FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(D)
FORM 10-KSB
(Mark One)
[X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934 [No Fee Required]
For the fiscal year ended December 31, 1998
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 [No Fee Required]
For the transition period from to
Commission file number 2-76434
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
(Name of small business issuer in its charter)
New York 13-3153572
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $397,000.
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of December 31, 1998. No market value exists for the limited
partnership interests of the Registrant, and, therefore, no aggregate market
value can be determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Drexel Burnham Lambert Real Estate Associates (the "Partnership" or
"Registrant") was organized as a limited partnership under the Limited
Partnership Law of the State of New York as of December 14, 1982. The
Partnership's general partner is DBL Properties Corporation ("DBL" or "General
Partner"). The General Partner is a subsidiary of Apartment Investment and
Management Company ("AIMCO"). The Partnership Agreement provides that the
Partnership is to terminate on December 31, 2031 unless terminated prior to such
date.
The Registrant is engaged in the business of operating and holding real
properties for investment. The Registrant acquired four investment properties
during 1983 and continues to own and operate one commercial property. See "Item
2. Description of Properties."
Commencing in January 1983, the Registrant offered, pursuant to the Prospectus
and a Registration Statement filed with the Securities and Exchange Commission,
11,500 Units of Limited Partnership Interests (the "Units") aggregating
$11,500,000. The offering closed on February 10, 1983. No Limited Partner has
made any additional capital contribution after that date. Partners holding 45
Units abandoned their Units in 1994.
A further description of the Partnership's business is included in Management's
Discussion and Analysis or Plan of Operation included in "Item 6" of this Form
10-KSB.
The General Partner of the Partnership intends to maximize the operating results
and, ultimately, the net realizable value of the Partnership's remaining
property in order to achieve the best possible return for the investors. Such
results may best be achieved by holding and operating the property or through a
property sale or exchange, refinancing, debt restructuring or relinquishment of
the asset. The Partnership intends to evaluate its holding periodically to
determine the most appropriate strategy for the asset.
The Partnership has no full time employees. The General Partner is vested with
full authority as to the general management and supervision of the business and
affairs of the Partnership. The limited partners have no right to participate
in the management or conduct of such business affairs. Insignia/ESG provides
day-to-day management services to the Partnership's investment property. Prior
to October 1, 1998, Insignia/ESG was an affiliate of the General Partner.
The business in which the Partnership is engaged is highly competitive. There
are other commercial properties within the market area of the Registrant's
property. The number and quality of competitive properties, including those
which may be managed by an affiliate of the General Partner in such market area,
could have a material effect on the rental market for the commercial space at
the Registrant's property and the rents that may be charged for such space. In
addition, various limited partnerships have been formed by the General Partner
and/or affiliates to engage in business which may be competitive with the
Registrant.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain
cases environmental testing has been performed, which resulted in no material
adverse conditions or liabilities. In no case has the Partnership received
notice that it is a potentially responsible party with respect to an
environmental clean up site.
Both the income and expenses of operating the remaining property owned by the
Partnership is subject to factors outside of the Partnership's control, such as
an oversupply of similar properties resulting from overbuilding, increases in
unemployment or population shifts, reduced availability of permanent mortgage
financing, changes in zoning laws, or changes in patterns or needs of users. In
addition, there are risks inherent in owning and operating a commercial property
because such property is susceptible to the impact of economic and other
conditions outside of the control of the Partnership.
Changes in Control
On June 24, 1997, Insignia Financial Group, Inc., a Delaware corporation, and
IFGP Corporation, a Delaware corporation (collectively, the "Buyer"), entered
into a Stock Purchase Agreement (the "Agreement") with The Wynnewood Company,
Inc., a New York corporation ("Seller"), DBL, a New York corporation, and
William Clements, an individual and the owner of 100% of the capital stock of
Seller. The closing of the transactions contemplated by the Agreement occurred
on June 24, 1997 (the "Closing"). At the Closing, pursuant to the terms and
conditions of the Agreement, the Buyer acquired all of the issued and
outstanding stock of DBL.
On October 1, 1998, Insignia Financial Group, Inc., the sole shareholder of IFGP
Corporation, completed its merger with and into Apartment Investment and
Management Company ("AIMCO"), a publicly traded real estate investment trust,
with AIMCO being the surviving corporation (the "Insignia Merger"). As a result
of the Insignia Merger, AIMCO acquired control of IFGP Corporation and, as a
result thereof, the General Partner. The General Partner does not believe that
this transaction will have a material effect on the affairs and operations of
the Partnership.
ITEM 2. DESCRIPTION OF PROPERTY
On June 29, 1983, the Partnership acquired, Wendover Business Park-Phase I
("Wendover") (approximately 68,000 square feet) located in Greensboro, North
Carolina. Wendover was acquired for $2,820,000 of which $1,410,000 was paid in
cash and $1,410,000 was paid in the form of a $1,110,000 senior purchase money
note and a $300,000 junior purchase money note. In July of 1993, the junior
note was paid in full. A new mortgage in the amount of $1,350,000 was executed
in January of 1994. The proceeds from the new mortgage were used to pay off the
original senior note. The principal balance of the current mortgage at December
31, 1998, is approximately $1,189,000. The mortgage matures February 1, 2001,
and is being amortized over twenty years with an interest rate of 8%. The
balloon payment due at maturity is approximately $1,097,000. See "Item 7.
Financial Statements - Note D" for information with respect to the Partnership's
ability to prepay this loan and other specific details about the loan.
