<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended September 30, 1995
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 0-12946
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First Capital Income Properties, Ltd. - Series IX
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(Exact name of registrant as specified in its charter)
Florida 59-2255857
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Riverside Plaza, Suite 950, Chicago, Illinois 60606-2607
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(Address of principal executive offices) (Zip Code)
(312) 207-0020
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(Registrant's telephone number, including area code)
Not applicable
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Documents incorporated by reference:
The First Amended and Restated Agreement of Limited Partnership filed as Exhibit
A to the Partnership's Prospectus dated May 24, 1983, included in the
Partnership's Registration Statement on Form S-11, is incorporated herein by
reference in Part I of this report.
<PAGE>
BALANCE SHEETS
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
September 30,
1995 December 31,
(Unaudited) 1994
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<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 15,722,900 $ 15,722,900
Buildings and improvements 63,984,200 61,904,700
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79,707,100 77,627,600
Accumulated depreciation and amortization (16,455,600) (14,695,200)
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Total investment properties, net of accumulated
depreciation and amortization 63,251,500 62,932,400
Cash and cash equivalents 15,860,000 15,085,400
Rents receivable 520,000 671,600
Escrow deposits 53,400
Other assets (primarily loan acquisition costs
net of accumulated amortization of $105,100 and
$78,400, respectively) 385,900 249,400
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$ 80,070,800 $ 78,938,800
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loans payable $ 8,158,700 $ 6,650,000
Accounts payable and accrued expenses 1,247,700 1,213,300
Distributions payable 1,000,000 722,200
Due to Affiliates 75,800 125,200
Security deposits 135,800 128,800
Other liabilities 38,000 147,000
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10,656,000 8,986,500
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Partners' (deficit) capital:
General Partner
Limited Partners (100,000 Units authorized,
issued and outstanding) 69,414,800 69,952,300
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69,414,800 69,952,300
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$ 80,070,800 $ 78,938,800
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</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the nine months ended September 30, 1995
and the year ended December 31, 1994
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
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<S> <C> <C> <C>
Partners' (deficit) capital,
January 1, 1994 $ (41,300) $60,842,000 $60,800,700
Net income for
the year ended December 31, 1994 269,100 19,160,300 19,429,400
Distributions for
the year ended December 31, 1994 (227,800) (10,050,000) (10,277,800)
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Partners' capital,
December 31, 1994 0 69,952,300 69,952,300
Net income for the
nine months ended September 30, 1995 283,300 2,012,500 2,295,800
Distributions for the nine months ended
September 30, 1995 (283,300) (2,550,000) (2,833,300)
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Partners' capital, September 30, 1995 $ 0 $69,414,800 $69,414,800
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</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended September 30, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Income:
Rental $2,726,600 $2,877,900
Interest 234,800 233,300
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2,961,400 3,111,200
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Expenses:
Interest 219,800 418,700
Depreciation and amortization 639,300 652,800
Property operating:
Affiliates 140,900 197,400
Nonaffiliates 480,600 642,200
Real estate taxes 252,400 432,400
Insurance--Affiliate 25,100 43,600
Repairs and maintenance 300,500 363,200
General and administrative:
Affiliates 30,000 61,800
Nonaffiliates 145,200 11,700
Expenses on sale of properties 41,200
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2,233,800 2,865,000
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Net income $ 727,600 $ 246,200
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Net income allocated to General Partners $ 100,000 $ 55,600
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Net income allocated to Limited Partners $ 627,600 $ 190,600
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Net income allocated to Limited Partners per Unit
(100,000 Units issued and outstanding) $ 6.28 $ 1.91
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</TABLE>
STATEMENTS OF INCOME AND EXPENSES
For the nine months ended
September 30, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Income:
Rental $8,061,700 $10,414,600
Interest 724,500 697,100
Gain on sale of properties 17,987,500
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8,786,200 29,099,200
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Expenses:
Interest 676,000 2,047,900
Depreciation and amortization 1,787,100 2,268,500
Property operating:
Affiliates 495,900 571,100
