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 June 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
For the transition period.........to.........
Commission file number 0-13530
DAVIDSON DIVERSIFIED REAL ESTATE I LIMITED PARTNERSHIP
(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
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) DAVIDSON DIVERSIFIED REAL ESTATE I LIMITED PARTNERSHIP
BALANCE SHEET
(Unaudited)
June 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash:
Unrestricted $ 868,132
Restricted-tenant security deposits 92,110
Accounts receivable 7,158
Escrows for taxes and insurance 45,259
Restricted escrows 264,315
Other assets 297,537
Investment properties:
Land $ 1,071,881
Buildings and related personal
property 11,166,313
12,238,194
Less accumulated depreciation (5,330,006) 6,908,188
$8,482,699
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 59,524
Tenant security deposits 92,806
Accrued taxes 166,255
Other liabilities 180,030
Due to affiliates 320,830
Mortgage notes payable 8,662,551
Partners' Deficit
General partners $ (71,683)
Limited partners (751.84 units
issued and outstanding) (927,614) (999,297)
$8,482,699
</TABLE>
See Accompanying Notes to Financial Statements
1
<PAGE>
b) DAVIDSON DIVERSIFIED REAL ESTATE I LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income $688,775 $633,893 $1,361,707 $1,241,435
Other income 68,058 37,059 115,919 71,468
Total revenues 756,833 670,952 1,477,626 1,312,903
Expenses:
Operating 174,141 182,839 327,629 344,766
General and administrative 39,370 23,810 61,988 42,632
Property management fees 37,356 32,195 73,148 64,023
Maintenance 110,859 67,775 170,491 134,607
Depreciation 116,185 103,884 237,649 206,554
Interest 219,734 221,435 439,885 443,272
Property taxes 63,189 63,419 114,120 121,788
Total expenses 760,834 695,357 1,424,910 1,357,642
Loss on disposal of property -- -- -- (1,799)
Net income (loss) $ (4,001) $(24,405) $ 52,716 $ (46,538)
Net loss allocated to general
partners (5%) $ (200) $ (1,220) $ 2,636 $ (2,327)
Net loss allocated to limited
partners (95%) (3,801) (23,185) 50,080 (44,211)
$ (4,001) $(24,405) $ 52,716 $ (46,538)
Net income per limited
partnership unit $ (5.06) $ (30.84) $ 66.61 $ (58.80)
</TABLE>
See Accompanying Notes to Financial Statements
2
<PAGE>
c) DAVIDSON DIVERSIFIED REAL ESTATE I LIMITED PARTNERSHIP
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)
Cash distributions for the
six months ended June 30,
1995 -- (7,699) (146,276) (153,975)
Net income for the six months
ended June 30, 1995 -- 2,636 50,080 52,716
Partners' deficit at June 30,
1995 751.84 $(71,683) $ (927,614) $ (999,297)
</TABLE>
See Accompanying Notes to Financial Statements
3
<PAGE>
d) DAVIDSON DIVERSIFIED REAL ESTATE I LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 52,716 $ (46,538)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 237,649 206,554
Amortization of discounts, loan fees, and
leasing commissions 31,116 30,720
Loss on disposal of property -- 1,799
Change in accounts:
Restricted cash (5,641) (6,239)
Accounts receivable 8,116 (6,975)
Escrows for taxes and insurance 96,413 70,299
Other assets (28,500) (36,020)
Accounts payable (2,563) (16,786)
Tenant security deposit liabilities 5,720 6,239
Accrued taxes (75,404) (33,896)
Other liabilities 65,302 (6,883)
Net cash provided by
operating activities
384,924 162,274
Cash flows from investing activities:
Property improvements and replacements (91,763) (254,989)
Deposits to restricted escrows (36,656) (36,259)
Receipts from restricted escrows 3,119 19,302
Net cash used in
investing activities (125,300) (271,946)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
4
<PAGE>
DAVIDSON DIVERSIFIED REAL ESTATE I LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
<S> <C> <C>
Cash flows from financing activities:
Payments on mortgage notes payable $ (47,236) $ (43,454)
Cash distributions to partners (153,975) --
Net cash used in financing
activities (201,211) (43,454)
Net increase (decrease) in cash 58,413 (153,126)
Cash at beginning of period 809,719 995,230
Cash at end of period $ 868,132 $ 842,104
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 408,770 $ 412,553
</TABLE>
See Accompanying Notes to Financial Statements
5
<PAGE>
e) DAVIDSON DIVERSIFIED REAL ESTATE I LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited 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 six month period ended June
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 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 six months ended June 30, 1995, and June 30, 1994:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Property management fees - Insignia $73,148 $64,023
Data processing services 1,115 1,025
Marketing services 294 2,657
Reimbursement for services of
affiliates 44,229 32,610
</TABLE>
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.
