19-
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 2000.
Item 11. Compensation.
During 2000, the Partnership paid or accrued:
(i) $68,500 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 $68,500 per year.
(ii)$129,660 to MPMI for property management fees for the
fiscal year ended December 31, 2000. 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
properties for which MPMI performs leasing services, 3
percent for multiple tenant properties for which MPMI does
not perform leasing services and 1 percent for single tenant
properties. 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, 2000.
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 beneficial 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, 2001:
-20-
Amount and
Nature of Percent
Title Name and Address of Beneficial of
of Class Beneficial Owner Ownership Class
Class A KM Investments, LLC 98,068* 6.46%
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 98,284* 4.66%
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.
(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, 2001 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.
-21-
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.
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, ("1998 Form 10-K"),
which is incorporated herein by reference.
-22-
4.1 Form of certificate evidencing Class A Interests
included as Exhibit 4.3 to the 1987 Form 10-K,
which is incorporated herein by reference.
4.2 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.
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 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").
10.6 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.
10.7 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.
-23-
10.8 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.
10.9 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.
10.10 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.
10.11 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.
10.12 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.
10.13 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.
10.14 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.
10.15Deed 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 Exhibit 10.11 of the
September 1997 10-Q.
10.16Assignment 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.
-24-
10.17 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.
10.18 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.
-25-
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 27, 2001.
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 27, 2001
-----------------------------------------------
Leonard S. Mandor
President (Principal Executive Officer) and Director of CM Plus
Corporation and CMP Beneficial Corp.
By:/s/ Robert A. Mandor March 27, 2001
-----------------------------------------------
Robert A. Mandor
Vice President and Director of CM Plus
Corporation and CMP Beneficial Corp.
By:/s/ Patrick Kirse March 27, 2001
-----------------------------------------------------
Patrick Kirse
Treasurer and Controller (Principal Accounting Officer) of CM
Plus Corporation and CMP Beneficial Corp.
-26-
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL SCHEDULE
1. Financial Statements:
a. Concord Milestone Plus, L.P.
1. Independent Auditors' Reports ................................29
2. Balance Sheets, December 31, 2000 and December 31, 1999.. 30
3. Statements of Revenues and Expenses for the Years Ended
December 31, 2000, 1999 and 1998 .............................31
4. Statements of Changes in Partners' Capital for the Years
Ended December 31, 2000, 1999 and 1998 .......................32
5. Statements of Cash Flows for the Years Ended December
31, 2000, 1999 and 1998 ......................................33
6. Notes to Financial Statements ................................34
2. Financial Schedule:
a. Real Estate and Accumulated Depreciation (Schedule III) ......41
This financial statement schedule of the Partnership for each of
the years ended December 31, 2000, 1999 and 1998 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.
-27-
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Concord Milestone Plus, L.P.
We have audited the accompanying balance sheets of Concord Milestone Plus, L.P.
(the "Partnership") as of December 31, 2000 and 1999, and the related statements
of revenues and expenses, changes in partners' capital, and cash flows for each
of the three years in the period ended December 31, 2000. Our audits also
included the information 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 audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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, 2000, and 1999, and the results of its operations, changes in
partners' capital and its cash flows for each of the three years in the period
ended December 31, 2000 in conformity with accounting principles generally
accepted in the United States. Also, in our opinion, the information 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
March 7, 2001
-29-
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 2000 and 1999
December 31, December 31,
2000 1999
------------------ ------------------
Property:
Building and improvements, at cost $ 15,911,310 $ 15,744,707
