10-Q 1 bbnfiling10q601.txt BROWN BENCHMARK 10Q 6/30/01 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 (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, 2001 { } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to For Quarter Ended June 30, 2001 Commission file number 000-16698 Brown-Benchmark Properties Limited Partnership (Exact Name of Registrant as Specified in its Charter) Delaware 31-1209608 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 225 East Redwood Street, Baltimore, Maryland 21202 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (410) 727-4083 N/A (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 BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP INDEX

Page No. Part I. Financial Information Item 1. Financial Statements Balance Sheets 1 Statements of Operations 2 Statements of Partners' Capital (Deficit) 3 Statements of Cash Flows 4 Notes to Financial Statements 5-6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6-7 Item 3. Quantitative and Qualitative Disclosures About Market Risk 8 Part II. Other Information Item 1. through Item 6. 8 Signatures 9

BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP Balance Sheets

~~March~~June 3130, 2001 December 31, ~~2001 2000~~ (Unaudited) 2000 --------------- ----------------- Assets Investment in real estate $ 12,~~581~~371,~~515~~293 $ 12,786,886 Cash and cash equivalents ~~659~~682,~~674~~086 638,784 Other assets Accounts receivable, net 1520,~~792~~761 14,144 Prepaid expenses 1517,~~799~~431 14,412 Escrow for real estate taxes ~~175~~266,~~868~~596 268,995 Loan fees, less accumulated amortization of $7782,~~519~~685 and $72,353, respectively 2520,~~843~~677 31,009 --------------- ----------------- Total other assets ~~233~~325,~~302~~465 328,560 --------------- ----------------- Total assets $ 13,~~474~~378,~~491~~844 $ 13,754,230 =============== ================= Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable and accrued expenses $ ~~500~~623,~~890~~566 $ 593,486 Tenant security deposits ~~125~~119,~~143~~478 125,701 Due to affiliates 114,~~455~~631 8,326 Mortgage loans payable 13,~~647~~583,~~260~~093 13,710,478 --------------- ----------------- Total liabilities 14,~~284~~330,~~748~~768 14,437,991 --------------- ----------------- Partners' Capital (Deficit) General Partners (~~229~~232,~~808~~641) (227,278) Assignor Limited Partner: Assignment of Limited Partnership Interests - $25 stated value per unit, 500,000 units outstanding (~~495~~634,~~590~~413) (371,634) Limited Partnership Interests - $25 stated value per unit, 40 units outstanding (84,~~959~~970) (84,949) Subordinated Limited Partners 100 100 --------------- ----------------- Total partners' capital (deficit) (~~810~~951,~~257~~924) (683,761) --------------- ----------------- Total liabilities and partners' capital (deficit) $ 13,~~474~~378,~~491~~844 $ 13,754,230 =============== =================

See accompanying notes to financial statements. -1- BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP Statements of Operations (Unaudited)

Three months ended Six months ended ----------------------------- ------------------------------ June 30, June 30, June 30, June 30, 2001 2000 2001 2000 ------------- -------------- -------------- -------------- Revenues Rental $income 1,~~037~~044,~~202~~692 $ 1,~~023~~036,~~282~~782 $ 2,081,893 $ 2,060,065 Interest income 43,~~949~~820 47,~~825~~559 8,769 12,384 ------------- -------------- -------------- -------------- 1,~~042~~048,~~151~~512 1,~~028~~044,~~107~~341 2,090,662 2,072,449 ------------- -------------- -------------- -------------- Expenses Compensation and benefits ~~112~~117,~~810~~282 ~~104~~117,~~332~~261 230,092 221,593 Utilities 9364,~~955~~085 8078,~~014~~216 158,040 158,230 Property taxes 92,490 91,326 184,980 182,652 Maintenance and repairs 69134,~~808~~554 59118,~~399~~633 204,361 178,031 Property management fee 47,014 46,~~443~~680 4593,~~889~~456 92,569 Advertising 1112,~~289~~273 10,~~019~~953 23,562 20,972 Insurance 8,625 8,625 17,250 17,250 Other 2213,~~078~~701 1113,~~978~~149 35,780 25,127 Administrative 17and professional fees 7,~~378~~332 2119,~~812~~866 24,710 41,679 Interest expense ~~263~~262,~~923~~975 ~~268~~267,~~594~~460 526,898 536,053 Depreciation of property and equipment 233,340 257,787 466,680 515,574 Amortization of loan fees 5,166 5,166 10,332 10,332 ------------- -------------- -------------- -------------- ~~977~~998,~~305~~837 ~~964~~1,~~941~~035,122 1,976,141 2,000,062 ------------- -------------- -------------- -------------- Net income 49,675 $ 649,~~846~~219 $ 63114,~~166~~521 $ 72,387 ============= ============== ============== ============== Net income per unit of assignee limited partnership interest - basic 0.10 $ 0.1302 $ 0.1222 $ 0.14 ============= ============== ============== ==============

See accompanying notes to financial statements. -2- BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP Statements of Partners' Capital (Deficit) Six months ended June 30, 2001 and 2000 (Unaudited)

