SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED June 30, 2004
COMMISSION FILE NO. 000-22741
CARRAMERICA REALTY, L.P.
(Exact name of registrant as specified in its charter)
| Delaware | 52-1976308 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
1850 K Street, N.W., Washington, D.C. 20006
(Address or principal executive office) (Zip code)
Registrant’s telephone number, including area code (202) 729-1700
N/A
(Former name, former address and former fiscal year, if changed since last report)
Number of Partnership Units outstanding of each of the registrant’s
classes of Partnership Units as of July 28, 2004:
(# of shares) 14,362,972
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 twelve (12) months (or such shorter period that the Registrant was required to file such report) and (2) has been subject to such filing requirements for the past ninety (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 ¨ NO x
Index
2
Item 1. Financial Information
The information furnished in our accompanying consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows reflects all adjustments which are, in our opinion, necessary for a fair presentation of the aforementioned financial statements for the interim periods.
The financial statements should be read in conjunction with the notes to the financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations. The results of operations for the six months ended June 30, 2004 are not necessarily indicative of the operating results to be expected for the full year.
3
CARRAMERICA REALTY, L.P. AND SUBSIDIARIES
Consolidated Balance Sheets
As of June 30, 2004 and December 31, 2003
| June 30, 2004 |
December 31, 2003 |
|||||||
| (In thousands) | (unaudited) | |||||||
| Assets |
||||||||
| Rental property: |
||||||||
| Land |
$ | 127,458 | $ | 127,458 | ||||
| Buildings |
576,830 | 575,985 | ||||||
| Tenant improvements |
57,707 | 53,463 | ||||||
| Furniture, fixtures, and equipment |
2,044 | 2,097 | ||||||
| 764,039 | 759,003 | |||||||
| Less – accumulated depreciation |
(144,247 | ) | (130,471 | ) | ||||
| Total rental property |
619,792 | 628,532 | ||||||
| Land held for development |
5,828 | 5,832 | ||||||
| Assets related to properties held for sale |
— | 10,626 | ||||||
| Restricted deposits |
240 | 115 | ||||||
| Accounts receivable, net |
7,930 | 9,724 | ||||||
| Investments in unconsolidated entities |
41,449 | 41,563 | ||||||
| Accrued straight-line rents |
17,855 | 16,806 | ||||||
| Tenant leasing costs, net |
9,469 | 9,564 | ||||||
| Prepaid expenses and other assets, net |
7,898 | 8,036 | ||||||
| $ | 710,461 | $ | 730,798 | |||||
| Liabilities, Redeemable Partnership Units and Partners’ Capital |
||||||||
| Liabilities: |
||||||||
| Mortgages payable |
$ | 63,313 | $ | 71,849 | ||||
| Notes payable to affiliates |
45,482 | 45,817 | ||||||
| Accounts payable and accrued expenses |
8,188 | 10,945 | ||||||
| Due to affiliates |
11,989 | 25,118 | ||||||
| Rents received in advance and security deposits |
4,959 | 7,050 | ||||||
| Total liabilities |
133,931 | 160,779 | ||||||
| Mandatorily redeemable partnership units (at redemption value) |
34,067 | 37,211 | ||||||
| Partners’ capital: |
||||||||
| General partner |
5,930 | 5,853 | ||||||
| Limited partners |
536,533 | 526,955 | ||||||
| Total partners’ capital |
542,463 | 532,808 | ||||||
| Commitments and contingencies |
||||||||
| $ | 710,461 | $ | 730,798 | |||||
See accompanying notes to consolidated financial statements.
