UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1996
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 0-13260
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3174553
(State of organization) (IRS Employer Identification No.)
2 World Trade Center, New York, NY 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212)
392-1054
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interests
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K's or any amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held
by nonaffiliates of the registrant. Not Applicable
DOCUMENTS INCORPORATED BY REFERENCE
None
Page 1 of 35<PAGE>
PART I.
ITEM 1. BUSINESS
The Registrant, Dean Witter Realty Income Partnership I, L.P. (the
"Partnership"), is a limited partnership formed in August 1983 under
the Uniform Limited Partnership Act of the State of Delaware for the
purpose of investing primarily in income-producing office,
industrial and retail properties.
The Managing General Partner of the Partnership is Dean Witter
Realty Income Properties I Inc. (the "Managing General Partner"), a
Delaware corporation which is wholly owned by Dean Witter Realty
Inc. ("Realty"). The Associate General Partner is Dean Witter
Realty Income Associates I, L.P. (the "Associate General Partner"),
a Delaware limited partnership, the general partner of which is Dean
Witter Realty Income Associates I Inc., a wholly-owned subsidiary of
the Managing General Partner. The Managing General Partner manages
and controls all aspects of the business of the Partnership. The
terms of transactions between the Partnership and its affiliates are
set forth below in footnote 8 to the Consolidated Financial
Statements in Item 8 and in Item 13 below.
The Partnership issued 92,780 units of limited partnership interest
(the "Units") with gross proceeds from the offering of $92,780,000.
The offering has been terminated and no additional Units will be
sold.
The proceeds from the offering were used to make equity investments
in four office properties (one of which was sold in fiscal 1996),
two office/research and development properties and one retail
property which were acquired without mortgage debt. The properties
are described in Item 2 below.
The Partnership considers its business to include one industry
segment, investment in real property. Financial information
regarding the Partnership is included in the Partnership's
Consolidated Financial Statements in Item 8 below.
The Partnership's real property investments are subject to
competition from similar types of properties in the vicinities in
which they are located. Further information regarding competition
and market conditions where the Partnership's properties are located
is set forth in Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
The Partnership has no employees.
All of the Partnership's business is conducted in the United States.
ITEM 2. PROPERTIES
The Partnership's principal offices are located at Two World Trade
Center, New York, New York 10048. The Partnership has no other
offices.
As of October 31, 1996, the Partnership owned directly or through a
partnership interest the following six property interests, none of
which is encumbered by mortgage debt. Generally, the leases
pertaining to the properties provide for pass-throughs to the
tenants of their pro-rata share of certain operating expenses. In
the opinion of the Managing General Partner, all of the properties
are adequately covered by insurance.
<TABLE>
<CAPTION>
Year(s) Acquisition Net Rentable Type of Ownership
Completed/ Cost Area of land and
Property, location and type Acquired ($000) (000 sq. ft.) Improvements
<S> <C> <C> <C> <C>
Westwood 10
Westwood, MA 1986/1984,86 $8,952 122 Fee ownership
Office/research and
development building
North Lake Plaza
Altamonte Springs, FL 1985/1984,86 $10,110 137 Fee ownership
Shopping center
Harborgate
Los Angeles, CA 1984/1984 $13,000 68 Fee ownership
Office Building
Arlington Business Center
Arlington Heights, IL 1984/1984 $9,721 98 Fee ownership
Three office/research and
development buildings
Carmel Park I and II
Charlotte, NC 1985/1985 $18,530 168 Fee ownership
Office buildings
Century Square
Pasadena, CA 1984/1985 $ 9,700 206 25% General Part-
Office building nership interest1
1. An affiliate of the Partnership, Dean Witter Realty Income Partnership
II, L.P., purchased the remaining 75% general partnership interest in the
partnership. The total cost of the property was $38.8 million.
</TABLE>
Each property was built with on-site parking facilities.
In fiscal 1996, the Partnership sold its 99.9% interest in 1718
Connecticut Avenue, an office building in Washington, D.C.
An affiliate of the Partnership is the property manager for Century
Square, North Lake Plaza, Westwood 10, Carmel Park and Harborgate.
Further information relating to the Partnership's properties is
included in Item 7 and footnotes 4 and 5 to the consolidated
financial statements in Item 8 below.
ITEM 3. LEGAL PROCEEDINGS
On December 27, 1995, a purported class action lawsuit (the "Grigsby
Action") naming various public real estate partnerships sponsored by
Realty (including the Partnership and its Managing General Partner
and Associate General Partner), Realty, Dean Witter Reynolds Inc.
("DWR") and others as defendants was filed in Superior Court in
California. The complaint alleged fraud, negligent
misrepresentation, intentional and negligent breach of fiduciary
duty, unjust enrichment and related claims and sought compensatory
and punitive damages in unspecified amounts and injunctive and other
equitable relief. The defendants removed the case to the United
States District Court for the Southern District of California.
Pursuant to an order of the U.S. District Court for the Southern
District of California entered May 24, 1996, the Grigsby Action was
transferred to the U.S. District Court for the Southern District of
New York.
On February 14, 1996, a purported class action lawsuit (the
"Schectman Action") naming various public real estate partnerships
sponsored by Realty (including the Partnership and its Managing
General Partner), Realty, Dean Witter, Discover & Co. ("DWD") and
DWR as defendants was filed in the Chancery Court of Delaware for
New Castle County (the "Delaware Chancery Court"). On February 23,
1996, a purported class action lawsuit (the "Dosky Action") naming
various public real estate partnerships sponsored by Realty
(including the Partnership and its Managing General Partner),
Realty, DWD, DWR and others as defendants was filed in the Delaware
Chancery Court. On February 29, 1996, a purported class action
lawsuit (the "Segal Action") naming various public real estate
partnerships sponsored by Realty (including the Partnership and its
Managing General Partner), Realty, DWR, DWD and others as defendants
was filed in the Delaware Chancery Court. On March 13, 1996, a
purported class action lawsuit (the "Young Action") naming the
partnership, other unidentified limited partnerships, DWD, DWR and
others as defendants was filed in the Circuit Court for Baltimore
City in Baltimore, Maryland. The defendants removed the Young
Action to the United States District Court for the District of
Maryland.
Thereafter, the Schectman Action, the Dosky Action and the Segal
Action were consolidated in a single action (the "Consolidated
Action") in the Delaware Chancery Court. The Young Action was
dismissed without prejudice. The plaintiffs in the Young Action and
the Grigsby Action joined the Consolidated Action. The Grigsby
Action remains stayed indefinitely subject to being reopened for
good cause.
On October 7, 1996, the plaintiffs in the Consolidated Action filed
a First Consolidated and Amended Class Action Complaint naming
various public real estate partnerships sponsored by Realty
(including the Partnership and its Managing General Partner),
Realty, DWD, DWR and others as defendants. This complaint alleges
breach of fiduciary duty and seeks an accounting of profits,
compensatory damages in an unspecified amount, possible liquidation
of the Partnership under a receiver's supervision and other
equitable relief. The defendants filed a motion to dismiss this
complaint on December 10, 1996.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the fiscal year
to a vote of Unit holders.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
STOCKHOLDER MATTERS
An established public trading market for the Units does not exist,
and it is not anticipated that such a market will develop in the
future. Accordingly, information as to the market value of a Unit
at any given date is not available. However, the Partnership does
allow its limited partners (the "Limited Partners") to transfer
their units if a suitable buyer can be located.
As of January 22, 1997 there were 14,245 holders of limited
partnership interests.
The Partnership is a limited partnership and, accordingly, does not
pay dividends. It does, however, make quarterly distributions of
cash to its partners. Pursuant to the partnership agreement,
distributable cash, as defined, is paid 90% to the Limited Partners
and 10% to the general partners (the "General Partners").
