<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10 - Q
Annual Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1998 Commission File No.: 2-80756
INDEPRO PROPERTY FUND I, L.P.
(Exact name of registrant as specified in its charter)
600 Dresher Road, Horsham, PA 19044
(Address of principal executive offices and zip code)
DELAWARE 51-0265801
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
(215) 956-0400
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section12(g) of the Act:
Limited Partnership Interests
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 for the
past 90 days.
YES __X__ NO____
There is no public market for the Limited Partnership Interests. Non-affiliates
hold 23,579 Limited Partnership Interests as of March 31, 1998.
<PAGE>
INDEPRO PROPERTY FUND I, L.P.
INDEX OF FINANCIAL STATEMENTS
Page Number
-----------
Part I - Financial Information
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets, as of March 31, 1998
and December 31, 1997 3
Consolidated Statements of Income, for the three months
ended March 31, 1998 and 1997 4
Consolidated Statement of Partners' Capital for the three
months ended March 31, 1998 5
Consolidated Statements of Cash Flows, for the three months
ended March 31, 1998 and 1997 6
Notes to Consolidated Financial Statements 7-8
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
Part II - Other Information 11
<PAGE>
INDEPRO PROPERTY FUND I, L.P. AND SUBSIDIARY
(A Delaware Limited Partnership)
CONSOLIDATED BALANCE SHEETS
As of March 31, 1998 and December 31, 1997
(Liquidation Basis)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1998 1997
---------- -----------
<S> <C> <C>
Assets
Investments in real estate held for sale (note 3) $ -- $9,413,227
Less: Accumulated depreciation and amortization and
valuation allowance -- 5,059,598
---------- ----------
Total investments -- 4,353,629
Cash and cash equivalents 157,855 989,554
Accounts receivable (net of allowance for doubtful
accounts of $2,600 in 1998 and $3,553 in 1997) 69,518 286,825
Prepaid expenses and other assets 12,769 70,556
---------- ----------
Total Assets $ 240,142 $5,700,564
========== ==========
Liabilities and Partners' Capital
Notes payable -- 378,618
Due to general partner and affiliates 204,405 99,209
Accrued liabilities 35,737 257,182
Advance deposits -- 8,470
---------- ----------
Total Liabilities 240,142 743,479
---------- ----------
Partners' capital -- 4,957,085
---------- ----------
Total liabilities and partners' capital $ 240,142 $5,700,564
========== ==========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
3
<PAGE>
INDEPRO PROPERTY FUND I, L.P. AND SUBSIDIARY
(A Delaware Limited Partnership)
CONSOLIDATED STATEMENTS OF INCOME
For the three months ended March 31, 1998 and 1997
(Liquidation Basis)
Three Months Three Months
Ended Ended
March 31, 1998 March 31, 1997
-------------- --------------
Income
Hotel revenues $ 113,474 $ 960,502
Hotel cost of revenues 84,565 384,512
--------- ---------
Gross profit from hotel operations 28,909 575,990
Investment income 25,885 11,289
--------- ---------
Total income 54,794 587,279
--------- ---------
Expenses
Property operating expenses 119,546 261,728
Depreciation and amortization -- 500
Real estate taxes 11,260 54,126
Administrative 4,960 10,295
Repairs and maintenance 5,481 25,839
Insurance 3,333 18,279
Provision for doubtful accounts (553) 1,822
Interest expense 1,899 9,438
--------- ---------
Total Expenses 145,926 382,027
--------- ---------
Net Income $ (91,132) $ 205,252
========= =========
Net income allocated to Limited Partners $ (90,221) $ 203,199
Net income allocated to General Partner (911) 2,053
--------- ---------
$ (91,132) 205,252
========= =========
Net income per Limited Partnership
interests outstanding (30,000)
$ (3) $ 7
========= =========
The accompanying notes are an integral part of the
consolidated financial statements.