Assignor Limited Partner ------------------------------- Assignment of Limited Limited Subordinated General Partnership Partnership Limited Partners Interests Interests Partners Total --------------- -------------- --------------- --------------- --------------- Balance at December 31, 2000 $ (227,278) $ (371,634) $ (84,949) $ 100 $ (683,761) Net income 12,~~297~~290 63112,~~544~~222 59 - 64114,~~846~~521 Distributions to partners (37,~~827~~654) (~~187~~375,~~500~~000) (1530) - (~~191~~382,~~342~~684) --------------- -------------- --------------- --------------- --------------- Balance at ~~March~~June 3130, 2001 $ (~~229~~232,~~808~~641) $ (~~495~~634,~~590~~413) $ (84,~~959~~970) $ 100 $ (~~810~~951,~~257~~924) =============== ============== =============== =============== =============== Balance at December 31, 1999 $ (214,960) $ 231,934 $ (84,901) $ 100 $ (67,827) Net income 1,~~263~~448 6170,~~898~~933 56 - 6372,~~166~~387 Distributions to partners (37,~~827~~654) (~~187~~375,~~500~~000) (1530) - (~~191~~382,~~342~~684) --------------- -------------- --------------- --------------- --------------- Balance at ~~March~~June 3130, 2000 $ (~~217~~221,~~524~~166) $ ~~106~~(72,~~332~~133) $ (84,~~911~~925) $ 100 $ (~~196~~378,~~003~~124) =============== ============== =============== =============== ===============

See accompanying notes to financial statements. -3- BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP Statements of Cash Flows Six months ended June 30, (Unaudited)

2001 2000 --------------- ---------------- Cash flows from operating activities Net income $ 64114,~~846~~521 $ 6372,~~166~~387 Adjustments to reconcile net income to net cash provided by operating activities Depreciation of property and equipment ~~233~~466,~~340~~680 ~~257~~515,~~787~~574 Amortization of loan fees 510,~~166~~332 510,~~166~~332 Changes in assets and liabilities (Increase) decrease in accounts receivable (16,~~648~~617) 44101,~~575~~444 Increase in prepaid expenses (13,~~387~~019) (872,210) Decrease in escrow for real estate taxes 932,~~127~~399 ~~107~~88,~~259~~740 ~~Decrease~~Increase (decrease) in accounts payable and accrued expenses 30,080 (9276,~~596~~382) (~~101,512~~Decrease) ~~Increase~~increase in due to affiliates (3,~~129~~695) 56,~~890~~127 (Decrease) increase in tenant security deposits (~~558~~6,223) 43,~~052~~730 --------------- ---------------- Net cash provided by operating activities ~~303~~604,~~419~~458 ~~386~~719,~~296~~742 --------------- ---------------- Cash flows from investing activities- additions to investment in real estate (2751,~~969~~087) (2556,~~165~~494) --------------- ---------------- Cash flows from financing activities Distributions to partners (~~191~~382,~~342~~684) (~~191~~382,~~342~~684) Mortgage loan principal reduction (63127,~~218~~385) (58118,~~547~~229) --------------- ---------------- Net cash used in financing activities (~~254~~510,~~560~~069) (~~249~~500,~~889~~913) --------------- ---------------- Net increase in cash and cash equivalents 2043,~~890~~302 ~~111~~162,~~242~~335 Cash and cash equivalents Beginning of period 638,784 541,297 --------------- ---------------- End of period $ ~~659~~682,~~674~~086 $ ~~652~~703,~~539~~632 =============== ================