The Partnership paid quarterly cash distributions during the year
ended October 31, 1996 aggregating $42.28 per Unit (including $12.28
per Unit from proceeds from the sale of the 1718 Connecticut Avenue
property). The total distributions aggregated $4,232,069 with
$3,922,805 distributed to the Limited Partners and $309,264 to the
General Partners. The distribution of proceeds from the sale of the
1718 Connecticut Avenue property was paid 100% to the Limited
Partners. For the year ended October 31, 1995, the Partnership paid
quarterly cash distributions aggregating $18.75 per Unit. The total
distribution aggregated $1,932,915 with $1,739,625 distributed to
the Limited Partners and $193,290 to the General Partners.
On November 27, 1996, the Partnership paid a cash distribution of
$8.95 per Unit. The total distribution aggregated $922,646 with
$830,381 distributed to the Limited Partners and $92,265 to the
General Partners.
The Partnership anticipates making regular distributions to its
partners in the future.
Sale or financing proceeds will be distributed, to the extent
available, first, to each Limited Partner, until there has been a
return of the Limited Partner's capital contribution plus cumulative
distributions of distributable cash and sale or financing proceeds
in an amount sufficient to provide a 9% cumulative annual return on
the Limited Partner's adjusted capital contribution. Thereafter,
any remaining sale or financing proceeds will be distributed 85% to
the Limited Partners and 15% to the General Partners after the
Managing General Partner receives a brokerage fee, if earned, of up
to 3% of the selling price of any equity investment.
Taxable income generally will be allocated in the same proportions
as distributions of distributable cash or sale or financing proceeds
(except that the General Partners must be allocated at least 1% of
taxable income from sales or financings). In the event there is no
distributable cash or sale or financing proceeds, taxable income
will be allocated 90% to the Limited Partners and 10% to the General
Partners. Any tax loss will be allocated 90% to the Limited
Partners and 10% to the General Partners.
ITEM 6. SELECTED FINANCIAL DATA
The following sets forth a summary of the selected financial data
for the Partnership:
<PAGE>
<TABLE>
Dean Witter RealtY Income Partnership I, L.P.
For the years ended October 31, 1996, 1995, 1994, 1993 and 1992
<CAPTION>
19961 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Total revenues $ 8,493,737 $ 8,000,566 $ 7,900,587 $ 7,211,147 $ 6,980,117
Net (loss) income $ (5,607,581)2 $ 1,535,137 $(10,175,630)3 $ 191,052 $ 459,493
Net (loss) income per
Unit of
limited
partnership
interest $(53.66) $14.89 $(98.71) $ 1.85 $ 4.46
Cash distributions
paid per Unit
of limited
partnership
interest4 $42.285 $18.75 $15.00 $15.00 $15.00
Total assets at
October 31 $43,069,014 $58,295,735 $58,611.333 $73,292,198 $74,016,333
Loan payable to bank
due after one year
(See note 6 to the
financial statements) $ - $ - $ - $ 2,785,665 $ -
1. Revenues and net income include gain of $0.7 million on the sale of the
1718 Connecticut Avenue property. See Note 4 to the Financial Statements in
Item 8.
2. Includes an $8.5 million loss on impairment recorded for the Westwood 10,
1718 Connecticut Avenue, Northlake Plaza and Carmel Park properties. See Item
7 and Note 4 to the Financial Statements in Item 8.
3. Includes a $10.8 million loss on impairment recorded for the Arlington
Business Center and Harborgate properties. See Item 7 and Note 4 to the
Financial Statements in Item 8.
4. Distributions paid to limited partners include a return of capital per Unit
of limited partnership interest of $42.28, $3.86, $15.00, $13.15 and $10.54 for
the years ended October 31, 1996, 1995, 1994, 1993, and 1992, respectively,
calculated as the excess of cash distributed per Unit over accumulated earnings
per Unit not previously distributed.
5. Includes $12.28 per Unit distribution of proceeds from the sale of 1718
Connecticut Avenue.
The above financial data should be read in conjunction with the consolidated
financial statements and the related notes in Item 8.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership raised $92,780,000 in a public offering which was
terminated in 1984. The Partnership has no plans to raise
additional capital.
The Partnership purchased six properties (one of which was sold in
fiscal 1996) and has made one investment in a partnership on an
all-cash basis. The Partnership's acquisition program has been
completed. No additional investments are planned.
The sale of the 1718 Connecticut Avenue office building closed on
June 24, 1996. See Note 4 to the consolidated financial statements.
In 1996, the Partnership's cash flow from operations decreased when
compared to 1995 by approximately $275,000 as result of the sale of
the building.
In many regions of the country, continued restraint of new office
construction and steady leasing have reduced office supply in office
markets, and, in certain areas, rental rates are rising. Some
office markets are faring better than others. For example,
Charlotte, NC, the location of the Carmel Park property is
approximately 4% vacant. Office properties located in the West are
benefiting from expansion by the entertainment, high-technology and
telecommunications industries; however, the SouthBay area of Los
Angeles (the location of Harborgate) and Pasadena (the location of
Century Square) continue to be negatively impacted by corporate
mergers and consolidations. Office construction remains primarily
on a build-to-suit basis as current rental rates do not justify
speculative development. Vacancies at many office/research and
development properties are declining as communications, computers
and software companies demand additional space. In the Boston area,
the location of the Westwood 10 property, growth in the software,
health care and telecommunications industries is reducing vacancy
levels in this market. Also, the vacancy rate in Arlington Heights,
IL, the location of Arlington Business Center, has improved to 14%,
and the Partnership expects this vacancy to decline further in 1997.
In the retail sector, a changing tenant base caused by the
domination of certain power center tenants coupled with bankruptcies
and major restructuring of other tenants and reduced consumer
spending have resulted in higher vacancies and stagnant rents at
many retail properties.
The Partnership's liquidity depends on the cash flow from operations
of its properties and expenditures for building improvements and
tenant improvements and leasing commissions in connection with the
leasing of vacant space. During the year ended October 31, 1996,
all of the Partnership's properties and its joint venture interest
generated positive cash flow from operations, and it is anticipated
that they will continue to do so.
In addition, the Partnership's liquidity has been and will continue
to be affected by sales of the Partnership's properties; when
properties are sold, the Partnership's cash from operations
available for distribution decreases. As a result of the absence of
operating cash flow from the 1718 Connecticut Avenue property, the
Partnership decreased its quarterly cash distribution from $10.00
per Unit to $8.95 per Unit (a 4% rate on the gross offering proceeds
attributable to the Partnership's remaining investments), beginning
with the fourth quarter distribution paid November 27, 1996.
The Managing General Partner believes that, barring a change in
circumstances, it will market the Partnership's remaining properties
for sale in 1997. In the fourth quarter of 1996, the Managing
General Partner engaged real estate brokers to market Century Square
and Arlington Business Center. However, there can be no assurance
that all properties will be sold.
During the year ended October 31, 1996, the Partnership's cash flow
from operations, net proceeds from the sale of the office building
and distributions received from the joint venture exceeded
distributions to partners, repayment of the loan from affiliate and
contributions to the joint venture. The Partnership used the excess
cash inflows in 1996 to fund a portion of capital expenditures and
payment of deferred distributions to the General Partners; the
remainder of these cash outflows were funded from cash reserves.
During the year ended October 31, 1996, the Partnership incurred
approximately $465,000 of capital expenditures, primarily in
connection with the leasing of space at the Westwood 10
(approxmateily $264,000) and Harborgate (approximately $134,000)
office buildings. The Partnership also contributed approximately
$131,000 to the Century Square joint venture, primarily for its
share of building improvements.
As of October 31, 1996, the Partnership has commitments to fund
approximately $300,000 of capital expenditures, primarily relating
to the Harborgate building.
During 1997, the Partnership expects that its cash flow from
operations and distributions received from its joint ventures will
exceed distributions to its investors (other than distributions of
net proceeds from future property sales) and contributions to its
joint ventures; the Partnership expects to fund a portion of capital
expenditures and deferred distributions payable to the General
Partners from cash reserves.