6
<PAGE>
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 six months ended June 30, 1995 and 1994:
<TABLE>
<CAPTION>
Average
Occupancy
1995 1994
<S> <C> <C>
Ashley Woods Apartments
Cincinnati, Ohio 95% 83%
Versailles on the Lake Apartments
Fort Wayne, Indiana 93% 94%
</TABLE>
The Managing General Partner attributes the increase in occupancy at
Ashley Woods to increased concessions and other leasing incentives since
1994. In addition, the rehabilitation of the property's exterior has
enhanced its ability to compete in the Cincinnati market.
The Partnership's net income for the six months ended June 30, 1995,
was $52,716 compared to a net loss of $46,538 for the corresponding
period in 1994. The Partnership incurred a net loss of $4,001 for the
three months ended June 30, 1995, compared to a net loss of $24,405 for
the three months ended June 30, 1994. Rental income increased for the
three and six months ended June 30, 1995, primarily due to the 12%
increase in occupancy at Ashley Woods, in addition to rental rates
increasing at both properties. Other income also increased for the three
and six months ending June 30, 1995, due to increases at Ashley Woods in
cleaning and damage fees totalling approximately $14,000, lease
cancellation fees totalling approximately $9,000, and increased pet
fees and laundry income at both properties. Total expenses increased
for the three and six months ended June 30, 1995, due primarily to
increases in maintenance and depreciation expenses. The increase in
maintenance expense was due primarily to increases in interior building
repairs and parking lot paving and striping at Ashley Woods. The
increase in depreciation expense relates to major exterior
rehabilitation at Ashley Woods that was completed in June 1994 in
combination with other property improvements and replacements at both
properties. 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.
7
<PAGE>
The Partnership held unrestricted cash of $868,132 at June 30, 1995,
and unrestricted cash of $842,104 at June 30, 1994. Net cash provided
by operating activities increased due to increased revenues as noted
above in combination with increases in other liabilities. Net cash used
in investing activities decreased due to reduced levels of property
improvements and replacements partially offset by reduced receipts from
restricted escrows. Net cash used in financing activities increased due
to distributions paid to partners during the six months ended June 30,
1995.
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 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 $8,662,551, net of
discount, is amortized over varying periods. Of this amount, $6,027,207,
which matures in 2000, relates to Ashley Woods and $2,635,344, which
matures in 2002, relates to Versailles on the Lake. At the time of
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 first six months of 1995. Future cash distributions
will depend on the levels of net cash generated from operations,
property sales and the availability of cash reserves.
8
<PAGE>
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 June 30, 1995.
9
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned, thereunto 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:
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Davidson Diversified Properties Real Estate I's 1995 Second Quarter 10-
QSB and is qualified in its entirety by reference to such 10-QSB filing.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 868,132
<SECURITIES> 0
<RECEIVABLES> 7,158
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,574,511
<PP&E> 12,238,194
<DEPRECIATION> 5,330,006
<TOTAL-ASSETS> 8,482,699
<CURRENT-LIABILITIES> 498,615
<BONDS> 8,662,551
<COMMON> 0
0
0
<OTHER-SE> (999,297)
<TOTAL-LIABILITY-AND-EQUITY> 8,482,699
<SALES> 0
<TOTAL-REVENUES> 1,477,626
<CGS> 0
<TOTAL-COSTS> 1,424,910
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 439,885
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,716
<EPS-PRIMARY> 66.61
<EPS-DILUTED> 0
</TABLE>
