<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 June 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 ______________________
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 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 Certificate and 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>
June 30,
1997 December 31,
(Unaudited) 1996
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<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 12,472,900 $ 12,472,900
Buildings and improvements 56,849,400 56,754,100
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69,322,300 69,227,000
Accumulated depreciation and amortization (20,634,100) (19,444,900)
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Total investment properties, net of accumulated
depreciation and amortization 48,688,200 49,782,100
Cash and cash equivalents 7,826,900 15,693,500
Investments in debt securities 8,841,800
Rents receivable 548,700 606,800
Escrow deposits 53,600 19,600
Other assets (including loan acquisition costs,
net of accumulated amortization of $95,700 and
$76,000, respectively) 287,700 287,400
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$ 66,246,900 $ 66,389,400
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loan payable $ 6,988,500 $ 7,339,500
Accounts payable and accrued expenses 1,172,000 883,100
Due to Affiliates 84,200 123,800
Distributions payable 1,166,700 1,166,700
Security deposits 134,100 144,600
Other liabilities 224,400 58,500
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9,769,900 9,716,200
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Partners' capital:
General Partners (deficit) (117,000) (117,000)
Limited Partners (100,000 units issued and
outstanding) 56,594,000 56,790,200
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56,477,000 56,673,200
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$ 66,246,900 $ 66,389,400
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</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the six months ended June 30, 1997 (Unaudited)
and the year ended December 31, 1996
(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, 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 six months ended
June 30, 1997 233,300 1,903,800 2,137,100
Distributions for the six months ended
June 30, 1997 (233,300) (2,100,000) (2,333,300)
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Partners' (deficit) capital,
June 30, 1997 $(117,000) $56,594,000 $56,477,000
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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 June 30, 1997 and 1996
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
Income:
Rental $ 2,981,700 $2,896,300
Interest 227,400 208,300
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3,209,100 3,104,600
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Expenses:
Interest 181,300 193,100
Depreciation and amortization 600,800 597,100
Property operating:
Affiliates 100,800 189,300
Nonaffiliates 485,300 453,700
Real estate taxes 200,200 268,300
Insurance--Affiliate 25,000 30,700
Repairs and maintenance 287,600 288,000
General and administrative:
Affiliates 5,700 11,200
Nonaffiliates 64,200 109,300
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1,950,900 2,140,700
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Net income $ 1,258,200 $ 963,900
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Net income allocated to General Partners $ 116,600 $ 116,700
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Net income allocated to Limited Partners $ 1,141,600 $ 847,200
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Net income allocated to Limited Partners per Unit
(100,000 Units outstanding) $ 11.42 $ 8.47
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</TABLE>
STATEMENTS OF INCOME AND EXPENSES
For the six months ended June 30, 1997 and 1996
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1997 996
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<S> <C> <C>
Income:
Rental $5,774,700 $5,732,200
Interest 431,400 412,200
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6,206,100 6,144,400
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Expenses:
Interest 363,400 395,300
Depreciation and amortization 1,208,900 1,189,300
Property operating:
Affiliates 213,500 402,200
Nonaffiliates 1,037,300 905,500
Real estate taxes 461,200 515,600
Insurance--Affiliate 56,700 61,500
Repairs and maintenance 584,000 597,400
General and administrative:
Affiliates 16,000 34,100
Nonaffiliates 128,000 186,900
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4,069,000 4,287,800
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Net income $2,137,100 $1,856,600
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Net income allocated to General Partners $ 233,300 $ 227,800
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Net income allocated to Limited Partners $1,903,800 $1,628,800
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Net income allocated to Limited Partners per Unit
(100,000 Units outstanding) $ 19.04 $ 16.29
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</TABLE>
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1997 and 1996
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,137,100 $ 1,856,600
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,208,900 1,189,300
Changes in assets and liabilities:
Decrease in rents receivable 58,100 96,400
(Increase) decrease in other assets (20,000) 32,600
Increase in accounts payable and accrued expenses 288,900 106,600
(Derease) increase in due to Affiliates (39,600) 93,500
Increase (decrease) in other liabilities 165,900 (141,000)
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Net cash provided by operating activities 3,799,300 3,234,000
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Cash flows from investing activities:
Payments for capital and tenant improvements (95,300) (295,200)
(Increase) in investments in debt securities (8,841,800) (7,897,600)
(Increase) decrease in escrow deposits (34,000) 26,800
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Net cash (used for) investing activities (8,971,100) (8,166,000)
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Cash flows from financing activities:
Principal payments on mortgage loan payable (351,000) (398,800)
Distributions paid to Partners (2,333,300) (2,166,700)
(Decrease) in security deposits (10,500) (600)
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Net cash (used for) financing activities (2,694,800) (2,566,100)
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Net (decrease) in cash and cash equivalents (7,866,600) (7,498,100)
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 $ 7,826,900 $ 8,026,200
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Supplemental information:
Interest paid during the period $ 304,100 $ 332,000
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</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
June 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 six months ended June 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 June 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 General
Partners not less than 1% of Net Profits and Net
4
<PAGE>
Losses from the sale, disposition or provision for value impairment of a
Partnership property. For the quarter and six months ended June 30, 1997, the
General Partners were entitled to a Partnership Management Fee, and
accordingly, allocated Net Profits from operations, of $116,600 and $233,300,
respectively.