Except as discussed above and in the consolidated financial
statements in Item 8 below, the Managing General Partner is not
aware of any trends or events, commitments or uncertainties that may
have a material impact on liquidity.
On November 27, 1996, the Partnership paid the fourth quarter cash
distribution of $8.95 per Unit. The total distribution aggregated
$922,646 with $830,381 distributed to the Limited Partners and
$92,265 distributed to the General Partners. The Partnership also
paid the remaining $1,233,837 of deferred distributions to the
General Partners.
Operations
Fluctuations in the Partnership's operating results for the year
ended October 31, 1996 compared to 1995 and for the year ended
October 31, 1995 compared to 1994 are primarily attributable to the
following:
No individual factor accounted for a significant change in rental
revenue, equity in earnings of joint venture, property operating
expenses and general and administrative expenses from 1995 to 1996
or 1994 to 1995.
The 1996 gain on the sale of the 1718 Connecticut property is
described in Note 4 to the consolidated financial statements.
Interest and other revenue decreased in 1996 compared to 1995 and
increased in 1995 compared to 1994 primarily due to tenant
reimbursements for certain expenses by tenants at Arlington Business
Center in 1995.
In 1996, depreciation and amortization decreased by approximately
$405,000 because the depreciable bases of the Westwood 10, Northlake
Plaza and Carmel Park properties were written down in the first
quarter of 1996. There are no other significant individual factors
which account for the remaining change in depreciation and
amortization in 1996 compared to 1995. The decreases in
depreciation and amortization for the year ended 1995 compared to
1994 are due to the lower depreciable basis of the Harborgate office
building and Arlington Business Center properties, as a result of
writedowns recorded in October 1994. See Note 4 to the consolidated
financial statements.
In 1996, interest expense decreased because the loan from affiliate
was repaid by the Partnership in June 1996. See Note 8 to the
consolidated financial statements. In 1995, interest expense
decreased because the loan payable to the bank was repaid by the
Partnership in September 1994. See Note 6 to the consolidated
financial statements.
In the first quarter of fiscal 1996, the Partnership recorded losses
on impairment of the Westwood 10, 1718 Connecticut, Northlake Plaza
and Carmel Park properties totalling $8,510,000. In fiscal 1994,
the Partnership recorded losses on impairment of the Harborgate and
Arlington Business Center properties totalling approximately
$10,800,000. See Note 4 to the consolidated financial statements.
A summary of the office, retail and research and development
building markets where the Partnership's properties are located and
the performance of each property is as follows:
In Pasadena, California, the location of the Century Square office
building, the overall office market vacancy rate was approximately
15% during 1996, and the Partnership does not expect the market to
improve in the near term. However, Century Square remained 100%
leased during the year. The property is currently occupied by three
tenants, and the leases of the property's largest tenant,
Countrywide Credit Industries Inc. (which occupies 84% of the
property's space), expire in 2010. There are no other tenants
occupying more than 10% of the property.
The office market in the SouthBay area of Los Angeles, California,
the location of Harborgate has not recovered from the severe
cutbacks by the defense industries in this area. In addition, the
depressed conditions in the nearby downtown Los Angeles office
market continue to negatively impact the SouthBay market. The
vacancy rate (including sublet space) in this market is currently
26% (a 3% improvement from the end of 1995). There is a limited
number of tenants seeking to lease space in this market. During
1996, average occupancy at the property was approximately 88%, and
at October 31, 1996, occupancy at the property was approximately 91%
compared to 84% at the prior year-end. The property is leased to 12
tenants. U.S. Sprint, which occupies approximately 52% of the
property's space, exercised a termination option on approximately
33% of the property's space effective December 31, 1996. The lease
on U.S. Sprint's remaining space expires in 2000; however, it may
terminate its lease on this space earlier. There are no other
tenants occupying more than 10% of the property.
Arlington Business Center, a research and development building, is
located in Arlington Heights, Illinois. The vacancy in this market
has decreased from 17% in 1995 to 14% in 1996. This decrease has
caused rental rates to increase in 1996. During 1996, average
occupancy at the property was approximately 99%. At October 31,
1996, occupancy at the property was 100% vs. 95% at the prior year-
end. The property is leased to 9 tenants. Tenants occupying more
than 10% of rentable space are CTC International, Inc. (26%), Racal
Data Communications (16%), Digital Equipment (16%), Pitney Bowes
(14%) and Electronic Prepress (11%). Leases at the property expire
as follows: 21% in 1997, 21% in 1999, 16% in 2000 and 42% in 2001.
Westwood 10, located in Westwood, Massachusetts, is experiencing
increasing demand from high tech and office tenants, which should
lead to a decline in the vacancy rate in this market. In 1996,
vacancy in this market decreased from 22% to 15%, and rental rates
are increasing. During 1996, average occupancy at the property was
91%; at October 31, 1996, occupancy at the property was 100% vs. 85%
at the prior year-end. The property is leased to 7 tenants.
Tenants occupying more than 10% of rentable space are Mitek Surgical
Products (30%), Executone Information Systems (18%), QCC Inc. (15%),
Mobile Media X-Ray (12%), and LIDS, L.P. (12%). Leases at the
property expire as follows: 30% in 1997, 12% in 2000, 33% in 2001
and 15% in 2003.
The vacancy rate in the Charlotte, North Carolina office market, in
which Carmel Park is located, decreased slightly in 1996, while
rental rates increased slightly and concessions decreased. There is
little new construction in this market. During 1996, average
occupancy at the property was 99%; at October 31, 1996, occupancy at
the property was 100% vs. 98% at the prior year-end. The property
is occupied by 18 tenants. The leases of CIGNA (for approximately
32% of the property's space) and Royal Indemnity (for approximately
41% of the space) expire in 1997 and 2000, respectively. There are
no other tenants occupying more than 10% of the property.
Altamonte Springs, Florida, the location of the North Lake Plaza
Shopping Center, is an improving retail market, and has a vacancy
rate of approximately 8%. During 1996, average occupancy at the
property was 85%, and at October 31, 1996, the occupancy was
approximately 80% compared to 91% at October 31, 1995. The property
is currently occupied by 8 tenants. Development of nearby office
projects and the scheduled expansion of North Lake Boulevard are
anticipated to increase traffic at the property. The leases for
Home Depot (for approximately 50% of the property's space) and
Marshalls Inc. (for approximately 21% of the space) expire in 1998
and 2002, respectively. In 1992, Home Depot sub-leased its space
to Burlington Coat Factory for the remainder of its lease term.
Home Depot will remain obligated to pay rent under the lease until
it expires. There are no other tenants occupying more than 10% of
the property.
Inflation
Inflation has been consistently low during the periods presented in
the financial statements and, as a result, has not had a significant
effect on the operations of the Partnership or its properties.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
INDEX
Page
(a) Financial statements
Independent Auditors' Report 14
Consolidated Balance Sheets at October 31, 1996 and 1995 15
Consolidated Statements of Operations for the years ended
October 31, 1996, 1995 and 1994 16
Consolidated Statements of Partners' Capital for the years
ended October 31, 1996, 1995 and 1994 17
Consolidated Statements of Cash Flows for the years ended
October 31, 1996, 1995 and 1994 18
Notes to Consolidated Financial Statements 19-26
(b) Financial statement schedule
Real Estate and Accumulated Depreciation III 33-34
All schedules other than those indicated above have been omitted because either
the required information is not applicable or the information is shown in the
consolidated financial statements or notes thereto.
<PAGE>
Independent Auditors' Report
To The Partners of
Dean Witter Realty Income Partnership I, L.P.:
We have audited the accompanying consolidated balance sheets of Dean
Witter Realty Income Partnership I, L.P. and consolidated partnerships
(the "Partnership") as of October 31, 1996 and 1995, and the related
consolidated statements of operations, partners' capital, and cash
flows for each of the three years in the period ended October 31, 1996.
