UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2003
Commission File No. 000-32633
Belmar Capital Fund LLC
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 04-3508106
-------- ------------------------------------
(State of organization) (I.R.S. Employer Identification No.)
The Eaton Vance Building
255 State Street, Boston, Massachusetts 02109
- --------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: 617-482-8260
------------
None
----
(Former Name, Former Address and Former Fiscal Year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and 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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES X NO
--- ---
Belmar Capital Fund LLC
Index to Form 10-Q
PART I - FINANCIAL INFORMATION Page
Item 1. Condensed Consolidated Financial Statements..........................3
Condensed Consolidated Statements of Assets and
Liabilities as of March 31, 2003 (Unaudited) and
December 31, 2002....................................................3
Condensed Consolidated Statements of Operations
(Unaudited) for the Three Months Ended March 31,
2003 and 2002........................................................4
Condensed Consolidated Statements of Changes in
Net Assets (Unaudited) for the Three Months Ended
March 31, 2003 and 2002..............................................6
Condensed Consolidated Statements of Cash Flows
(Unaudited) for the Three Months Ended March 31, 2003 and 2002.......7
Financial Highlights (Unaudited) for the Three Months
Ended March 31, 2003.................................................9
Notes to Condensed Consolidated Financial Statements
as of March 31, 2003 (Unaudited)....................................10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations...............................................15
Item 3. Quantitative and Qualitative Disclosures About Market Risk..........18
Item 4. Controls and Procedures.............................................21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...................................................22
Item 2. Changes in Securities and Use of Proceeds...........................22
Item 3. Defaults Upon Senior Securities.....................................22
Item 4. Submission of Matters to a Vote of Security Holders.................22
Item 5. Other Information...................................................22
Item 6. Exhibits and Reports on Form 8-K....................................22
SIGNATURES....................................................................23
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002......24
EXHIBIT INDEX.................................................................26
2
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BELMAR CAPITAL FUND LLC
Condensed Consolidated Statements of Assets and Liabilities
March 31,
2003 December 31,
(Unaudited) 2002
-------------------- -------------------
Assets:
Investment in Belvedere Capital Fund Company LLC
(Belvedere Capital) $ 1,568,928,236 $ 1,645,261,953
Investment in Partnership Preference Units 557,769,433 550,352,892
Investment in other real estate investments 202,910,466 203,940,755
Short-term investments 3,600,000 -
-------------------- -------------------
Total investments $ 2,333,208,135 $ 2,399,555,600
Cash 5,059,359 6,149,096
Escrow deposits - restricted 2,777,504 4,583,810
Dividends and interest receivable 2,456,512 2,456,370
Receivable for securities sold - 29,285,540
Other assets 3,344,961 3,608,880
-------------------- -------------------
Total assets $ 2,346,846,471 $ 2,445,639,296
-------------------- -------------------
Liabilities:
Loan payable - Credit Facility $ 596,500,000 $ 596,500,000
Mortgages payable 162,101,475 162,461,900
Open interest rate swap contracts, at value 39,217,224 47,057,312
Swap interest payable 1,568,800 1,696,469
Notes payable to minority shareholder 565,972 565,972
Security deposits 785,163 776,772
Accrued expenses:
Interest expense 2,490,344 2,487,473
Property taxes 785,277 3,143,437
Other expenses and liabilities 1,615,656 1,601,191
Minority interests in controlled subsidiaries 9,268,502 9,118,965
-------------------- -------------------
Total liabilities $ 814,898,413 $ 825,409,491
-------------------- -------------------
Net assets $ 1,531,948,058 $ 1,620,229,805
Shareholders' Capital
-------------------- -------------------
Shareholders' capital $ 1,531,948,058 $ 1,620,229,805
-------------------- -------------------
Shares Outstanding 23,290,330 23,190,678
-------------------- -------------------
Net Asset Value and Redemption Price Per Share $ 65.78 $ 69.87
-------------------- -------------------
See notes to condensed consolidated financial statements
3
BELMAR CAPITAL FUND LLC
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
2003 2002
----------------- ----------------
Investment Income:
Dividends allocated from Belvedere Capital
(net of foreign taxes of $72,603, and
$29,355, respectively) $ 5,950,467 $ 5,445,139
Interest allocated from Belvedere Capital 118,842 181,358
Expenses allocated from Belvedere Capital (2,427,926) (3,146,053)
----------------- ----------------
Net investment income allocated from
Belvedere Capital $ 3,641,383 $ 2,480,444
Dividends from Partnership Preference Units 12,484,532 13,912,529
Rental income 8,587,490 8,742,889
Interest 24,127 11,895
----------------- ----------------
Total investment income $ 24,737,532 $ 25,147,757
----------------- ----------------
Expenses:
Investment advisory and administrative fees $ 1,736,439 $ 2,104,754
Property management fees 338,987 347,649
Distribution and servicing fees 759,629 1,043,486
Interest expense on Credit Facility 2,745,800 3,677,584
Interest expense on swap contracts 9,198,945 10,197,831
Interest expense on mortgages 3,547,846 3,821,757
Property and maintenance expenses 2,778,593 2,706,386
Property taxes and insurance 1,177,303 1,230,307
Miscellaneous 196,810 282,989
----------------- ----------------
Total expenses $ 22,480,352 $ 25,412,743
Deduct -
Reduction of investment advisory and
administrative fees 382,008 515,469
---------------- -----------------
Net expenses $ 22,098,344 $ 24,897,274
----------------- ----------------
Net investment income before minority
interest in net income of controlled
subsidiary $ 2,639,188 $ 250,483
Minority interest in net income of
controlled subsidiary (137,545) (114,392)
----------------- ----------------
Net investment income $ 2,501,643 $ 136,091
----------------- ----------------
See notes to condensed consolidated financial statements
4
BELMAR CAPITAL FUND LLC
Condensed Consolidated Statements of Operations (Unaudited) (Continued)
Three Months Three Months
Ended Ended
March 31, March 31,
2003 2002
------------------ -----------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) -
Investment transactions from Belvedere
Capital (identified cost basis) $ (7,241,552) $ (12,537,225)
Investment transactions in Partnership
Preference Units (identified cost basis) 638,700 -
Termination of interest rate swap contracts (492,772) -
------------------ -----------------
Net realized loss $ (7,095,624) $ (12,537,225)
------------------ -----------------
Change in unrealized appreciation (depreciation) -