See accompanying notes to financial statements. -4- BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP Notes to Financial Statements June 30, 2001 and 2000 NOTE 1 - THE FUND AND BASIS OF PREPARATION The accompanying financial statements of Brown-Benchmark Properties Limited Partnership (the "Partnership") do not include all of the information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America. The unaudited interim financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of financial position, operating results and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. The unaudited interim financial information should be read in conjunction with the financial statements contained in the 2000 Annual Report. NOTE 2 - INVESTMENT IN REAL ESTATE Investment in real estate is stated at cost, net of accumulated depreciation, and is summarized as follows: June 30, 2001 December 31, 2000 Land $ 1,257,000 $ 1,257,000 Buildings 21,416,568 21,416,568 Furniture, fixtures and equipment 2,621,349 2,570,262 25,294,917 25,243,830 Less accumulated depreciation 12,923,624 12,456,944 Total $12,371,293 $12,786,886 NOTE 3 - CASH AND CASH EQUIVALENTS Cash and cash equivalents consist solely of cash and money market accounts, stated at cost, which approximates market value at June 30, 2001 and December 31, 2000. NOTE 4 - RELATED PARTY TRANSACTIONS The Administrative General Partner earned $4,631 and $13,788 for the three months ended June 30, 2001 and 2000, respectively, and $16,086 and $27,339 for the six months ended June 30, 2001 and 2000, respectively, for reimbursement of costs associated with administering the Partnership, including clerical services, investor communication services, and reports and filings made to regulatory authorities. Benchmark Properties, Inc., an affiliate of the Development General Partner, the managing agent for the properties, earned a management fee of $47,014 and $46,680 for the three months ended June 30, 2001 and 2000, respectively, and 93,457 and $92,569 for the six months ended June 30, 2001 and 2000, respectively. NOTE 5 - MORTGAGE LOANS PAYABLE The mortgage loans bear interest at 7.7% and are due June 1, 2002. Monthly payments are based on a 25-year amortization schedule with a balloon payment due at maturity. The mortgage loan interest paid was $526,622 and $536,053 for the six months ended June 30, 2001 and 2000, respectively. -5- BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP NOTE 6 - NET INCOME PER UNIT OF ASSIGNEE LIMITED PARTNERSHIP INTEREST Net income per Unit of assignee limited partnership interest is disclosed on the Statement of Operations and is based upon average units outstanding of 500,000 during the periods ended June 30, 2001 and 2000. -6- BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources The Partnership's liquidity is largely dependent on its ability to maintain reasonably high occupancy levels, achieve rental rate increases as the respective markets allow and to control operating expenses. The Partnership currently has sufficient liquid assets from its rental revenues to satisfy its anticipated operating expenditures and debt service obligations in 2001. On August 10, 2001, the Partnership will make a cash distribution to its partners totaling $191,342, representing an annualized return of 6% on invested capital. This distribution will be funded from the operations of the three apartment properties during the second quarter of the year. Based on the operating results through the second quarter, and the budget for the remainder of the year, operating cash flow during 2001 is expected to fully fund a distribution rate of 6%. The Partnership does not anticipate an outlay for any significant capital improvements or repair costs that might adversely impact its liquidity in 2001. Results of Operations Second quarter 2001 revenues increased by $4,171 (.5%) when compared to revenues during the second quarter of 2000. Through the first half of 2001, revenues increased by $18,213 (1%) when compared to revenues during the first half of 2000. The increase in revenues through the first half of the year is a result of marginally higher rental rates achieved at the properties as the aggregate occupancy level of the portfolio was unchanged at approximately 92%. Second quarter operating expenses, excluding interest charges, depreciation and amortization costs decreased $7,353 (2%) versus similar expenses incurred during the second quarter of 2000. Through the first half of the year , similar expenses have increased $34,128 (4%), versus 2000. Operating costs are expected to rise modestly during the second half of the year due primarily to exterior painting and asphalt repairs. Due to the larger increase in operating expenses versus revenues through the first half of 2001, the aggregate net operating income of the Partnership (defined as revenues less operating expenses excluding interest charges, depreciation and amortization costs) decreased $15,915 (1%) when compared to the first half of 2000. Occupancy levels at Woodhills, in Dayton, Ohio, decreased from 92% during the first quarter of 2001 to 90% during the second quarter of the year. Rental revenues through the first half of 2001 were approximately $12,000 higher than those received in 2000 due primarily to increased rental rates. The average rental rate at Woodhills increased 2% from $592 during the second quarter of 2000 to $606 during the second quarter of 2001. The Dayton apartment rental market remains competitive and management is focused on achieving the 93% budgeted occupancy level during the second half of the year. The average occupancy level at the Deerfield property has remained at 95% through the first half of 2001. The average rental rate at the community has increased from approximately $634 during the second quarter of 2000 to $646 during the second quarter of 2001, a 2% increase. Rental revenues received during the first half of 2001 increased approximately $3,500 when compared to revenues received during the first half of 2000. Throughout the remainder of the year, management will strive to raise rental rates while maintaining occupancy levels at or above 95%. Improvements planned for the second half of the year include exterior painting and asphalt repairs. The Cincinnati market continues to be strong and we are optimistic a favorable operating trend will continue throughout the year. At Oakbrook, in Columbus, Ohio, occupancy levels improved from 92% during the first quarter to 94% during the second quarter of 2001. During July the drivepaths were sealcoated and the exterior painting of the community was completed. Management expects that occupancy levels at the Columbus property will improve to 95% during the third quarter of the year. Rental rates have increased from $591 during the second quarter of 2000 to $616 during the second quarter of 2001. Rental revenues through the first half of 2001 increased by approximately $6,500 when compared to 2000. Management's focus during the second half of the year will be on increasing rents and keeping expenses at or below budget. -7- BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP PART I. FINANCIAL INFORMATION Item 3. Quantitative and Qualitative Disclosures About Market Risk Inapplicable PART II. OTHER INFORMATION Item 1. Legal Proceedings Inapplicable Item 2. Changes in Securities and Use of Proceeds Inapplicable Item 3. Defaults upon Senior Securities Inapplicable Item 4. Submission of Matters to a Vote of Security Holders Inapplicable Item 5. Other Information Inapplicable Item 6. Exhibits and Reports on Form 8-K a) Reports on Form 8-K: None. -8- BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) 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, thereunto duly authorized. BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP DATE: 08/9/01 By: /s/ John M.Prugh John M. Prugh President and Director Brown-Benchmark AGP, Inc. Administrative General Partner DATE: 08/9/01 By: /s/ Timothy M.Gisriel Timothy M. Gisriel Treasurer Brown-Benchmark AGP, Inc. Administrative General Partner -9-

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