<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, 1997
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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
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2255857
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Riverside Plaza, Suite 1100, 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 definitive Prospectus dated December 8, 1988, included in the
Registrant'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,
1997 December 31,
(Unaudited) 1996
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<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 7,997,900 $ 12,472,900
Buildings and improvements 31,351,400 56,754,100
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39,349,300 69,227,000
Accumulated depreciation and amortization (12,468,000) (19,444,900)
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Total investment properties, net of accumulated
depreciation and amortization 26,881,300 49,782,100
Cash and cash equivalents 28,209,800 15,693,500
Investments in debt securities 15,832,000
Rents receivable 569,100 606,800
Escrow deposits 79,100 19,600
Other assets (including loan acquisition costs,
net of accumulated amortization of $105,600 and
$76,000, respectively) 177,800 287,400
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$ 71,749,100 $ 66,389,400
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loan payable $ 6,704,800 $ 7,339,500
Accounts payable and accrued expenses 951,500 883,100
Due to Affiliates 86,100 123,800
Distributions payable 28,050,000 1,166,700
Security deposits 41,500 144,600
Other liabilities 230,400 58,500
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36,064,300 9,716,200
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Partners' capital:
General Partners (deficit) 62,200 (117,000)
Limited Partners (100,000 units issued and
outstanding) 35,622,600 56,790,200
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35,684,800 56,673,200
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$ 71,749,100 $ 66,389,400
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</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the nine months ended September 30, 1997 (Unaudited) and the year ended
December 31, 1996
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital, January 1,
1996 $(90,000) $60,544,800 $60,454,800
Net income for the year ended December 31,
1996 434,100 395,400 829,500
Distributions for the year ended December
31, 1996 (461,100) (4,150,000) (4,611,100)
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Partners' (deficit) capital, December 31,
1996 (117,000) 56,790,200 56,673,200
Net income for the nine months ended
September 30, 1997 462,500 8,932,400 9,394,900
Distributions for the nine months ended
September 30, 1997 (283,300) (30,100,000) (30,383,300)
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Partners' capital, September 30, 1997 $ 62,200 $35,622,600 $35,684,800
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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, 1997 and 1996
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1997 1996
- ------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $2,024,000 $2,765,200
Interest 493,400 218,300
Gain on sale of property 6,218,200
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8,735,600 2,983,500
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Expenses:
Interest 179,300 192,700
Depreciation and amortization 378,200 601,600
Property operating:
Affiliates 79,100 199,400
Nonaffiliates 392,500 495,300
Real estate taxes 182,400 250,500
Insurance--Affiliate 23,800 30,700
Repairs and maintenance 175,400 273,500
General and administrative:
Affiliates 6,800 13,900
Nonaffiliates 60,300 30,600
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1,477,800 2,088,200
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Net income $7,257,800 $ 895,300
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Net income allocated to General Partners $ 229,200 $ 116,600
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Net income allocated to Limited Partners $7,028,600 $ 778,700
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Net income allocated to Limited Partners per Unit
(100,000 Units outstanding) $ 70.29 $ 7.79
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</TABLE>
STATEMENTS OF INCOME AND EXPENSES
For the nine months ended September 30, 1997 and 1996
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1997 1996
- -------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $ 7,798,700 $8,497,400
Interest 924,800 630,500
Gain on sale of property 6,218,200
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14,941,700 9,127,900
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Expenses:
Interest 542,700 588,000
Depreciation and amortization 1,587,100 1,790,900
Property operating:
Affiliates 292,600 601,600
Nonaffiliates 1,429,800 1,400,800
Real estate taxes 643,600 766,100
Insurance--Affiliate 80,500 92,200
Repairs and maintenance 759,400 870,900
General and administrative:
Affiliates 22,800 48,000
Nonaffiliates 188,300 217,500
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5,546,800 6,376,000
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Net income $ 9,394,900 $2,751,900