Our audits also included the financial statement schedule listed in the
Index at Item 8. These financial statements and financial statement
schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on the financial statements and
the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Dean Witter Realty
Income Partnership I, L.P. and consolidated partnerships as of October
31, 1996 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended October 31, 1996
in conformity with generally accepted accounting principles. Also, in
our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set
forth therein.
/s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
New York, New York
January 24, 1997
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
CONSOLIDATED BALANCE SHEETS
October 31, 1996 and 1995
<CAPTION>
ASSETS
1996 1995
<S> <C> <C>
Cash and cash equivalents $ 2,954,592 $ 3,572,041
Real estate:
Land 10,367,200 12,230,400
Buildings and improvements 42,683,414 56,550,871
53,050,614 68,781,271
Accumulated depreciation 22,598,452 24,089,561
30,452,162 44,691,710
Investment in joint venture 8,423,845 8,626,606
Deferred leasing commissions, net 252,819 260,912
Other assets 985,596 1,144,466
$43,069,014 $ 58,295,735
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities $ 748,320 $ 808,003
Security deposits 149,389 210,413
Loan from affiliate - 4,032,527
Deferred distributions 1,233,837 2,467,674
2,131,546 7,518,617
Partners' capital (deficiency)
General partners (4,228,169) (3,289,800)
Limited partners ($1,000 per Unit,
92,780 Units issued) 45,165,637 54,066,918
Total partners' capital 40,937,468 50,777,118
$43,069,014 $ 58,295,735
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended October 31, 1996, 1995 and 1994
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Revenues:
Rental $ 7,013,164 $7,110,106 $ 7,141,940
Gain on sale of real estate 683,471 - -
Equity in earnings of joint
venture 589,362 474,263 586,104
Interest and other 207,740 416,197 172,543
8,493,737 8,000,566 7,900,587
Expenses:
Property operating 3,085,939 2,963,316 3,064,472
Depreciation 1,745,666 2,534,549 2,949,356
Amortization 138,008 219,225 292,590
Interest 218,159 342,221 490,260
General and administrative 403,546 406,118 442,475
Losses on impairment of real
estate 8,510,000 - 10,837,064
14,101,318 6,465,429 18,076,217
Net (loss) income $(5,607,581) $1,535,137 $(10,175,630)
Net (loss) income allocated to:
Limited partners $(4,978,476) $1,381,623 $ (9,158,067)
General partners (629,105) 153,514 (1,017,563)
$(5,607,581) $1,535,137 $(10,175,630)
Net (loss) income per Unit of
limited partnership interest $(53.66) $14.89 $(98.71)
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
For the years ended October 31, 1996, 1995 and 1994
<CAPTION>
Limited General
Partners Partners Total
<S> <C> <C> <C>
Partners' capital (deficiency)
at November 1, 1993 $64,974,687 $(2,077,828) $ 62,896,859
Net loss (9,158,067) (1,017,563) (10,175,630)
Distributions (1,391,700) (154,633) (1,546,333)
Partners' capital (deficiency)
at October 31, 1994 54,424,920 (3,250,024) 51,174,896
Net income 1,381,623 153,514 1,535,137
Distributions (1,739,625) (193,290) (1,932,915)
Partners' capital (deficiency)
at October 31, 1995 54,066,918 (3,289,800) 50,777,118
Net loss (4,978,476) (629,105) (5,607,581)
Distributions (3,922,805) (309,264) (4,232,069)
Partners' capital (deficiency)
at October 31, 1996 $45,165,637 $(4,228,169) $ 40,937,468
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended October 31, 1996, 1995 and 1994
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income $(5,607,581) $ 1,535,137 $(10,175,630)
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation 1,745,666 2,534,549 2,949,356
Amortization 138,008 219,225 292,590
Equity in earnings of joint venture (589,362) (474,263) (586,104)
Gain on sale of real estate (683,471) - -
Losses on impairment of real estate 8,510,000 - 10,837,064
(Increase) decrease to operating assets:
Deferred leasing commissions (129,915) (61,412) (204,225)
Other assets 19,568 (442,889) (64,652)
(Decrease) increase to operating liabilities:
Accounts payable and accrued liabilities (51,471) 16,107 (1,521)
Security deposits (19,544) 43,195 4,607
Net cash provided by operating activities 3,331,898 3,369,649 3,051,485
Cash flows from investing activities:
Proceeds from disposition of real estate 5,092,559 - -
Additions to real estate (335,596) (720,356) (692,220)
Distributions from joint venture 922,699 989,365 1,162,129
Investments in joint venture (130,576) (387,503) (11,557)
Net cash provided by (used in) investing
activities 5,549,086 (118,494) 458,352
Cash flows from financing activities:
Decrease in deferred distributions (1,233,837) - -
Decrease in loan from affiliates (4,032,527) (15,780) -
Cash distributions (4,232,069) (1,894,257) (1,391,700)
Repayment of loan payable to bank - - (3,116,621)
Decrease in restricted cash - - 250,000
Net cash used in financing activities (9,498,433) (1,910,037) (4,258,321)
(Decrease) increase in cash and cash equivalents (617,449) 1,341,118 (748,484)
Cash and cash equivalents at beginning of year 3,572,041 2,230,923 2,979,407
Cash and cash equivalents at end of year $ 2,954,592 $ 3,572,041 $ 2,230,923
Supplemental disclosure of cash flow information:
Cash paid for interest $ 218,159 $ 342,221 $ 490,260
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Notes to Consolidated Financial Statements
1. The Partnership
Dean Witter Realty Income Partnership I, L.P. (the "Partnership") is
a limited partnership organized under the laws of the State of
Delaware in 1983. The Partnership is managed by Dean Witter Realty
Income Properties I Inc. (the "Managing General Partner"). The
Partnership's fiscal year ends on October 31.
In 1984, the Partnership issued 92,780 units of limited partnership
interest (the "Units") for $92,780,000. No additional Units will be
sold. The proceeds of the offering were used to make equity
investments in income-producing office, industrial and retail
properties which were not encumbered by debt when acquired.
2. Summary of Significant Accounting Policies
The financial statements include the accounts of the Partnership and
1718 Connecticut, Ltd. on a consolidated basis. The Partnership's
25% interest in the Century Square property is accounted for on the
equity method.
The Partnership's records are maintained on the accrual basis of
accounting for financial reporting and tax purposes. The
preparation of financial statements in conformity with generally
accepted accounting principles 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.
Cash and cash equivalents consist of cash and highly liquid
investments with maturities, when purchased, of three months or
less.
The carrying value of real estate includes the purchase price paid
by the Partnership and acquisition fees and expenses. Costs of
improvements to the properties are capitalized, and repairs are
expensed. Depreciation is recorded on the straight-line method.
At least annually, and more often if circumstances dictate, the
Partnership evaluates the recoverability of the net carrying value
of its real estate and any related assets. As part of this
evaluation, the Partnership assesses, among other things, whether
there has been a significant decrease in the market value of any of
its properties. If events or circumstances indicate that the net
carrying value of a property may not be recoverable, the expected
future net cash flows from the property are estimated for a period
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Notes to Consolidated Financial Statements
of approximately five years (or a shorter period if the Partnership
expects that the property may be disposed of sooner), along with
estimated sales proceeds at the end of the period. If the total of
these future undiscounted cash flows were less than the carrying
amount of the property, the property would be written down to its
fair value as determined (in some cases with the assistance of
outside real estate consultants) based on discounted cash flows, and
a loss on impairment recognized by a charge to earnings. The
Partnership's accounting policy complies with Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of".