Depreciation of building and improvements is computed on the straight-line
method over estimated service lives ranging from three to thirty years. Wendover
had a gross carrying value of approximately $3,228,000 at December 31, 1998,
with accumulated depreciation of approximately $1,598,000 for a net book value
of approximately $1,630,000. The Federal tax basis at December 31, 1998, of the
property was approximately $763,185.
RENTAL RATES AND OCCUPANCY:
Average annual rental rates and average annual occupancy for 1998 and 1997 for
Wendover were as follows:
Average Annual Average Annual
Rental Rate Occupancy
1998 $5.97/sq.ft. 90%
1997 $5.73/sq.ft. 86%
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. The property is subject to competition from commercial
buildings in the area. The General Partner believes that the property is
adequately insured. The property is a commercial building which leases units for
terms for more than twelve months. The property is in good physical condition,
subject to normal depreciation and deterioration as is typical for an asset of
this type and age.
The following is a schedule of the lease expirations for the years 1999 - 2008:
Number of % of Gross
Expirations Square Feet Annual Rent Annual Rent
(in thousands)
1999 4 24,437 $115 30.22%
2000 2 13,980 81 21.28%
2001 1 11,323 95 24.96%
2002 1 2,610 23 6.07%
2003 1 3,480 24 6.36%
2004 - -- -- --
2005 1 6,960 42 11.11%
2006 - 2008 - -- -- --
The following schedule reflects information on tenants occupying 10% or more of
the leasable square feet at Wendover:
Square Footage Annual Rent
Nature of Business Leased Per Square Foot Lease Expiration
Communication equipment 7,020 $7.71 10/31/00
Communication equipment 13,903 8.39 08/31/01
Wholesale auto supplies 7,037 4.82 01/31/99
Textile equipment sales 6,960 4.24 06/30/99
Electrical contractor 6,960 4.74 05/31/99
Office furniture and
equipment supplies 6,960 3.86 07/31/00
Floor covering supplies 6,960 6.08 06/30/05
Real estate taxes in 1998 for Wendover were approximately $33,000. The 1998 tax
rate is approximately 1.22%.
CAPITAL EXPENDITURES
Wendover I
During the year ended December 31, 1998, the Partnership completed approximately
$70,000 of capital improvement projects at Wendover I, consisting primarily of
tenant improvements and air conditioning repairs. These improvements were
funded from cash flow from operations. Capital improvements scheduled for 1999
include, but are not limited to, tenant improvements and HVAC upgrades. These
improvements are expected to cost approximately $74,000. The capital
improvements planned for 1999 at the Partnership's property will be made only
to the extent of cash available from operations and Partnership reserves.
ITEM 3. LEGAL PROCEEDINGS
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature arising in the ordinary course of business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of unit holders during the quarter
ended December 31, 1998.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP EQUITY AND RELATED PARTNER MATTERS
The Partnership, a publicly-held limited partnership, offered and sold 11,500
limited partnership units aggregating $11,500,000. The Partnership currently
has 994 holders of record owning an aggregate of 11,455 Units. No public
trading market has developed for the Units, and it is not anticipated that such
a market will develop in the future.
There were no distributions made to the partners during the years ended
December 31, 1998 and 1997. Future cash distributions will depend on the levels
of net cash generated from operations, refinancings, property sales and the
availability of cash reserves. The Partnership's distribution policy will be
reviewed on a quarterly basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations after required
capital expenditures to permit any distributions to its partners in 1999 or
subsequent periods.
As of December 31, 1998, the remaining unpaid preferred return arrearage totaled
approximately $9,861,000 or approximately $861 per Interest. Reference is made
to "Item 6. Management's Discussion and Analysis or Plan of Operation" for a
description of liquidity and capital resources.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussion of
the Registrant's business and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operation. Accordingly,
actual results could differ materially from those projected in the forward-
looking statements as a result of a number of factors, including those
identified herein.
This item should be read in conjunction with the financial statements and other
items contained elsewhere in this report.
Results of Operations
The Partnership's net loss for the year ended December 31, 1998 was
approximately $67,000 as compared to a net loss of approximately $71,000 for the
year ended December 31, 1997. (See "Note H" of the financial statements for a
reconciliation of these amounts to the Partnership's federal taxable loss). The
decrease in net loss is primarily attributable to the increase in total revenues
which was offset by an increase in total expenses. The increase in total
revenue is attributable to an increase in total rental operations resulting from
an increase in average rental rates and occupancy at the Partnership's
investment property, partially offset by an increase in operating expenses.
Total expense increased primarily as a result of an increase in operating
expenses. Operating expenses increased for the year ended December 31, 1998, as
compared to the corresponding period in 1997 as a result of various
rehabilitation projects performed in 1998. These projects include repairs to
the parking areas and exterior painting. Depreciation expenses increased as a
result of accelerated depreciation taken on tenant improvements made in 1997.
Included in general and administrative expenses at both December 31, 1998 and
1997 are management reimbursements to the General Partner allowed under the
Partnership Agreement. In addition, costs associated with the quarterly and
annual communications with investors and regulatory agencies and the annual
audit required by the Partnership Agreement are included.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of the investment property to assess the
feasibility of increasing rents, maintaining or increasing occupancy levels and
protecting the Partnership from increases in expense. As part of this plan, the
General Partner attempts to protect the Partnership from the burden of
inflation-related increases in expenses by increasing rents and maintaining a
high overall occupancy level. However, due to changing market conditions, which
can result in the use of rental concessions and rental reductions to offset
softening market conditions, there is no guarantee that the General Partner will
be able to sustain such a plan.
