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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
( ) Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
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Commission File Number 33-97014-01
FIRST INDUSTRIAL SECURITIES, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 36-4036965
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
311 S. WACKER DRIVE, SUITE 4000, CHICAGO, ILLINOIS 60606
(Address of principal executive offices)
(312) 344-4300
(Registrant's telephone number, including area code)
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No.
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FIRST INDUSTRIAL SECURITIES, L.P.
FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30, 1997
INDEX
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<CAPTION>
PART I: FINANCIAL INFORMATION PAGE
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Item 1. Financial Statements
Balance Sheets of First Industrial Securities, L.P. as of September
30, 1997 and December 31, 1996....................................... 2
Statements of Operations of First Industrial Securities, L.P. for the
Nine Months Ended September 30, 1997 and September 30, 1996.......... 3
Statements of Operations of First Industrial Securities, L.P. for the
Three Months Ended September 30, 1997 and September 30, 1996......... 4
Statements of Cash Flows of First Industrial Securities, L.P. for the
Nine Months Ended September 30, 1997 and September 30, 1996......... 5
Notes to Financial Statements........................................ 6-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 8-9
<CAPTION>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings........................................... 10
Item 2. Changes in Securities....................................... 10
Item 3. Defaults Upon Senior Securities............................. 10
Item 4. Submission of Matters to a Vote of Security Holders......... 10
Item 5. Other Information........................................... 10
Item 6. Exhibits and Reports on Form 8-K............................ 10
SIGNATURE................................................................. 11
EXHIBIT INDEX............................................................. 12
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST INDUSTRIAL SECURITIES, L.P.
BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
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ASSETS
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Assets:
Investment in Real Estate:
Land.............................................................. $ 11,626 $ 11,626
Buildings and Improvements........................................ 65,790 64,629
Less: Accumulated Depreciation................................... (4,945) (3,673)
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Net Investment in Real Estate................................... 72,471 72,582
Cash and Cash Equivalents.......................................... 533 1,428
Restricted Cash.................................................... 411 411
Tenant Accounts Receivable, Net.................................... 223 568
Deferred Rent Receivable........................................... 1,028 717
Prepaid Expenses and Other Assets, Net............................. 721 631
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Total Assets.................................................... $ 75,387 $ 76,337
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<CAPTION>
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts Payable and Accrued Expenses.............................. 704 858
Rents Received in Advance and Security Deposits.................... 445 582
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Total Liabilities............................................... 1,149 1,440
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Commitments and Contingencies....................................... --- ---
Partners' Capital:
General Partner and Preferred Limited Partner...................... 41,247 41,254
Limited Partner.................................................... 32,991 33,643
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Total Partners' Capital......................................... 74,238 74,897
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Total Liabilities and Partners' Capital......................... $ 75,387 $ 76,337
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</TABLE>
The accompanying notes are an integral part of the financial statements.
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FIRST INDUSTRIAL SECURITIES, L.P.
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Nine
Months Ended Months Ended
September 30, 1997 September 30, 1996
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Revenues:
Rental Income.......................................... $ 6,336 $ 6,467
Tenant Recoveries and Other Income..................... 2,114 2,156
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Total Revenues...................................... 8,450 8,623
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Expenses:
Real Estate Taxes...................................... 1,656 1,720
Repairs and Maintenance................................ 363 305
Property Management.................................... 280 256
Utilities.............................................. 128 76
Insurance.............................................. 24 69
Other.................................................. 66 88
Depreciation and Amortization.......................... 1,352 1,320
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Total Expenses...................................... 3,869 3,834
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Net Income.............................................. $ 4,581 $ 4,789
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</TABLE>
The accompanying notes are an integral part of the financial statements.
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FIRST INDUSTRIAL SECURITIES, L.P.
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Three
Months Ended Months Ended
September 30, 1997 September 30, 1996
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<S> <C> <C>
Revenues:
Rental Income.......................................... $ 2,170 $ 2,071
Tenant Recoveries and Other Income..................... 724 805
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Total Revenues...................................... 2,894 2,876
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Expenses:
Real Estate Taxes...................................... 534 782
Repairs and Maintenance................................ 93 85
Property Management.................................... 101 91
Utilities.............................................. 29 21
Insurance.............................................. 6 20
Other.................................................. 21 60
Depreciation and Amortization.......................... 462 442
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Total Expenses...................................... 1,246 1,501
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Net Income.............................................. $ 1,648 $ 1,375
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</TABLE>
The accompanying notes are an integral part of the financial statements.