Nonaffiliates 1,447,200 1,953,400
Real estate taxes 737,100 1,387,200
Insurance--Affiliate 78,500 139,400
Repairs and maintenance 884,300 1,117,900
General and administrative:
Affiliates 64,800 83,500
Nonaffiliates 319,500 148,300
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6,490,400 9,717,200
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Net income before extraordinary (loss) on early
extinguishments of debt 2,295,800 19,382,000
Extraordinary (loss) on early extinguishments of debt (1,151,600)
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Net income $2,295,800 $18,230,400
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Net income allocated to General Partners $ 283,300 $ 196,900
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Net income allocated to Limited Partners $2,012,500 $18,033,500
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Net income before extraordinary (loss) on early
extinguishments of debt allocated to Limited Partners
per Unit (100,000 Units issued and outstanding) $ 20.13 $ 191.72
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Net income allocated to Limited Partners per Unit
(100,000 Units issued and outstanding) $ 20.13 $ 180.34
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</TABLE>
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,295,800 $18,230,400
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,787,100 2,268,500
Extraordinary loss on early extinguishments of debt 1,151,600
Gain on sale of properties (17,987,500)
Changes in assets and liabilities:
Decrease in rents receivable 151,600 133,900
(Increase) in restricted cash (128,800)
(Increase) in other assets (93,300) (128,800)
Increase in accounts payable and accrued expenses 34,400 256,500
(Decrease) in due to Affiliates (49,400) (113,100)
(Decrease) in other liabilities (109,000) (137,000)
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Net cash provided by operating activities 4,017,200 3,545,700
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Cash flows from investing activities:
Proceeds from sale of commercial rental property 46,598,400
Payments for capital and tenant improvements (2,079,500) (2,005,000)
(Increase) decrease in escrow deposits (53,400) 94,300
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Net cash (used for) provided by investing
activities (2,132,900) 44,687,700
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Cash flows from financing activities:
Proceeds from issuance of mortgage loan payable 8,500,000
Principal payments on mortgage loans payable (6,991,300) (37,041,400)
Distributions paid to Partners (2,555,500) (9,000,000)
Loan acquisition costs incurred (69,900)
Prepayment costs on mortgage loans (1,151,600)
Maturity of restricted certificate of deposit 75,000
Decrease in security deposits 7,000 66,100
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Net cash (used for) financing activities (1,109,700) (47,051,900)
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Net increase in cash and cash equivalents 774,600 1,181,500
Cash and cash equivalents at the beginning of the
period 15,085,400 19,160,900
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Cash and cash equivalents at the end of the period $15,860,000 $20,342,400
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Supplemental information:
Interest paid during the period $ 726,000 $ 1,866,000
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</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
September 30, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement filed with the Securities and
Exchange Commission on Form S-11. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is included in the Registration Statement and
incorporated herein by reference.
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles. Under this method of accounting, revenues are
recorded when earned and expenses are recorded when incurred.
The financial information included in these financial statements is unaudited;
however, in management's opinion, all adjustments (consisting of only normal,
recurring accruals) necessary for a fair presentation of the results of
operations for the periods included have been made. Results of operations for
the quarter and nine months ended September 30, 1995 are not necessarily
indicative of the operating results for the year ending December 31, 1995.
Certain reclassifications have been made to the previously reported 1994
statements in order to provide comparability with the 1995 statements. These
reclassifications have no effect on net income or Partners' capital.
The financial statements include the Partnership's 50% interest in a joint
venture with an Affiliated partnership. This joint venture was formed for the
purpose of acquiring a 100% interest in certain real property and is operated
under the common control of the Managing General Partner. In addition, the 1994
financial statements include the Partnership's 50% interest in two joint
ventures with Affiliated partnerships. These joint ventures were formed for the
purpose of each acquiring a 100% interest in certain real property and were
operated under the common control of the Managing General Partner prior to the
sale and disposition of the properties on April 6, 1994 and December 9, 1994,
respectively. Accordingly, the Partnership's pro rata share of the ventures'
revenues, expenses, assets, liabilities and capital was included in the
financial statements.