Liquidity and Capital Resources
At December 31, 1998, the Partnership had cash and cash equivalents of
approximately $79,000, as compared to approximately $129,000 at December 31,
1997. The decrease in cash and cash equivalents is due to approximately $70,000
of cash used in investing activities and approximately $38,000 of cash used in
financing activities offset by approximately $58,000 of cash provided by
operating activities. Cash used in investing activities consists of property
improvements and replacements and cash used in financing activities consists of
payments of principal made on the mortgage encumbering the Registrant's
property. The Partnership invests its working capital reserves in a money
market account.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Registrant and to comply with Federal, state,
and local legal and regulatory requirements. The Registrant has budgeted
approximately $74,000 in capital improvements for the Registrant's property in
1999. These improvements include, but are not limited to, tenant improvements
and HVAC upgrades. The capital expenditures will be incurred only if cash is
available from operations and Partnership reserves. To the extent that such
budgeted capital improvements are completed, the Registrant's distributable cash
flow, if any, may be adversely affected at least in the short term.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $1,189,000 matures on February 1, 2001, with a
balloon payment due at maturity. The General Partner will attempt to refinance
such indebtedness and/or sell the property prior to such maturity date. If the
property cannot be refinanced or sold for a sufficient amount, the Registrant
will risk losing such property through foreclosure.
There were no cash distributions made during the years ended December 31, 1997
and 1998. The Registrant's distribution policy is reviewed on a quarterly basis.
There can be no assurance, however, that the Registrant will generate sufficient
funds from operations after required capital expenditures to permit
distributions to its partners in 1999 or subsequent periods.
Year 2000 Compliance
General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership
is dependent upon the General Partner and its affiliates for management and
administrative services ("Managing Agent"). Any of the computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
Over the past two years, the Managing Agent has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Managing Agent presently believes that with modifications or
replacements of existing software and certain hardware, the Year 2000 issue can
be mitigated. However, if such modifications and replacements are not made or
not completed in time, the Year 2000 issue could have a material impact on the
operations of the Partnership.
The Managing Agent's plan to resolve Year 2000 issues involves four Phases:
assessment, remediation, testing, and implementation. To date, the Managing
Agent has fully completed its assessment of all the information systems that
could be significantly affected by the Year 2000, and has begun the remediation,
testing and implementation phases on both hardware and software systems.
Assessments are continuing in regards to embedded systems. The status of each
is detailed below.
Status of Progress in Becoming Year 2000 Compliant, Including Timetable for
Completion of Each Remaining Phase
Computer Hardware:
During 1997 and 1998, the Managing Agent identified all of the computer systems
at risk and formulated a plan to repair or replace each of the affected systems.
In August 1998, the mainframe system used by the Managing Agent became fully
functional. In addition to the mainframe, PC-based network servers and routers
and desktop PCs were analyzed for compliance. The Managing Agent has begun to
replace each of the non-compliant network connections and desktop PCs and, as of
December 31, 1998, had completed approximately 75% of this effort.
The total cost to the Managing Agent to replace the PC-based network servers,
routers and desktop PCs is expected to be approximately $1.5 million of which
$1.3 million has been incurred to date. The remaining network connections and
desktop PCs are expected to be upgraded to Year 2000 compliant systems by March
31, 1999.
Computer software:
The Managing Agent utilizes a combination of off-the-shelf, commercially
available software programs as well as custom-written programs that are designed
to fit specific needs. Both of these types of programs were studied, and
implementation plans written and executed with the intent of repairing or
replacing any non-compliant software programs.
During 1998, the Managing Agent began converting the existing property
management and rent collection systems to its management properties Year 2000
compliant systems. The estimated additional costs to convert such systems at
all properties, is $200,000, and the implementation and the testing process is
expected to be completed by March 31, 1999.
The final software area is the office software and server operating systems.
The Managing Agent has upgraded all non-compliant office software systems on
each PC and has upgraded 80% of the server operating systems. The remaining
server operating systems are planned to be upgraded to be Year 2000 compliant by
March 31, 1999.
Operating Equipment:
The Managing Agent has operating equipment, primarily at the property sites,
which needed to be evaluated for Year 2000 compliance. In September 1997, the
Managing Agent began taking a census and inventory of embedded systems
(including those devices that use time to control systems and machines at
specific properties, for example elevators, heating, ventilating, and air
conditioning systems, security and alarm systems, etc.).
The Managing Agent has chosen to focus its attention mainly upon security
systems, elevators, heating, ventilating and air conditioning systems, telephone
systems and switches, and sprinkler systems. While this area is the most
difficult to fully research adequately, management has not yet found any major
non-compliance issues that put the Managing Agent at risk financially or
operationally. The Managing Agent intends to have a third-party conduct an
audit of these systems and report their findings by March 31, 1999.
Any of the above operating equipment that has been found to be non-compliant to
date has been replaced or repaired. To date, these have consisted only of
security systems and phone systems. As of December 31, 1998 the Managing Agent
has evaluated approximately 86% of the operating equipment for the Year 2000
compliance.
The total cost incurred for all properties managed by the Managing Agent as of
December 31, 1998 to replace or repair the operating equipment was approximately
$400,000. The Managing Agent estimates the cost to replace or repair any
remaining operating equipment is approximately $325,000, which is expected to be
completed by April 30, 1999.
The Managing Agent continues to have "awareness campaigns" throughout the
organization designed to raise awareness and report any possible compliance
issues regarding operating equipment within our enterprise.
Nature and Level of Importance of Third Parties and Their Exposure to the Year
2000
The Managing Agent continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness. The Managing
Agent has banking relationships with three major financial institutions, all of
which have indicated their compliance efforts will be complete before May 1999.