Investment in Belvedere Capital (identified
cost basis) $(73,116,188) $ 26,921,774
Investments in Partnership Preference Units
(identified cost basis) 14,811,441 (69,633)
Investment in other real estate investments
(net of minority interest in unrealized gain
(loss) of controlled subsidiary of $11,992,
and ($760,447), respectively) (1,383,288) 760,447
Interest rate swap contracts 7,840,088 8,127,630
------------------ -----------------
Net change in unrealized appreciation (depreciation) $(51,847,947) $ 35,740,218
------------------ -----------------
Net realized and unrealized gain (loss) $(58,943,571) $ 23,202,993
------------------ -----------------
Net (decrease) increase in net assets from operations $(56,441,928) $ 23,339,084
================== =================
See notes to condensed consolidated financial statements
5
BELMAR CAPITAL FUND LLC
Condensed Consolidated Statements of Changes in Net Assets (Unaudited)
Three Months Three Months
Ended Ended
March 31, 2003 March 31, 2002
----------------------- -----------------------
Increase (Decrease) in Net Assets:
Net investment income $ 2,501,643 $ 136,091
Net realized loss from investment transactions (7,095,624) (12,537,225)
Net change in unrealized appreciation (depreciation) of
investments (51,847,947) 35,740,218
----------------------- -----------------------
Net (decrease) increase in net assets from operations $ (56,441,928) $ 23,339,084
----------------------- -----------------------
Transactions in Fund Shares -
Net asset value of Fund Shares issued to shareholders
in payment of distributions declared $ 17,737,085 $ -
Net asset value of Fund Shares redeemed (10,256,516) (11,041,571)
----------------------- -----------------------
Net increase (decrease) in net assets from
Fund Share transactions $ 7,480,569 $ (11,041,571)
----------------------- -----------------------
Distributions -
Distributions to Shareholders $ (39,320,388) $ -
----------------------- -----------------------
Total distributions $ (39,320,388) $ -
----------------------- -----------------------
Net (decrease) increase in net assets $ (88,281,747) $ 12,297,513
Net assets:
At beginning of period $ 1,620,229,805 $ 2,108,684,133
----------------------- -----------------------
At end of period $ 1,531,948,058 $ 2,120,981,646
======================= =======================
See notes to condensed consolidated financial statements
6
BELMAR CAPITAL FUND LLC
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
2003 2002
----------------- ------------------
Cash Flows From (For) Operating Activities -
Net (decrease) increase in net assets from operations $(56,441,928) $23,339,084
Adjustments to reconcile net (decrease) increase in net assets
from operations to net cash flows from operating activities -
Amortization of debt issuance costs 84,501 89,628
Net investment income allocated from Belvedere Capital (3,641,383) (2,480,444)
Increase in dividends and interest receivable (142) (3,984,219)
Decrease in interest payable for open swap contracts (127,669) (21,512)
Decrease in escrow deposits - restricted 1,806,306 3,021,832
Decrease in receivable for securities sold 29,285,540 -
Decrease in other assets 179,418 255,283
Decrease in accrued property taxes (2,358,160) (2,258,582)
(Increase) decrease in security deposits, accrued interest, and
accrued other expenses and liabilities 25,727 (1,093,073)
Proceeds from sales of Partnership Preference Units 8,033,600 -
Improvements to rental property (341,007) (595,182)
Net (increase) decrease in investment in Belvedere Capital (10,000,001) 4,538,926
(Increase) decrease in short-term investments (3,600,000) 3,335,722
Payment for termination of interest rate swap contracts (492,772) -
Minority interest in net income of controlled subsidiary 137,545 114,392
Net realized loss from investment transactions 7,095,624 12,537,225
Net change in unrealized (appreciation) depreciation of investments 51,847,947 (35,740,218)
------------------ ------------------
Net cash flows from operating activities $ 21,493,146 $ 1,058,862
Cash Flows From (For) Financing Activities -
Payments on mortgages $ (360,425) $ (356,437)
Payment on notes payable to minority shareholder - (134,028)
Payments for Fund Shares redeemed (639,155) (916,026)
Distributions paid to Shareholders (21,583,303) -
------------------ ------------------
Net cash flows for financing activities $ (22,582,883) $(1,406,491)
Net decrease in cash $ (1,089,737) $ (347,629)
Cash at beginning of period $ 6,149,096 $ 1,658,511
------------------ ------------------
Cash at end of period $ 5,059,359 $ 1,310,882
================== ==================
See notes to condensed consolidated financial statements
7
BELMAR CAPITAL FUND LLC
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)
Three Months Three Months
Ended Ended
March 31, March 31,
2003 2002
------------------- ------------------
Supplemental Disclosure and Non-cash Investing and
Financing Activities-
Interest paid for loan - Credit Facility $ 2,085,315 $ 3,063,209
Interest paid for mortgages $ 3,449,183 $ 3,706,234
Interest paid for swap contracts $ 9,326,614 $ 10,219,343
Market value of securities distributed in payment of redemptions $ 9,617,361 $ 10,125,545
See notes to condensed consolidated financial statements
8
BELMAR CAPITAL FUND LLC as of March 31, 2003
Condensed Consolidated Financial Statements (Continued)
FINANCIAL HIGHLIGHTS (UNAUDITED)
For the Three Months Ended March 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value - Beginning of period $ 69.870
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(6) $ 0.107
Net realized and unrealized loss (2.497)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LOSS FROM OPERATIONS $ (2.390)
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders $ (1.700)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (1.700)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE - END OF PERIOD $ 65.780
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(1) (3.57)%
- ------------------------------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE AS A PERCENTAGE
OF AVERAGE NET OF AVERAGE GROSS
RATIOS ASSETS (5) ASSETS (2)(5)
- ---------------------------------------------------------------------------------------------------------------------------
Expenses of Consolidated Real Property Subsidiaries
Interest and other borrowing costs (7) 0.73%(8) 0.49%(8)
Operating expenses(7) 0.91%(8) 0.60%(8)
Belmar Capital Fund LLC Expenses
Interest and other borrowing costs(4) 3.14%(8) 2.08%(8)
Investment advisory and administrative fees, servicing
fees and other Fund operating expenses(3)(4) 1.21%(8) 0.81%(8)
--------------------------------------------
Total expenses 5.99%(8) 3.98%(8)
Net investment income 0.66%(8) 0.44%(8)
- ---------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $1,531,948
Portfolio Turnover of Tax-Managed Growth Portfolio (the Portfolio) 4%
- ---------------------------------------------------------------------------------------------------------------------------
(1) Returns are calculated by determining the percentage change in net asset
value with all distributions reinvested. Total return is not computed on an
annualized basis.