Cash equivalents are considered all highly liquid investments purchased with
maturity of three months or less.
Reference is made to the Partnership's annual report for the year ended
December 31, 1994 for a description of other accounting policies and additional
details of the Partnership's financial condition, results of operations,
changes in Partners' capital and changes in cash balances for the year then
ended. The details provided in the notes thereto have not changed except as a
result of normal transactions in the interim or as otherwise disclosed herein.
2. RELATED PARTY TRANSACTIONS:
In accordance with the Partnership Agreement, subsequent to October 31, 1983,
the Termination of the Offering, the General Partners are entitled to 10% of
distributable Cash Flow (as defined by the Partnership Agreement), as a
Partnership Management Fee. In addition, Net Profits (exclusive of Net Profits
from the sale or disposition of Partnership properties) are allocated: first,
to the General Partners, in an amount equal to the greater of: (A) the General
Partners' Partnership Management Fee for such fiscal year; or (B) 1% of such
Net Profits; and second, the balance, if any, to the Unit Holders. Net Profits
from the sale or disposition of a Partnership property are allocated: first, to
the General Partners and the Unit Holders with negative balances in their
capital accounts, pro rata in proportion to such respective negative balances,
to the extent of the total of such negative balances; second, to the General
Partners, in an amount necessary to make the aggregate amount of their capital
accounts equal to the greater of: (A) the Sale or Refinancing Proceeds to be
distributed to the General Partners with respect to the sale or disposition of
such property; or (B) 1% of such Net Profits; and third, the balance, if any,
to the Unit Holders. Net Losses (exclusive of Net Losses from the sale or
disposition of Partnership properties) are allocated 1% to the General Partners
and 99% to the Unit Holders. Net Losses from the sale or disposition of
Partnership properties are allocated: first, to the General Partners to the
extent of the aggregate balance in their capital accounts; second, to the Unit
Holders and among them (in the ratio which their respective capital account
balances bear to the aggregate of all capital account balances of the Unit
Holders) until the balance in their capital accounts shall be reduced to zero;
third, the balance, if any, 99% to the Unit Holders and 1% to the General
Partners. In all events there shall be allocated to the General Partners not
less than 1% of Net Profits and Net Losses from the sale or disposition of a
Partnership property. For the quarter and nine months ended September 30, 1995,
the General Partners were entitled to a Partnership Management Fee, and
accordingly, Net Profits of approximately $100,000 and $283,300, respectively.
Fees and reimbursement paid and payable by the Partnership to Affiliates during
the quarter and nine months ended September 30, 1995 were as follows:
<TABLE>
<CAPTION>
Paid
--------------------
Quarter Nine Months Payable
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<S> <C> <C> <C>
Property management and leasing fees $206,900 $539,000 $ 2,000
Reimbursement of property insurance premiums, at
cost 25,000 78,400 None
Real estate commissions (a) None None 48,500
Reimbursement of expenses, at cost:
(1) Accounting 4,900 18,800 8,400
(2) Investor communication 2,800 9,300 14,600
(3) Legal 20,700 106,300 2,300
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$260,300 $751,800 $75,800
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</TABLE>
(a) As of September 30, 1995, the Partnership owed approximately $48,500 to the
Managing General Partner for a real estate commission earned in connection
with the sale of a Partnership property. This commission has been accrued
but not paid. In accordance with the Partnership Agreement, no Affiliate of
the General Partners may receive payment of a real estate commission upon
the sale of a Partnership property until Unit Holders have received
cumulative distributions of Sale or Refinancing Proceeds equal to 100% of
their Original Capital Contribution, plus a cumulative return (including
all Cash Flow (as defined by the Partnership Agreement) which has been
distributed to the Unit Holders) of 6% simple interest per annum on their
Capital Investment from the initial date of investment.