The Managing Agent has updated data transmission standards with two of the three
financial institutions. The Managing Agent's contingency plan in this regard is
to move accounts from any institution that cannot be certified Year 2000
compliant by June 1, 1999.
The Partnership does not rely heavily on any single vendor for goods and
services, and does not have significant suppliers and subcontractors who share
information systems (external agent). To date the Partnership is not aware of
any external agent with a Year 2000 compliance issue that would materially
impact the Partnership's results of operations, liquidity, or capital resources.
However, the Partnership has no means of ensuring that external agents will be
Year 2000 compliant.
The Managing Agent does not believe that the inability of external agents to
complete their Year 2000 remediation process in a timely manner will have a
material impact on the financial position or results of operations of the
Partnership. However, the effect of non-compliance by external agents is not
readily determinable.
Costs to Address Year 2000
The total cost of the Year 2000 project to the Managing Agent is estimated at
$3.5 million and is being funded from operating cash flows. To date, the
Managing Agent has incurred approximately $2.8 million ($0.6 million expensed
and $2.2 million capitalized for new systems and equipment) related to all
phases of the Year 2000 project. Of the total remaining project costs,
approximately $0.5 million is attributable to the purchase of new software and
operating equipment, which will be capitalized. The remaining $0.2 million
relates to repair of hardware and software and will be expensed as incurred.
The Partnership's portion of these costs are not material.
Risks Associated with the Year 2000
The Managing Agent believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner. As noted above, the Managing Agent has not
yet completed all necessary phases of the Year 2000 program. In the event that
the Managing Agent does not complete any additional phases, certain worst case
scenarios could occur. The worst case scenarios could include elevators,
security and heating, ventilating and air conditioning systems that read
incorrect dates and operate with incorrect schedules (e.g., elevators will
operate on Monday as if it were Sunday). Although such a change would be
annoying to residents, it is not business critical.
In addition, disruptions in the economy generally resulting from Year 2000
issues could also adversely affect the Partnership. The Partnership could be
subject to litigation for, among other things, computer system failures,
equipment shutdowns or failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.
Contingency Plans Associated with the Year 2000
The Managing Agent has contingency plans for certain critical applications and
is working on such plans for others. These contingency plans involve, among
other actions, manual workarounds and selecting new relationships for such
activities as banking relationships and elevator operating systems.
ITEM 7. FINANCIAL STATEMENTS
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
LIST OF FINANCIAL STATEMENTS
Independent Auditors' Reports
Balance Sheet - December 31, 1998
Statements of Operations - Years ended December 31, 1998 and 1997
Statements of Changes in Partners' Capital (Deficit) - Years ended December 31,
1998 and 1997
Statements of Cash Flows - Years ended December 31, 1998 and 1997
Notes to Financial Statements
Independent Auditors Report
To The Partners
Drexel Burnham Lambert Real Estate Associates (a New York Limited Partnership)
We have audited the accompanying balance sheet of Drexel Burnham Lambert Real
Estate Associates (a New York Limited Partnership) as of December 31, 1998,
and the related statements of operations, changes in partners' capital
(deficit) and cash flows for year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership's management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Drexel Burnham Lambert Real
Estate Associates (a New York Limited Partnership) at December 31, 1998,
and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Greenville, South Carolina
February 9, 1999
Independent Auditor's Report
To the Partners
Drexel Burnham Lambert Real Estate Associates
We have audited the accompanying statements of operations, changes in partners'
capital (deficit) and cash flows of Drexel Burnham Lambert Real Estate
Associates (a limited partnership) for the year ended December 31, 1997. These
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of
Drexel Burnham Lambert Real Estate Associates (a limited partnership) for the
year ended December 31, 1997, in conformity with generally accepted accounting
principles.
Pannell Kerr Forster PC
February 6, 1998
New York, NY
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
BALANCE SHEET
(in thousands, except unit data)
December 31, 1998
Assets
Cash and cash equivalents $ 79
Receivables and deposits 32
Other assets 85
Investment property (Notes A and G):
Land $ 227
Building and related personal property 3,001
3,228
Less accumulated depreciation (1,598) 1,630
$ 1,826
Liabilities and Partners' Capital (Deficit)
Liabilities
Tenant security deposits payable $ 7
Other liabilities 30
Mortgage note payable (Note D) 1,189
Partners' Capital (Deficit) (Note E)
General partner's $ (49)
Limited partners' (11,455 units issued and
outstanding) 649 600
$ 1,826
See Accompanying Notes to Financial Statements
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1998 1997
Revenues
Rental operations $ 395 $ 346
Interest income 2 5
Total revenues 397 351
Expenses
Operating 138 104
General and administrative 44 47
Depreciation 143 128
Interest 106 109
Property taxes 33 34
Total expenses 464 422
Net loss $ (67) $ (71)
Net loss allocated to general partner (1%) $ (1) $ (1)
Net loss allocated to limited partners (99%) (66) (70)
$ (67) $ (71)
Net loss per limited partnership interest $(5.76) $(6.11)
See Accompanying Notes to Financial Statements
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner's Partners' Total
Original capital contributions 11,500 $ 1 $11,500 $11,501
Partners' (deficit) equity at
December 31, 1996 11,455 $ (47) $ 785 $ 738
Net loss for the year ended
December 31, 1997 -- (1) (70) (71)
Partners' (deficit) capital at
December 31, 1997 11,455 (48) 715 667
Net loss for the year ended
December 31, 1998 -- (1) (66) (67)
Partners' (deficit) capital at
December 31, 1998 11,455 $ (49) $ 649 $ 600
See Accompanying Notes to Financial Statements
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1998 1997
Cash flows from operating activities:
Net loss $ (67) $ (71)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation 143 128
Amortization of lease commissions and loan costs 26 23
Rent abatement -- (22)