Less: accumulated depreciation 7,201,754 6,605,544
----------- -----------
Building and improvements, net 8,709,556 9,139,163
Land, at cost 10,987,034 10,987,034
---------- ----------
Property, net 19,696,590 20,126,197
Cash and cash equivalents 625,426 561,737
Accounts receivable 251,756 209,899
Restricted cash 230,189 215,400
Debt financing costs, net 211,503 242,836
Prepaid expenses and other assets, net 66,109 67,306
------------ ------------
Total assets $21,081,573 $21,423,375
========== ==========
Liabilities:
Mortgage loans payable $16,130,734 $ 16,327,881
Accrued interest 113,424 114,809
Deposits 87,266 84,109
Accrued expenses and other liabilities 159,147 181,834
Accrued expenses payable to affiliates 62,754 51,999
------------- ------------
Total liabilities 16,553,325 16,760,632
----------- ----------
Commitments and Contingencies
Partners' capital:
General partner (77,282) (75,937)
Limited partners:
Class A Interests, 1,518,800 4,605,530 4,738,680
Class B Interests, 2,111,072 - -
---------------- ---------------
Total partners' capital 4,528,248 4,662,743
------------ ----------
Total liabilities and partners' capital $21,081,573 $21,423,375
========== ==========
See Accompanying Notes to Financial Statements
-30-
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF REVENUES AND EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
December 31, December 31, December 31,
2000 1999 1998
------------------ ------------------ ------------------
Revenues:
Rent $2,560,747 $2,509,336 $2,588,112
Reimbursed expenses 490,397 460,539 494,418
Interest and other income 28,063 16,627 21,108
------------ ----------- -----------
Total revenues 3,079,207 2,986,502 3,103,638
---------- --------- ---------
Expenses:
Interest expense 1,346,743 1,358,804 1,373,559
Depreciation and amortization 636,489 630,782 646,719
Management and property expenses 958,610 856,001 795,954
Administrative and management fees
to related party 198,169 153,905 156,909
Professional fees and other expenses 73,691 71,317 99,227
------------ ------ -----------
Total expenses 3,213,702 3,070,809 3,072,368
----------- --------- ---------
Net (loss) income $(134,495) $ (84,307) $ 31,270
=========== =-------- ==========
Net (loss) income attributable to:
Limited partners $(133,150) $(83,464) $30,957
General partner (1,345) (843) 313
------------- ----------- ------------
Net (loss) income $(134,495) $(84,307) $31,270
=========== ======== =========
(Loss) income per weighted average
Limited Partnership 100 Class A
Interests outstanding, basic and diluted $ (8.86) $ (5.55) $2.06
============ ========== ==========
Weighted average number of 100
Class A interests outstanding 15,188 15,188 15,188
=========== ========= =========
See Accompanying Notes to Financial Statements
-31-
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, and 1998
General Class A Class B
Total Partner Interests Interests
------------- --------- ----------- -----------
PARTNERS' CAPITAL (DEFICIT)
January 1, 1998 $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 -
---------- -------- ---------- --------------
Net Loss for 2000 (134,495) (1,345) (133,150) -
--------- --------- ---------- --------------
PARTNERS' CAPITAL (DEFICIT)
December 31, 2000 $4,528,248 $(77,282) $4,605,530 -
=========== ========= ========== --------------
See Accompanying Notes to Financial Statements
-32-
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 and 1998
December 31, December 31, December 31,
2000 1999 1998
-------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $(134,495) $(84,307) $31,270
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation and amortization 636,489 630,782 646,719
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable (41,857) 14,373 (101,120)
Increase in prepaid expenses and other assets, net (7,749) (3,715) (18,451)
Decrease in accrued interest (1,385) (1,301) (1,198)
Decrease in accrued expenses, deposits, and other (19,530) (33,803) (41,517)
Increase (decrease) in accrued expenses payable to affiliates 10,755 6,358 (28,294)
---------- ----------- ------------
Net cash provided by operating activities 442,228 528,387 487,409
--------- ---------- -----------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Property improvements (166,603) (114,259) (176,503)
--------- -------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease (increase) in restricted cash (14,789) 16,530 37,965
Principal repayments on mortgage loans payable (197,147) (185,173) (170,520)
Cash distributions to partners - (120,004) -
-------------- -------- ----------------
Net cash used in financing activities (211,936) (288,647) (132,555)
---------- -------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 63,689 125,481 178,351
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 561,737 436,256 257,905
---------- ------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 625,426 $561,737 $ 436,256
========== ======= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $1,348,128 $1,360,105 $1,374,757
========= ========= =========
See Accompanying Notes to Financial Statements
-33-
CONCORD MILESTONE PLUS, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000, 1999 and 1998
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.