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Net income allocated to General Partners $ 462,500 $ 344,400
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Net income allocated to Limited Partners $ 8,932,400 $2,407,500
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Net income allocated to Limited Partners per Unit
(100,000 Units outstanding) $ 89.32 $ 24.08
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</TABLE>
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1997 and 1996 (Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 9,394,900 $ 2,751,900
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,587,100 1,790,900
Gain on sale of property (6,218,200)
Changes in assets and liabilities:
Decrease in rents receivable 37,700 6,600
Decrease in other assets 80,000 49,400
Increase in accounts payable and accrued expenses 68,400 367,000
(Derease) increase in due to Affiliates (37,700) 84,600
Increase (decrease) in other liabilities 171,900 (140,400)
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Net cash provided by operating activities 5,084,100 4,910,000
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Cash flows from investing activities:
Payments for capital and tenant improvements (198,900) (448,400)
(Increase) in investments in debt securities (15,832,000) (6,923,900)
Proceeds from sale of property 27,760,400
(Increase) decrease in escrow deposits (59,500) 8,900
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Net cash provided by (used for) investing
activities 11,670,000 (7,363,400)
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Cash flows from financing activities:
Principal payments on mortgage loan payable (634,700) (525,800)
Distributions paid to Partners (3,500,000) (3,333,400)
(Decrease) in security deposits (103,100) (4,400)
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Net cash (used for) financing activities (4,237,800) (3,863,600)
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Net increase (decrease) in cash and cash
equivalents 12,516,300 (6,317,000)
Cash and cash equivalents at the beginning of the
period 15,693,500 15,524,300
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Cash and cash equivalents at the end of the period $ 28,209,800 $ 9,207,300
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Supplemental information:
Interest paid during the period $ 542,700 $ 525,600
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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, 1997
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 ("GAAP"). Under this method of accounting,
revenues are recorded when earned and expenses are recorded when incurred.
Preparation of the Partnership's financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
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, 1997 are not necessarily
indicative of the operating results for the year ending December 31, 1997.
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. Accordingly, the
Partnership's pro rata share of the joint venture's revenues, expenses, assets,
liabilities and Partners' capital was included in the financial statements.
Commercial rental properties are recorded at cost, net of any provisions for
value impairment, and depreciated (exclusive of amounts allocated to land) on
the straight-line method over their estimated useful lives. Lease acquisition
fees are recorded at cost and amortized on the straight-line method over the
life of the respective lease. Maintenance and repair costs are expensed against
operations as incurred; expenditures for improvements are capitalized to the
appropriate property accounts and depreciated on the straight-line method over
the estimated life of such improvements.
The Partnership evaluates its rental properties when conditions exist which may
indicate that it is probable that the sum of expected future cash flows
(undiscounted) from a property is less than its estimated carrying basis. Upon
determination that an impairment has occurred, the basis in the rental property
is reduced to fair value. Management was not aware of any indicator that would
result in a significant impairment loss during the periods reported.
Loan acquisition costs are amortized over the term of the mortgage loan made in
connection with the acquisition of Partnership properties or refinancing of
Partnership loans. When a property is disposed of or a loan is refinanced, the
related loan acquisition costs and accumulated amortization are removed from
the respective accounts and any unamortized balance is expensed.
Cash equivalents are considered all highly liquid investments with maturity of
three months or less when purchased.
Investments in debt securities at September 30, 1997 are comprised of corporate
debt securities and obligations of the United States government and are
classified as held-to-maturity. These investments are carried at their
amortized cost basis in the financial statements, which approximated fair
market value. All of these securities had maturities of less than one year when
purchased.
Certain reclassifications have been made to the previously reported 1996
statements in order to provide comparability with the 1997 statements. These
reclassifications have no effect on net income or Partners' (deficit) capital.