4
<PAGE>
INDEPRO PROPERTY FUND I, L.P. AND SUBSIDIARY
(A Delaware Limited Partnership)
CONSOLIDATED STATEMENTS OF INCOME
For the three months ended March 31, 1998 and 1997
(Liquidation Basis)
<TABLE>
<CAPTION>
Limited
General Partnership
Partner Units Total
------- ------------- -----------
<S> <C> <C> <C>
Partners' capital at January 1, 1998 $ 744,954 $ 4,212,131 $ 4,957,085
Net income (911) (90,221) (91,132)
Distributions of sales proceeds (39,722) (3,932,400) (3,972,122)
Capital contribution by General Partner 1,994,459 -- 1,994,459
Cash distributions from operations and guarantee -- (2,888,290) (2,888,290)
----------- ----------- -----------
Partners' capital at March 31, 1998 $ 2,698,780 $(2,698,780) $ --
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
5
<PAGE>
INDEPRO PROPERTY FUND I, L.P. AND SUBSIDIARY
(A Delaware Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1998 and 1997
(Liquidation Basis)
<TABLE>
<CAPTION>
Three months Three months
Ended Ended
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ (91,132) $ 205,252
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization -- 500
Change in assets and liabilities:
Decrease (increase) in accounts receivable 217,307 (124,464)
Increase (decrease) in prepaid expenses 57,787 (63,338)
Decrease in accrued liabilities (221,445) (6,023)
Increase (decrease) in advance deposits (8,470) 11,335
Increase (decrease) in amounts due to general
partner and affiliates 105,196 5,300
----------- -----------
Net cash provided by (used in) operating activities 59,243 28,562
----------- -----------
Cash flows from investing activities:
Proceeds from sale of real estate 4,353,629 --
Additions to real estate -- (7,600)
----------- -----------
Net cash used in investing activities 4,353,629 (7,600)
----------- -----------
Cash flows from financing activities:
Repayment of notes payable (378,618) (20,019)
Repayment of capital lease obligation -- (326)
Contribution from General Partner - guaranteed return 1,994,459 --
Distributions of sales proceeds (3,972,122) --
Distributions to partners from operations and guaranteed return (2,888,290) (227,273)
----------- -----------
Net cash (used in) financing activities (5,244,571) (247,618)
----------- -----------
Net decrease in cash and cash equivalents (831,699) (226,656)
Cash and cash equivalents, beginning of period 989,554 1,217,068
----------- -----------
Cash and cash equivalents, end of period $ 157,855 $ 990,412
=========== ===========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
6
<PAGE>
INDEPRO PROPERTY FUND I, L.P.
NOTES TO FINANCIAL STATEMENTS
As of March 31, 1998
1. General
The preceding unaudited financial information sets forth the operations
of Indepro Property Fund I, L.P. for the three months ended March 31,
1998. In the opinion of Management, the financial statements reflect all
adjustments necessary to present fairly the results of operations for the
three months ended March 31, 1998.
Footnotes are presented pursuant to Rule 10-01 of Regulation S-X and do
not include complete financial information otherwise made in the Form
10 - K. These interim financial statements should be read in conjunction
with the Form 10 - K for the year ended December 31, 1997.
2. Partners' Capital
Indepro Property Fund I, L.P. made a distribution of $3,972,122 in
February 1998 relating to the net proceeds from the sale of the Brunswick
Hotel and Conference Center located in Lancaster, PA.
The General Partner was obligated under the terms of the Partnership
Agreement to make a capital contribution upon the Partnership's
dissolution in the amount necessary to enable the Partnership to pay to
each Limited Partner an 8% non-compounded return on the unrecovered
capital contribution of the Limited Partner, less all distributions of
distributable cash and all distributions of sale or refinancing proceeds
in excess of the capital contributions of the Limited Partner. This
guaranteed return was computed from the date of each Limited Partner's
admission to the Partnership. This obligation did not guarantee to the
Limited Partners a return of their capital contributions.
Partnership Dissolution
Since the Partnership effectively terminates upon sale of all the real
property holdings, and since the last real property holding was sold on
January 20, 1998, the General Partner made a contribution of $1,994,459
to the Partnership in March 1998 to satisfy the 8% guaranteed return. In
addition, in March 1998, the General Partner made a final distribution to
the Limited Partners of $122.43 or $122.65 per Limited Partnership Unit
(depending on the date of the Limited Partners' admission to the
Partnership) which represented remaining Partnership cash from operations
as well as the 8% guaranteed return on investment. Pennsylvania
withholding taxes that were paid by Indepro Property Fund I, L.P. on the
partners' behalf were deducted from the final distribution made in March
1998.