-34-
Revenue Recognition
Rental income is accrued as earned except when doubt exists as to
collectibility, in which case the accrual is discontinued. When rental payments
due under leases vary from a straight-line basis because of free rent periods or
stepped increases, income is recognized on a straight-line basis in accordance
with generally accepted accounting principles. Reimbursed expenses represent a
portion of property operating expense billed to the tenants, including common
area maintenance, real estate taxes and other recoverable costs. Expenses
subject to reimbursement are recognized in the period when the expenses are
incurred. Rental income based on a tenant's revenues ("percentage rent") is
accrued when a tenant reports sales that exceed a specified amount.
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 $596,210, $593,225,
$609,161, in 2000, 1999, and 1998, respectively.
The Partnership's individually reviews each of their properties for possible
impairment at least annually, and more frequently if circumstances warrant.
Impairment is determined to exist when estimated amounts recoverable through
future cash flows from operations on an un-discounted basis is less than the
property's carrying value. If a property is determined to be impaired, it is
written down to its estimated fair value to the extent that the carrying amount
exceeds the fair value of the property. No write downs for impairment of
property investments were recorded in 2000, 1999 and 1998.
The determination of impairment is based, not only upon future cash flows, which
rely upon estimates and assumptions including expense growth, occupancy and
rental rates, but also upon market capitalization and discount rates as well as
other market indicators. The Partnership believes that the estimates and
assumptions used are appropriate in evaluating the carrying amount of the
Partnership's properties. However, changes in market conditions and
circumstances may occur in the near term which would cause these estimates and
assumptions to change, which, in turn, could cause the amounts ultimately
realized upon the sale or other disposition of the properties to differ
materially from their carrying value. Such changes may also require future
write-downs.
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 $3,090,677 and $2,996,877 higher
than the amounts reported for financial statement purposes at December 31, 2000
and 1999, 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.
-35-
Debt Financing Costs
The costs to obtain the 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 Partnership 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 (Loss)
A statement of comprehensive income (loss) has not been included per SFAS 130,
"Reporting Comprehensive Income", as the Partnership has no items of other
comprehensive income (loss)
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.
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 1998 and 1999 financial
statements to conform with the 2000 presentation.
Recently Issued Accounting Pronouncements
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities" and SFAS No. 138, "Accounting
for Certain Derivative Instruments and Certain hedging Activities, an Amendment
of FASB 133" establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires an entity to recognize all
derivatives as either assets or liabilities in the statement of financial
position, and measure those instruments at fair value. Changes in the fair value
of those derivatives will be reported in earnings or other comprehensive income
depending on the use of the derivative and whether the derivative qualifies for
hedge accounting. These pronouncements are effective for all fiscal quarters of
fiscal years beginning after June 30, 2000. The Partnership adopted SFAS No.
133, as amended by SFAS No. 138, on
-36-
January 1, 2001. The Partnership does not expect this adoption to have any
material impact on reported earnings, comprehensive income, or financial
position, as the Partnership's derivative instruments embedded in certain leases
are insignificant, and the Partnership does not use any hedging activities.
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 eight years, at December 31, 2000 are as
follows:
Year Ended
December 31 Amount
------------- ----------
2001 $2,268,413
2002 1,779,892
2003 1,270,013
2004 928,600
2005 753,438
Thereafter 555,717
---------
Total $7,556,073
=========
-37-
The above table does not include contingent rental amounts. The total contingent
rentals received in 2000, 1999, and 1998, were $148,585, $142,847, and $148,490,
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 2000, 1999 and 1998 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, 2000, 1999,
and 1998, were $129,660, $128,904, and $131,909, respectively. Management Fees
are payable to Milestone Property Management, Inc., a Delaware corporation and
affiliate of the General Partner ("MPMI").
The Partnership paid $25,000 to MPMI for administrative services for the years
ended December 31, 1999 and 1998. As of December 31, 2000 and 1999, the
Partnership accrued $62,754 and $51,991, respectively, payable to Milestone
Properties, Inc. ("MPI"), an affiliate of the General Partner for administrative
and management fees.
6. Mortgage Loans Payable
As of September 30, 1997, the Partnership closed three fixed rate first mortgage
loans (the "Mortgage Loans") in the amounts of $2,865,000, $8,445,000 and
$5,400,000. All three Mortgage Loans are secured by cross- collateralized first
mortgages on the Partnership's shopping centers.