Reference is made to the Partnership's annual report for the year ended
December 31, 1996 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 in the Partnership Agreement), as a
Partnership Management Fee. 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 Limited Partners. Net Profits from the
sale or disposition of a Partnership property are allocated: first, to the
General Partners and the Limited Partners 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 for
such property; or (B) 1% of such Net Profits; and third, the balance, if any,
to the Limited Partners. Net Losses (exclusive of Net Losses from the sale,
disposition or provision for value impairment of Partnership properties) are
allocated 1% to the General Partners and 99% to the Limited Partners. Net
Losses from the sale, disposition or provision for value impairment of
Partnership properties are allocated: first, to the General Partners to the
extent of the aggregate balance in their capital accounts; second, to the
Limited Partners and among them (in the ratio which their respective capital
account balances bear to the aggregate of all capital account balances of the
Limited Partners) until the balance in their capital accounts shall be reduced
to zero; third, the balance, if any, 99% to the Limited Partners and 1% to the
General Partners. In all events there shall be allocated to the
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
September 30, 1997
General Partners not less than 1% of Net Profits and Net Losses from the sale,
disposition or provision for value impairment of a Partnership property. For
the quarter and nine months ended September 30, 1997, the General Partners were
entitled to a Partnership Management Fee, and accordingly, allocated Net
Profits from operations, of $50,000 and $283,300, respectively. In addition the
General Partners were allocated Net Profits from the sale of Citrus Center of
$179,200 for the quarter and nine months ended September 30, 1997.
Fees and reimbursements paid and payable/(receivable) by the Partnership
to/from Affiliates during the quarter and nine months ended September 30, 1997
were as follows:
<TABLE>
<CAPTION>
Paid
-------------------- (Receivable)
Quarter Nine Months Payable
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Property management and leasing fees $ 40,600 $292,700 $(4,900)
Reimbursement of property insurance
premiums, at cost 43,600 80,500 None
Real estate commission (a) None None 48,500
Legal 37,500 44,900 35,300
Reimbursement of expenses, at cost:
--Accounting 5,900 12,100 4,600
--Investor communications 2,600 5,800 2,600
- -----------------------------------------------------------------------
$130,200 $436,000 $86,100
- -----------------------------------------------------------------------
</TABLE>
(a) As of September 30, 1997, the Partnership owed $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, the Partnership will
not pay the General Partners or any Affiliates a real estate commission
from the sale of a Partnership property until Limited Partners 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 in the Partnership Agreement) which
has been distributed to the Limited Partners from the initial date of
investment) of 6% simple interest per annum on their Capital Investment
from the initial date of investment.
Firstate Financial A Savings Bank ("Firstate"), a tenant at Citrus Center, was
owned by an Affiliate of the Managing General Partner, until its sale to an
unrelated party in April 1997. Firstate's rent was comparable to that paid by
other tenants at Citrus Center.
3. MORTGAGE LOAN PAYABLE:
Mortgage loan payable at September 30, 1997 and December 31, 1996 consisted of
the following non-recourse loan:
<TABLE>
<CAPTION>
Partnership's Share
of Average
Principal Balance at Interest Maturity
Property Pledged as Collateral 9/30/97 12/31/96 Rate (a) Date
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Glendale Center Shopping Mall (50%) $6,704,800 $7,339,500 10.12% 1/1/1999
- ----------------------------------------------------------------------------
</TABLE>
(a) This interest rate represents the weighted average for the nine months
ended September 30, 1997. This interest rate is subject to change on a
monthly basis in accordance with the provisions of the loan agreement. As
of September 30, 1997, the interest rate on this loan was 10.19%.
For additional information regarding the mortgage loan payable, see Notes to
the Financial Statements in the Partnership's annual report for the year ended
December 31, 1996.
4. PROPERTY SALE:
On August 1, 1997, the Partnership consummated the sale of Citrus Center,
located in Orlando, Florida, for a sale price of $28,500,000. Net proceeds, net
of closing expenses, from this transaction were $27,760,400. The Partnership
reported a gain of $6,218,200 for the nine months ended September 30, 1997 in
connection with this sale and intends to distribute $27,500,000 or $275.00 per
Unit on November 30, 1997 to Limited Partners of record as of August 1, 1997.