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FIRST INDUSTRIAL SECURITIES, L.P.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Nine
Months Ended Months Ended
September 30, 1997 September 30, 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income....................................................... $ 4,581 $ 4,789
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:
Depreciation and Amortization................................... 1,352 1,320
Provision for Bad Debts......................................... --- 50
Decrease (Increase) in Tenant Accounts
Receivable.................................................... 345 (221)
Increase in Deferred Rent Receivable .......................... (311) (185)
Increase in Prepaid Expenses and Other Assets, Net.............. (170) (76)
Increase (Decrease) in Accounts Payable and Accrued
Expenses...................................................... (154) 14
Increase (Decrease) in Rents Received in Advance and
Security Deposits............................................. (137) 93
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Net Cash Provided by Operating Activities.................... 5,506 5,784
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of and Additions to Investment in Real Estate.......... (1,161) (810)
Decrease in Restricted Cash .................................... --- 3
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Net Cash Used in Investing Activities........................ (1,161) (807)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions................................................... (5,240) (4,447)
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Net Cash Used In Financing Activities......................... (5,240) (4,447)
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Net (Decrease) Increase in Cash and Cash Equivalents.............. (895) 530
Cash and Cash Equivalents, Beginning of Period.................... 1,428 1,112
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Cash and Cash Equivalents, End of Period.......................... $ 533 $ 1,642
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</TABLE>
The accompanying notes are an integral part of the financial statements.
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FIRST INDUSTRIAL SECURITIES, L.P.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. ORGANIZATION
First Industrial Securities, L.P. (the "Company") is a Delaware limited
partnership formed on August 14, 1995, the 1% general partner of which is First
Industrial Securities Corporation ("Securities Corporation"), a wholly owned
subsidiary of First Industrial Realty Trust, Inc. ("FI"), and the 99% limited
partner of which is First Industrial, L.P. ("the "Operating Partnership"), of
which FI is the sole general partner. Securities Corporation also owns a
preferred limited partnership interest in the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying interim financial statements have been prepared in
accordance with the accounting policies described in the financial statements
and related notes included in the Company's 1996 Form 10-K. These interim
financial statements should be read in conjunction with the December 31, 1996
audited financial statements and notes thereto included in the Company's 1996
Form 10-K. The following notes to these interim financial statements highlight
significant changes to the notes included in the December 31, 1996 audited
financial statements included in the Company's 1996 Form 10-K and present
interim disclosures as required by the Securities and Exchange Commission.
In the opinion of management, all adjustments consisting of normal
recurring adjustments necessary to present fairly the financial position of the
Company as of September 30, 1997 and the results of operations for the nine
months and three months ended September 30, 1997 and 1996 and the cash flows
for the nine months ended September 30, 1997 and 1996 have been included.
In order to conform with generally accepted accounting principles,
management, in preparation of the Company's financial statements, is required
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities as of
September 30, 1997 and December 31, 1996, and reported amounts of revenues and
expenses for the nine months and three months ended September 30, 1997 and
1996. Actual results could differ from these estimates.
The Company evaluates and, if applicable, provides for an allowance for
doubtful accounts against the portion of tenant accounts receivable which is
estimated to be uncollectible. Tenant accounts receivable in the balance
sheets are shown net of an allowance for doubtful accounts of $50 as of
September 30, 1997 and December 31, 1996.
Certain 1996 items have been reclassified to conform to the 1997
presentation.
3. RELATED PARTY TRANSACTIONS
The 19 properties owned by the Company are managed by the Operating
Partnership. Management fees incurred are based on 3.25% of gross receipts.
Such fees totaled $280 and $256 for the nine months ended September 30, 1997
and 1996, respectively. At September 30, 1997 and December 31, 1996, $0 and
$42 of accrued management fees were due to the Operating Partnership,
respectively.
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FIRST INDUSTRIAL SECURITIES, L.P.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
4. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company is involved in legal actions
arising from the ownership of its properties. In management's opinion, the
liabilities, if any, that may ultimately result from such legal actions are not
expected to have a materially adverse effect on the financial position,
operations or liquidity of the Company.
5. PARTNERS' CAPITAL
On March 27, 1997, the Company paid a pro rata general and limited
partnership distribution to Securities Corporation and the Operating
Partnership, respectively, in the aggregate amount of $1,300.
On March 31, 1997, the Company distributed $980 to Securities Corporation
in respect of its preferred limited partnership interest in the Company, and
Securities Corporation paid a preferred stock dividend of $980 to FI, in each
case, the amount equal to the aggregate dividend payable on FI's Series A
Preferred Stock.
