14
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 July 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 instrument)
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
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
July 31, October
31,
1998 1997
<S> <C>
<C>
ASSETS
Cash and cash equivalents $ 871,677 $
5,974,627
Real estate:
Land
2,312,300 4,942,300
Buildings and improvements 7,180,519
12,736,897
9,492,819
17,679,197
Accumulated depreciation 2,824,309
7,054,850
6,668,510
10,624,347
Real estate held for sale -
15,761,239
Deferred leasing commissions, net 7,892
345,238
Other assets 78,712
908,045
$ 7,626,791
$33,613,496
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities $ 242,845 $
484,705
Security deposits 40,538
110,788
283,383
595,493
Partners' capital (deficiency):
General partners (4,446,846)
(4,364,301)
Limited partners ($1,000 per Unit, 92,780 Units issued)
11,790,254 37,382,304
Total partners' capital 7,343,408
33,018,003
$ 7,626,791
$33,613,496
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
CONSOLIDATED INCOME STATEMENTS
Three and nine months ended July 31, 1998 and 1997
<CAPTION>
Three months ended
Nine months ended
July 31, July 31,
1998 1997 1998 1997
<S> <C> <C> <C>
<C>
Revenues:
Rental $ 286,836 $1,556,681 $
1,483,967 $4,798,148
Gains on sales of real estate 3,503,189 -
12,799,112 -
Equity in earnings of joint venture - - -
2,425,949
Interest and other 33,269 126,674
135,459 191,176
3,823,294 1,683,355
14,418,538 7,415,273
Expenses:
Property operating 136,719 766,249
700,250 2,171,988
Depreciation and amortization 49,122
346,498 191,746 1,034,561
General and administrative 83,576
110,676 290,029 352,067
269,417 1,223,423
1,182,025 3,558,616
Net income $3,553,877 $ 459,932
$13,236,513 $3,856,657
Net income allocated to:
Limited partners $3,548,808 $ 413,939
$13,192,773 $3,677,251
General partners 5,069 45,993
43,740 179,406
$3,553,877 $ 459,932
$13,236,513 $3,856,657
Net income per Unit of limited
partnership interest $ 38.25 $ 4.46 $
142.19 $ 39.63
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
Nine months ended July 31, 1998
<CAPTION>
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 13,192,773
43,740 13,236,513
Cash distributions (38,784,823)
(126,285) (38,911,108)
Partners' capital (deficiency)
at July 31, 1998 $ 11,790,254
$(4,446,846) $ 7,343,408
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended July 31, 1998 and 1997
<CAPTION>
1998 1997
<S> <C>
<C>
Cash flows from operating activities:
Net income $ 13,236,513 $
3,856,657
Adjustments to reconcile net income to net cash
provided by operating activities:
Gains on sales of real estate (12,799,112)
- -
Depreciation and amortization 191,746
1,034,561
Equity in earnings of joint venture -
(2,425,949)
(Decrease) increase in operating assets:
Deferred leasing commissions (181,795)
(190,486)
Other assets 64,399
(199,291)
(Decrease) increase in operating liabilities:
Accounts payable and accrued liabilities (277,860)
72,858
Security deposits (92,172)
15,685
Net cash provided by operating activities
141,719 2,164,035
Cash flows from investing activities:
Proceeds from disposition of real estate 34,220,999
- -
Additions to real estate (554,560)
(57,181)
Distributions from joint venture -
10,855,353
Investment in joint venture -
(5,559)
Net cash provided by investing activities
33,666,439 10,792,613
Cash flows from financing activities:
Distributions (38,911,108)
(12,977,827)
Decrease in deferred distributions -
(1,233,837)
Net cash used in financing activities (38,911,108)
(14,211,664)
Decrease in cash and cash equivalents (5,102,950)
(1,255,016)
Cash and cash equivalents at beginning of period
5,974,627 2,954,592
Cash and cash equivalents at end of period $ 871,677 $
1,699,576
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 gains on sales 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.
