FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT of 1934
For the transition period.........to.........
Commission file number 0-13530
DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.
(Exact name of small business issuer as specified in its charter)
Delaware 62-1181565
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1995
<S> <C> <C>
Assets
Cash:
Unrestricted $ 781,237
Restricted-tenant security deposits 92,152
Accounts receivable 9,788
Escrows for taxes and insurance 123,200
Restricted escrows 284,470
Other assets 271,565
Investment properties:
Land $ 1,071,881
Buildings and related personal property 11,246,788
12,318,669
Less accumulated depreciation (5,453,112) 6,865,557
$8,427,969
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 11,799
Tenant security deposits 92,489
Accrued taxes 227,051
Other liabilities 122,744
Due to affiliates 320,830
Mortgage notes payable 8,642,791
Partners' Deficit
General partners $ (71,205)
Limited partners (751.84 units
issued and outstanding) (918,530) (989,735)
$8,427,969
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
b) DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income $695,996 $666,049 $2,057,703 $1,907,484
Other income 57,382 52,174 173,301 123,642
Total revenues 753,378 718,223 2,231,004 2,031,126
Expenses:
Operating 169,234 172,361 496,863 502,307
General and administrative 23,962 20,395 85,950 77,847
Property management fees 37,236 34,390 110,384 98,413
Maintenance 108,524 155,845 279,015 290,452
Depreciation 123,106 127,270 360,755 333,824
Interest 219,284 221,025 659,169 664,297
Property taxes 62,470 52,930 176,590 174,718
Total expenses 743,816 784,216 2,168,726 2,141,858
Loss on disposal of property -- -- -- (1,799)
Net income (loss) $ 9,562 $(65,993) $ 62,278 $ (112,531)
Net income (loss) allocated
to general partners (5%) $ 478 $ (3,300) $ 3,114 $ (5,627)
Net income (loss) allocated
to limited partners (95%) 9,084 (62,693) 59,164 (106,904)
$ 9,562 $(65,993) $ 62,278 $ (112,531)
Net income (loss) per limited
partnership unit $ 12.08 $ (83.39) $ 78.69 $ (142.19)
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
c) DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 751.84 $ 1,000 $15,008,000 $15,009,000
Partners' deficit at
December 31, 1994 751.84 $(66,620) $ (831,418) $ (898,038)
Distributions to partners for
the nine months ended
September 30, 1995 -- (7,699) (146,276) (153,975)
Net income for the nine months
ended September 30, 1995 -- 3,114 59,164 62,278
Partners' deficit at
September 30, 1995 751.84 $(71,205) $ (918,530) $ (989,735)
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
d) DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 62,278 $(112,531)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 360,755 333,824
Amortization of discounts and loan fees 46,765 46,158
Loss on disposal of property -- 1,799
Change in accounts:
Restricted cash (5,683) (12,065)
Accounts receivable 5,486 (8,034)
Escrows for taxes and insurance 18,472 24,334
Other assets (13,569) (20,201)
Accounts payable (50,288) 39,191
Tenant security deposit liabilities 5,403 14,364
Accrued taxes (14,608) (12,935)
Other liabilities 8,016 784
Net cash provided by operating
activities 423,027 294,688
Cash flows from investing activities:
Property improvements and replacements (172,238) (512,960)
Deposits to restricted escrows (56,811) (57,187)
Receipts from restricted escrows 3,119 231,260
Net cash used in investing activities (225,930) (338,887)
Cash flows from financing activities:
Payments on mortgage notes payable (71,604) (65,869)
Distributions to partners (153,975) --
Net cash used in financing activities (225,579) (65,869)
Net decrease in cash (28,482) (110,068)
Cash at beginning of period 809,719 995,230
Cash at end of period $ 781,237 $ 885,162
Supplemental disclosure of cash flow information:
Cash paid for interest $ 612,404 $ 618,139
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Supplemental Disclosure of Non-cash Activity
Property improvements and replacements
Accounts payable included $73,137 at September 30, 1994, for non-cash amounts in
connection with property improvements and replacements.
See Accompanying Notes to Consolidated Financial Statements
e) DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the Managing General Partner, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the nine month
period ended September 30, 1995, are not necessarily indicative of the results
that may be expected for the year ending December 31, 1995. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Partnership's annual report on Form 10-KSB for the year
ended December 31, 1994.
Certain reclassifications have been made to the 1994 information to conform
to the 1995 presentation.
Note B - Transactions with Affiliated Parties
Affiliates of Insignia Financial Group, Inc. ("Insignia") own the controlling
ownership interest in the Partnership s Managing General Partner. As a result,
affiliates of Insignia provide property management and asset management services
to the Partnership.