Changes in accounts:
Receivables and deposits (13) 11
Other assets (24) (21)
Accounts payable (3) (51)
Tenant security deposits payable (1) (4)
Other liabilities (3) 2
Net cash provided by (used in) operating
activities 58 (5)
Cash flows used in investing activities:
Property improvements and replacements (70) (85)
Cash flows used in financing activities:
Payments of mortgage note payable (38) (36)
Net decrease in cash and cash equivalents (50) (126)
Cash and cash equivalents at beginning of year 129 255
Cash and cash equivalents at end of year $ 79 $ 129
Supplemental disclosure of cash flow information:
Cash paid for interest $ 97 $ 100
See Accompanying Notes to Financial Statements
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization: Drexel Burnham Lambert Real Estate Associates (the "Partnership"
or "Registrant") was organized as a limited partnership under the laws of the
State of New York pursuant to a Certificate of a Limited Partnership dated
December 14, 1982. The general partner of the Partnership is DBL Properties
Corporation ("DBL" or the "General Partner"). The General Partner is a
subsidiary of Apartment Investment and Management Company ("AIMCO"). See "Note
B - Transfer of Control". The directors and officers of the General Partner
also serve as executive officers of AIMCO. The Partnership Agreement provides
that the Partnership is to terminate on December 31, 2031 unless terminated
prior to such date. The Partnership commenced operations on January 1983, and
completed its acquisitions of investment properties during 1983.
The Partnership owns and operates the Wendover Business Park - Phase I
("Wendover I"), an office/warehouse complex, containing approximately 68,000
square feet of office/warehouse space on 3.776 acres in Greensboro, North
Carolina.
Uses of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Allocation of Profits, Gains, Losses and Distributions: Profits, gains, losses
and distributions of the Partnership are allocated between general and limited
partners in accordance with the provisions of the Partnership Agreement.
Fair Value of Financial Instruments: Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments", as amended by SFAS No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments", requires
disclosure of fair value information about financial instruments, whether or not
recognized in the balance sheet, for which it is practicable to estimate fair
value. Fair value is defined in the SFAS as the amount at which the instruments
could be exchanged in a current transaction between willing parties, other than
in a forced or liquidation sale. The Partnership believes that the carrying
amount of its financial instruments (except for long term debt) approximates
their fair value due to the short term maturity of these instruments. The fair
value of the Partnership's long term debt, after discounting the scheduled loan
payments to maturity, approximates its carrying balance.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and
in banks, money market accounts and certificates of deposit with original
maturities less than 90 days. At certain times, the amount of cash deposited at
a bank may exceed the limit on insured deposits.
Security Deposits: The Partnership requires security deposits from lessees for
the duration of the lease and such deposits are included in receivables and
deposits. The security deposits are refunded when the tenant vacates, provided
the tenant has not damaged the space, and is current on rental payments.
Investment Property: Investment property is stated at cost. Acquisition fees
are capitalized as a cost of real estate. In accordance with SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of", the Partnership records impairment losses on long-lived assets
used in operations when events and circumstances indicate that the assets might
be impaired and the undiscounted cash flows estimated to be generated by those
assets are less than the carrying amounts of those assets. No adjustments for
impairment of value were recorded in 1998 or 1997.
Depreciation: Depreciation of the Wendover building and improvements is
computed on straight-line and accelerated methods over estimated service lives
ranging from three to thirty years.
Loan Costs: Loan costs of approximately $65,000, less accumulated amortization
of approximately $45,000, are included in other assets and are being amortized
on a straight-line basis over the life of the loans.
Lease Commissions: Lease commissions are deferred and amortized over the lives
of the related leases. Such amortization is charged to operating expense and is
included in other assets. At December 31, 1998, unamortized leasing commissions
totaled approximately $50,000.
Leases: The straight-line basis is used to recognize minimum rental income
under leases which provide for varying rents over their terms. For all other
leases, rents are recognized over the terms of the leases as earned.
Segment Reporting: In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Standards ("SFAS") No. 131, "Disclosure about
Segments of an Enterprise and Related Information" ("Statement 131"), which is
effective for years beginning after December 15, 1997. Statement 131
established standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. It also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
Advertising:
The Partnership expenses the costs of advertising as incurred. Advertising
costs were immaterial for the years ended December 31, 1998 and 1997.
Income taxes:
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision for income taxes is made in the
financial statements of the Partnership.
Reclassifications:
Certain reclassifications have been made to the 1997 balances to conform to the
1998 presentation.
Noncash investing and financing activities:
During 1996, the Partnership agreed to reimburse approximately $105,000 to one
of the Wendover commercial tenants for improvements made to commercial space and
paid for by the tenant. The agreement provided that one-half would be paid in
January 1997 and the balance in the form of rental abatements commencing
September 1996. As a result of this agreement, approximately $22,000 of rent
was abated in both 1996 and 1997.
NOTE B - TRANSFER OF CONTROL
On October 1, 1998, Insignia Financial Group, Inc., the sole shareholder of IFGP
Corporation, completed its merger with and into Apartment Investment and
Management Company ("AIMCO"), a publicly traded real estate investment trust,
with AIMCO being the surviving corporation (the "Insignia Merger"). As a result
of the Insignia Merger, AIMCO acquired control of IFGP Corporation and, as a
result thereof, the General Partner. The General Partner does not believe that
this transaction will have a material effect on the affairs and operations of
the Partnership.
NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The Partnership Agreement provides for payments to affiliates for services and
as reimbursement of certain expenses incurred by affiliates on behalf of the
Partnership.
The following transactions with affiliates of the General Partner were incurred
during the twelve month periods ended December 31, 1998 and 1997 (in thousands):
1998 1997
Property management fees (included in operating
expenses) $ 14 $ 12
Reimbursement for services of affiliates (included in
general and administrative expense) 29 8
During the year ended December 31, 1997 and for the nine months ending September
30, 1998, affiliates of the General Partner were entitled to varying percentages
of gross receipts from the Registrant's commercial property as compensation for
providing property management services. These services were performed by
affiliates of the General Partner during 1997 and for the nine months ending
September 30, 1998 which totaled approximately $12,000 and $14,000,
respectively. Effective October 1, 1998 (the effective date of the Insignia
Merger), these services for the commercial property were performed by an
unrelated party.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $29,000 and $8,000 for the
years ended December 31, 1998 and 1997, respectively.
Prior to Insignia's affiliation on June 24, 1997, affiliates of Insignia
provided property management and partnership administrative services for the
Partnership.
In accordance with the partnership agreement, the General Partner was allocated
its one percent continuing interest in the Partnership's net loss.
NOTE D - MORTGAGE NOTE PAYABLE
The Wendover mortgage note payable matures on February 1, 2001, and requires
monthly payments of approximately $11,000 to be applied first to interest at the
rate of 8% per annum and the balance to reduction of principal. The principal
balance due at maturity is approximately $1,097,000. In addition, the mortgage
note payable provides that monthly escrow deposits be made for payments of real
estate taxes and insurance. At December 31, 1998, the balance in the escrow
account was approximately $11,000.
Scheduled principal payments of the mortgage note payable subsequent to December
31, 1998, are as follows (in thousands):
1999 $ 42
1999 46
2001 1,101
Total $1,189
NOTE E - PARTNERS' CAPITAL
Pursuant to a public offering, 11,500 limited partnership units were sold at
$1,000 per interest. Partners holding 45 units abandoned their Partnership
interests in 1994, accordingly, calculations of net loss per limited partner
interest in 1998 and 1997 are based on 11,455 interests outstanding.
For income tax purposes, the limited partners share 99% and the General Partner
1% (subordinated as defined in the partnership agreement) in all profits or
losses from operations until the limited partners have received an 8% cumulative
preferred return on their invested capital. Thereafter, the limited partners
share 90% and the General Partner shares 10% in the profits or losses from
operations.
Cash distributions from sales or refinancings, if any, shall be made to the
partners to the extent available and, as more fully described in the partnership
agreement, as follows: first, to each partner in an amount equivalent to the
positive amount of such partner's capital account on the date of distribution
after adjustment; second, to the limited partners, until the limited partners
have received an amount equal to their original invested capital; third, 99% to
the limited partners equal to any unpaid preferred return arrearage; and fourth,
as to any excess, 85% to the limited partners and 15% to the General Partner.
Distributions in liquidation to the partners shall be made in accordance with
the terms of the preceding two paragraphs, as appropriate.
No distributions were made during the years ended December 31, 1998 and 1997.
As of December 31, 1998, the unpaid preferred return arrearage totaled
approximately $9,861,000.
NOTE F - SIGNIFICANT TENANTS AND MINIMUM FUTURE RENTAL PAYMENTS
The Partnership leases office and warehouse space in the Wendover property to
tenants under lease agreements which expire on various dates through 2005. The
following is a schedule by year of the minimum future rentals, excluding
escalations, required under these leases as of December 31, 1998 (in thousands):
1999 $ 316
2000 249
2001 155
2002 85
Thereafter 122
Total $ 927
One tenant of Wendover individually accounted for 26%, of total rental revenue
for the year ended December 31, 1998. One tenant of Wendover individually
accounted for 27.5% of the total rental revenue for the year ended December 31,
1997.
NOTE G - REAL ESTATE AND ACCUMULATED DEPRECIATION
Initial Cost
To Partnership
(in thousands)
Buildings Net Costs
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
Wendover Business Park I
Greensboro, $1,189 $ 234 $2,727 $ 267
North Carolina
<TABLE>
<CAPTION>
Gross Amount at Which Carried
December 31, 1998
(in thousands)
Buildings
and Deprec-
Related iable
Personal Accumulated Date of Date Life-
Description Land Property Total Depreciation Construction Acquired Years
<S> <C> <C> <C> <C> <C> <C> <C>
Wendover Business Park I $ 227 $3,001 $3,228 $1,598 1981 06/83 3-30
</TABLE>
Reconciliation of Real Estate and Accumulated Depreciation:
Years Ended December 31,
1998 1997
Investment Property
Balance at beginning of year $3,158 $3,073
Property improvements 70 85
Balance at end of year $3,228 $3,158
Accumulated Depreciation
Balance at beginning of year $1,455 $1,327
Additions charged to expense 143 128
Balance at end of year $1,598 $1,455
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1998 and 1997, respectively, is approximately $3,228,000 and
$3,063,000. The accumulated depreciation taken for Federal income tax purposes
at December 31, 1998 and 1997, respectively, is approximately $2,465,000 and
$2,400,000.
