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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
- --- OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2002
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
- ---- OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ___________
Commission file number 000-16757
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CONCORD MILESTONE PLUS, L.P.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 52-1494615
------------------------------- -----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
150 EAST PALMETTO PARK ROAD
4TH FLOOR
BOCA RATON, FLORIDA 33432
- ----------------------------------- ------------
(Address of Principal Executive Offices) (Zip Code)
(561) 394-9260
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Registrant's Telephone Number, Including Area Code
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Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
PART I _ FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
JUNE 30, 2002 (UNAUDITED) AND DECEMBER 31, 2001
Assets: June 30, 2002 December 31, 2001
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Property:
Building and improvements, at cost $16,176,860 $16,068,049
Less: accumulated depreciation 8,121,339 7,814,386
----------- ----------
Building and improvements, net 8,055,521 8,253,663
Land, at cost 10,987,034 10,987,034
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Property, net 19,042,555 19,240,697
Cash and cash equivalents 978,837 705,399
Accounts receivable 209,272 206,749
Restricted cash 231,893 230,673
Debt financing costs, net 164,502 180,169
Prepaid expenses and other assets, net 20,226 67,821
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Total assets $20,647,285 $20,631,508
=========== ============
Liabilities:
Mortgage loans payable $15,794,977 $15,912,710
Accrued interest 107,482 111,892
Deposits 86,205 82,498
Accrued expenses and other liabilities 226,173 194,032
Accrued expenses payable to affiliates 45,568 42,580
----------- -----------
Total liabilities 16,260,405 16,343,712
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Commitments and Contingencies
Partners' capital:
General partner (78,696) (79,687)
Limited partners:
Class A Interests, 1,518,800 4,465,576 4,367,483
Class B Interests, 2,111,072 - -
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Total partners' capital 4,386,880 4,287,796
----------- -----------
Total liabilities and partners' capital $20,647,285 $20,631,508
=========== ===========
See Accompanying Notes to Financial Statements
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CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF REVENUES AND EXPENSES
(UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
Revenues:
June 30, 2002 June 30, 2001
------------- -------------
Rent $665,690 $683,122
Reimbursed expenses 146,534 139,009
Bad debts recovered 116,328 -
Interest and other income 8,692 5,665
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Total revenues 937,244 827,796
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Expenses:
Interest expense 326,416 331,067
Depreciation and amortization 164,155 163,945
Management and property expenses 265,906 284,537
Administrative and management fees to affiliates 55,529 51,336
Professional fees and administrative expenses 22,075 39,076
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Total expenses 834,081 869,961
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Net income (loss) $103,163 $(42,165)
======== =========
Net income (loss) attributable to:
Limited partners $102,131 $(41,744)
General partner 1,032 (421)
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Net income (loss) $103,163 $(42,165)
======== ========
Income (loss) per weighted average
Limited Partnership 100 Class A
Interests outstanding, basic & diluted $ 6.79 $ (2.78)
========= =========
Weighted average number of 100
Class A interests outstanding 15,188 15,188
========= =========
See Accompanying Notes to Financial Statements
-3-
CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF REVENUES AND EXPENSES
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
Revenues: June 30, 2002 June 30, 2001
------------- -------------
Rent $1,338,591 $1,344,764
Reimbursed expenses 268,402 239,049
Bad debts recovered 116,328 -
Interest and other income 16,168 17,595
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Total revenues 1,739,489 1,601,408
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Expenses:
Interest expense 650,495 659,656
Depreciation and amortization 325,732 324,286
Management and property expenses 515,420 520,072
Administrative and management fees to affiliates 106,557 101,265
Professional fees and administrative expenses 42,201 56,373
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Total expenses 1,640,405 1,661,652
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Net income (loss) $99,084 $(60,244)
======= ========
Net income (loss) attributable to:
Limited partners $98,093 $(59,642)
General partner 991 (602)
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Net income (loss) $99,084 $(60,244)
======= ========
Income (loss) per weighted average
Limited Partnership 100 Class A
Interests outstanding, basic & diluted $ 6.52 $ (3.97)
======= ========
Weighted average number of 100
Class A interests outstanding 15,188 15,188
======= ======
See Accompanying Notes to Financial Statements
-4-
CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2002
General Class A Class B
Total Partner Interests Interests
----- ------- --------- ---------
PARTNERS' CAPITAL (DEFICIT)
January 1, 2002 $4,287,796 $(79,687) $4,367,483 $0
Net Income 99,084 991 98,093 0
--------- --------- ---------- -
PARTNERS' CAPITAL (DEFICIT)
June 30, 2002 $4,386,880 $ (78,696) $4,465,576 $0
========= ======== ========= =
See Accompanying Notes to Financial Statements
-5-
CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
June 30, 2002 June 30, 2001
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $99,084 $(60,244)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 325,732 323,606
Change in operating assets and liabilities:
Increase in accounts receivable (2,523) (54,600)
Decrease in prepaid expenses and other assets, net 44,483 36,548
Decrease in accrued interest (4,410) (4,401)
Increase in accrued expenses, deposits,
and other liabilities 35,848 26,008
Increase (decrease) in accrued expenses payable to affiliates 2,988 (24,101)
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Net cash provided by operating activities 501,202 242,816
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CASH FLOWS FROM INVESTING ACTIVITIES:
Property improvements (108,811) (138,285)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in restricted cash (1,220) (17,629)
Principal repayments on mortgage loans payable (117,733) (108,586)
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Net cash used in financing activities (118,953) (126,215)
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NET INCREASE (DECREASE)
CASH AND CASH EQUIVALENTS 273,438 (21,684)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 705,399 625,426
-------- --------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $978,837 $603,742
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for interest $654,905 $664,057
======== ========
See Accompanying Notes to Financial Statements
-6-
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Board of Directors of
Concord Milestone Plus, L.P.