Because the determination of fair value is based upon projections of
future economic events such as property occupancy rates, rental
rates, operating cost inflation and market capitalization rates
which are inherently subjective, the amounts ultimately realized at
disposition may differ materially from the net carrying value as of
October 31, 1996. The cash flows used to evaluate the
recoverability of the properties and to determine fair value are
based on good faith estimates and assumptions developed by the
Managing General Partner. Unanticipated events and circumstances
may occur and some assumptions may not materialize; therefore actual
results may vary from the estimates and the variances may be
material. The Partnership may provide additional write-downs which
could be material in subsequent years if real estate markets or
local economic conditions change.
Deferred leasing commissions are amortized over the applicable lease
terms.
Rental income is accrued on a straight-line basis over the terms of
the leases. Accruals in excess of amounts payable by tenants
pursuant to their leases (resulting from rent concessions or rents
which periodically increase over the term of a lease) are recorded
as receivables and included in other assets.
Net income (loss) per Unit amounts are calculated by dividing net
income (loss) allocated to Limited Partners, in accordance with the
Partnership Agreement, by the weighted average number of Units
outstanding.
No provision for income taxes has been made in the financial
statements, since the liability for such taxes is that of the
partners rather than the Partnership.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Notes to Consolidated Financial Statements
For income tax purposes, Partnership results are reported for the
calendar year. The accounting policies used for tax reporting
purposes differ from those used for financial reporting as follows:
(a) depreciation is calculated using accelerated methods, (b) rental
income is recognized based on the payment terms in the applicable
leases, and (c) writedowns for impairment of real estate are not
deductible. In addition, offering costs are treated differently for
tax and financial reporting purposes. The tax basis of the
Partnership's assets and liabilities is approximately $10 million
higher than the amounts reported for financial statement purposes.
3. Partnership Agreement
The Partnership Agreement provides that distributable cash, as
defined, will be paid 90% to the Limited Partners and 10% to the
General Partners.
Sale or financing proceeds will be distributed, to the extent
available, first, to each Limited Partner, until there has been a
return of the Limited Partner's capital contribution, plus
cumulative distributions of distributable cash and sale or financing
proceeds, in an amount sufficient to provide a 9% cumulative annual
return on the Limited Partner's adjusted capital contribution.
Thereafter, any remaining sale or financing proceeds will be
distributed 85% to the Limited Partners and 15% to the General
Partners after the Managing General Partner receives a brokerage
fee, if earned, of up to 3% of the selling price of any equity
investment.
Taxable income generally will be allocated in the same proportions
as distributions of distributable cash or sale or financing proceeds
(except that the General Partners must be allocated at least 1% of
taxable income from sales or financings). In the event there is no
distributable cash or sale or financing proceeds, taxable income
will be allocated 90% to the Limited Partners and 10% to the General
Partners. Any tax loss will be allocated 90% to the Limited
Partners and 10% to the General Partners.
Distributions paid to limited partners include a return of capital
per Unit of limited partnership interest of $42.28, $3.86, and
$15.00, for the years ended October 31, 1996, 1995 and 1994,
respectively, calculated as the excess of cash distributed per Unit
over the accumulated earnings per Unit not previously distributed.
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Notes to Consolidated Financial Statements
4. Real Estate Investments
The locations, years of acquisition and net carrying values of the
properties are as follows:
<CAPTION>
Net Carrying Value
Year of at October 31,
Acquisition 1996 1995
<S> <C> <C> <C>
Westwood 10, Westwood, MA 1984, 1986 $ 5,614,689 $ 8,330,901
North Lake Plaza,
Altamonte Springs, FL 1984, 1986 6,877,537 8,431,300
Harborgate, Los Angeles, CA 1984 3,926,202 3,953,133
Arlington Business Center,
Arlington Heights, IL 1984 3,084,915 3,303,088
Carmel Park, Charlotte, NC 1985 10,948,819 14,501,220
1718 Connecticut,
Washington, D.C. 1984 - 6,172,068
$30,452,162 $44,691,710
</TABLE>
On June 24, 1996, the Partnership sold the 1718 Connecticut property
to an unaffiliated party for a sales price of approximately $5.1
million (net of closing costs). The Partnership recognized a gain
on this sale of approximatley $683,000, which was allocated 100% to
the Limited Parters in accordance with the Partnership Agreement.
In the first quarter of fiscal 1996, in accordance with the
impairment evaluation policy described in Note 2, the Partnership
evaluated the recoverability of its investments in real estate and
concluded that, based on revised expectations as to the holding
periods of the properties, the Partnership would be unable to
recover its investments in the Westwood 10, 1718 Connecticut,
Northlake Plaza and Carmel Park properties. Accordingly, the
Partnership wrote these properties down to their estimated fair
values (based on independent appraisals) and recorded losses on
impairment of $2,634,000, $1,742,000, $1,377,000 and $2,757,000,
respectively.
In fiscal 1994, the Partnership concluded that the values of the
Harborgate office building and Arlington Business Center were
impaired. Accordingly, in fiscal 1994, in accordance with its
policies for evaluating the recoverability of its real estate, the
Partnership recognized losses on impairment of these properties of
approximately $6,130,000 and $4,707,000, respectively.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Notes to Consolidated Financial Statements
5. Investment in Joint Venture
Century Square, Pasadena, California
In 1985, the Partnership purchased, for $9.7 million, a 25% general
partnership interest in the partnership (the "Joint Venture") which
owns the property, an office building. An affiliate of the
Partnership, Dean Witter Realty Income Partnership II, L.P.,
purchased the remaining 75% general partnership interest. Cash flow
and profits and losses are allocated to the Partnership and the
affiliate according to their interests in the Joint Venture.
<TABLE>
Summarized balance sheet information of the Joint Venture is as
follows:
<CAPTION>
1996 1995
<S> <C> <C>
Land and building, net $31,312,446 $32,185,831
Other 2,567,434 2,519,804
Total assets $33,879,880 $34,705,635
Liabilities $ 184,503 $ 199,212
Partners' capital 33,695,377 34,506,423
Total liabilities and capital $33,879,880 $34,705,635
Summarized results of operations of the Joint Venture are as
follows:
Year ended October 31,
1996 1995 1994
Rental income $5,761,715 $5,403,499 $5,941,457
Other income 69,838 21,519 31,383
5,831,553 5,425,018 5,972,840
Property operating expenses 1,926,040 1,917,052 2,110,092
Depreciation and amotization 1,548,067 1,610,915 1,518,333
3,474,107 3,527,967 3,628,425
Net income $2,357,446 $1,897,051 $2,344,415
</TABLE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Notes to Consolidated Financial Statements
Activity in the Investment in Joint Venture is as follows:
<CAPTION>
Year ended October 31,
1996 1995 1994
<S> <C> <C> <C>
Investment at beginning
of year $8,626,606 $ 8,754,205 $ 9,318,673
Equity in earnings 589,362 474,263 586,104
Distributions (922,699) (989,365) (1,162,129)
Additional investments 130,576 387,503 11,557
Investment at end of year $8,423,845 $ 8,626,606 $ 8,754,205
</TABLE>
The accounting policies employed by the Joint Venture are the same
as those of the Partnership.
6. Loan Payable to Bank
In December 1992, the Partnership established a $3.8 million secured
line of credit with a bank. Borrowings bore interest, at the prime
rate plus three quarters percent. In September 1994, this loan was
repaid in its entirety.
7. Leases
Minimum future rental income under noncancellable operating leases
as of October 31, 1996 is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Year ending October 31:
1997 $4,530,319
1998 3,507,507
1999 3,092,289
2000 2,344,634
2001 1,043,646
Thereafter 385,215
Total $14,903,610
</TABLE>
The Partnership has determined that all leases relating to its
properties are operating leases. The lease terms range from three
to fifteen years, and generally provide for fixed minimum rents with
rental escalation and/or expense reimbursement clauses.
8. Related Party Transactions
An affiliate of the Managing General Partner provided property
management services for six properties in 1996, 1995 and 1994. The
Partnership paid the affiliate management fees (included in property
operating expenses) of $225,800, $186,538 and $232,272 for the years
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Notes to Consolidated Financial Statements
ended October 31, 1996, 1995 and 1994, respectively.