NOTE H - INCOME TAXES
The following is a reconciliation of the Partnership's net income (loss) for
financial and tax reporting purposes (in thousands):
1998 1997
Net loss as reported $ (67) $ (71)
Excess of book over tax depreciation 77 3
Deferred rent loss (1) (27)
Federal taxable net income (loss) $ 9 $ (95)
Federal taxable income (loss) per limited
partnership unit $ .80 $ (8.28)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
1998
Net assets as reported $ 600
Depreciation (865)
Syndication costs 1,363
Other (17)
Net assets - tax basis $ 1,081
NOTE I - SEGMENT INFORMATION
Description of the types of products and services from which the reportable
segment derives its revenues: As defined by SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", the Partnership has one
reportable segment: commercial properties. The Partnership's commercial
property segment consists of one office/warehouse complex in the Southeast. The
Partnership leases space to tenants for terms that are typically twelve months
or longer.
Measurement of segment profit or loss: The Partnership evaluates performance
based on net income. The accounting policies of the reportable segment are the
same as those described in the summary of significant accounting policies.
Segment information for the years 1998 and 1997 is shown in the tables below (in
thousands). The "Other" column includes partnership administration related
items and income and expense not allocated to the reportable segment.
1998
Commercial Other Totals
Rental income $ 395 $ -- $ 395
Interest income -- 2 2
Interest expense 106 -- 106
Depreciation 143 -- 143
General and administrative expense -- 44 44
Segment loss (25) (42) (67)
Total assets 1,784 42 1,826
Capital expenditures for investment
properties 70 -- 70
1997
Commercial Other Totals
Rental income $ 346 $ -- $ 346
Interest income 1 4 5
Interest expense 109 -- 109
Depreciation 128 -- 128
General and administrative expense -- 47 47
Segment loss (28) (43) (71)
Total assets 1,853 85 1,938
Capital expenditures for investment
properties 85 -- 85
NOTE J - LEGAL PROCEEDINGS
The Partnership is unaware of pending or outstanding litigation that is not of a
routine nature arising in the ordinary course of business.
ITEM 8.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Effective September 23, 1998, the Registrant dismissed its prior Independent
Auditors, Pannell Kerr Foster PC ("PKF") and retained as its new Independent
Auditors, KPMG Peat Marwick LLP. PKF's Independent Auditor's Report on the
Registrant's financial statements for the calendar year ended December 31, 1997
did not contain an adverse opinion or a disclaimer of opinion, and was not
qualified or modified as to uncertainty, audit scope or accounting principles.
The decision to change Independent Auditors was approved by the General
Partner's directors. During the calendar year ended 1997 and through September
23, 1998, there were no disagreements between the Registrant and PKF on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope of procedure which disagreements if not resolved to the
satisfaction of PKF, would have caused it to make references to the subject
matter of the disagreements in connection with its reports.
Effective September 23, 1998, the Registrant engaged KPMG Peat Marwick LLP as
its Independent Auditors. During the last two calendar years and through
September 23, 1998, the Registrant did not consult KPMG Peat Marwick LLP
regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii)
of Regulation S-B.
PART III
ITEM 9.DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Drexel Burnam Lambert Real Estate Associates (the "Registrant" or the
"Partnership") does not have any officers or directors. Management and
administrative services are performed by DBL Properties Corporation ("DBL" or
the "General Partner") and its affiliates. The General Partner has general
responsibility and authority in all matters affecting the business of the
Partnership.
The names of the directors and executive officers of DBL, their ages and nature
of all positions presently held by them are set forth below. There are no
family relationships between or among any officers and directors:
Name Age Position
Patrick J. Foye 41 Executive Vice President and Director
Timothy R. Garrick 42 Vice President - Accounting and Director
Patrick J. Foye has been Executive Vice President of the General Partner since
October 1, 1998. Mr. Foye has served as Executive Vice President of AIMCO since
May 1998. Prior to joining AIMCO, Mr. Foye was a partner in the law firm of
Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was Managing
Partner of the firm's Brussels, Budapest and Moscow offices from 1992 through
1994. Mr. Foye is also Deputy Chairman of the Long Island Power Authority and
serves as a member of the New York State Privatization Council. He received a
B.A. from Fordham College and a J.D. from Fordham University Law School.
Timothy R. Garrick has served as Vice President-Accounting of AIMCO and Vice
President-Accounting and Director of the General Partner since October 1, 1998.
Prior to that date, Mr. Garrick served as Vice President-Accounting Services of
Insignia Financial Group since June of 1997. From 1992 until June of 1997, Mr.
Garrick served as Vice President of Partnership Accounting and from 1990 to 1992
as an Asset Manager for Insignia Financial Group. From 1984 to 1990, Mr.
Garrick served in various capacities with U.S. Shelter Corporation. From 1979
to 1984, Mr. Garrick worked on the audit staff of Ernst & Whinney. Mr. Garrick
received his B.S. Degree from the University of South Carolina and is a
Certified Public Accountant.
ITEM 10. EXECUTIVE COMPENSATION
Neither directors nor officers of the General Partner received any remuneration
from the Registrant.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The directors and officers of the General Partner, as a group, do not own any of
the Partnership's units.
As of December 31, 1998, there is no person known to the Partnership who owns
beneficially or of record more than five percent of the limited partnership
units of the Partnership.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The Partnership Agreement provides for payments to affiliates for services and
as reimbursement of certain expenses incurred by affiliates on behalf of the
Partnership.