Firstate Financial A Savings Bank, ("Firstate") an Affiliate of the Managing
General Partner, is obligated to the Partnership under a lease of office space
at the Citrus Center. The lease expires in February, 2002. For the quarter and
nine months ended September 30, 1995, Firstate paid approximately $59,500 and
$176,400 in total rents, respectively.
3. MORTGAGE LOAN PAYABLE:
On January 6, 1995, Indianapolis Mall Associates, the joint venture which owns
Glendale Center Shopping Mall ("Glendale"), obtained a new mortgage loan in the
amount of $17,000,000 secured by this property. The Partnership's share of the
new loan amount was $8,500,000. The existing loan was paid off in full with the
proceeds from the new loan. The interest rate on the new loan is variable at
Libor plus 4.5% with interest payable monthly. The maturity date of the new
loan is January 1, 1999. Monthly payments of principal are to be made based on
an 11-year amortization and an interest rate of 9.5%. The joint venture may be
required to pay annually additional principal amortization equal to 50% of net
cash flow (pursuant to the loan agreement) from the property for each prior
calender year, depending on certain debt-coverage requirements defined by the
loan agreement. As of September 30, 1995 the Partnership's share of the
outstanding mortgage loan balance was $8,158,700.
4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the Partnership's annual report for the year ended
December 31, 1994, for a discussion of the Partnership's business.
As the Partnership progresses through the disposition phase of its life cycle,
management's discussion and analysis of financial condition and results of
operations is complicated between periods. Results of net income and cash flows
as defined by generally accepted accounting principles ("GAAP") as well as Cash
Flow (as defined by the Partnership Agreement) are generally expected to
decline as real property interests are sold or disposed of since the
Partnership no longer receives the results generated from such real property
interests. Accordingly, rental income, debt service, depreciation and
amortization expense, property operating expenses, repairs and maintenance
expenses, real estate taxes and insurance are expected to decline as well, but
will continue to comprise the significant components of net income and cash
flows (as defined by GAAP) as well as Cash Flow (as defined by the Partnership
Agreement) until the final property is sold. Also, during the disposition
phase, cash and cash equivalents increase as Sale and Refinancing Proceeds are
received and decrease as the Partnership utilizes these proceeds for the
purposes of making distributions to Limited Partners, repayment of the mortgage
loan payable, making capital improvements and incurring leasing costs at the
Partnership's remaining properties or other working capital requirements. Prior
to being utilized for such purposes, these proceeds are invested in short-term
money market instruments. Sale and Refinancing Proceeds are excluded from the
determination of Cash Flow (as defined by the Partnership Agreement).
OPERATIONS
The table below is a recap of certain operating results of each of the
Partnership's properties for the quarters and nine months ended September 30,
1995 and 1994. The discussion following the table should be read in conjunction
with the Financial Statements and Notes thereto appearing in this report.
<TABLE>
<CAPTION>
Comparative Operating Results (a)
For the For the Nine
Quarters Ended Months Ended
9/30/95 9/30/94 9/30/95 9/30/94
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<S> <C> <C> <C> <C> <C>
CITRUS CENTER
Rental revenues $1,186,500 $970,300 $3,482,700 $3,170,900
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Property net income (b) $ 287,500 $170,400 $ 842,900 $ 409,700
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Average occupancy 97.9% 86.3% 97.0% 84.7%
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GLENDALE CENTER SHOPPING MALL
Rental revenues $ 875,000 $880,100 $2,584,500 $2,617,200
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Property net income $ 15,300 $ 51,600 $ 6,600 $ 256,100
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Average occupancy 92.1% 85.9% 92.1% 85.7%
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SHOPPES OF WEST MELBOURNE
Rental revenues $ 340,600 $319,600 $ 991,400 $ 962,900
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Property net income $ 192,700 $135,500 $ 545,600 $ 383,100
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Average occupancy 98.0% 91.6% 95.5% 92.9%
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</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
RICHMOND PLAZA SHOPPING CENTER
Rental revenues $329,300 $ 296,400 $1,002,200 $ 886,900
- ---------------------------------------------------------------
Property net income $177,200 $ 150,100 $ 539,100 $ 458,100
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Average occupancy 93.8% 92.3% 92.4% 91.2%
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FASHION ATRIUM BUILDING (C)
Rental revenues $ 412,400 $1,405,600
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Property net (loss) $(368,400) $ (808,800)
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Average occupancy 71.6% 71.7%
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EL PASO NATURAL GAS BUILDING (D)
Rental revenues $1,003,400
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Property net income $ 324,100
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Average occupancy (d)
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TRIANGLE BUILDING (E)
Rental revenues $ 367,600
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Property net (loss) $ (59,000)
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Average occupancy (e)
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</TABLE>
(a) Excludes certain income and expense items which are either not directly
related to individual property operating results such as interest income
and general and administrative expenses or are related to properties
previously owned by the Partnership.