(2) Average Gross Assets is defined as the average daily amount of all assets
of Belmar Capital Fund LLC (Belmar Capital) (including Belmar Capital's
interest in Belvedere Capital Fund Company LLC (Belvedere Capital) and
Belmar Capital's ratable share of the assets of its directly and indirectly
controlled subsidiaries), without reduction by any liabilities. For this
purpose, the assets of Belmar Realty Corporation's (Belmar Realty)
controlled subsidiaries are reduced by the proportionate interests therein
of investors other than Belmar Realty.
(3) Includes Belmar Capital's share of Belvedere Capital's allocated expenses,
including those expenses allocated from the Portfolio.
(4) Includes the expenses of Belmar Capital and Belmar Realty. Does not include
expenses of the real estate subsidiary, majority owned by Belmar Realty.
(5) For the purpose of calculating ratios, the income and expenses of Belmar
Realty's controlled subsidiary are reduced by the proportionate interests
therein of investors other than Belmar Realty.
(6) Calculated using average shares outstanding.
(7) Includes Belmar Realty's proportional share of expenses incurred by its
majority-owned subsidiary.
(8) Annualized.
See notes to condensed consolidated financial statements
9
BELMAR CAPITAL FUND LLC as of March 31, 2003
Notes To Condensed Consolidated Financial Statements (Unaudited)
1 Basis of Presentation
The condensed consolidated interim financial statements of Belmar Capital Fund
LLC (Belmar Capital) and its subsidiaries (collectively, the Fund) have been
prepared by the Fund, without audit, in accordance with accounting principles
generally accepted in the United States of America for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, certain information and footnote disclosures normally included
in annual financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or
omitted as permitted by such rules and regulations. All adjustments, consisting
of normal recurring adjustments, have been included. Management believes that
the disclosures are adequate to present fairly the financial position, results
of operations, cash flows and financial highlights at the dates and for the
periods presented. It is suggested that these interim financial statements be
read in conjunction with the financial statements and the notes thereto included
in the Fund's latest annual report on Form 10-K. Results for interim periods are
not necessarily indicative of those to be expected for the full fiscal year.
The balance sheet at December 31, 2002 has been derived from the December 31,
2002 audited financial statements but does not include all of the information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements as permitted by the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Certain amounts in the prior period's condensed consolidated financial
statements have been reclassified to conform with the current period
presentation.
2 Estate Freeze
Shareholders in Belmar Capital are entitled to restructure their Fund Share
interests under what is termed an Estate Freeze Election. Under this election,
Fund Shares are divided into Preferred Shares and Common Shares. Preferred
Shares have a preferential right over the corresponding Common Shares equal to
(i) 95% of the original capital contribution made in respect of the undivided
Shares from which the Preferred Shares and Common Shares were derived, plus (ii)
an annuity priority return equal to 8.5% of the Preferred Shares' preferential
interest in the original capital contribution of the undivided Fund Shares. The
associated Common Shares are entitled to the remaining 5% of the original
capital contribution in respect of the undivided Shares, plus any returns
thereon in excess of the fixed annual priority of the Preferred Shares. At March
31, 2003 and December 31, 2002, the Preferred Shares were valued at $65.78 and
$69.87, respectively, and the Common Shares had no value. The existence of
restructured Fund Shares does not adversely affect Shareholders who do not
participate in the election nor do the restructured Fund Shares have
preferential rights to Fund Shares that have not been restructured. Shareholders
who subdivide Fund Shares under this election sacrifice certain rights and
privileges that they would otherwise have with respect to the Fund Shares so
divided, including redemption rights and voting and consent rights. Upon the
twentieth anniversary of the issuance of the associated undivided Fund Shares to
the original holders thereof, Preferred and Common Shares will automatically
convert into full and fractional undivided Fund Shares.
10
3 Investment Transactions
Increases and decreases of the Fund's investment in Belvedere Capital Fund
Company LLC (Belvedere Capital) for the three months ended March 31, 2003
aggregated $10,000,000 and $9,617,360 respectively, and for the three months
ended March 31, 2002 aggregated $12,045,414 and $26,709,874, respectively. For
the three months ended March 31, 2003, purchases and sales of Partnership
Preference Units aggregated $0 and $8,033,600, respectively. There were no
purchases and sales of Partnership Preference Units for the three months ended
March 31, 2002. There were no acquisitions and sales of other real property for
the three months ended March 31, 2003 and March 31, 2002.
Sales of Partnership Preference Units for the three months ended March 31, 2003
represent amounts sold to other funds sponsored by Eaton Vance Management for
which a gain of $638,700 was recognized.
4 Indirect Investment in Portfolio
Belvedere Capital's interest in Tax-Managed Growth Portfolio (the Portfolio) at
March 31, 2003, was $8,400,349,853 representing 61.1% of the Portfolio's net
assets and at March 31, 2002 was $10,618,305,771 representing 56.5% of the
Portfolio's net assets. The Fund's investment in Belvedere Capital at March 31,
2003 was $1,568,928,236, representing 18.7% of Belvedere Capital's net assets
and at March 31, 2002 was $2,132,045,602, representing 20.1% of Belvedere
Capital's net assets. Investment income allocated to Belvedere Capital from the
Portfolio for the three months ended March 31, 2003 totaled $32,398,573, of
which $6,069,309 was allocated to the Fund. Investment income allocated to
Belvedere Capital from the Portfolio for the three months ended March 31, 2002
totaled $27,289,011, of which $5,626,497 was allocated to the Fund. Expenses
allocated to Belvedere Capital from the Portfolio for the three months ended
March 31, 2003 totaled $9,667,954, of which $1,820,273 was allocated to the
Fund. Expenses allocated to Belvedere Capital from the Portfolio for the three
months ended March 31, 2002 totaled $11,408,561, of which $2,347,879 was
allocated to the Fund. Belvedere Capital allocated additional expenses to the
Fund of $607,653 for the three months ended March 31, 2003, representing $17,977
of operating expenses and $589,676 of service fees. Belvedere Capital allocated
additional expenses to the Fund of $798,174 for the three months ended March 31,
2002, representing $20,422 of operating expenses and $777,752 of service fees.
