UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the period ended January 31, 1998
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 governing in
strument)
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
Former name, former address and former fiscal year, if
changed since last report: not applicable
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
Pages 1 of 16
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
CONSOLIDATED BALANCE SHEETS
January 31,
October 31,
1998 1997
ASSETS
<S> <C>
<C>
Cash and cash equivalents $ 817,379 $
5,974,627
Real estate:
Land
4,942,300 4,942,300
Buildings and improvements 12,770,934
12,736,897
17,713,234
17,679,197
Accumulated depreciation 7,117,135
7,054,850
10,596,099
10,624,347
Real estate held for sale -
15,761,239
Deferred leasing commissions, net 82,572
345,238
Other assets 90,053
908,045
$11,586,103
$33,613,496
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities $ 301,907 $
484,705
Security deposits 43,095
110,788
345,002
595,493
Partners' capital (deficiency):
General partners (4,411,328)
(4,364,301)
Limited partners ($1,000 per Unit, 92,780 Units issued)
15,652,429 37,382,304
Total partners' capital 11,241,101
33,018,003
$11,586,103
$33,613,496
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
CONSOLIDATED STATEMENTS OF INCOME
Three months ended January 31, 1998 and 1997
1998 1997
<S> <C>
<C>
Revenues:
Rental $ 784,273 $
1,589,557
Equity in earnings of joint venture -
143,620
Gain on sale of real estate 9,295,923
- -
Interest and other 94,988
20,196
10,175,184
1,753,373
Expenses:
Property operating 374,715
665,137
Depreciation and amortization 70,269
348,735
General and administration 108,700
128,451
553,684
1,142,323
Net income $ 9,621,500 $
611,050
Net income allocated to:
Limited partners $ 9,588,942 $
549,945
General partners 32,558
61,105
$ 9,621,500 $
611,050
Net income per Unit of
limited partnership interest $103.35
$5.93
See accompanying notes to consolidated financial statements
</TABLE>
<TABLE>
<CAPTION>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
Three months ended January 31, 1998
Limited General
Partners Partners
Total
<S> <C> <C>
<C>
Partners' capital (deficiency)
at November 1, 1997 $37,382,304
$(4,364,301) $33,018,003
Net income 9,588,942
32,558 9,621,500
Cash distributions (31,318,817)
(79,585) (31,398,402)
Partners' capital (deficiency)
at January 31, 1998 $15,652,429
$(4,411,328) $11,241,101
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended January 31, 1998 and 1997
1998 1997
<S> <C>
<C>
Cash flows from operating activities:
Net income $ 9,621,500 $
611,050
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of real estate (9,295,923)
- -
Depreciation and amortization 70,269
348,735
Equity in earning of joint venture -
(143,620)
(Increase) decrease in operating assets:
Deferred leasing commissions (16,697)
(15,263)
Other assets 86,948
131,601
(Decrease) increase in operating liabilities:
Accounts payable and accrued liabilities (212,798)
(64,459)
Security deposits (67,693)
18,378
Net cash provided by operating activities
185,606 886,422
Cash flows from investing activities:
Proceeds from disposition of real estate 26,089,585
- -
Additions to real estate (34,037)
(39,034)
Distributions from joint venture -
188,969
Net cash provided by investing activities
26,055,548 149,935
Cash flows from financing activities:
Distributions (31,398,402)
(922,646)
Decrease in deferred distributions -
(1,233,837)
Net cash used in financing activities (31,398,402)
(2,156,483)
Decrease in cash and cash equivalents (5,157,248)
(1,120,126)
Cash and cash equivalents at beginning of period
5,974,627 2,954,592
Cash and cash equivalents at end of period $ 817,379 $
1,834,466
See accompanying notes to consolidated financial statements.
</TABLE>
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's fiscal year ends on October 31.
The Partnership's interest in the Century Square property
(which was sold in the second quarter of fiscal 1997) was
accounted for on the equity method.
The Partnership's records are maintained on the accrual
basis of accounting for financial reporting and tax
purposes.
Net income per Unit of limited partnership interest
amounts are calculated by dividing net income allocated
to the Limited Partners, in accordance with the
Partnership Agreement, by the weighted average number of
Units outstanding.