(b) Excludes an extraordinary loss on early extinguishment of debt of
approximately $237,300 for the nine months ended September 30, 1994.
(c) On December 9, 1994 the Fashion Atrium Building was disposed of through the
orderly conveyance of title to the mortgage holder.
(d) El Paso Natural Gas Building ("El Paso") was sold on April 6, 1994. The
property net income excludes the gain on sale of $18,929,600 and a
prepayment penalty of $(914,300) which was included as an extraordinary
loss on early extinguishment of debt in the Statements of Income and
Expenses for the nine months ended September 30, 1994.
(e) Triangle Building was sold on June 10, 1994. The property net (loss)
excludes a loss on sale of the property of $(942,200) which was included in
the Statement of Income and Expenses for the nine months ended September
30, 1994.
Net income for the Partnership for the quarter ended September 30, 1995
increased $481,400 when compared to the quarter ended September 30, 1994. The
increase was primarily due to increased operating results at Shoppes of West
Melbourne ("Shoppes"), Richmond Plaza Shopping Center ("Richmond") and Citrus
Center totaling $201,400 and the absence of the deficit operating results of
the Fashion Atrium Building ("Fashion Atrium"), offset by a decrease in
operating results at Glendale. Net income for the nine months ended September
30, 1995 decreased $15,934,600 when compared to the nine months ended September
30, 1994. The primary reason for this decrease was the recognition of the gain
on the sale of El Paso on April 6, 1994, offset by the loss on sale of the
Triangle Building ("Triangle") on June 10, 1994 and the extraordinary losses on
early extinguishments of debt for Citrus Center and El Paso. For further
discussion regarding the gain and loss on sales and the loss on early
extinguishments of debt see
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
notes (b), (c), (d) and (e) to the above table. The disposition of these
properties accounted for the significant decreases in rental income, interest
expense, property operating expenses, depreciation and amortization expense,
real estate tax expense, insurance expense and repairs and maintenance,
accordingly, the comparison of operating results between periods is
complicated.
Net income before extraordinary loss on early extinguishments of debt,
exclusive of all sold and disposed of properties, increased $72,000 or 11% and
$357,600 or 18.5%, respectively, for the quarterly and nine-month periods under
comparison. The increases in net income were primarily due to: 1) improved
operating results at Citrus Center of $117,100 and $433,200, respectively, for
the quarter and nine months ended September 30, 1995 when compared to the
quarter and nine months ended September 30, 1994; 2) improved operating results
at Shoppes and Richmond totaling approximately $84,300 and $243,500,
respectively, for the quarter and nine months ended September 30, 1995 when
compared to 1994 and 3) increased interest income of approximately $1,500 and
$27,400, respectively, for the quarterly and nine-month comparable periods
primarily due to an increase in rates available on the Partnership's short-term
investments slightly offset by a decrease in cash available for such
investments. Partially offsetting the increases in net income was: 1) decreased
operating results at Glendale of $36,300 and $249,500, respectively, for the
comparable periods and 3) increased general and administrative expenses of
$104,000 and $155,200, respectively, for the quarterly and nine-month
comparable periods due to an increase in state and local taxes and printing and
mailing costs.