The following transactions with affiliates of the General Partner were incurred
during the twelve month periods ended December 31, 1998 and 1997 (in thousands):
1998 1997
Property management fees $ 18 $ 12
Reimbursement for services of affiliates 29 8
During the year ended December 31, 1997 and for the nine months ending September
30, 1998, affiliates of the General Partner were entitled to varying percentages
of gross receipts from the Registrant's commercial property as compensation for
providing property management services. These services were performed by
affiliates of the General Partner during 1997 and for the nine months ending
September 30, 1998 which totaled approximately $12,000 and $14,000,
respectively. Effective October 1, 1998 (the effective date of the Insignia
Merger), these services for the commercial property were performed by an
unrelated third party.
Affiliates of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $29,000 and $8,000 for the
year ended December 31, 1998 and 1997, respectively.
Prior to Insignia's affiliation on June 24, 1997, affiliates of Insignia
provided property management and partnership administrative services for the
Partnership.
In accordance with the partnership agreement, the General Partner was allocated
its one percent continuing interest in the Partnership's net loss.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K:
(a)Exhibits:
See Exhibit Index contained herein.
(b)Reports on Form 8-K filed during the fourth quarter of 1997:
Current Report on Form 8-K dated on October 1, 1998, and filed October 16, 1998
disclosing change in control of the Registrant from Insignia Financial Group,
Inc. to AIMCO.
Current Report on Form 8-K dated on September 23, 1998, disclosing the change in
independent auditor from Pannel Kerr Foster PC to KPMG Peat Marwick LLP.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
By: DBL Properties Corporation
Its General Partner
By: /s/ Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/ Timothy R. Garrick
Timothy R. Garrick
Vice President - Accounting
Date: March 31, 1999
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
/s/ Patrick J. Foye Executive Vice President Date: March 31, 1999
Patrick J. Foye and Director
/s/ Timothy R. Garrick Vice President - Accounting Date: March 31, 1999
Timothy R. Garrick and Director
EXHIBIT INDEX
Exhibit
3.1 Prospectus of the Partnership filed pursuant to rule 424(b), dated
November 2, 1982 is hereby incorporated herein by reference.
3.2 Form of Agreement of Limited Partnership of the Partnership - reference
is made to Exhibit A to the Prospectus.
3.3 Certificate of Limited Partnership of the Partnership, which appears as
Exhibit 3.2 to the Registration Statement is hereby incorporated herein
by reference.
10.1 Agreement relating to purchase by the Partnership of the Wendover
Business Park Phase I in Greensboro, North Carolina, for which a Report
on Form 8-K was filed with the Commission on July 14, 1983 and was
amended on November 18, 1983, which report is hereby incorporated herein
by reference.
10.2 Contracts related to refinancing of the debt of Wendover Business Park
Phase I were filed as Exhibit 10.6 to the Report on Form 10-KSB for the
fiscal year ended December 31, 1993, and are hereby incorporated herein
by reference:
(a) Mortgage note dated January 13, 1994 between Drexel Burnham
Lambert Real Estate Associates, a New York limited partnership, and
United Family Life Insurance Company, a Georgia corporation.
(b) Deed of Trust and Security Agreement dated January 13, 1994
between Drexel Burnham Lambert Real Estate Associates, a New York
limited partnership, and Stewart Title Guaranty Company for the benefit
of United Family Life Insurance Company, a Georgia corporation.
(c) Assignment of Leases, Rents, Contracts, and Agreements dated
January 13, 1994 from Drexel Burnham Lambert Real Estate Associates, a
New York limited partnership, to United Family Life Insurance Company, a
Georgia corporation.
(d) Hazardous Material Indemnification Agreement dated January 13,
1994 between Drexel Burnham Lambert Real Estate Associates, a New York
limited partnership, and United Family Life Insurance Company, a Georgia
corporation.
(e) Escrow Agreement dated January 13, 1994 by and between United
Family Life Insurance Company, a Georgia corporation, Drexel Burnham
Lambert Real Estate Associates, a New York limited partnership, and
Dickinson, Logan, Todd and Barber, Inc. (the "Escrow Agent").
10.3 Exchange Agreement effective January 13, 1994 between Drexel Burnham
Lambert Real Estate Associates, a New York limited partnership, and the
DBL Liquidating Trust, a trust established under the laws of New York
was filed as Exhibit 10.7 to Report 10-KSB for fiscal year ended
December 31, 1993, and is hereby incorporated herein by reference.
27 Financial Data Schedule
99.1 Special Report/Acquisition Bulletin dated July 1, 1983 is hereby
incorporated herein by reference.
99.2 Report on Form 8-K filed July 14, 1983 and amended November 18, 1983
regarding the purchase of Wendover Business Park Phase I in Greensboro,
North Carolina is hereby incorporated herein by reference.
99.3 Report on Form 8-K filed May 5, 1988 regarding the suspension of cash
distributions to Limited Partners is hereby incorporated herein by
reference.
99.4 Report on Form 8-K filed October 11, 1989 regarding the change in
control of the parent company of the General Partner is hereby
incorporated herein by reference.
99.5 Report on Form 8-K filed February 3, 1993 regarding the sale of
outstanding stock of the General Partner is hereby incorporated herein
by reference.
99.6 Report on Form 8-K filed July 9, 1997, regarding the change in control
of the Partnership.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Drexel
Burnham Lambert Real Estate Associates 1998 Year-End 10-KSB and is qualified in
its entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000700951
<NAME> DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 79
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 3,228
<DEPRECIATION> 1,598
<TOTAL-ASSETS> 1,826
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 1,189
0
0
<COMMON> 0
<OTHER-SE> 600
<TOTAL-LIABILITY-AND-EQUITY> 1,826
<SALES> 0
<TOTAL-REVENUES> 397
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 464
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 106
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (67)
<EPS-PRIMARY> (5.76)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