A summary of the Portfolio's Statement of Assets and Liabilities, at March 31,
2003, December 31, 2002 and March 31, 2002 and its operations for the three
months ended March 31, 2003, the year ended December 31, 2002 and for the three
months ended March 31, 2002 follows:
March 31, December 31, March 31,
2003 2002 2002
---------------------- ---------------------- ---------------------
Investments, at value $ 13,797,517,752 $ 14,544,149,182 $ 18,699,529,315
Other assets 24,535,362 70,073,039 137,094,099
- ----------------------------------- ---------------------- ---------------------- ---------------------
Total assets $ 13,822,053,114 $ 14,614,222,221 $ 18,836,623,414
Total liabilities 73,659,303 42,700,633 54,877,430
- ----------------------------------- ---------------------- ---------------------- ---------------------
Net Assets $ 13,748,393,811 $ 14,571,521,588 $ 18,781,745,984
=================================== ====================== ====================== =====================
11
=================================== ====================== ====================== =====================
Dividends and interest $ 53,431,732 $ 213,292,082 $ 48,561,319
- ----------------------------------- ---------------------- ---------------------- ---------------------
Investment adviser fee $ 15,490,999 $ 71,564,552 $ 19,634,596
Other expenses 477,083 2,577,489 654,041
- ----------------------------------- ---------------------- ---------------------- ---------------------
Total expenses $ 15,968,082 $ 74,142,041 $ 20,288,637
- ----------------------------------- ---------------------- ---------------------- ---------------------
Net investment income $ 37,463,650 $ 139,150,041 $ 28,272,682
Net realized losses (62,969,970) (459,996,840) (111,417,095)
Net change in unrealized
appreciation (depreciation) (649,928,537) (3,312,547,564) 229,264,275
- ----------------------------------- ---------------------- ---------------------- ---------------------
Net increase (decrease) in net
assets from operations $ (675,434,857) $ (3,633,394,363) $ 146,119,862
- ----------------------------------- ---------------------- ---------------------- ---------------------
5 Cancelable Interest Rate Swap Agreements
Belmar Capital has entered into cancelable interest rate swap agreements in
connection with its real estate investments and the associated borrowings. Under
such agreements Belmar Capital has agreed to make periodic payments at fixed
rates in exchange for payments at floating rates.
The notional or contractual amounts of these instruments may not necessarily
represent the amounts potentially subject to risk. The measurement of the risks
associated with these investments is meaningful only when considered in
conjunction with all related assets, liabilities and agreements. As of March 31,
2003 and December 31, 2002, Belmar Capital has entered into cancelable interest
rate swap agreements with Merrill Lynch Capital Services, Inc., as listed below.
Notional Initial
Amount Optional Final Unrealized Unrealized
(000's Fixed Floating Termination Termination Depreciation Depreciation
omitted) Rate Rate Date Date At March 31, 2003 At December 31, 2002
- -------------- ----------- ------------------ ---------------- ---------------- ---------------------- -----------------------
$27,500 8.96% LIBOR + 0.40% 3/05 3/30 $ 3,325,175 $ 3,589,811
19,146 9.09% LIBOR + 0.40% 4/04 3/30 1,458,621 1,721,750
43,181 9.20% LIBOR + 0.40% 6/03 3/30 757,388 1,544,077
21,766 9.24% LIBOR + 0.40% 4/03 3/30 87,561 491,825
38,102 9.11% LIBOR + 0.40% 2/04 3/30 2,459,070 3,020,889
20,659 9.13% LIBOR + 0.40% 11/03 3/30 988,396 1,317,687
23,027 9.05% LIBOR + 0.40% 7/04 3/30 2,083,007 2,366,994
10,773 9.54% LIBOR + 0.40% 4/03 3/30 45,056 253,235
12,984 9.50% LIBOR + 0.40% 6/03 3/30 236,794 483,956
9,608 9.46% LIBOR + 0.40% 11/03 3/30 482,832 647,043
13,274 9.42% LIBOR + 0.40% 2/04 3/30 901,841 1,111,586
12,063 9.38% LIBOR + 0.40% 4/04 3/30 967,432 1,145,024
10,799 9.35% LIBOR + 0.40% 7/04 3/30 1,034,255 1,178,045
41,185 9.31% LIBOR + 0.40% 9/04 3/30 4,333,245 4,841,445
7,255 9.26% LIBOR + 0.40% 3/05 3/30 937,210 1,013,121
22,982 9.17% LIBOR + 0.40% 2/03 3/30 - * 163,553
28,305 9.15% LIBOR + 0.40% 4/03 3/30 112,502 631,854
32,404 9.13% LIBOR + 0.40% 6/03 3/30 563,061 1,146,899
3,383 9.08% LIBOR + 0.40% 11/03 3/30 160,584 213,883
12,062 9.00% LIBOR + 0.40% 2/04 3/30 762,993 936,025
24,622 8.985% LIBOR + 0.40% 4/04 3/30 1,837,962 2,167,107
9,184 8.97% LIBOR + 0.40% 7/04 3/30 816,994 927,854
12
13,454 8.93% LIBOR + 0.40% 9/04 3/30 1,309,776 1,459,523
17,888 8.87% LIBOR + 0.40% 3/05 3/30 2,116,131 2,283,727
39,407 7.46% LIBOR + 0.40% - 9/10 8,386,661 8,423,378
11,776 8.34% LIBOR + 0.40% 3/05 3/30 1,195,246 1,287,360
2,338 8.41% LIBOR + 0.40% 9/04 3/30 198,608 220,542
23,636 8.48% LIBOR + 0.40% 2/04 3/30 1,332,757 1,623,935
20,265 8.60% LIBOR + 0.40% 6/03 3/30 326,066 655,632
28,629 8.66% LIBOR + 0.40% 2/03 3/30 - * 189,552
- -------------- ----------- ------------------ ---------------- ---------------- ---------------------- -----------------------
$ 39,217,224 $ 47,057,312
- -------------- ----------- ------------------ ---------------- ---------------- ---------------------- -----------------------
* Agreement was terminated on the Initial Optional Termination Date.