2. Sales of Real Estate
On December 8, 1997, the Partnership sold the Carmel Park
property to an unaffiliated party for approximately $17.7
million. The Partnership recognized a gain on this sale of
approximately $6.2 million, 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 approximately $9.4
million. The Partnership recognized a gain on this sale of
approximately $3.0 million, which was
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Notes to Consolidated Financial Statements
allocated 100% to the Limited Partners in accordance with
the Partnership Agreement.
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 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 July 10, 1998, the Partnership sold the Harborgate
property to an unaffiliated party for $8.5 million. The
Partnership recognized a gain on this sale of approximately
$3.5 million, which was allocated 100% to the Limited
Partners in accordance with the Partnership Agreement. The
Partnership received net sales proceeds from this sale of
approximately $8,046,000. On July 23, 1998, the Partnership
distributed approximately $7,046,000 of such proceeds 100%
to Limited Partners ($75.94 per Unit).
3. Related Party Transactions
An affiliate of the Managing General Partner provided
property management services for the North Lake Plaza,
Carmel Park (sold December 1997) and Westwood 10 (sold
December 1997) properties in 1998; the affiliate managed
five properties in 1997. The Partnership paid the affiliate
management fees of approximately $43,000 and $141,000 for
the nine months ended July 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 nine months ended July 31, 1998 and
1997, the Partnership incurred approximately $126,000 and
$181,000, respectively, for these services. These amounts
are included in general and administrative expenses.
As of July 31, 1998, the affiliates were owed a total of
approximately $15,000 for these services.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Notes to Consolidated Financial Statements
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 fiscal 1997.
4. Litigation
Various public partnerships sponsored by Dean Witter Realty
Inc. (including the Partnership and its Managing General
Partner) were defendants in a class action lawsuit. On July
17, 1998, the Delaware Chancery Court granted the
defendants' motion to dismiss the complaint in the lawsuit.
The Plaintiffs filed a notice of appeal from the Court's
order.
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. In
fiscal year 1997, the Century Square and Arlington Business
Center properties were sold in April 1997 and October 1997,
respectively. In fiscal year 1998, the Westwood 10, Carmel
Park and Harborgate properties were sold in December 1997,
December 1997 and July 1998, respectively. As a result of
sales of properties in fiscal years 1997 and 1998,
Partnership cash flow from operations decreased during the
nine-month period ended July 31, 1998 compared to 1997.
The Managing General Partner will market the North Lake
Plaza property for sale during the fourth fiscal quarter of
1998; however, there can be no assurance that this property
will be sold.
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 and
Partnership cash from operations decreases. The Partnership
will also require less cash reserves to fund capital
expenditures and leasing commissions. Generally, future
cash distributions will be paid from proceeds received from
the sale of the North Lake Plaza property and cash reserves.
During the nine months ended July 31, 1998, all of the
Partnership's remaining properties generated positive cash
flow from operations, and it is anticipated that the North
Lake Plaza property will continue to do so during the period
the Partnership continues to own it.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
During the nine months ended July 31, 1998, the Partnership
incurred capital expenditures and leasing commissions of
approximately $736,000, primarily for tenant-related capital
expenditures at the Harborgate property.
During the nine months ended July 31, 1998, the
Partnership's distributions to partners (excluding
distributions of sales proceeds) and capital expenditures
exceeded its cash flow from operations. This deficiency was
funded from Partnership cash reserves.
The North Lake Plaza property currently has a vacancy rate
of 18%; as a result, the Partnership may incur significant
capital expenditures and leasing commissions to fill the
vacant space.
The Managing General Partner believed that the Partnership
as of July 31, 1998 would not have sufficient cash reserves
to fully fund its potential liability for capital
expenditures and leasing commissions at the North Lake Plaza
property and other Partnership cash requirements.