We have reviewed the accompanying balance sheet of Concord Milestone Plus, L.P.
(the "Partnership") as of June 30, 2002, and the related statements of revenues
and expenses, changes in partners' capital, and cash flows for the three month
and six month periods ended June 30, 2002 and June 30, 2001. These financial
statements are the responsibility of the management of the Partnership.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
/s/ Ahearn, Jasco + Company, P.A.
AHEARN, JASCO + COMPANY, P.A.
Certified Public Accountants
Pompano Beach, Florida
August 7, 2002
-7-
CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2002
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. The
financial statements as of and for the periods ended June 30, 2002 and 2001 are
unaudited. The financial statements for the periods ended June 30, 2002 and 2001
have been reviewed by an independent public accountant pursuant to Rule 10-01(d)
of Regulation S-X and following applicable standards for conducting such
reviews, and the report of the accountant is included as part of this filing.
The results of operations for the interim periods shown in this report are not
necessarily indicative of the results of operations for the fiscal year. Certain
information for 2001 has been reclassified to conform to the 2002 presentation.
These interim financial statements should be read in conjunction with the annual
financial statements and footnotes included in the Partnership's financial
statements filed on Form 10-K for the year ended December 31, 2001.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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GENERAL
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This Form 10-Q and the 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 the following: general economic and
business conditions, which will, among other things, affect the demand for
retail space or retail goods, availability and creditworthiness of prospective
tenants, lease rents and the terms and availability of financing; risks of real
estate development and acquisition; governmental actions and initiatives; and
environmental and safety requirements. These statements are not guarantees of
future performance and are subject to certain risks, uncertainties and
assumptions that are difficult to predict; therefore, actual results may differ
materially from those expressed or forecasted in any such forward-looking
statements.
-8-
ORGANIZATION AND CAPITALIZATION
- -------------------------------
Concord Milestone Plus, L.P., a Delaware limited partnership (the
"Partnership"), was formed on December 12, 1986, for the purpose of investing in
existing income_producing commercial and industrial real estate. The Partnership
began operations on August 20, 1987, and currently owns and operates three
shopping centers located in Searcy, Arkansas; Valencia, California; and Green
Valley, Arizona.
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 Bonds and 36 Class B Interests. The Partnership
redeemed all of the outstanding Bonds as of September 30, 1997 with the proceeds
of three new fixed rate mortgage loans. Each Equity Unit consists of 100 Class A
Interests and 100 Class B Interests. Capital contributions to the Partnership
consisted of $15,187,840 from the sale of the Equity Units and $592,272 which
represent the Class B Interests from the sale of the Bond Units.
RESULTS OF OPERATIONS
- ---------------------
COMPARISON OF THREE MONTHS ENDED JUNE 30, 2002 TO THREE MONTHS ENDED
- --------------------------------------------------------------------
JUNE 30, 2001
- -------------
The Partnership recognized a net income of $103,163 for the three months
ended June 30, 2002 as compared to a net loss of $42,165 for the same period in
2001. The change is primarily due to the following factors:
(i) An increase in revenue of $109,448 or 13.22% to $937,244 for three
months ended June 30, 2002 as compared to $827,796 for three months ended June
30, 2001. The net increase is due to the following: a) as a result of the
recovery of rent from a tenant bankruptcy settlement, which was recorded as
income in this period, even though the rent was charged to the tenant from June
2000 to July 2001 but the income was never recognized due to the poor financial
condition of the tenant; b) an increase in accrued common area and taxes
reimbursed expense and c) a decrease in base rent due to the increase in vacancy
in Green Valley.