In the opinion of management, the accompanying financial
statements, which have not been audited, include all
adjustments necessary to present fairly the results for
the interim period. Except for the gains on sale of real
estate, such adjustments consist only of normal recurring
accruals.
These financial statements should be read in conjunction
with the annual financial statements and notes thereto
included in the Partnership's annual report on Form 10-K
filed with the Securities and Exchange Commission for the
year ended October 31, 1997. Operating results of interim
periods may not be indicative of the operating results
for the entire year.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Notes to Consolidated Financial Statements
2. Real Estate
On November 26, 1997, the Partnership distributed
approximately $4,538,000 ($48.91 per Unit), the net
proceeds from the October 1997 sale of the Arlington
Business Center property. The distribution was paid 100%
to Limited Partners.
On December 8, 1997, the Partnership sold the Carmel Park
property to an unaffiliated party for a negotiated sale
price of approximately $17.7 million. The Partnership
recognized a gain on this sale of approximately
$6,264,000, which was allocated 100% to the Limited
Partners in accordance with the Partnership Agreement.
On December 23, 1997, the Partnership sold the Westwood
10 property to an unaffiliated party for a negotiated
sale price of approximately $9.4 million. The
Partnership recognized a gain on this sale of
approximately $3,032,000, which was allocated 100% to the
Limited Partners in accordance with the Partnership
Agreement.
On December 29, 1997, the Partnership distributed
approximately $26,065,000 ($280.93 per Unit), the net
proceeds from the sale of the Carmel Park and Westwood 10
properties. The distribution was paid 100% to the
Limited Partners.
3. Related Party Transactions
An affiliate of the Managing General Partner provided
property management services for three and five
properties for the three months ended January 31, 1998
and 1997, respectively. The Partnership paid the
affiliate management fees of $23,318 and $44,652 for the
three months ended January 31, 1998 and 1997,
respectively. These amounts are included in property
operating expenses.
Another affiliate of the Managing General Partner
performs administrative functions, processes certain
investor transactions and prepares tax information for
the Partnership. For the three months ended January 31,
1998 and 1997, the Partnership incurred approximately
$48,000 and $66,000, respectively, for these services.
These amounts are included in general and administrative
expenses.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Notes to Consolidated Financial Statements
As of January 31, 1998, the affiliates were owed a total
of approximately $16,000 for these services.
Through January 31, 1995, the General Partners deferred
receipt of distributions aggregating $2,467,674 to which
they were entitled; amounts deferred were charged against
partners' capital and recorded as liabilities to the
General Partner. The Partnership made the final payment
of these distributions ($1,233,837) to the General
Partners in the first quarter of 1997.
4. 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, misrepresentation and related
claims, and seek compensatory and other damages and
equitable relief. The defendants intend to vigorously
defend against these actions. It is impossible to
predict the effect, if any, the outcome of these actions
might have on the Partnership's financial statements.
5. Subsequent Distribution
On February 25, 1998, the Partnership paid a cash
distribution of $4.53 per Unit. The distribution totaled
$466,993, with $420,293 distributed to the Limited
Partners and $46,700 distributed to the General Partners.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
ITEM 2. 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 and made one
investment in the partnership which owned the Century
Square property on an all-cash basis. The Partnership's
acquisition program has been completed. No additional
investments are planned.
The 1718 Connecticut property was sold in fiscal 1996.
The Century Square and Arlington Business Center
properties were sold in fiscal 1997. The Carmel Park and
Westwood 10 properties were sold during the first quarter
of fiscal 1998.
Employment growth, especially in the communications,
technology and financial services industries, has
increased demand for space in many office markets. Such
increasing demand and a controlled amount of speculative
construction has resulted in falling vacancies and rising
rents. Improved property performance along with an
influx of capital from REITs, pension funds and foreign
investors are increasing property values. Some office
markets, especially suburban markets, are faring better
than others and, in certain areas, improved market
conditions can support new construction. Recently, the
vacancy rate in the SouthBay area of the Los Angeles
office market, the location of Harborgate, improved
slightly to 19% due to tenant influx caused by limited
leasing options in surrounding markets. In the retail
sector, an over supply of space and consolidation among
retailers continued to lessen the demand for retail
space. Also, many outdated properties are being
redeveloped in order to compete with newer retail
properties. The abundance of available retail space and
sub-lease space offered by retailers (usually at lower
rents) has exerted downward pressure on rents in many
markets. Although investment interest for retail
properties has waned somewhat, REITs continue to purchase
retail properties nationwide. Although North Lake Plaza
is located in a strong retail market (Altamonte Springs
is near Orlando, Florida), the property's vacancy rate is
currently 21%.