Fees and reimbursement paid and payable by the Partnership to Affiliates during
the quarter and six months ended June 30, 1997 were as follows:
<TABLE>
<CAPTION>
Paid
-------------------
Quarter Six Months Payable
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<S> <C> <C> <C>
Property management and leasing fees (a) $ 83,600 $252,100 $11,500
Reimbursement of property insurance premiums, at
cost 36,900 36,900 19,800
Real estate commission (b) None None 48,500
Reimbursement of expenses, at cost:
--Accounting 6,200 9,200 1,000
--Investor communications 3,200 4,200 500
--Legal 7,400 23,400 2,900
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$137,300 $325,800 $84,200
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</TABLE>
(a) Effective on December 31, 1996, the Affiliate providing property management
and certain leasing services to the Partnership's shopping centers, sold
its interest in the property management agreements to an unrelated party.
(b) As of June 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 of 1997. Firstate's rent, which is comparable to that
paid by other tenants at Citrus Center, was unaffected by the sale. Citrus
Center was sold on August 1, 1997, see Note 4 for further information.
3. MORTGAGE LOAN PAYABLE:
Mortgage loan payable at June 30, 1997 and December 31, 1996 consisted of the
following non-recourse loan:
<TABLE>
<CAPTION>
Principal Balance at
Interest Maturity
Property Pledged as Collateral 6/30/97 12/31/96 Rate (a) Date
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<S> <C> <C> <C> <C>
Glendale Center Shopping Mall (50%) $6,988,500 $7,339,500 10.09% 1/1/1999
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</TABLE>
(a) This interest rate represents the weighted average for the six months ended
June 30, 1997. This interest rate is subject to change on a monthly basis
in accordance with the provisions of the loan agreement. As of June 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. SUBSEQUENT EVENT:
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 approximated $27,750,000. The
Partnership will report a gain of approximately $6,225,000 for the nine months
ended September 30, 1997 in connection with this sale and intends to distribute
substantially all of the Sales Proceeds 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 table below is a recap of certain operating results of each of the
Partnership's properties for the quarters and six months ended June 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 Ended For the Six Months Ended
6/30/97 6/30/96 6/30/97 6/30/96
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<S> <C> <C> <C> <C>
CITRUS CENTER
Rental Revenues $1,283,600 $1,219,300 $ 2,525,800 $ 2,482,500
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Property net income $ 334,200 $ 261,300 $ 681,100 $ 557,500
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Average Occupancy 97% 98% 97% 98%
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GLENDALE CENTER SHOPPING MALL (50%)
Rental Revenues $1,030,900 $ 947,600 $ 1,899,900 $ 1,843,000
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Property net income $ 375,100 $ 170,300 $ 397,200 $ 279,800
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Average Occupancy 91% 91% 91% 91%
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SHOPPES OF WEST MELBOURNE
Rental Revenues $ 337,600 $ 328,300 $ 694,800 $ 678,900
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Property net income $ 216,700 $ 199,100 $ 442,300 $ 429,300
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Average Occupancy 96% 94% 96% 95%
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RICHMOND PLAZA SHOPPING CENTER
Rental Revenues $ 329,600 $ 401,100 $ 645,200 $ 727,900
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Property net income $ 171,800 $ 228,300 $ 326,700 $ 390,100
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Average Occupancy 91% 93% 91% 93%
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</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.
Unless otherwise disclosed, discussions of fluctuations between 1997 and 1996
refer to both the quarters and six months ended June 30, 1997 and 1996.
Net income for the Partnership increased by $294,300 and $280,500 for the
quarter and six months ended June 30, 1997 when compared to the quarter and six
months ended June 30, 1996, respectively. The increases were primarily due
improved operating results at Citrus Center and Glendale Center Shopping Mall
("Glendale"). Also contributing to the increases were decreases in general and
administrative expenses, which resulted from the 1996 settlement of a Florida
intangibles tax audit, and reduced personnel costs. Partially offsetting the
increases were diminished operating results at Richmond Plaza Shopping Center
("Richmond").
Rental revenues increased by $85,400 or 2.9% and $42,500 or 0.7% for the
quarter and six months ended June 30, 1997 when compared to the quarter and six
months ended June 30, 1996, respectively. The increases were primarily the
result of consideration received for the early termination of tenant's leases
at Glendale being greater in 1997 than in 1996. Also contributing to the
increases was higher base rental income at Citrus Center resulting from an
increase in the average base rental rate charged to new and renewing tenants.
Partially offsetting the increases was an absence in 1997 of consideration
received for the early termination of tenant's leases at Richmond.
Real estate tax expense decreased by $68,100 and $54,400 for the quarter and
six months ended June 30, 1997 when compared to the quarter and six months
ended June 30, 1996, respectively. The decrease was primarily due to a
successful appeal of the assessed value of Glendale which reduced the estimated
taxes for 1997 along with the refund received for the years under appeal.