(ii) A decrease in management and property expenses of $18,631 or 6.54% to
$265,906 for the three months ended June 30, 2002 as compared to $284,537 for
the three months ended June 30, 2001. This decrease is primarily due to a bad
debt expense recorded in 2001 that was not incurred in 2002; and
(iii) A decrease in professional fees and other expenses of $17,001 or
43.50% to $22,075 for the three months ended June 30, 2002 as compared to
$39,076 for the three months ended June 30 2001. This decrease is primarily due
to expenses that were incurred in 2001 that were not incurred in 2002. The
timing of these expenses varies from year to year.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 2002 TO SIX MONTHS ENDED JUNE 30, 2001
- ------------------------------------------------------------------------------
The Partnership recognized net income of $99,084 for the six months ended
June 30, 2002 as compared to a net loss of $60,244 for the same period in
2001.The change is primarily due to the following factors:
(i) An increase in revenue of $138,081 or 8.62% to $1,739,489 for six months
ended June 30, 2002 as compared to $1,601,408 for three months ended June 30,
2001. The net increase is due to the
-9-
following: a) as a result of the recovery of rent from a tenant bankruptcy
settlement, which was recorded as income in this period, even though the rent
was charged to the tenant from June 2000 to July 2001 but the income was never
recognized due to the poor financial condition of the tenant; b) an increase in
accrued common area and taxes reimbursed expense.
(ii) A decrease in professional fees and other expenses of $14,172 or 25.13%
to $42,201 for the six months ended June 30, 2002 as compared to $56,373 for the
six months ended June 30, 2001. This decrease is primarily due to the expenses
that were incurred in 2001 that were not incurred in 2002. The timing of these
expenses varies from year to year.
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 for the next 12 months. 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, 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. This space represents about 20% of the Green Valley
Property's leaseable area. 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 building of a Safeway Supermarket in the year 2002
near the Green Valley Mall will have an adverse effect on leasing 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. To date, the vacancy of the Abco space has not had 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. However, no assurances can be given that the continued Abco
space vacancy won't cause existing tenants to leave, or won't cause tenant
renewals to be at lower rental rates. The Partnership cannot predict how soon
such space will be leased and the terms of such new lease. Currently,
approximately $150,000 of the Partnership's working capital is being held in
escrow in connection with the refinancing by the holder of the first mortgage on
the Green Valley Property pending the resolution of the vacancy in this
unoccupied anchor tenant space. These funds are available to offset cash costs
of closing a new tenant.
The Partnership has made distributions to its partners in the past.
Distributions were suspended after the second quarter of 1999 following the
departure of Abco from the Green Valley Property. Additionally, several capital
projects were undertaken and completed at the Properties. 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 June 30, 2002 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.
-10-
Net cash provided by operating activities of $501,202 for the six months
ended June 30, 2002 included (i) a net income of $99,084, (ii) non-cash
adjustments of $325,732 for depreciation and amortization expense and (iii) a
net change in operating assets and liabilities of $76,386.
Net cash provided by operating activities of $242,816 for the six months
ended June 30, 2001 included (i) a net loss of $60,244, (ii) non-cash
adjustments of $323,606 for depreciation and amortization expense and (iii) a
net change in operating assets and liabilities of $20,546.
Net cash used in investing activities of $108,811 for the six months ended
June 30, 2002 was for capital expenditures for property improvements.
Net cash used in investing activities of $138,285 for the six months ended
June 30, 2001 was for capital expenditures for property improvements.
Net cash used in financing activities of $118,953 for the six months ended
June 30, 2002 include (i) principal repayments on mortgage loans payable of
$117,733 and (ii) an increase in restricted cash of $1,220.
Net cash used in financing activities of $126,215 for the six months ended
June 30, 2001 include (i) principal repayments on mortgage loans payable of
$108,586 and (ii) an increase in restricted cash of $17,629.
ITEM 3. 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 number of years, 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'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.
-11-
PART II - OTHER INFORMATION
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(A) 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, which is incorporated herein by reference.
99-1 Certifications by the Chief Executive Officer, pursuant to the
Sarbanes - Oxley Act of 2002.
99-2 Certifications by the Chief Financial Officer, pursuant to the
Sarbanes - Oxley Act of 2002.
(B) REPORTS:
No reports on form 8-K were filed during the quarter covered by this Report.
-12-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: August 12, 2002 CONCORD MILESTONE PLUS, L.P.
--------------- ----------------------------
(Registrant)
BY: CM PLUS CORPORATION
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General Partner
By: /S/ Robert Mandor
-----------------
Robert Mandor
Director and Vice President
By: /S/ Patrick Kirse
-----------------
Patrick Kirse
Treasurer and Controller
-13-