Another affiliate of the Managing General Partner performs
administrative functions and processes certain investor and tax
information on behalf of the Partnership. In 1996, 1995 and 1994
the affiliate was reimbursed $259,076, $247,518 and $278,250,
respectively (included in general and administrative expenses) for
these services.
As of October 31, 1996, the affiliates were owed $40,208 for these
services.
Prior to 1990, the Partnership borrowed funds from an affiliate of
the Managing General Partner to fund the cost of tenant
improvements, capital expenditures and other Partnership
expenditures. The loan bore interest at the prime rate. During the
first quarter of 1996, the Partnership and the affiliate amended and
restated the Partnership's borrowing relationship. The Partnership
agreed to repay all outstanding amounts borrowed from the affiliate
no later than October 31, 1997. Advances to the Partnership under
the Partnership's line of credit were capped at $4,500,000. In June
1996, the loan was repaid with a portion of the proceeds from the
sale of the 1718 Connecticut Avenue property. Interest expense
amounted to $218,159, $342,221 and $281,361 in 1996, 1995 and 1994,
respectively.
Through January 31, 1995, the General Partners deferred receipt of
an aggregate amount of $2,467,674 of distributions to which they are
entitled, including distributions of $38,658 and $154,633 for the
years ended October 31, 1995 and 1994, respectively; amounts
deferred were charged against partners' capital and recorded as
liabilities to the General Partner. Beginning with the February 28,
1995 distribution, the General Partners began to receive their
distributions currently. In September 1996, the Partnership paid
$1,233,837 of deferred distributions, and, in November 1996, paid
the remaining deferred distributions to the General Partners.
9. Litigation
Various public partnerships sponsored by Dean Witter Realty Inc.
(including the Partnership and its Managing General Partner) are
defendants in purported class action lawsuits pending in state and
federal courts. The complaints allege a number of claims, including
breach of fiduciary duty, fraud and misrepresentation, and seek an
accounting of profits, compensatory and other damages in an
unspecified amount, possible liquidation of the Partnership under a
receiver's supervision and other equitable relief. The defendants
are vigorously defending these actions. It is impossible to predict
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Notes to Consolidated Financial Statements
the effect, if any, the outcome of these actions might have on the
Partnership's financial statements.
10. Subsequent Event
On November 27, 1996, the Partnership paid a cash distribution of
$8.95 per Unit. The distribution was $922,646 with $830,381
distributed to the Limited Partners and $92,265 distributed to the
General Partners. <PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Partnership is a limited partnership which has no directors or
officers.
The directors and executive officers of the Managing General Partner
are as follows:
Position with the
Name Managing General Partner
William B. Smith Chairman of the Board of Directors
E. Davisson Hardman, Jr. President and Director
Lawrence Volpe Controller and Director
Ronald T. Carman Secretary and Director
All of the directors have been elected to serve until the next
annual meeting of the shareholder of the Managing General Partner or
until their successors are elected and qualify. Each of the
executive officers has been elected to serve until his successor is
elected and qualifies.
William B. Smith, age 53, is a Managing Director of Dean Witter
Realty Inc. and has been with Dean Witter Realty Inc. since 1982.
He is an Executive Vice President of Dean Witter Reynolds, Inc.
E. Davisson Hardman, Jr., age 47, is a Managing Director of Dean
Witter Realty Inc. and has been with Dean Witter Realty Inc. since
1982.
Lawrence Volpe, age 49, is a Director and the Controller of Dean
Witter Realty Inc. He is a Senior Vice President and Controller of
Dean Witter Reynolds Inc., which he joined in 1983.
Ronald T. Carman, age 45, is a Director and the Secretary of Dean
Witter Realty, Inc. He is a Senior Vice President and Associate
General Counsel of Dean Witter Discover & Co. and Dean Witter
Reynolds Inc., which he joined in 1984.
There is no family relationship among any of the foregoing persons.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
ITEM 11. EXECUTIVE COMPENSATION
The General Partners are entitled to receive cash distributions,
when and as cash distributions are made to the Limited Partners, and
a share of taxable income or tax loss. Descriptions of such
distributions and allocations are in Item 5 above. At October 31,
1995, the General Partners had deferred receipt of a total of
$2,467,674 of cash distributions to which they were entitled,
including $38,658 and $154,633 for the years ended October 31, 1995
and 1994, respectively. The General Partners receive their share of
cash distributions currently, beginning with the distribution made
in February 1995, and received cash distributions of $309,264 and
$154,632 for fiscal years 1996 and 1995, respectively. In September
1996, the Partnership paid $1,233,837 of deferred distributions to
the General Partners, and, in November 1996, paid the remaining
deferred distributions.
The General Partners and their affiliates were paid certain fees and
reimbursed for certain expenses. Information concerning such fees
and reimbursements is contained in Note 8 to the Consolidated
Financial Statements in Item 8 above.
The directors and officers of the Partnership's Managing General
Partner received no remuneration from the Partnership.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
(a) No person is known to the Partnership to be the beneficial owner
of more than five percent of the Units.
(b) The directors and executive officers of the Managing General
Partner own the following Units as of January 1, 1997:
(1) (2) (3)
Amount and
Title of Name of Nature of
Class Beneficial Owner Beneficial Ownership
Limited All directors and executive *
Partnership officers of Managing General
Interests Partner, as a group
*Own, by virtue of their ownership of Limited Partnership interests in the
Associate General Partner, less than 1% of the Units of the Partnership.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As a result of their being partners of a limited partnership which
is the limited partner of the Associate General Partner, certain
current and former officers and directors of the Managing General
Partner also own indirect general partnership interests in the
Partnership. The Partnership Agreement of the Partnership provides
that cash distributions and allocations of income and loss to the
General Partners be distributed or allocated 50% to the Managing
General Partner and 50% to the Associate General Partner. The
General Partners' share of cash distributions and income or loss is
described in Item 5 above.
All of the outstanding shares of common stock of the Managing
General Partner are owned by Realty, a Delaware corporation which is
a wholly-owned subsidiary of Dean Witter, Discover & Co. The
general partner of the Associate General Partner is Dean Witter
Realty Income Associates I Inc., which is a wholly-owned subsidiary
of the Managing General Partner. The limited partner of the
Associate General Partner is LSA 84 L.P., a Delaware limited
partnership. Realty and certain current and former officers and
directors of Realty are partners of LSA 84 L.P. Additional
information with respect to the directors and executive officers and
compensation of the Managing General Partner and affiliates is
contained in Items 10 and 11 above.
The General Partners and their affiliates were paid certain fees and
reimbursed for certain expenses. Information concerning such fees
and reimbursements is contained in Note 8 to the Consolidated
Financial Statements in Item 8 above. The Partnership believes that
the payment of fees and the reimbursement of expenses to the General
Partners and their affiliates are on terms as favorable as would be
obtained from unrelated third parties.
Prior to 1990, the Partnership borrowed funds from an affiliate of
the Managing General Partner to fund the cost of tenant
improvements, capital expenditures and other Partnership
expenditures. The loan bore interest at the prime rate. During the
first quarter of 1996, the Partnership and the affiliate amended and
restated the Partnership's borrowing relationship. The Partnership
agreed to repay all outstanding amounts borrowed from the affiliate
no later than October 31, 1997. Advances to the Partnership under
the Partnership's line of credit were capped at $4,500,000. In June
1996, the loan was repaid with a portion of the proceeds from the
sale of the 1718 Connecticut Avenue property.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Through January 31, 1995, the General Partners deferred receipt of
an aggregate amount of $2,467,674 of distributions to which they are
entitled, including distributions of $38,658 and $154,633 for the
years ended October 31, 1995 and 1994, respectively; amounts
deferred were charged against partners' capital and recorded as
liabilities to the General Partner. Beginning with the February 28,
1995 distribution, the General Partners began to receive their
distributions currently. In September 1996, the Partnership paid
$1,233,837 of deferred distributions, and, in November 1996, paid
the remaining deferred distributions to the General Partners.