4
CARRAMERICA REALTY, L.P. AND SUBSIDIARIES
Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2004 and 2003
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| (Unaudited and in thousands) | 2004 |
2003 |
2004 |
2003 |
||||||||||||
| Operating revenues: |
||||||||||||||||
| Rental revenue: |
||||||||||||||||
| Base rent |
$ | 20,312 | $ | 21,284 | $ | 40,890 | $ | 42,830 | ||||||||
| Recoveries from tenants |
2,847 | 3,820 | 6,269 | 7,431 | ||||||||||||
| Parking and other tenant charges |
774 | 1,000 | 1,656 | 1,806 | ||||||||||||
| Total rental revenues |
23,933 | 26,104 | 48,815 | 52,067 | ||||||||||||
| Other revenue |
180 | 177 | 378 | 505 | ||||||||||||
| Total operating revenues |
24,113 | 26,281 | 49,193 | 52,572 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Property expenses: |
||||||||||||||||
| Operating expenses |
6,996 | 6,885 | 13,654 | 13,561 | ||||||||||||
| Real estate taxes |
2,211 | 2,356 | 4,501 | 4,785 | ||||||||||||
| General and administrative |
2,216 | 1,189 | 4,493 | 2,284 | ||||||||||||
| Depreciation and amortization |
7,780 | 8,258 | 15,750 | 15,704 | ||||||||||||
| Total operating expenses |
19,203 | 18,688 | 38,398 | 36,334 | ||||||||||||
| Real estate operating income |
4,910 | 7,593 | 10,795 | 16,238 | ||||||||||||
| Other (expense) income: |
||||||||||||||||
| Interest expense |
(2,204 | ) | (3,064 | ) | (4,605 | ) | (4,987 | ) | ||||||||
| Interest income |
168 | 384 | 340 | 390 | ||||||||||||
| Equity in earnings of unconsolidated entities |
307 | 762 | 731 | 1,257 | ||||||||||||
| Net other expense |
(1,729 | ) | (1,918 | ) | (3,534 | ) | (3,340 | ) | ||||||||
| Income from continuing operations before (loss) gain on sales of properties |
3,181 | 5,675 | 7,261 | 12,898 | ||||||||||||
| (Loss) gain on sales of properties |
— | (3 | ) | 7 | (442 | ) | ||||||||||
| Income from continuing operations |
3,181 | 5,672 | 7,268 | 12,456 | ||||||||||||
| Discontinued operations - Net operations of property sold or held for sale |
— | 295 | 300 | 579 | ||||||||||||
| Discontinued operations - Gain on sale of property |
— | — | 66 | — | ||||||||||||
| Net income |
$ | 3,181 | $ | 5,967 | $ | 7,634 | $ | 13,035 | ||||||||
| Net income attributable to general partner |
$ | 32 | $ | 60 | $ | 76 | $ | 130 | ||||||||
| Net income attributable to limited partners |
$ | 3,149 | $ | 5,907 | $ | 7,558 | $ | 12,905 | ||||||||
See accompanying notes to consolidated financial statements.
5
CARRAMERICA REALTY, L.P. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2004 and 2003
| (Unaudited and in thousands) | 2004 |
2003 |
||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 7,634 | $ | 13,035 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization (including discontinued operations) |
15,822 | 16,018 | ||||||
| (Gain) loss on sale of properties |
(7 | ) | 442 | |||||
| Gain on sale of discontinued operations |
(66 | ) | — | |||||
| Equity in earnings of unconsolidated entities |
(731 | ) | (1,257 | ) | ||||
| Other |
(173 | ) | — | |||||
| Change in assets and liabilities: |
||||||||
| Decrease in accounts receivable, net |
1,777 | 1,262 | ||||||
| Increase in accrued straight-line rents |
(902 | ) | (1,822 | ) | ||||
| Additions to tenant leasing costs |
(1,099 | ) | (2,420 | ) | ||||
| Decrease in prepaid expenses and other assets, net |
(545 | ) | (1,194 | ) | ||||
| Decrease in accounts payable and accrued expenses |
(2,799 | ) | (2,471 | ) | ||||
| (Decrease) increase in rent received in advance and security deposits |
(2,156 | ) | 576 | |||||
| Total adjustments |
9,121 | 9,134 | ||||||
| Net cash provided by operating activities |
16,755 | 22,169 | ||||||
| Cash flows from investing activities: |
||||||||
| Acquisition and development of rental property |
(4,837 | ) | (6,141 | ) | ||||
| Additions to land held for development |
— | (110 | ) | |||||
| Distributions from unconsolidated entities |
820 | 1,886 | ||||||
| Proceeds from sale of property |
10,512 | — | ||||||
| Increase in restricted deposits |
(125 | ) | (239 | ) | ||||
| < | ||||||||