For purposes of the following discussion, the comparative operating results of
Fashion Atrium, El Paso and Triangle have been excluded.
Rental revenues increased by $265,000 or 10.8% and $422,900 or 5.5%,
respectively, for the quarter and nine months ended September 30, 1995 when
compared to the quarter and nine months ended September 30, 1994. The primary
factor which caused the increase in rental revenues was increases in the
average occupancy at Citrus Center, Richmond and Shoppes. Partially offsetting
the increase was a decrease in rental revenues at Glendale primarily due to a
decrease in tenant expense reimbursements for common area costs and real estate
tax escalations and a decrease in other rental income, slightly offset by an
increase in percentage rents and base rental revenues.
Interest expense increased by $41,000 for the quarterly periods under
comparisons primarily resulting from increased interest expense at Glendale.
Although the average outstanding principal balance on the Glendale mortgage is
lower in 1995 when compared to 1994, the interest expense increased due to an
increase in the interest rate. The decrease in interest expense of $245,200 for
the nine months ended September 30, 1995 when compared to 1994 was primarily
the result of the payoffs in 1994 of the mortgage loans collateralized by
Citrus Center and Shoppes, partially offset by the increase in interest expense
at Glendale, as previously discussed.
Property operating expenses decreased by $46,500 for the quarterly periods
under comparison. The decrease in property operating expenses for the quarter
ended September 30, 1995 when compared to 1994 was primarily due to: 1)
decreased professional fees at Shoppes; 2) decreased promotional and
advertising expenses at Richmond and Glendale and 3) decreased utilities at
Glendale. Property operating expenses increased by $41,100 for the nine-month
periods under comparison. The increase in property operating expenses for the
nine months ended September 30, 1995 when compared to 1994 was primarily due
to: 1) increased utilities, professional fees and advertising and promotional
expenditures at Citrus Center related to the increase in occupancy and 2)
increased professional fees at Richmond. Partially offsetting the increase in
property operating expenses for the nine-month comparable periods was decreased
professional fees at Shoppes and decreased property operating expenses at
Glendale, as previously discussed.
Insurance expense decreased $15,000 and $41,200, respectively, for the quarter
and nine months ended September 30, 1995, when compared to the prior year
periods. These decreases were primarily due to lower group rates on the
Partnership's combined insurance coverage as a result of a minimal amount of
claims made over the past several years, which provided a good loss experience
relative to the Partnership's properties.
Real estate tax expense decreased $2,300 for the quarterly periods under
comparison primarily due to a decrease in real estate tax expense at Shoppes
resulting from a decrease in the assessed valuation of the property. Real
estate tax expense increased $7,300 for the nine-month periods under comparison
primarily due to an increase in the tax rates for Citrus Center and Glendale,
partially offset by a decrease in real estate tax expense at Shoppes, as
previously discussed.
Repairs and maintenance expense increased $10,000 and $26,900, respectively,
for the quarter and nine months ended September 30, 1995 when compared to the
quarter and nine months ended September 30, 1994. The primary factors which
caused the increase were: 1) increased maintenance salaries at Glendale,
partially offset by a decrease in expenditures on the interior and exterior of
the building; 2) increased maintenance salaries and janitorial services at
Citrus Center, partially offset by a decrease in cleaning supplies and uniforms
and 3) increased roof repairs and supplies at Richmond. Partially offsetting
the increase in repairs and maintenance was a slight decrease in unreimbursed
common area costs at Shoppes.
To increase and/or maintain occupancy levels at the Partnership's properties,
the Managing General Partner, through its Affiliated asset and property
management groups, continues to take the following actions: 1) implementation
of marketing programs, including hiring of third-party leasing agents or
providing on-site leasing personnel, advertising, direct mail campaigns and
development of building brochures; 2) early renewal of existing tenants and
addressing any expansion needs these tenants may have; 3) promotion of local
broker events and networking with local brokers; 4) networking with national
level retailers; 5) cold-calling other businesses and tenants in the market
area; and 6) providing rental concessions or competitively pricing rental rates
depending on market conditions.