The following payments were made to Insignia and its affiliates for the nine
months ended September 30, 1995, and September 30, 1994:
1995 1994
Property management fees $110,384 $98,413
Data processing services 1,550 1,800
Marketing services 1,305 3,197
Reimbursement for services of affiliates 57,851 48,915
The Partnership insures its properties under a master policy through an agency
and insurer unaffiliated with the Managing General Partner. An affiliate of the
Managing General Partner acquired, in the acquisition of a business, certain
financial obligations from an insurance agency which was later acquired by the
agent who placed the current year's master policy. The current agent assumed
the financial obligations to the affiliate of the Managing General Partner who
receives payments on these obligations from the agent. The amount of the
partnership's insurance premiums accruing to the benefit of the affiliate of the
Managing General Partner by virtue of the agent's obligations is not
significant.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of two apartment complexes.
The following table sets forth the average occupancy by property for the nine
months ended September 30, 1995 and 1994:
Average
Occupancy
1995 1994
Ashley Woods Apartments
Cincinnati, Ohio 95% 86%
Versailles on the Lake Apartments
Fort Wayne, Indiana 95% 94%
The Managing General Partner attributes the increase in occupancy at Ashley
Woods to increased levels of concessions and other leasing incentives and the
rehabilitation of the property's exterior has enhanced its ability to compete in
the Cincinnati market.
The Partnership realized net income of $62,278 for the nine months ended
September 30, 1995, compared to a net loss of $112,531 for the corresponding
period of 1994. The Partnership realized net income of $9,562 for the three
months ended September 30, 1995, compared to a net loss of $65,993 for the
corresponding period of 1994. Total revenues increased primarily due to
increases in other income in combination with 9% rent increases at Versailles on
the Lake in February 1995 and increased occupancy at Ashley Woods. Other income
increased due to increases in lease cancellation fees totalling approximately
$16,500 and cleaning & damages fees totalling approximately $18,500 at Ashley
Woods along with increases in laundry income and legal fees at both properties.
Total expenses were comparable for the three and nine months ended September 30,
1995. Maintenance expenses decreased for the three months ended September 30,
1995, due to decreases in contract cleaning, snow removal, and other decorating
contracts at Ashley Woods. The loss on disposal of property related to roof
replacements at Versailles on the Lake during the second quarter of 1994.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expenses. As part of this plan, the Managing General Partner attempts to
protect the Partnership from the burden of inflation-related increases in
expenses by increasing rents and maintaining a high overall occupancy level.
However, due to changing market conditions, which can result in the use of
rental concessions and rental reductions to offset softening market conditions,
there is no guarantee that the Managing General Partner will be able to sustain
such a plan.
The Partnership held unrestricted cash of $781,237 at September 30, 1995,
compared to unrestricted cash of $885,162 at September 30, 1994. Net cash
provided by operating activities increased for the nine months ended September
30, 1995, due to increased rental revenues and other income as noted above.
Net cash used in investing activities decreased for the nine months ended
September 30, 1995, due to reduced levels of property improvements and
replacements. Net cash used in financing activities increased for the nine
months ended September 30, 1995, due to the distributions paid to partners.
The sufficiency of existing liquid assets to meet future liquidity and
capital expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and meet other operating needs of the Partnership. Such assets are currently
thought to be sufficient for any near-term needs of the partnership. The
mortgage indebtedness of $8,642,791, net of discount, is amortized over varying
periods. Of this amount, $6,019,212, maturing in 2000, relates to Ashley Woods
and $2,623,579, maturing in 2002, relates to Versailles on the Lake. Prior to
or at maturity, the properties will either be sold or the debt refinanced. No
cash distributions were made in 1994. Cash distributions of $153,975 were made
during the nine months ended September 30, 1995. Future cash distributions will
depend on the levels of net cash generated from operations, property sales and
the availability of cash reserves.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereuonto
duly authorized.
DAVIDSON DIVERSIFIED REAL ESTATE I
By: Davidson Diversified Properties, Inc.
Managing General Partner
By: /s/ Carroll D. Vinson
Carroll D. Vinson
President
By: /s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: November 14, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Davidson
Diversified Real Estate I LP 1995 Third Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB.
</LEGEND>
<CIK> 0000721673
<NAME> DAVIDSON DIVERSIFIED REAL ESTATE I LP
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 781,237
<SECURITIES> 0
<RECEIVABLES> 9,788
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,562,412
<PP&E> 12,318,669
<DEPRECIATION> 5,453,112
<TOTAL-ASSETS> 8,427,969
<CURRENT-LIABILITIES> 454,083
<BONDS> 8,642,791
<COMMON> 0
0
0
<OTHER-SE> (989,735)
<TOTAL-LIABILITY-AND-EQUITY> 8,427,969
<SALES> 0
<TOTAL-REVENUES> 2,231,004
<CGS> 0
<TOTAL-COSTS> 2,168,726
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 659,169
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 62,278
<EPS-PRIMARY> 78.69
<EPS-DILUTED> 0
</TABLE>