On June 30, 1997, the Company distributed $980 to Securities Corporation
in respect of its preferred limited partnership interest in the Company, and
Securities Corporation paid a preferred stock dividend of $980 to FI, in each
case, the amount equal to the aggregate dividend payable on FI's Series A
Preferred Stock.
On July 18, 1997, the Company paid a pro rata general and limited
partnership distribution to Securities Corporation and the Operating
Partnership, respectively, in the aggregate amount of $1,000.
On September 30, 1997, the Company distributed $980 to Securities
Corporation in respect of its preferred limited partnership interest in the
Company, and Securities Corporation paid a preferred stock dividend of $980 to
FI, in each case, the amount equal to the aggregate dividend payable on FI's
Series A Preferred Stock.
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FIRST INDUSTRIAL SECURITIES, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of First Industrial Securities,
L.P.'s (the "Company") financial condition and the results of operations
should be read in conjunction with the financial statements and notes thereto
appearing elsewhere in this Form 10-Q.
RESULTS OF OPERATIONS
At September 30, 1997 and 1996, the Company owned 19 properties with
approximately 2.2 million square feet.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1997 TO NINE MONTHS ENDED
SEPTEMBER 30, 1996
Total revenues decreased by $.2 million, or 2.0%, due primarily to a
slight decrease in occupancy.
Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses,
remained relatively unchanged.
Depreciation and amortization remained relatively unchanged.
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1997 TO THREE MONTHS ENDED
SEPTEMBER 30, 1996
Total revenues remained relatively unchanged.
Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses,
decreased by $.3 million, or 26.0%. This decrease is due primarily to a
decrease in real estate taxes for the Company's properties located in Chicago,
Illinois and Minneapolis, Minnesota.
Depreciation and amortization remained relatively unchanged.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $5.5 million for the nine
months ended September 30, 1997 compared to $5.8 million for the nine months
ended September 30, 1996. The decrease is primarily due to the operations of
the properties as discussed in the results of operations above.
Net cash used in investing activities was $1.2 million for the nine months
ended September 30, 1997 compared to $ .8 million for the nine months ended
September 30, 1996. The majority of the cash used in investing activities was
for capital improvements of the Company's properties.
Net cash used in financing activities for the nine months ended September
30, 1997 consisted of preferred limited partner distributions of $2.9 million
and a general and limited partner distribution of $2.3 million. Net cash used
in financing activities for the nine months ended September 30, 1996 consisted
of preferred limited partner distributions of $2.9 million and a general a
limited partner distribution of $1.5 million.
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The Company has considered its short-term (less than one year) liquidity
requirements and the adequacy of its estimated cash flows from operations. The
Company believes that its liquidity needs are to fund normal recurring
expenses, and to pay the quarterly preferred limited partnership distribution
and other partnership distributions. The Company anticipates that these needs
will be met with cash flows provided by operating activities.
The Company expects to fund its long-term (greater than one year)
liquidity requirements for non-recurring capital improvements with its cash
flows from operations and in part with a deferred maintenance escrow
established in connection with the issuance of First Industrial Realty Trust,
Inc.'s Series A Preferred Stock which is included in restricted cash on the
balance sheet.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit No. Description
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27 Financial Data Schedule
No reports on Form 8-K were filed during the quarter ended September 30,
1997.
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SIGNATURE
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.
FIRST INDUSTRIAL SECURITIES, L.P.,
BY: FIRST INDUSTRIAL SECURITIES CORPORATION,
ITS SOLE GENERAL PARTNER
Date: November 13, 1997 By: /s/ Michael J. Havala
--- -------------------------------
Michael J. Havala
Chief Financial Officer
(Principal Financial and Accounting Officer)
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EXHIBIT INDEX
Exhibit No. Description
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EX-27 Financial Data Schedule
12
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from (A) the
financial statements of First Industrial Securities, L.P. for the nine months
ended September 30, 1997 and is qualified in its entirety by reference to such
(B) financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 533
<SECURITIES> 0
<RECEIVABLES> 223
<ALLOWANCES> (50)
<INVENTORY> 0
<CURRENT-ASSETS> 756
<PP&E> 77,416
<DEPRECIATION> (4,945)
<TOTAL-ASSETS> 75,387
<CURRENT-LIABILITIES> 704
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 74,238
<TOTAL-LIABILITY-AND-EQUITY> 75,387
<SALES> 8,450
<TOTAL-REVENUES> 8,450
<CGS> (2,517)
<TOTAL-COSTS> (2,517)
<OTHER-EXPENSES> (1,352)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,581
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,581
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,581
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