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) The following documents are filed as part of this Annual
Report:
1. Financial Statements (see Index to Financial Statements
filed as part of Item 8 of this Annual Report).
2. Financial Statement Schedules (see Index to Financial
Statements filed as part of Item 8 of this Annual
Report).
3. Exhibits
(a) Amended and Restated Agreement of Limited Partnership
dated as of August 15, 1983 set forth in Exhibit A to the
Prospectus included in Registration Statement Number
286041 is incorporated herein by reference.
(b) Certificate of Limited Partnership included in
Registration Statement Number 286041 is incorporated
herein by reference.
(4)(a) Amended and Restated Agreement of Limited Partnership
dated as of August 15, 1983 set forth in Exhibit A to the
Prospectus included in Registration Statement Number
286041 is incorporated herein by reference.
(b) Certificate of Limited Partnership included in
Registration Statement Number 286041 is
incorporated herein by reference.
(10)(a) Purchase and Sale Agreements for properties purchased
were filed as Exhibits to Form 8-K on April 26, 1984,
October 17, 1984, October 26, 1984, October 31, 1984,
December 20, 1984, July 15, 1985 and October 29, 1985
and are incorporated herein by reference.
(b) "Purchase Agreement" dated as of May 31, 1996 for sale
of the 1718 Connecticut Avenue property was filed as an
Exhibit to Form 8-K on June 24, 1996 and is
incorporated herein by reference.
(21) Subsidiary: 1718 Connecticut, Ltd., a District of Columbia
limited partnership.
(27) Financial Data Schedule.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
(b) No Forms 8-K were filed by the Partnership during the last
quarter of the period covered by this report.
(d)(2) Financial Statements of Century Square Venture, the joint
venture which owns the Century Square property.
<PAGE>
<TABLE>
SCHEDULE III
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Real Estate and Accumulated Depreciation
October 31, 1996
Initial Cost to Partnership (A)
<CAPTION> Cost
Capitalized
Building and Subsequent
Description Land Improvements Total Acquisition
<S> <C> <C> <C> <C>
Office/R&D
Building
Westwood, MA $ 1,750,000 $6,780,006 $8,530,006 $2,686,793
Shopping Center
Altamonte
Springs, FL 2,300,000 7,626,517 9,926,517 870,004
Office Building
Los Angeles, CA 2,630,000 10,919,123 13,549,123 780,381
Office Buildings
Arlington
Heights, IL 2,280,000 7,860,616 10,140,616 1,812,597
Office Buildings
Charlotte, NC 1,934,000 17,186,456 19,120,456 3,239,185
$10,894,000 $50,372,718 $61,266,718 $9,388,960
Gross Amount at which
Carried at End of Period (B)
Losses on
Impairment of Buildings &
Description Real Estate Land Improvements Total
Office/R&D
Building
Westwood, MA $ (2,634,000) $ 1,486,600 $7,096,199 $ 8,582,799
Shopping Center
Altamonte
Springs, FL (1,377,000) 2,312,300 7,107,221 9,419,521
Office Building
Los Angeles, CA (6,129,699) 2,630,000 5,569,805 8,199,805
Office Buildings
Arlington
Heights, IL (4,707,365) 2,280,000 4,965,848 7,245,848
Office Buildings
Charlotte, NC (2,757,000) 1,658,300 17,944,341 19,602,641
$(17,605,064) $10,367,200 $42,683,414 $53,050,614
</TABLE>
<TABLE>
SCHEDULE III (continued)
<CAPTION>
Life on which
Depreciation
in Latest Income
Accumulated Date of Date Statements is
Description Depreciation Construction Acquired Computed
<S> <C> <C> <C> <C>
Office/R&D
Building
Westwood, MA $2,968,110 1983-1986 April 1984 5-40 years
Shopping Center
Altamonte
Springs, FL 2,541,984 1981-1985 October 1984 5-40 years
Office Building
Los Angeles, Ca 4,273,603 1984 October 1984 5-40 years
Office Buildings
Arlington
Heights, IL 4,160,933 1984 December 1984 5-40 years
Office Buildings
Charlotte, NC 8,653,822 1983-1985 July 1985 5-40 years
$22,598,452
Notes:
(A) The initial cost includes the purchase price paid by the Partnership and
acquisition fees and expenses. No carrying costs have been capitalized
subsequent to acquisition. There is no difference between cost for financial
reporting purposes and federal income tax purposes.
(B) Reconciliation of real estate owned
at October 31: 1996 1995 1994
Balance at beginning of period $68,781,271 $68,060,915 $ 78,205,759
Additions during period:
Improvements 335,596 720,356 692,220
Sale of real estate (7,556,253) - -
Losses on impairments of
real estate (8,510,000) - (10,837,064)
Balance at end of period $53,050,614 $68,781,271 $ 68,060,915
(C) Reconciliation of accumulated depreciation:
Balance at beginning of period $24,089,561 $21,555,012 $ 18,605,656
Depreciation expense 1,745,666 2,534,549 2,949,356
Sale of real estate (3,236,775) - -
Balance end of period $22,598,452 $24,089,561 $ 21,555,012
/TABLE
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
By: Dean Witter Realty Income Properties I Inc.
Managing General Partner
By: /s/E. Davisson Hardman, Jr. Date: January 29, 1997
E. Davisson Hardman, Jr.
President
By: /s/Lawrence Volpe Date: January 29, 1997
Lawrence Volpe
Controller
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
DEAN WITTER REALTY INCOME PROPERTIES I INC.
Managing General Partner
/s/William B. Smith Date: January 29, 1997
William B. Smith
Chairman of the Board of Directors
/s/E. Davisson Hardman, Jr. Date: January 29, 1997
E. Davisson Hardman, Jr.
Director
/s/Lawrence Volpe Date: January 29, 1997
Lawrence Volpe
Director
/s/Ronald T. Carman Date: January 29, 1997
Ronald T. Carman
Director
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Year Ended October 31, 1996
Exhibit Index
Exhibit
No.
27 Financial Data Schedule
d.2 Financial Statements of Century Square Venture
E1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Registrant is a limited partnership which invests in real estate, and real
estate joint ventures. In accordance with industry practice, its balance
sheet is unclassified. For full information, refer to the accompanying
audited financial statements.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<CASH> 2,954,592
<SECURITIES> 0
<RECEIVABLES> 985,596
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 43,069,014<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 40,937,468<F2>
<TOTAL-LIABILITY-AND-EQUITY> 43,069,014<F3>
<SALES> 0
<TOTAL-REVENUES> 8,493,737<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,373,159
<LOSS-PROVISION> 8,510,000
<INTEREST-EXPENSE> 218,159
<INCOME-PRETAX> (5,607,581)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,607,581)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,607,581)
<EPS-PRIMARY> (53.66)<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net investments
in real estate of $30,452,162, investment in joint venture of $8,423,845, and
net deferred leasing commissions of $252,819.
<F2>Represents partners' capital.
<F3>Liabilities include accounts payable and accrued liabilities of
$748,320, security deposits payable of $149,389 and other liabilities of
$1,233,837.
<F4>Total revenue includes rent of $7,013,164, gain on sale of real estate
of $683,471, equity in earnings of joint venture of $589,362, and interest
and other revenue of $207,740.
<F5>Represents net income per Unit of limited partnership interest.
</FN>
</TABLE>
Independent Auditors' Report
To the Partners of
Century Square Venture
We have audited the accompanying balance sheets of Century Square Venture (a
California general partnership) as of October 31, 1996 and 1995, and the
related statements of operations, partners' capital, and cash flows for each of
the three years in the period ended October 31, 1996. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on the financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statements presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Century Square Venture as of October 31,
1996 and 1995, and the results of its operations and its cash flows for each of
the three years in the period ended October 31, 1996 in conformity with
generally accepted accounting principles.