LIQUIDITY AND CAPITAL RESOURCES
One of the Partnership's objectives is to dispose of its properties when market
conditions allow for the achievement of the maximum possible sales price. In
the interim, the Partnership continues to manage and maintain its remaining
properties. Notwithstanding the Partnership's intention relative to property
sales, another primary objective of the
6
<PAGE>
ANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Partnership is to provide cash distributions to Partners from Partnership
operations. To the extent cumulative cash distributions exceed net income, such
excess distributions will be treated as a return of capital. Cash Flow (as
defined in the Partnership Agreement) is generally not equal to Partnership net
income or cash flows as defined by generally accepted accounting principles
("GAAP"), since certain items are treated differently under the Partnership
Agreement than under GAAP. Management believes that to facilitate a clear
understanding of the Partnership's operations, an analysis of Cash Flow (as
defined by the Partnership Agreement) should be examined in conjunction with an
analysis of net income or cash flows (as defined by GAAP). The following table
includes a reconciliation of Cash Flow (as defined by the Partnership
Agreement) to cash flow provided by operating activities as determined by GAAP.
Such amounts are not indicative of actual distributions to Partners and should
not necessarily be considered as an alternative to the results disclosed in the
Statements of Income and Expenses and Statements of Cash Flows.
<TABLE>
<CAPTION>
Comparative Cash Flow
Results for the
Nine Months Ended
9/30/95 9/30/94
- ------------------------------------------------------------------------------
<S> <C> <C>
Amount of Cash Flow (as defined in the Partnership
Agreement) $ 3,741,600 $ 3,303,900
Items of reconciliation:
Principal payments on mortgage loans 341,300 359,100
Decrease (increase) in current assets 58,300 (123,700)
(Decrease) increase in current liabilities (124,000) 6,400
- ------------------------------------------------------------------------------
Net cash provided by operating activities $ 4,017,200 $ 3,545,700
- ------------------------------------------------------------------------------
Net cash (used for) provided by investing
activities $(2,132,900) $ 44,687,700
- ------------------------------------------------------------------------------
Net cash (used for) financing activities $(1,109,700) $(47,051,900)
- ------------------------------------------------------------------------------
</TABLE>
The increase in Cash Flow (as defined by the Partnership Agreement) for the
nine months ended September 30, 1995 when compared to the nine months ended
September 30, 1994 of $437,700 was primarily due to the increase in net income,
exclusive of depreciation and amortization, and a reduction in scheduled debt
service resulting from the reduction of mortgage loans payable previously
collateralized by El Paso, Citrus Center and Shoppes.
The increase in the Partnership's cash position as of September 30, 1995 when
compared to December 31, 1994 was primarily the result of net cash provided by
operating activities and financing activities exceeding payments made for
capital and tenant improvements and leasing costs and distributions paid to
Partners. Liquid assets of the Partnership as of September 30, 1995 are
comprised of amounts held for working capital purposes and undistributed Cash
Flow (as defined by the Partnership Agreement).
The increase of $471,500 in net cash provided by operating activities for the
nine months ended September 30, 1995 when compared to the nine months ended
September 30, 1994 was primarily due to the increase in net income as well as a
decrease in accrued real estate taxes resulting from the foreclosure by the
mortgage holder of Fashion Atrium in 1994.
Net cash provided by (used for) investing activities changed from $44,687,700
for the nine months ended September 30, 1994 to $(2,132,900) for the nine
months ended September 30, 1995. This change was primarily due to proceeds
received of approximately $46,598,400 from the sale of El Paso, partially
offset by an increase in payments for capital and tenant improvements and
leasing costs and to a lesser extent to an increase in escrow deposits. The
Partnership maintains working capital reserves to pay for capital expenditures
such as building and tenant improvements and leasing costs. During the nine
months ended September 30, 1995, the Partnership spent approximately $2,079,500
for building and tenant improvements and leasing costs and has budgeted to
spend an additional $1,020,000 during the remainder of 1995. Of the remaining
budgeted amount, approximately $415,000, $378,000, $145,000 and $82,000 relates
to anticipated capital and tenant improvements and leasing costs expected to be
incurred at Glendale, Shoppes, Citrus Center and Richmond, respectively. The
Managing General Partner believes these improvements and leasing costs are
necessary in order to increase and/or maintain occupancy levels in very
competitive markets, maximize rental rates charged to new and renewing tenants
and to prepare the remaining properties for eventual disposition.