5
<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, 1996 for a discussion of the Partnership's business.
OPERATIONS
The Partnership is in the disposition phase of its life cycle. During the
disposition phase, comparisons of operating results are complicated due to the
timing and effect of property sales. Partnership operating results are
generally expected to decline as real property interests are sold or disposed
of since the Partnership no longer receives income generated from such real
property interests.
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,
1997 and 1996. 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 Quarters For the Nine Months
Ended Ended
9/30/97 9/30/96 9/30/97 9/30/96
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
GLENDALE CENTER SHOPPING MALL (50%)
Rental Revenues $847,900 $ 893,700 $2,747,800 $2,736,700
- --------------------------------------------------------------
Property net income $124,500 $ 78,100 $ 521,700 $ 357,900
- --------------------------------------------------------------
Average Occupancy 89% 91% 90% 92%
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SHOPPES OF WEST MELBOURNE
Rental Revenues $393,800 $ 327,200 $1,088,600 $1,006,100
- --------------------------------------------------------------
Property net income $268,400 $ 200,400 $ 710,700 $ 629,700
- --------------------------------------------------------------
Average Occupancy 96% 97% 96% 95%
- --------------------------------------------------------------
RICHMOND PLAZA SHOPPING CENTER
Rental Revenues $326,400 $ 320,700 $ 980,600 $1,048,600
- --------------------------------------------------------------
Property net income $145,600 $ 159,000 $ 472,300 $ 549,100
- --------------------------------------------------------------
Average Occupancy 90% 91% 91% 93%
- --------------------------------------------------------------
CITRUS CENTER (B)
Rental Revenues $456,000 $1,223,400 $2,981,800 $3,705,900
- --------------------------------------------------------------
Property net income $ 86,500 $ 284,700 $ 767,600 $ 842,200
- --------------------------------------------------------------
Average Occupancy 97% 98%
- --------------------------------------------------------------
</TABLE>
(a) Excludes certain income and expense items which are not directly related to
individual property operating results such as interest income and general
and administrative expenses.
(b) Property was sold on August 1, 1997. For additional information see Note 4
of Notes to Financial Statements.
Unless otherwise disclosed, discussions of fluctuations between 1997 and 1996
refer to both the quarters and nine months ended September 30, 1997 and 1996.
Net income for the Partnership increased by $6,362,500 and $6,643,000 for the
quarter and nine months ended September 30, 1997 when compared to the quarter
and nine months ended September 30, 1996, respectively. The increases were
primarily due to the gain recorded on the sale of Citrus Center. Net income
exclusive of Citrus Center increased by $343,700 and $499,600 for the periods
under comparison. The increases were primarily due to improved operating
results at Shoppes of West Melbourne ("Shoppes") along with an increase in
interest earned on the Partnership's short-term investments which was the
result of the investment of Sale Proceeds until their distribution on November
30, 1997. Partially offsetting the increases were diminished operating results
at Richmond Plaza Shopping Center ("Richmond").
The following comparative discussion excludes the results of Citrus Center.
Rental revenues increased by $26,300 or 1.7% and $25,400 or 0.5% for the
quarter and nine months ended September 30, 1997 when compared to the quarter
and nine months ended September 30, 1996, respectively. The increases were
primarily the result of consideration received for the early termination of
tenants' leases at Glendale being greater in 1997 than in 1996. In addition,
the 1997 reconciliation of 1996 expenses resulted in tenant expense
reimbursements being greater than previously estimated. Partially offsetting
the increases was an absence in 1997 of consideration received for the early
termination of a tenants' lease at Richmond.
Real estate tax expense decreased by $59,600 for the nine months ended
September 30, 1997 when compared to the nine months ended September 30, 1996.