Property operating expenses decreased by $56,900 for the both the quarterly and
six-month comparable periods. The decrease was primarily the result of a
decrease in management fees at Shoppes of West Melbourne ("Shoppes") which was
due to an increase in lease commission fees paid to outside brokers. Also
contributing to the decreases were reduced personnel costs at Glendale and
utility expenses at Citrus Center. Partially offsetting the decreases were
increases in advertising and promotional costs at Glendale.
Interest expense decreased by $11,800 and $31,900 for the periods under
comparison, respectively. The decreases were primarily due to the effects of
principal payments made during the last 18 months on the mortgage loan
collateralized by Glendale.
Repair and maintenance expense decreased by $13,400 for the six months ended
June 30, 1997 when compared to the six months ended June 30, 1996. The decrease
was primarily due to a decrease in repairs to the elevators at Citrus Center
and the roof at Richmond. Partially offsetting the decrease was an increase in
janitorial services at Glendale. Repair and maintenance expenses remained
relatively unchanged for the quarterly periods under comparison.
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 four
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
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
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 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 Six
Months Ended
6/30/97 6/30/96
- ------------------------------------------------------------------------------
<S> <C> <C>
Cash Flow (as defined in the Partnership Agreement) $ 2,995,000 $ 2,647,100
Items of reconciliation:
Principal payments on mortgage loan 351,000 398,800
Decrease in current assets 38,100 129,000
Increase in current liabilities 415,200 59,100
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Net cash provided by operating activities $ 3,799,300 $ 3,234,000
- ------------------------------------------------------------------------------
Net cash (used for) investing activities $(8,971,100) $(8,166,000)
- ------------------------------------------------------------------------------
Net cash (used for) financing activities $(2,694,800) $(2,566,100)
- ------------------------------------------------------------------------------
</TABLE>
The increase in Cash Flow (as defined in the Partnership Agreement) of $347,900
for the six months ended June 30, 1997 when compared to six months ended June
30, 1996 was primarily due to improved operating results at all of the
Partnership properties, except Richmond, exclusive of depreciation and
amortization, as previously discussed.
The decrease of $7,866,600 in the Partnership's cash position for the six
months ended June 30, 1997 was primarily the result of investments in debt
securities, principal payments on mortgage loan payable and distributions paid
to Partners exceeding net cash provided by operating activities. Liquid assets
(including cash, cash equivalents and investments in debt securities) as of
June 30, 1997 were comprised of amounts held for working capital purposes.
The increase in net cash provided by operating activities of $565,300 for the
six months ended June 30, 1997 when compared to the six months ended June 30,
1996 was primarily due to the receipt of refunds for real estate taxes at
Glendale, the increase in net income, exclusive of depreciation and
amortization, as previously discussed and the timing of the payment of certain
expenses at Shoppes.
Net cash used for investing activities increased by $805,100 for the six months
ended June 30, 1997 when compared to the six months ended June 30, 1996. This
increase was primarily due to the increase in investments in debt securities,
partially offset by a decrease in capital and tenant improvements and leasing
costs. 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. 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 six months ended June 30, 1997, the Partnership spent
$95,300 for capital and tenant improvement and leasing costs and has projected
to spend an additional $225,000 during the remainder of 1997. Of the projected,
approximately $175,000 and $50,000 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, the future tenancy level at Glendale is uncertain. The
potential loss of one or both of its anchor tenants at their lease termination
dates (January 2001) 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 approximately $27,750,000. The Partnership
intends to distribute substantially all of these proceeds on November 30, 1997
to Limited Partners of record as of August 1, 1997.
The increase in net cash used for financing activities of $128,700 for the six
months ended June 30, 1997 when compared to the six months ended June 30, 1996
was primarily due to increased distributions paid to Partners in 1997,
partially offset by a decrease 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 and 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 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 six
months ended June 30, 1997, Cash Flow (as defined in the Partnership Agreement)
retained to supplement working capital reserves was $661,700.
Distributions to Limited Partners for the quarter ended June 30, 1997 were
declared in the amount of $1,050,000, or $10.50 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>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K:
- ------- ----------------------------------
(a) Exhibits: None
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the quarter ended June
30, 1997.
<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: August 14, 1997 By: /s/ DOUGLAS CROCKER II
--------------- --------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: August 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 7,826,900
<SECURITIES> 8,841,800
<RECEIVABLES> 548,700
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,271,000
<PP&E> 69,322,300
<DEPRECIATION> 20,634,100
<TOTAL-ASSETS> 66,246,900
<CURRENT-LIABILITIES> 2,508,500
<BONDS> 6,988,500
0
0
<COMMON> 0
<OTHER-SE> 56,477,000
<TOTAL-LIABILITY-AND-EQUITY> 66,246,900
<SALES> 0
<TOTAL-REVENUES> 6,206,100
<CGS> 0
<TOTAL-COSTS> 2,352,700
<OTHER-EXPENSES> 144,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 363,400
<INCOME-PRETAX> 2,137,100
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,137,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,137,100
<EPS-PRIMARY> 19.04
<EPS-DILUTED> 19.04
</TABLE>