Currently, the Partnership's liquidity is primarily
affected by sales of the Partnership's properties; as
the properties are sold, the Partnership has fewer
income-producing investments, Partnership cash from
operations decreases and Partnership distributions will
decline. During the quarter ended January 31, 1998,
Partnership cash flow from operations decreased compared
to 1997 due to the absence of cash flows from the
Century Square ($189,000) and Arlington Business Center
($158,000) properties which were sold in fiscal 1997.
Partnership cash flow from operations also decreased in
1998 compared to 1997 as a result of the sale of the
Carmel Park and Westwood 10 buildings in 1998; the
Partnership's operating cash flow from the Carmel Park
property was approximately $121,000 and $324,000 in
fiscal 1998 and 1997, respectively, and operating cash
flow from the Westwood 10 property was approximately
$96,000 and $203,000 in 1998 and 1997, respectively.
Because of the decrease in operating cash flow caused by
the above-mentioned sales, the Partnership decreased its
quarterly cash distribution from $7.72 per Unit to $4.53
per Unit for the first quarter distribution paid in
February 1998. Since the Partnership will receive no
further operating cash flow from the properties sold
during the first quarter of fiscal 1998, the Partnership
will decrease its second quarter distribution to be paid
in May 1998 to $2.94 per Unit. Future cash distribution
levels will fluctuate based on cash flow generated by
the Partnership's remaining properties and proceeds
received from property sales.
The Managing General Partner has engaged a real estate
broker to market for sale the Harborgate building, and
believes that, barring a change in circumstances, it
will market the North Lake Plaza property for sale later
in 1998. However, there can be no assurance that either
property will be sold.
The Partnership's liquidity also depends on cash flow
from operations of its remaining properties and
expenditures for building improvements and tenant
improvements and leasing commissions in connection with
the leasing of space. During the quarter ended January
31, 1998, all of the Partnership's properties generated
positive cash flow from operations, and it is
anticipated that the Partnership's remaining properties
will continue to generate positive cash flow from
operations during the remainder of 1998.
During the quarter ended January 31, 1998, the
Partnership's capital expenditures and distributions to
partners (excluding distributions of sales proceeds)
exceeded its cash flow from operations. This deficiency
was funded from Partnership cash reserves which the
Managing General Partner determined were in excess of
the Partnership's needs.
Currently, the Partnership has commitments to fund
approximately $587,000 of capital expenditures, relating
to the Harborgate property. Since the North Lake Plaza
property currently has a significant amount of vacant
space, the Partnership may have to incur a significant
amount of capital expenditures and leasing commissions
to fill such space.
During the remainder of 1998, the Partnership expects
that cash flow from operations will exceed distributions
to Limited Partners (other than distributions of net
proceeds from property sales); the Partnership expects
to fund a portion of capital expenditures from cash
reserves.
Other assets, deferred leasing commissions, accounts
payable and accrued liabilities and security deposits
payable decreased significantly as a result of the sales
of the Carmel Park and Westwood 10 properties in 1998.
On November 26, 1997, the Partnership distributed
approximately $4,538,000 ($48.91 per Unit), the net
proceeds from the sale of the Arlington Business Center
property. The distribution was paid 100% to the Limited
Partners.
On December 29, 1997, the Partnership distributed
approximately $26,065,000 ($280.93 per Unit), the net
proceeds from the sale of the Carmel Park and Westwood
10 properties. The distribution was paid 100% to the
Limited Partners.
On February 25, 1998, the Partnership paid the first
quarter cash distribution; the total distribution
aggregated $466,993 with $420,293 distributed to the
Limited Partners and $46,700 distributed to the General
Partners.
Except as discussed above and in the consolidated
financial statements, the Managing General Partner is
not aware of any trends or events, commitments or
uncertanities that may have a material impact on
liquidity.
Operations
Fluctuations in the Partnership's operating results for
the three-month period ended January 31, 1998 compared to
1997 were primarily attributable to the following:
The Sale of the Arlington Business Center property in
October 1997 caused the absence of the following income
and expense items in 1998: rental revenues ($333,000 in
1997), property operating expenses ($176,000 in 1997) and
depreciation and amortization expenses ($42,000 in 1997).