/s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
New York, New York
January 24, 1997
<PAGE>
<TABLE>
CENTURY SQUARE VENTURE
(a California general partnership)
BALANCE SHEET
October 31, 1996 and 1995
ASSETS
<CAPTION>
1996 1995
<S> <C> <C>
Cash and cash equivalents $ 351,134 $ 307,341
Real estate:
Land 6,429,000 6,429,000
Buildings and improvements 38,307,211 37,784,915
44,736,211 44,213,915
Accumulated depreciation 13,423,765 12,028,084
31,312,446 32,185,831
Deferred leasing commissions, net 986,908 1,139,294
Other assets 1,229,392 1,073,169
$33,879,880 $ 34,705,635
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and other liabilities $ 184,503 $ 199,212
Partners' capital 33,695,377 34,506,423
$33,879,880 $ 34,705,635
See accompanying notes to financial statements.
/TABLE
<PAGE>
<TABLE>
CENTURY SQUARE VENTURE
(a California general partnership)
STATEMENTS OF OPERATIONS
For the years ended October 31, 1996, 1995 and 1994
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Revenues:
Rental $ 5,761,715 $5,403,499 $ 5,941,457
Interest and other 69,838 21,519 31,383
5,831,553 5,425,018 5,972,840
Expenses:
Property operating 1,926,040 1,917,052 2,110,092
Depreciation and
amortization 1,548,067 1,610,915 1,518,333
3,474,107 3,527,967 3,628,425
Net income $ 2,357,446 $1,897,051 $ 2,344,415
See accompanying notes to financial statements.
/TABLE
<PAGE>
<TABLE>
CENTURY SQUARE VENTURE
(a California general partnership)
STATEMENTS OF PARTNERS' CAPITAL
For the years ended October 31, 1996, 1995 and 1994
<CAPTION>
<S> <C>
Partners' capital at November 1, 1993 $37,274,695
Net income 2,344,415
Contributions 46,226
Distributions (4,648,515)
Partners' capital at October 31, 1994 35,016,821
Net income 1,897,051
Contributions 1,550,011
Distributions (3,957,460)
Partners' capital at October 31, 1995 34,506,423
Net income 2,357,446
Contributions 522,302
Distributions (3,690,794)
Partners' capital at October 31, 1996 $33,695,377
See accompanying notes to financial statements.
/TABLE
<PAGE>
<TABLE>
CENTURY SQUARE VENTURE
(a California general partnership)
STATEMENTS OF CASH FLOWS
For the years ended October 31, 1996, 1995 and 1994
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,357,446 $ 1,897,051 $ 2,344,415
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,548,067 1,610,915 1,518,333
(Increase) decrease in operating assets
Deferred leasing commissions - (1,031,230) (7,089)
Other assets (156,223) 269,025 250,898
Decrease in accounts payable and
other liabilities (14,709) (6,726) (85,832)
Net cash provided by operating
activities 3,734,581 2,739,035 4,020,725
Cash flows from investing activities:
(Additions) reductions to real estate (522,296) (491,669) 724,335
Cash flows from financing activities:
Cash distributions (3,690,794) (3,957,460) (4,648,515)
Contributions to partnership 522,302 1,550,011 46,226
Net cash used in financing activities (3,168,492) (2,407,449) (4,602,289)
Increase (decrease) in cash and
cash equivalents 43,793 (160,083) 142,771
Cash and cash equivalents at beginning
of year 307,341 467,424 324,653
Cash and cash equivalents at end of year $ 351,134 $ 307,341 $ 467,424
See accompanying notes to financial statements.
/TABLE
<PAGE>
CENTURY SQUARE VENTURE
(a California general partnership)
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
1. The Partnership
Century Square Venture (the "Partnership") is a general partnership
organized under the laws of the State of California in 1985 to own
and lease an office building in Pasadena California. The partners
are Dean Witter Realty Income Partnership I, L.P. and Dean Witter
Realty Income Partnership II, L.P., with partnership interests of
25% and 75%, respectively. Profits, losses and distributions are
allocated to the partners in accordance with their partnership
interests.
2. Summary of Significant Accounting Policies
The Partnership's records are maintained on the accrual basis of
accounting for financial reporting and tax purposes. The
preparation of financial statements in conformity with generally
accepted accounting principles 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.
Cash and cash equivalents consist of cash and highly liquid
investments with maturities, when purchased, of three months or
less.
The carrying value of real estate includes the purchase price paid
by the Partnership and acquisition fees and expenses. Costs of
improvements to the properties are capitalized, and repairs are
expensed. Depreciation is recorded on the straight-line method.
At least annually, and more often if circumstances dictate, the
Partnership evaluates the recoverability of the net carrying value
of its real estate and any related assets. As part of this
evaluation the Partnership assesses, among other things, whether
there has been a significant decrease in the market value of the
property. If events or circumstances indicate that the net carrying
value of the property may not be recoverable, the expected future
net cash flows from the property are estimated for a period of
approximately five years (or a shorter period if the Partnership
expects that the property may be disposed of sooner), along with
estimated sales proceeds at the end of the period. If the total of
these future undiscounted cash flows were less than the carrying
2. Summary of Significant Accounting Policies (continued)
amount of the property, the property would be written down to its
fair value as determined (in some cases with the assistance of
outside real estate consultants) based on discounted cash flows, and
a loss on impairment recognized by a charge to earnings. The
Partnership's accounting policy complies with Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of".
Because the determination of fair value is based upon projections of
future economic events such as property occupancy rates, rental
rates, operating cost inflation and market capitalization rates
which are inherently subjective, the amounts ultimately realized at
disposition may differ materially from the net carrying value as of
October 31, 1996. The cash flows used to evaluate the
recoverability of the property and to determine fair value are based
on good faith estimates and assumptions developed by the Managing
General Partner. Unanticipated events and circumstances may occur
and some assumptions may not materialize; therefore, actual results
may vary from the estimates and the variances may be material. The
Partnership may provide additional write-downs which could be
material in subsequent years if real estate markets or local
economic conditions change.
Deferred leasing commissions are amortized over the applicable lease
terms.
Rental income is accrued on a straight-line basis over the terms of
the leases. Accruals in excess of amounts payable by tenants
pursuant to their leases (resulting from rent concessions or rents
which periodically increase over the term of a lease) are recorded
as receivables and included in other assets.
No provision for income taxes has been made in the financial
statements, since the liability for such taxes is that of the
partners rather than the Partnership.
For income tax purposes, Partnership results are reported for the
calendar year. The accounting policies used for tax reporting
purposes differ from those used for financial reporting as follows:
(a) depreciation is calculated using accelerated methods and (b)
rental income is recognized based on the payment terms in the
applicable leases. The tax basis of the Partnership's assets and
liabilities is approximately $5 million less than the amounts
reported for financial statement purposes.
<TABLE>
3. Leases
Minimum future rental income under noncancellable operating leases
as of October 31, 1996 is as follows:
<CAPTION>
<S> <C>
Year ending October 31:
1997 $ 4,842,938
1998 4,865,108
1999 4,887,278
2000 4,930,064
2001 4,951,667
Thereafter 38,959,119
Total $63,436,174
</TABLE>
The Partnership has determined that all leases relating to its
properties are operating leases. The lease terms range from eight
to fifteen years, and generally provide for fixed minimum rents with
rental escalation and/or expense reimbursement clauses.
4. Related Party Transactions
An affiliate of the partners provided property management services
to the Partnership in 1996, 1995 and 1994. The Partnership paid the
affiliate management fees (included in property operating expenses)
of approximately $131,000, $132,000 and $149,000 for the years ended
October 31, 1996, 1995 and 1994, respectively. As of October 31,
1996, the Partnership owed the affiliate approximately $11,000 for
these services.