The decreases were primarily due to a successful appeal of the assessed value
of Glendale which reduced the estimated taxes for 1997 and resulted in refunds
being received in 1997 for the years which were under appeal. Real estate tax
expense remained relatively unchanged for the quarterly periods under
comparison.
Property operating expenses decreased by $42,500 and $57,200 for the quarterly
and nine-month comparable periods, respectively. The decreases were primarily
the result of a reduction in personnel, professional, security and utility
costs at Glendale. Partially offsetting the decreases were increases in
advertising and promotional costs at Glendale.
Interest expense decreased by $13,400 and $45,300 for the periods under
comparison. The decreases were primarily due to the effects of principal
payments made during the last 21 months on the mortgage loan collateralized by
Glendale.
To increase and/or maintain occupancy levels at the Partnership's properties,
the Managing General Partner, through its Affiliated and unaffiliated 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' leases 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 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 net income or cash flows as determined 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 in the Partnership Agreement)
should be examined in conjunction with an analysis of net income or cash flows
as determined by GAAP. The following table includes a reconciliation of Cash
Flow (as defined in the Partnership Agreement) to cash flow provided by
operating activities as determined by GAAP and are not indicative of actual
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
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 Flow.
<TABLE>
<CAPTION>
Comparative
Cash Flow Results
For the Nine
Months Ended
9/30/97 9/30/96
- -------------------------------------------------------------------------------
<S> <C> <C>
Cash Flow (as defined in the Partnership Agreement) $ 4,129,100 $ 4,017,000
Items of reconciliation:
Principal payments on mortgage loan 634,700 525,800
Decrease in current assets 117,700 56,000
Increase in current liabilities 202,600 311,200
- -------------------------------------------------------------------------------
Net cash provided by operating activities $ 5,084,100 $ 4,910,000
- -------------------------------------------------------------------------------
Net cash provided by (used for) investing activities $11,670,000 $(7,363,400)
- -------------------------------------------------------------------------------
Net cash (used for) financing activities $(4,237,800) $(3,863,600)
- -------------------------------------------------------------------------------
</TABLE>
The increase in Cash Flow (as defined in the Partnership Agreement) of $112,100
for the nine months ended September 30, 1997 when compared to nine months ended
September 30, 1996 was primarily due to the increase in net income, exclusive
of the gain on sale and depreciation and amortization, as previously discussed.
The increase of $12,516,300 in the Partnership's cash position for the nine
months ended September 30, 1997 was primarily the result of Citrus Center Sale
Proceeds and net cash provided by operating activities exceeding additional
investments in debt securities, principal payments on mortgage loan payable and
distributions paid to Partners. Liquid assets (including cash, cash equivalents
and investments in debt securities) as of September 30, 1997 were comprised of
amounts held for working capital purposes and undistributed Sales Proceeds from
the sale Citrus Center.
The increase in net cash provided by operating activities of $174,100 for the
nine months ended September 30, 1997 when compared to the nine months ended
September 30, 1996 was primarily due to the increase in net income, exclusive
of the gain on sale and depreciation and amortization, as previously discussed
and the timing of the payment of certain expenses at Shoppes and Glendale.
Net cash (used for) provided by investing activities changed from $(7,363,400)
for the nine months ended September 30, 1996 to $11,670,000 for the nine months
ended September 30, 1997. This change was primarily due to the receipt of Sale
Proceeds and a reduction in payments for capital and tenant improvements,
partially offset by an increase in investments in debt securities. The increase
in investment securities is a result of the continued extension of the
maturities of certain of the Partnership's short-term investments in an effort
to maximize the return on these amounts as they are held for working capital
purposes or for distributions of Partners. These investments are of investment-
grade and generally mature less than one year from their date of purchase.