The sale of the Carmel Park property on December 8, 1997
caused rental revenues and property operating expenses to
decrease in 1998 by $301,000 and $90,000, respectively.
Since the property was classified as real estate held for
sale in 1998 prior to the sale, there was an absence of
depreciation and amortization expenses in 1998 (such
costs totaled $158,000 in 1997).
The sale of the Westwood 10 property on December 23, 1997
caused rental revenues to decease in 1998 by $114,000;
the sale did not cause a significant decrease in property
operating expenses. Since the property was classified as
real estate held for sale in 1998 prior to the sale,
there was an absence of depreciation and amortization
expenses in 1998 (such costs totaled $76,000 in 1997).
The sale of the Century Square property in April 1997
caused the absence of equity in earnings of joint venture
in 1998.
Interest and other revenues increased in 1998 due to
interest earned on sales proceeds of the above-mentioned
properties held by the Partnership between the date of
sale and date of distribution to Limited Partners.
No individual factor accounted for a significant change
in general and administrative expenses from 1997 to 1998.
A summary of the markets where the Partnership's
remaining properties are located and the performance of
each property is as follows:
Currently, the vacancy rate in the office market in the
SouthBay area of Los Angeles, California, the location
of Harborgate, is approximately 19%, and market rental
rates are stable. During the quarter ended January 31,
1998, occupancy at the property remained at 59%.
Subsequent to January 31, 1998, the Partnership signed a
new ten-year lease with Nippon Travel Agency Inc., for
approximately 26% of the property's space. U.S. Sprint,
who leases approximately 19% of the space, did not
exercise its option to terminate its lease on its space
in 1998; as a result, its lease expires in 2000. No
other significant amounts of space are scheduled to
expire before 2000.
Altamonte Springs, Florida, the location of the North
Lake Plaza Shopping Center, is a strong retail market.
Currently, the vacancy rate in this market is
approximately 7%, and market rental rates are stable.
During the first quarter of 1998, occupancy at the
property remained at 79%. Development of nearby office
projects and the scheduled expansion of North Lake
Boulevard (which borders the shopping center) are
anticipated to increase traffic at the property. The
lease for Home Depot (for approximately 50% of the
property's space) expires in 2003. Home Depot continues
to sub-lease its space to Burlington Coat Factory but
remains obligated to pay rent under the lease. The
lease of Marshalls Inc., (for approximately 21% of the
space) is scheduled to expire in 2002.
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.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
PART II - OTHER INFORMATION
Item 6.Exhibits & Reports on Form 8-K
(a) Exhibits -
An exhibit index has been filed as part of this
Report on Page E1.
(b) Reports on Form 8-K
1. Report dated December 8, 1997 regarding the
sale of the Carmel Park property.
2. Report dated December 23, 1997 regarding the
sale of the Westwood 10 property.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto
duly authorized.
DEAN WITTER REALTY INCOME
PARTNERSHIP I, L.P.
By: Dean Witter Realty Income
Properties I Inc.
Managing General Partner
Date: March 17, 1998 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: March 17, 1998 By: /s/Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Quarter Ended January 31, 1998
Exhibit Index
Exhibit No. Description
27 Financial Data Schedule
E1
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<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
unaudited financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> JAN-31-1998
<CASH> 817,379
<SECURITIES> 0
<RECEIVABLES> 90,053
<ALLOWANCES> 0
INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,586,103<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 11,241,101<F2>
<TOTAL-LIABILITY-AND-EQUITY> 11,586,103<F3>
<SALES> 0
<TOTAL-REVENUES> 10,175,184<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 553,684
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,621,500
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,621,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,621,500
<EPS-PRIMARY> 103.35<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net
investments in real estate of $10,596,099 and net deferred leasing
commissions of $82,572.
<F2>Represents partners' capital.
<F3>Liabilities include accounts payable and accrued liabilities
of $301,907 and other liabilities of $43,095.
<F4>Total revenues include rent of $784,273, gain on sale of real
estate of $9,295,923, and interest and other revenue of $94,988 .
<F5>Represents net income per Unit of limited partnership interest.
</FN>
</TABLE>