6 Segment Information
Belmar Capital pursues its investment objective primarily by investing
indirectly in the Portfolio through Belvedere Capital. The Portfolio is a
diversified investment company of equity securities that emphasizes investments
in common stocks of domestic and foreign growth companies that are considered to
be high in quality and attractive in their long-term investment prospects.
Separate from its investment in Belvedere Capital, Belmar Capital invests in
real estate assets through its subsidiary Belmar Realty Corporation (Belmar
Realty). Belmar Realty invests directly in Partnership Preference Units and
indirectly in real property through a controlled subsidiary, Bel Alliance
Apartments, LLC.
Belmar Capital evaluates performance of the reportable segments based on the net
increase (decrease) in net assets from operations of the respective segment,
which includes net investment income or loss, net realized gain (loss), and
unrealized gain (loss). The accounting policies of the reportable segments are
the same as those for Belmar Capital on a consolidated basis. No reportable
segments have been aggregated. Reportable information by segment is as follows:
TAX-MANAGED
FOR THE THREE MONTHS ENDED GROWTH REAL
MARCH 31, 2003 PORTFOLIO* ESTATE TOTAL
- ---------------------------------------------------------------------------------------------------------------------
Revenue $ 3,641,383 $ 21,072,718 $ 24,714,101
Interest expense on mortgages - (3,547,846) (3,547,846)
Interest expense on Credit Facility - (2,388,846) (2,388,846)
Interest expense on swap contracts - (9,198,945) (9,198,945)
Operating expenses (270,648) (5,514,554) (5,785,202)
Minority interest in net income of controlled
subsidiaries - (137,545) (137,545)
- ---------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 3,370,735 $ 284,982 $ 3,655,717
Net realized gain (loss) (7,241,552) 145,928 (7,095,624)
Change in unrealized gain (loss) (73,116,188) 21,268,241 (51,847,947)
- ---------------------------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN NET ASSETS FROM
OPERATIONS OF REPORTABLE SEGMENTS $ (76,987,005) $ 21,699,151 $ (55,287,854)
- ---------------------------------------------------------------------------------------------------------------------
Segment assets $ 1,568,928,236 $ 770,449,048 $ 2,339,377,284
Segment liabilities - 737,102,435 737,102,435
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS OF REPORTABLE SEGMENTS $ 1,568,928,236 $ 33,346,613 $ 1,602,274,849
- ---------------------------------------------------------------------------------------------------------------------
13
TAX-MANAGED
FOR THE THREE MONTHS ENDED GROWTH REAL
MARCH 31, 2002 PORTFOLIO* ESTATE TOTAL
- ---------------------------------------------------------------------------------------------------------------------
Revenue $ 2,480,444 $ 22,667,313 $ 25,147,757
Interest expense on mortgages - (3,821,757) (3,821,757)
Interest expense on Credit Facility - (3,493,705) (3,493,705)
Interest expense on swap contracts - (10,197,831) (10,197,831)
Operating expenses (394,222) (5,706,901) (6,101,123)
Minority interest in net income of controlled
subsidiaries - (114,392) (114,392)
- ---------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) $ 2,086,222 $ (667,273) $ 1,418,949
Net realized loss (12,537,225) - (12,537,225)
Change in unrealized gain (loss) 26,921,774 8,818,444 35,740,218
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS OF
REPORTABLE SEGMENTS $ 16,470,771 $ 8,151,171 $ 24,621,942
- ---------------------------------------------------------------------------------------------------------------------
Segment assets $ 2,132,045,602 $ 834,460,703 $ 2,966,506,305
Segment liabilities - 815,230,884 815,230,884
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS OF REPORTABLE SEGMENTS $ 2,132,045,602 $ 19,229,819 $ 2,151,275,421
- ---------------------------------------------------------------------------------------------------------------------
*Belmar Capital invests indirectly in Tax-Managed Growth Portfolio through
Belvedere Capital.
The following tables reconcile the reported segment information to the condensed
consolidated financial statements for the three months ended March 31, 2003 and
March 31, 2002:
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 2003 MARCH 31, 2002
---------------------- ----------------------
Revenue:
Revenues from reportable segments $ 24,714,101 $ 25,147,757
Unallocated revenue 23,431 -
---------------------- ----------------------
TOTAL REVENUE $ 24,737,532 $ 25,147,757
---------------------- ----------------------
Net increase (decrease) in net assets from operations:
Net (decrease) increase in net assets from operations of reportable
segments $ (55,287,854) $ 24,621,942
Unallocated revenue 23,431 -
Unallocated expenses ** (1,177,505) (1,282,858)
---------------------- ----------------------
TOTAL NET (DECREASE) INCREASE IN NET ASSETS FROM OPERATIONS $ (56,441,928) $ 23,339,084
---------------------- ----------------------
** Unallocated expenses include costs of Belmar Capital to operate the Fund such as servicing and distribution
expenses as well as other miscellaneous administrative costs of Belmar Capital.
Net assets:
Net assets of reportable segments $1,602,274,849 $2,151,275,421
Unallocated cash 3,869,187 476
Short-term investments 3,600,000 584,083
Loan payable - Credit Facility (77,545,000) (30,675,000)
Other liabilities (250,978) (203,334)
---------------------- ----------------------
TOTAL NET ASSETS $1,531,948,058 $2,120,981,646
---------------------- ----------------------
14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information in this report contains forward-looking statements within the
meaning of the federal securities laws. Forward-looking statements typically are
identified by use of terms such as "may," "will," "should," "might," "expect,"
"anticipate," "estimate," and similar words, although some forward-looking
statements are expressed differently. The actual results of Belmar Capital Fund
LLC (the Fund) could differ materially from those contained in the
forward-looking statements due to a number of factors. The Fund undertakes no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events, or otherwise, except as required by
applicable law. Factors that could affect the Fund's performance include a
decline in the U.S. stock markets or in general economic conditions, adverse
developments affecting the real estate industry or fluctuations in interest
rates.