The Partnership maintains working capital reserves to pay for capital
expenditures. During the nine months ended September 30, 1997, the Partnership
spent $198,900 for capital and tenant improvement and leasing costs and has
projected to spend an additional $75,000 during the remainder of 1997. Of the
projected, approximately $50,000 and $25,000 relates to anticipated capital,
tenant improvement and leasing costs expected to be incurred at Richmond, and
Shoppes, respectively. Actual amounts expended in 1997 may vary depending on a
number of factors including actual leasing activity and other market conditions
throughout the year. 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.
As more fully discussed in the Partnership's Annual Report for the year ended
December 31, 1996, there are issues related to the future tenancy level at
Glendale. It is currently uncertain whether one or both of its anchor tenants
will vacate at their lease termination dates (January 2001). The loss of either
or both tenants would have a dramatic negative impact on the operations of the
property. The Managing General Partner is continuing to explore alternatives
for Glendale, which include, but are not limited to, pursuing other tenants and
the sale of the property.
On August 1, 1997, the Partnership completed the sale of Citrus Center. Net
proceeds from the transaction were $27,760,400. The Partnership will distribute
$27,500,000 or $275.00 per Unit from this sale on November 30, 1997 to Limited
Partners of record as of August 1, 1997.
The Partnership is currently negotiating to sell Richmond and Shoppes to
unrelated parties. There can be no assurance as to the successful completion or
timing of these transactions. The sale of these assets by the Partnership would
result in reduced distributions to Partners and Glendale being the
Partnership's sole remaining investment. Due to the uncertainty surrounding
Glendale it is necessary for the Partnership to retain sufficient cash to
protect its interest in the property. It may also be necessary to further
reduce or possibly suspend distributions to Partners due to certain provisions
contained in the mortgage note securing Glendale.
The increase in net cash used for financing activities of $374,200 for the nine
months ended September 30, 1997 when compared to the nine months ended
September 30, 1996 was primarily due to increased distributions paid to
Partners in 1997 together with an increase in principal payments on the
mortgage loan collateralized by Glendale.
The Managing General Partner continues to take a conservative approach to
projections of future rental income in its determination of adequate levels of
cash reserves due to the uncertainty surrounding Glendale. The Managing General
Partner believes that Cash Flow (as defined in the Partnership Agreement) is
one of the best and least expensive sources of cash. As a result, cash
continues to be retained to supplement working capital reserves. For the nine
months ended September 30, 1997, Cash Flow (as defined in the Partnership
Agreement) retained to supplement working capital reserves was $1,345,800.
Distributions to Limited Partners for the quarter ended September 30, 1997 were
declared in the amount of $500,000, or $5.00 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.
7
<PAGE>
<TABLE>
<CAPTION>
PART II. OTHER INFORMATION
<S> <C>
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits: None
(b) Reports on Form 8-K:
A report filed on August 18, 1997 reporting the sale of Citrus
Center.
</TABLE>
<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, 1997 By: /s/ DOUGLAS CROCKER II
----------------- ------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: November 14, 1997 By: /s/ NORMAN M. FIELD
----------------- ------------------------------------
NORMAN M. FIELD
Vice President - Finance and Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,209,800
<SECURITIES> 15,832,000
<RECEIVABLES> 569,100
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 44,690,000
<PP&E> 39,349,300
<DEPRECIATION> 12,468,000
<TOTAL-ASSETS> 71,749,100
<CURRENT-LIABILITIES> 29,080,600
<BONDS> 6,704,800
0
0
<COMMON> 0
<OTHER-SE> 35,684,800
<TOTAL-LIABILITY-AND-EQUITY> 71,749,100
<SALES> 0
<TOTAL-REVENUES> 14,941,700
<CGS> 0
<TOTAL-COSTS> 3,205,900
<OTHER-EXPENSES> 211,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 542,700
<INCOME-PRETAX> 9,394,900
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,394,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,394,900
<EPS-PRIMARY> 89.32
<EPS-DILUTED> 89.32
</TABLE>