Upon final payments of bills and collection of receivables, the
Partnership will be liquidated. As a result, the Partnership has adopted
the liquidation basis of accounting. This basis of accounting is
considered appropriate since the Partnership will be dissolving and the
Partnership is no longer viewed as a going concern. Under this basis of
accounting, assets and liabilities are stated at their estimated net
realizable value and estimated costs of liquidating the Partnership are
provided to the extent they are reasonably determinable. The adoption of
the liquidation basis of accounting had no impact on the financial
statements.
7
<PAGE>
INDEPRO PROPERTY FUND I, L.P.
NOTES TO FINANCIAL STATEMENTS
As of March 31, 1998
3. Investment in Real Estate
On January 20, 1998 the Partnership conveyed title to the Brunswick Hotel
and Conference Center to L.A. Brunswick Associates, L.P. (the Purchaser.)
The Purchaser is a Pennsylvania limited partnership affiliated with GF
Management, Inc., a Pennsylvania corporation, which owns and/or manages
hotels and other real estate investments primarily in the greater
Philadelphia area and which has no affiliation to the Partnership, the
General Partner, or Indepro Corp. (the Advisor.) The total consideration
received by the Partnership for the sale of the property was $4,715,000
which was negotiated at arm's length through a competitive bidding
process. Relevant factors utilized in determining the adequacy of the
consideration were the sale prices of comparable properties in the
marketplace, the age and physical condition of the property sold, present
and anticipated future market conditions for hotel properties in the
Lancaster area, the duration of the Partnership's investment in the
property, and the decision of the OPM and Army, the two largest users of
guest rooms at the hotel, not to extend their agreements beyond June
1998. After payment of the costs of sale of approximately $361,371 and
the balance of the mortgage loan on the property of $381,472, the total
net cash proceeds of $3,972,122, were distributed to the General and
Limited Partners in February 1998.
4. Cash Flow Information
Net cash provided by operating activities reflects cash payments for
interest of $1,899 and $9,383 respectively, during the three months ended
March 31, 1998 and March 31, 1997.
For purposes of the Consolidated Statements of Cash Flows, the
Partnership considers highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
5. Concentration of Credit Risk
The Partnership's operations consisted of ownership of a hotel located in
Lancaster, Pennsylvania. This hotel was sold on January 20, 1998. The
Partnership maintained adequate levels of property and liability
insurance for the hotel. The Partnership's hotel customers primarily
included governmental agencies, and to a lesser extent, corporate
travelers and tourists. The Partnership performed credit evaluations of
its customers and generally did not require collateral.
The Partnership invests its excess cash primarily through a major
commercial bank. Cash available in these accounts may at times exceed
FDIC insurance limits.
8
<PAGE>
INDEPRO PROPERTY FUND I, L.P. AND SUBSIDIARY
(A Delaware Limited Partnership)
Part I, Item 2
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The Partnership's net loss for the three months ended March 31, 1998 was
$(91,132), a decrease of $296,384 from the same period of the prior year. This
decrease is primarily attributable to the sale of the Brunswick Hotel and
Conference Center on January 20, 1998.
The Brunswick Hotel and Conference Center (the Hotel) is a 227 room hotel
located in downtown Lancaster, Pennsylvania. It recently has served three main
client segments which are the U.S. Government, tourist and corporate. Income
attributable to the Brunswick Hotel decreased from $203,197 for the three months
ended March 31, 1997 to a loss of $(113,099) for the three months ended March
31, 1998, primarily due to the sale of the Hotel on January 20, 1998. Gross
profit from hotel operations is down by $547,081 for the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997. Hotel
operations for the 1997 time period included three months of activity while the
1998 operations only include the operations of the hotel for the first nineteen
days of the year. In addition, the expenses of operating the property, such as
administrative, marketing, real estate taxes, insurance and repairs and
maintenance, are also down in the three months ended March 31, 1998 as compared
to the same period of the prior year, since they only include the operations of
the hotel for the first nineteen days of the year. Collectively, these expenses
have decreased by $230,785 in the three months ended March 31, 1998, as compared
to the same period of the prior year. However, the costs of operating the
property have not decreased proportionately as much as hotel revenues have
decreased, due to the additional costs associated with the transfer of the
ownership of the Hotel.