The following discussion should be read in conjunction with the Fund's unaudited
condensed consolidated financial statements and related notes in Item 1 above.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2003, COMPARED TO THE
QUARTER ENDED MARCH 31, 2002
PERFORMANCE OF THE FUND.(1) The Fund's total return was -3.57% for the quarter
ended March 31, 2003. This return reflects a decrease in the Fund's net asset
value per share from $69.87 to $65.78 and a distribution of $1.70 per share
during the quarter. For comparison, the Standard & Poor's 500 Index (the S&P
500), an unmanaged index of large capitalization stocks commonly used as a
benchmark for the U.S. equity market, had a total return of -3.15% over the same
period.(2) The performance of the Fund outperformed that of the Tax-Managed
Growth Portfolio (the Portfolio) by approximately 1.14% during the period. Last
year, the Fund had a total return performance of 1.11% for the quarter ended
March 31, 2002. This return reflected an increase in the Fund's net asset value
per share from $87.37 to $88.34. For comparison, the S&P 500 had a total return
of 0.28% over the same period.(2) The performance of the Fund outperformed that
of the Portfolio by approximately 0.28% during the period.
PERFORMANCE OF THE PORTFOLIO. War angst coupled with rising oil prices, domestic
terrorist fears, and negative investor sentiment contributed to continued market
volatility in the first quarter of 2003. The quarter was marked by a few
leadership reversals from the same period last year. Particularly of note was
the dominance of large capitalization and growth related stocks, and the
divergence in performance of growth oriented sectors and sub-industries during
the quarter. Most major domestic benchmarks experienced negative returns and
only two of the S&P 500 sectors had gains during the period.
The best performing sector of the S&P 500 during the first quarter of 2003 was
health care, while the telecommunications services sector continued to trail the
performance of the S&P 500. Market leading industries in the first quarter
included computer software, biotechnology, and managed health care. Defensive
groups such as food distributors, material manufacturing, and drug retailing
realized weaker quarterly returns during the period.
In this challenging environment, the performance of the Portfolio trailed that
of the overall market mostly due to lower exposure to more aggressive sectors
and industries. During the quarter, Boston Management and Research (Boston
- -------------
(1) Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that Shares, when redeemed, may be worth
more or less than their original cost.
(2) It is not possible to invest directly in an Index.
15
Management), the Portfolio's investment adviser, emphasized industrials and
consumer staples sectors, a continuing theme from last year. While this emphasis
has been productive in prior periods, it hurt Portfolio returns during the first
quarter of 2003. Relatively stronger stock selection within the airfreight and
logistics, personal products and beverages sub-industries partially offset the
negative performance of these sectors during the quarter.
Boston Management gradually increased the Portfolio's exposure to the energy
sector (particularly the oil and gas industries) during the quarter to a
relatively higher allocation from its neutral standing versus the S&P 500 last
year. Boston Management slightly trimmed the Portfolio's positions in the
healthcare and financial sectors from last year's levels, primarily due to
fundamental and political headwinds. Lack of earnings visibility in the
information technology sector prompted a continued underweight allocation versus
the S&P 500. The Portfolio also underweighted the telecommunications services
sector during the quarter, which was the S&P 500's worst performing sector
during the period. Boston Management believes that these sector shifts are
appropriate for the longer-term positioning of the Portfolio.
PERFORMANCE OF REAL ESTATE INVESTMENTS. For the quarter ended March 31, 2003,
the Fund's real estate operations conducted through a Real Estate Joint Venture
reflected weakening multifamily market fundamentals and the uncertain outlook
for the U.S. economy as a whole. Rental income decreased to $8.6 million for the
quarter ended March 31, 2003 compared to $8.7 million for the quarter ended
March 31, 2002, a decrease of $0.1 million or 1%, while property operating
expenses (before debt service and excluding certain operating expenses of Belmar
Realty Corporation (Belmar Realty) of approximately $1.2 million) totaled $4.3
million for each period. The decline in rental income was principally due to
increased rental concessions offered at the multifamily properties held by the
Real Estate Joint Venture. During the quarter ended March 31, 2003, Real Estate
Joint Venture operations were also affected by deteriorating multifamily market
fundamentals in most regions with falling occupancy levels. Given the continued
uncertain outlook for the U.S. economy as a whole, expectations are that real
estate operating results in 2003 will be modestly below the levels of 2002.
At March 31, 2003, the estimated fair value of the real properties held through
the Fund's Real Estate Joint Venture was $202.9 million compared to $229.7
million at March 31, 2002, a decrease of $26.8 million or 12%. The decrease in
estimated real property value was due to a reduction in the number of properties
held by the Fund's Real Estate Joint Venture during 2002 and due to declines in
estimated property values that resulted from declines in near-term earnings
expectations and the economic downturn. The Fund recognized unrealized
depreciation of the estimated fair value of its other real estate investments of
approximately $1.4 million for the quarter ended March 31, 2003. Despite weaker
market conditions, declines in asset values for multifamily properties have
generally been modest as decreases in capitalization rates have largely offset
declining income level expectations.
For the quarter ended March 31, 2003, the Fund's investments in Partnership
Preference Units generally benefited from declining interest rates and
tightening spreads in income-oriented securities, particularly in real
estate-related securities. The Fund sold Partnership Preference Units over the
past year, and as a result, the estimated fair value of the Fund's Partnership
Preference Units declined. At March 31, 2003, the estimated fair value of the
Fund's Partnership Preference Units equaled $557.8 million compared to $587.5
million at March 31, 2002, a decrease of $29.7 million or 5%. The decrease in
value, due to fewer Partnership Preference Units held at March 31, 2003, was
offset in part by increases in values of the Partnership Preference Units owned
by the Fund at March 31, 2003. The Fund recognized $14.8 million in unrealized
16
appreciation in the estimated fair value of the Partnership Preference Units
during the quarter ended March 31, 2003 primarily due to the market conditions
described above. Dividends received from the Partnership Preference Units for
the quarter ended March 31, 2003 totaled $12.5 million compared to $13.9 million
for the quarter ended March 31, 2002, a decrease of $1.4 million or 10%. The
decrease was due to fewer Partnership Preference Unit holdings during the
quarter ended March 31, 2003.