The decrease of $45,942,200 in net cash used for financing activities for the
nine months ended September 30, 1995 when compared to the nine months ended
September 30, 1994 was primarily due to: 1) the payoff in 1994 of the mortgage
loans collateralized by El Paso, Citrus Center and Shoppes, including
prepayment penalties; 2) the partial principal paydown in 1994 on the mortgage
loan collateralized by Glendale and 3) distribution of Sale Proceeds to
Partners from the sale of El Paso. Partially offsetting the decrease was the
refinancing of the mortgage loan collateralized by Glendale in 1995.
On January 6, 1995, Indianapolis Mall Associates, the joint venture which owns
Glendale, obtained a new mortgage loan in the amount of $17,000,000 secured by
Glendale. The Partnership's share of the new loan amount was $8,500,000. The
existing loan was paid off in full with the proceeds from the new loan. The net
cash received by the Partnership in connection with this new loan was
approximately $1,780,100, which was net of approximately $69,900 in loan
acquisition costs, and was added to the Partnership's working capital.
The Managing General Partner continues to take a conservative approach to
projections of future rental income and to maintain higher levels of cash
reserves due to the anticipated capital and tenant improvements and leasing
costs necessary to be made at the Partnership's properties during the next
several years. The Managing General Partner believes that Cash Flow (as defined
by the Partnership Agreement) is one of the best and least expensive sources of
cash. As a result of this, cash continues to be retained to supplement working
capital reserves. For the nine months ended September 30, 1995, Cash Flow (as
defined by the Partnership Agreement) retained to supplement working capital
reserves approximated $908,300.
Distributions to Limited Partners for the quarter ended September 30, 1995 were
declared in the amount of $9.00 per Unit. Cash distributions are made 60 days
after the last day of each fiscal quarter. The amount of future distributions
to Partners will ultimately be dependent upon the performance of the
Partnership's investments as well as the Managing General Partner's
determination of the amount of cash necessary to supplement working capital
reserves to meet future liquidity requirements of the Partnership. Accordingly,
there can be no assurance of the availability of cash for distribution to
Partners.
7
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the quarter ended
September 30, 1995.
<PAGE>
SIGNATURES
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 CAPITAL INCOME PROPERTIES, LTD. - SERIES IX
BY: FIRST CAPITAL FINANCIAL CORPORATION
MANAGING GENERAL PARTNER
Date: November 14, 1995 By: /s/ DOUGLAS CROCKER II
----------------- -----------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: November 14, 1995 By: /s/ NORMAN M. FIELD
----------------- -----------------------------------------
NORMAN M. FIELD
Vice President - Finance and Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000716297
<NAME> First Capital Income Properties, Ltd.--Series IX
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 15,860,000
<SECURITIES> 0
<RECEIVABLES> 520,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,380,000
<PP&E> 79,707,100
<DEPRECIATION> 16,455,600
<TOTAL-ASSETS> 80,070,800
<CURRENT-LIABILITIES> 2,410,800
<BONDS> 8,158,700
<COMMON> 0
0
0
<OTHER-SE> 69,414,800
<TOTAL-LIABILITY-AND-EQUITY> 80,070,800
<SALES> 0
<TOTAL-REVENUES> 8,786,200
<CGS> 0
<TOTAL-COSTS> 3,643,000
<OTHER-EXPENSES> 384,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 676,000
<INCOME-PRETAX> 2,295,800
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,295,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,295,800
<EPS-PRIMARY> 20.13
<EPS-DILUTED> 20.13
</TABLE>