Liquidity and Capital Resources
As of March 31, 1998, the Partnership had cash and cash equivalents totaling
$157,855, in comparison with $989,554 at December 31, 1997 and $990,412 at March
31, 1997. The decrease in cash from December, 1997 is primarily attributable to
the final distribution made in March 1998 which represented all remaining
Partnership cash from operations as well as the 8% guaranteed return. All cash
remaining in the Partnership is to be used to fund existing liabilities. As a
result, there will be no further distributions to the Limited Partners.
During 1991, the Hotel obtained third party financing in the form of a
promissory note to fund the major renovations to the Hotel and Mall.
Approximately $791,443 had been advanced under this note. At the date of sale of
the Hotel, the note had a balance of $381,472, including accrued interest to the
date of sale. This amount was paid at the settlement of the sale of the
property.
9
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)
Distributions
Indepro Property Fund I, L.P. made a distribution of $3,972,122 in February 1998
relating to the net proceeds from the sale of the Brunswick Hotel and Conference
Center.
The General Partner was obligated under the terms of the Partnership agreement
to make a capital contribution upon the Partnership's dissolution in the amount
necessary to enable the Partnership to pay to each Limited Partner an 8%
non-compounded return on the unrecovered capital contribution of the Limited
Partner, less all distributions of distributable cash and all distributions of
sale or refinancing proceeds in excess of the capital contributions of the
Limited Partner. This guaranteed return was computed from the date of each
Limited Partner's admission to the Partnership. This obligation did not
guarantee to the Limited Partners a return of their capital contributions. In
March 1998, the General Partner made a contribution to the Partnership of
$1,994,459, the amount necessary to satisfy this guarantee obligation. In
addition, in March 1998, a final distribution was made to the Limited Partners
in the amount of $122.43 or $122.65 per Limited Partnership Unit, depending on
the date of the Limited Partners' admission to the Partnership. This
distribution included remaining Partnership cash as well as the amount
contributed by the General Partner to fund the 8% guaranteed return.
Year 2000 Disclosure
Since the last real property investment was sold by the Partnership on January
20, 1998, and since the Partnership effectively terminates upon sale of all the
real property investments, the Partnership will be formally dissolved during
1998. Therefore, the General Partner does not expect to encounter any problems
with the Year 2000 in its computer systems.
10
<PAGE>
INDEPRO PROPERTY FUND I, L.P.
(A Delaware Limited Partnership)
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings
As of March 31, 1998, the Partnership was not a party to any
pending legal proceeding.
ITEM 2. Changes in Securities
None
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
Not applicable
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8 - K
A report on Form 8-K was filed on February 4, 1998 to reflect the
sale of the Brunswick Hotel and Conference Center on January 20,
1998.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of 15(d) 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.
INDEPRO PROPERTY FUND I, L.P.
By: Indepro Property Fund I Corp.,
General Partner
Date: May 14, 1998 By: /s/ Ann M. Strootman
------------------------------
Ann M. Strootman
Controller
(Authorized officer and
Principal Financial Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 157,855
<SECURITIES> 0
<RECEIVABLES> 72,118
<ALLOWANCES> 2,600
<INVENTORY> 0
<CURRENT-ASSETS> 240,142
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 240,142
<CURRENT-LIABILITIES> 240,142
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 240,142
<SALES> 113,474
<TOTAL-REVENUES> 139,359
<CGS> 84,565
<TOTAL-COSTS> 223,632
<OTHER-EXPENSES> 4,960
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,899
<INCOME-PRETAX> (91,132)
<INCOME-TAX> 0
<INCOME-CONTINUING> (91,132)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (91,132)
<EPS-PRIMARY> (3)
<EPS-DILUTED> (3)
</TABLE>