PERFORMANCE OF INTEREST RATE SWAPS. For the quarter ended March 31, 2003,
interest rate swap valuations appreciated modestly by approximately $7.8
million, as initial optional termination dates moved closer. Approximately 53%
of existing notional contract amounts will reach optional termination over the
next four quarters. Offsetting the appreciation were minimal interest rate
decreases during the first quarter 2003, in contrast to interest rate increases
during the first quarter of 2002. Valuations appreciated by approximately $8.1
million for the quarter ended March 31, 2002 due to increases in swap rates
during the period.
LIQUIDITY AND CAPITAL RESOURCES
The Fund has entered into interest rate swap agreements with respect to its
borrowings and real estate investments. Pursuant to these agreements, the Fund
makes periodic payments to the counterparty at predetermined fixed rates, in
exchange for floating-rate payments from the counterparty that fluctuate with
one-month LIBOR. During the terms of the outstanding swap agreements, changes in
the underlying values of the swaps are recorded as unrealized gains or losses.
As of March 31, 2003 and 2002 the unrealized depreciation related to the
interest rate swap agreements was $39,217,224 and $36,111,680, respectively.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Fund's discussion and analysis of its financial condition and results of
operations are based upon the Fund's unaudited condensed consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these
financial statements requires the Fund to make estimates, judgments and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses. The Fund bases these estimates, judgments and assumptions on
historical experience and on other various factors that are believed to be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions.
The Fund's critical accounting policies affect the Fund's more significant
estimates and assumptions used in valuing the Fund's real estate investments and
interest rate swap agreements. Prices are not readily available for these types
of investments and therefore are valued on an ongoing basis by Boston
Management, in its capacity as manager of Belmar Realty, in the case of real
estate investments, and in its capacity as the Fund's investment adviser, in the
case of interest rate swap agreements.
In estimating the value of the Fund's investments in real estate, Boston
Management takes into account relevant factors, data and information, including
with respect to investments in Partnership Preference Units, information from
dealers and similar firms with knowledge of such issues and the prices of
comparable preferred equity securities and other fixed or adjustable rate
instruments having similar investment characteristics. Real estate investments
other than Partnership Preference Units are generally stated at estimated fair
values based upon independent valuations assuming an orderly disposition of
assets. Detailed investment valuations are performed at least annually and
reviewed periodically. Interim valuations reflect results of operations and
17
distributions, and may be adjusted if there has been a significant change in
economic circumstances since the most recent independent valuation. Given that
such valuations include many assumptions, including but not limited to an
orderly disposition of assets, values may differ from amounts ultimately
realized. Boston Management, as the Fund's investment adviser, determines the
value of interest rate swaps and, in doing so, may consider among other things,
dealer and counter-party quotes and pricing models.
The policies for valuing real estate investments involve significant judgments
that are based upon, without limitation, general economic conditions, the supply
and demand for different types of real properties, the financial health of
tenants, the timing of lease expirations and terminations, fluctuations in
rental rates and operating costs, exposure to adverse environmental conditions
and losses from casualty or condemnation, interest rates, availability of
financing, managerial performance and government rules and regulations. The
valuations of Partnership Preference Units held by the Fund through its
investment in Belmar Realty fluctuate over time to reflect, among other factors,
changes in interest rates, changes in perceived riskiness of such units
(including call risk), changes in the perceived riskiness of comparable or
similar securities trading in the public market and the relationship between
supply and demand for comparable or similar securities trading in the public
market.
The value of interest rate swaps may be subject to wide swings in valuation
caused principally by changes in interest rates. Interest rate swaps may be
difficult to value since such instruments may be considered illiquid.
Fluctuations in the value of Partnership Preference Units derived from changes
in general interest rates can be expected to be offset in part (but not
entirely) by changes in the value of interest rate swap agreements or other
interest rate hedges entered into by the Fund with respect to its borrowings.
Fluctuations in the value of real estate investments derived from other factors
besides general interest rate movements (including issuer-specific and
sector-specific credit concerns, property-specific concerns and changes in
interest rate spread relationships) will not be offset by changes in the value
of interest rate swap agreements or other interest rate hedges entered into by
the Fund. Changes in the valuation of Partnership Preference Units not offset by
changes in the valuation of interest rate swap agreements or other interest rate
hedges entered into by the Fund and changes in the value of other real estate
investments will cause the performance of the Fund to deviate from the
performance of the Portfolio.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Fund's primary exposure to interest rate risk arises from its real estate
investments that are financed by the Fund with floating rate borrowings under a
revolving securitization facility with two affiliated special purpose commercial
paper issuers (the CP Issuers) which is supported by a liquidity facility
(collectively, the Credit Facility) and by fixed-rate secured mortgage debt
obligations of the Real Estate Joint Venture. The interest rate on borrowings
under the Fund's Credit Facility is reset at regular intervals based on the CP
Issuers' cost of financing plus a margin of one-month LIBOR plus a premium. The
Fund utilizes cancelable interest rate swap agreements to fix the cost of its
borrowings under the Credit Facility and to mitigate the impact of interest rate
changes on the Fund's net asset value. Under the terms of the interest rate swap
agreements, the Fund makes cash payments at fixed rates in exchange for floating
rate payments that fluctuate with one-month LIBOR. In the future, the Fund may
use other interest rate hedging arrangements (such as caps, floors and collars)
to fix or limit borrowing costs. The use of interest rate hedging arrangements
is a specialized activity that can expose the Fund to significant loss.
The value of the Partnership Preference Units and, to a lesser degree, the Real
Estate Joint Venture is sensitive to interest rate risk. Increases in interest
rates generally will have an adverse affect on the value of Partnership
Preference Units and the Real Estate Joint Venture.
18
The following table summarizes the contractual maturities and weighted-average
interest rates associated with the Fund's significant non-trading financial
instruments. The Fund has no market risk sensitive instruments held for trading
purposes. This information should be read in conjunction with Note 5 to the
Fund's unaudited condensed consolidated financial statements in Item 1.