The Mortgage Loans and related terms at December 31, 2000 are summarized as
follows:
Principal Monthly
Balance at Payments of
December Interest Principal
Property/Location 31, 2000 Rate % and Interest
----------------- -------------- ------ ------------
Searcy, AR $2,780,475 8.125 $21,640
Valencia, CA 8,105,294 8.125 65,881
Green Valley, AZ 5,244,964 8.250 41,252
--------- ------
Total $16,130,733 $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, 2000 are
as follows:
-38-
Year Ending
December 31 Amount
----------- -------
2001 $218,023
2002 236,758
2003 257,101
2004 275,482
2005 302,865
Thereafter 14,840,504
----------
Total $16,130,733
==========
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.
CM Plus Corporation, the general partner of the Partnership, guarantees certain
limited recourse obligations under the Mortgage Loans.
7. Fair Value of Financial Instruments
The following estimated fair value were determined by the Partnership using
available market information and valuation methodologies considered appropriate
by management. However, considerable judgement is necessary to interpret and
apply market data to develop specific fair value estimates for given financial
instruments, and the use of different market assumptions and/or estimation
methodologies could have a material effect on reported fair value amounts.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts that could be realized upon disposition of the Partnership's
financial instruments.
Cash and cash equivalents, accounts receivable and accrued expenses and other
liabilities are reflected in the balance sheets at cost, which is considered by
management to reasonably approximate fair value due to their short term nature.
The Partnership estimates the fair value of its long term fixed rate Mortgage
Loans generally using discounted cash flow analysis based on current rates for
similar types of debt. At December 31, 2000, the fair value of the Mortgage
Loans was estimated to be $15,218,728 compared to a carrying value amount of
$16,130,733. The fair value estimates presented herein are based on information
available as of December 31, 2000. Although management is not aware of any
factors that would significantly affect the estimated fair value amounts, a
comprehensive re-evaluation of all of the Properties has not been performed for
purposes of these financial statement disclosures.
8. 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. 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. Currently,
however, the vacancy of this anchor tenant space did not 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
-39-
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, 2000, management believes that any such outstanding
issues will be resolved without significantly impairing the financial condition
of the Partnership.
-40-
CONCORD MILESTONE PLUS, L.P.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
Costs
Capitalized
Subsequent
Initial Cost to Acquisition
----------------------------------- --------------
Land
Building & Building & Building &
Description and Location Encumbrances Land Improvements Improvements Land Improvements
- ---------------------------------- ------------ ------------ ------------ ------------------------- -------------
Town & Country Plaza $2,780,475 $430,000 $3,620,000 $455,340 $430,000 $4,146,234
Searcy, AR
Old Orchard Shopping Center 8,105,294 6,500,000 5,075,000 1,369,256 6,500,000 6,515,006
Valencia, CA
Green Valley Mall 5,244,964 5,100,000 4,587,000 1,566,818 4,057,034 5,250,069
--------- --------- --------- --------- --------- ---------
Green Valley, AZ
$16,130,733 $12,030,000 $13,282,000 $3,391,414 $10,987,034 $15,911,309
========== ========== ========== ========= ========== ==========
Gross Amount at
which Carried at Close of Period (A)
-----------------------------------------
Accumulated Date Depreciation
Description and Location Total Depreciation(B) Acquired Life
- ---------------------------------- ---------------------------- --------------------------
Town & Country Plaza $4,576,234 $1,770,128 08/20/87 31.5 years
Searcy, AR
Old Orchard Shopping Center 13,015,006 2,816,923 01/22/88 31.5 years
Valencia, CA
Green Valley Mall 9,307,103 2,614,703 04/15/88 31.5 years
--------- ---------
Green Valley, AZ
$26,898,343 $7,201,754
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2000 1999 1998
(A) Reconciliation of investment properties owned:
Beginning balance $26,731,741 $26,617,482 $26,440,979
Property acquisitions/improvements 166,602 114,259 176,503
Write-down of property 0 0 0
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Balance at end of period $26,898,343 $26,731,741 $26,617,482
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(B) Reconciliation of accumulated depreciation:
Beginning balance $6,605,544 $6,017,284 $5,413,087
Depreciation expense 596,210 588,260 604,197
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Balance at end of period $7,201,754 $6,605,544 $6,017,284
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