Therefore, in order to increase cash reserves, the
Partnership withheld approximately $1,000,000 from the
distribution of proceeds from the sale of the Harborgate
property and did not pay its second and third quarter 1998
distributions.
Deferred leasing commissions, other assets, accounts payable
and accrued liabilities and security deposits payable
decreased in 1998 as a result of the above-mentioned sales
of properties.
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 July 23, 1998, the Partnership distributed approximately
$7,045,700 ($75.94 per Unit), a portion of the net proceeds
of $8,046,000 from the sale of the Harborgate property. The
distribution was paid 100% to the Limited Partners.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
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- and nine-month periods ended July 31, 1998 compared
to 1997 were primarily attributable to the following:
During the nine and three months ended July 31, 1998, rental
income, property operating expenses and depreciation and
amortization expenses decreased as a result of the sales of
the Arlington Business Center, Westwood 10, Carmel Park, and
Harborgate properties.
The gains on sales of real estate in fiscal 1998 resulted
from the sales of the Carmel Park, Harborgate and Westwood
10 properties.
There was no equity in earnings of joint venture income in
1998. The Partnership's share of the gain on sale of the
Century Square property included in equity in earnings in
1997 was approximately $2.1 million.
Interest and other income decreased during the nine and
three months ended July 31, 1998 primarily because the
Partnership's interest earned in 1997 on the proceeds from
the sale of the Century Square property (until such proceeds
were distributed to Limited Partners) exceeded interest
earned in 1998 on the proceeds from the sale of properties.
No individual factor accounted for a significant change in
general and administrative expenses from 1997 to 1998.
The North Lake Plaza Shopping Center is located in Altamonte
Springs, Florida (which is near Orlando, Florida).
Currently, the vacancy rate in this market is approximately
10%, and market rental rates are stable. During the three
months ended July 31, 1998, occupancy at the property
increased to 82%. Development of nearby office projects and
apartment buildings 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
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
the lease. The lease of Marshalls Inc., (for approximately
21% of the space) is scheduled to expire in 2002.
During the nine months ended July 31, 1998, the North Lake
property incurred rental revenues, property operating
expenses and depreciation and amortization expenses of
approximately $727,000, $223,000, and $122,000,
respectively.
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 1. Legal Proceedings
On July 17, 1998, the Delaware Chancery Court
granted the defendants' motion to dismiss the
complaint in the Consolidated Action. The
plaintiffs filed a notice of appeal from the
Chancery Courts' order on August 14, 1998.
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.
Report dated July 10, 1998 regarding the sale of
the Harborgate 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: September 14, 1998 By: /s/E. Davisson Hardman,
Jr.
E. Davisson Hardman, Jr.
President
Date: September 14, 1998 By: /s/Charles M. Charrow
Charles M. Charrow
Controller
(Principal Financial and
Accounting Officer)
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P.
Quarter Ended July 31, 1998
Exhibit Index
Exhibit No. Description
27 Financial Data Schedule
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
unaudited financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> JUL-31-1998
<CASH> 871,677
<SECURITIES> 0
<RECEIVABLES> 78,712
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,626,791<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 7,343,408<F2>
<TOTAL-LIABILITY-AND-EQUITY> 7,626,791<F3>
<SALES> 0
<TOTAL-REVENUES> 14,418,538<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,182,025
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 13,236,513
<INCOME-TAX> 0
<INCOME-CONTINUING> 13,236,513
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,236,513
<EPS-PRIMARY> 142.19<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net investments
in real estate of $6,668,510 and net deferred leasing commissions of $7,892.
<F2>Represents partners' capital.
<F3>Liabilities include accounts payable and accrued liabilities of $242,845
and security deposit payables of $40,538.
<F4>Total revenues include rent of $1,483,967, gains on sales of real estate
of $12,799,112, and interest and other revenue of $135,459.
<F5>Represents net income per Unit of limited partnership interest.
</FN>
</TABLE>