Interest Rate Sensitivity
Cost, Principal (Notional) Amount by Contractual Maturity
For the Twelve Months Ended March 31,
Estimated
2004-2006 2007 2008 Thereafter Total Fair Value
--------------- --------------- ------------ ---------------- --------------- -----------------
Rate sensitive liabilities:
- --------------------------------
Long-term debt:
- --------------------------------
Fixed-rate mortgages $162,101,475 $162,101,475 $186,000,000
Average interest rate 8.50% 8.50%
- --------------------------------
Variable-rate Credit Facility $596,500,000 $596,500,000 $596,500,000
Average interest rate 1.24% 1.24%
- -------------------------------- --------------- --------------- ------------ ---------------- --------------- -----------------
Rate sensitive derivative
financial instruments:
- --------------------------------
Pay fixed/Receive variable
interest rate swap contracts $550,046,000 $550,046,000 $(39,217,224)
Average pay rate 8.97% 8.97%
Average receive rate 1.24% 1.24%
- -------------------------------- --------------- --------------- ------------ ---------------- --------------- -----------------
Rate sensitive investments:
- --------------------------------
Fixed-rate Partnership
Preference Units:
- --------------------------------
Cabot Industrial Properties,
L.P., 8.625% Series B
Cumulative Redeemable
Preferred Units, Callable
4/29/04, Current Yield: 8.67% $55,831,200 $55,831,200 $64,675,000
- --------------------------------
Camden Operating, L.P., 8.50%
Series B Cumulative Redeemable
Perpetual Preferred Units,
Callable 2/23/04, Current
Yield: 8.32% $58,869,144 $58,869,144 $69,751,500
- --------------------------------
CP Limited Partnership, 8.125%
Series A Cumulative Redeemable
Preferred Units, Callable
4/20/03, Current Yield: 9.04% $60,844,550 $60,844,550 $67,383,150
- --------------------------------
Essex Portfolio, L.P., 7.875%
Series B Cumulative Redeemable
Preferred Units, Callable
2/6/03, Current Yield: 8.38% $11,997,050 $11,997,050 $15,273,927
- --------------------------------
Essex Portfolio, L.P., 9.30%
Series D Cumulative Redeemable
Preferred Units, Callable
7/28/04, Current Yield: 9.05% $43,009,575 $43,009,575 $51,374,800
19
- --------------------------------
Essex Portfolio, L.P., 9.125%
Series C Cumulative Redeemable
Preferred Units, Callable
11/24/03, Current Yield: 9.01% $ 3,383,200 $ 3,383,200 $ 4,053,112
- --------------------------------
Kilroy Realty, L.P, 8.075%
Series A Cumulative Redeemable
Preferred Units, Callable
2/6/03, Current Yield: 8.95% $19,298,920 $19,298,920 $23,626,636
- --------------------------------
Kilroy Realty, L.P., 9.375%
Series C Cumulative Redeemable
Preferred Units, Callable
11/24/03, Current Yield: 9.69% $30,266,640 $30,266,640 $33,872,580
- --------------------------------
PSA Institutional Partners,
L.P., 9.50% Series N
Cumulative Redeemable
Perpetual Preferred Units,
Callable 3/17/05, Current
Yield: 9.07% $64,418,165 $64,418,165 $66,915,450
- --------------------------------
Prentiss Properties
Acquisition Partners, L.P.,
8.30% Series B Cumulative
Redeemable Perpetual Preferred
Units, Callable 6/25/03,
Current Yield: 8.91% $37,660,205 $37,660,205 $44,900,778
- --------------------------------
Regency Centers, L.P., 8.125%
Series A Cumulative Redeemable
Preferred Units, Callable
6/25/03, Current Yield: 8.09% $39,693,050 $39,693,050 $50,220,000
- --------------------------------
Regency Centers, L.P., 9.125%
Series D Cumulative Redeemable
Preferred Units, Callable
9/29/04, Current Yield: 8.69% $12,924,525 $12,924,525 $15,742,500
- --------------------------------
Sun Communities Operating
L.P., 8.875% Series A
Cumulative Redeemable
Perpetual Preferred Units,
Callable 9/29/04, Current
Yield: 8.88% $44,052,800 $44,052,800 $49,980,000
- --------------------------------
20
ITEM 4. CONTROLS AND PROCEDURES
Within the 90-day period prior to the filing of this report, Eaton Vance
Management (Eaton Vance), as the Fund's manager, and the Fund's Chief Executive
Officer and Chief Financial Officer have conducted an evaluation of the
effectiveness of disclosure controls and procedures pursuant to Rule 13a-14
under the Securities Exchange Act of 1934, as amended. Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that the
disclosure controls and procedures are, to the best of their knowledge,
effective in ensuring that all material information required to be filed in this
quarterly report has been made known to them in a timely fashion. There have
been no significant changes in internal controls, or in factors that could
significantly affect internal controls, subsequent to the date the Chief
Executive Officer and Chief Financial Officer completed their evaluation.
As the Fund's manager, the complete and entire management, control and operation
of the Fund are vested in Eaton Vance. The Fund's organizational structure does
not provide for a board of directors or a board audit committee. As such, the
Fund's Chief Executive Officer and Chief Financial Officer intend to report any
significant deficiency in the design or operation of internal controls which
could adversely affect the Fund's ability to record, process, summarize and
report financial data, and any fraud, whether or not material, that involves
management or other employees who have a significant role in the Fund's internal
controls to Eaton Vance.
21
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Although in the ordinary course of business, the Fund, Belmar Realty
and the Real Estate Joint Venture may become involved in legal
proceedings, the Fund is not aware of any material pending legal
proceedings to which any of them is the subject.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the
three months ended March 31, 2003.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) The following is a list of all exhibits filed as part of this Form
10-Q:
4.1 Copy of First and Second Amendments to Revolving Credit and
Security Agreement dated March 12, 2003 and April 11, 2003,
respectively, filed herewith.
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K:
None.
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized officer on May 15, 2003.
BELMAR CAPITAL FUND LLC
(Registrant)
By: /s/ Michelle A. Alexander
------------------------------------
Michelle A. Alexander
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
23
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Thomas E. Faust Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Belmar Capital Fund
LLC;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ Thomas E. Faust Jr.
--------------------------
Thomas E. Faust Jr.
Chief Executive Officer
24
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Michelle A. Alexander, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Belmar Capital Fund
LLC;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ Michelle A. Alexander
-----------------------------------------
Michelle A. Alexander
Chief Financial Officer
25
EXHIBIT INDEX
4.1 Copy of First and Second Amendments to Revolving Credit and Security
Agreement dated March 12, 2003 and April 11, 2003, filed herewith.
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
26