<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended September 30, 1994
---------------------------------------------------
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: 0-12945
----------------------------------------------------
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 2
- - --------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2313852
- - ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Riverside Plaza, Suite 950, Chicago, Illinois 60606-2607
- - ------------------------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
(312) 207-0020
- - -----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
- - -----------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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
----- -----
DOCUMENTS INCORPORATED BY REFERENCE:
The First Amended and Restated Agreement of Limited Partnership filed as Exhibit
A to the Partnership's Prospectus dated October 19, 1983, included in the
Partnership's Registration Statement on Form S-11, is incorporated herein by
reference in Part I of this report.
<PAGE>
BALANCE SHEETS
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
September 30,
1994 December 31,
(Unaudited) 1993
- - -----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $10,237,400 $11,177,700
Buildings and improvements 36,908,300 40,226,600
- - -----------------------------------------------------------------------------
47,145,700 51,404,300
Accumulated depreciation and amortization (10,868,600) (10,765,000)
- - -----------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 36,277,100 40,639,300
Cash and cash equivalents 12,827,600 9,502,400
Marketable securities, at cost which approximates
market 25,000 25,000
Investment in joint venture 5,997,700 6,022,300
Rents receivable 143,800 270,700
Other assets (including amounts due from joint
venture of $730,700 and $790,300, respectively) 770,100 934,600
- - -----------------------------------------------------------------------------
$56,041,300 $57,394,300
- - -----------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 492,400 $ 450,900
Due to Affiliates 79,900 102,800
Security deposits 114,200 122,200
Distributions payable 896,000 499,900
Other liabilities 69,500 124,700
- - -----------------------------------------------------------------------------
1,652,000 1,300,500
- - -----------------------------------------------------------------------------
Partners' (deficit) capital:
General Partner (106,300) (93,500)
Limited Partners (84,886 Units authorized, issued
and outstanding) 54,495,600 56,187,300
- - -----------------------------------------------------------------------------
54,389,300 56,093,800
- - -----------------------------------------------------------------------------
$56,041,300 $57,394,300
- - -----------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the nine months ended September 30, 1994
and the year ended December 31, 1993
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
- - -----------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital,
January 1, 1993 $ (89,800) $54,961,100 $54,871,300
Net income for the year ended
December 31, 1993 196,300 3,025,800 3,222,100
Distributions for the year ended
December 31, 1993 (200,000) (1,799,600) (1,999,600)
- - -----------------------------------------------------------------------------
Partners' (deficit) capital,
December 31, 1993 (93,500) 56,187,300 56,093,800
Net income for the nine months ended
September 30, 1994 218,300 388,000 606,300
Distributions for the nine months ended
September 30, 1994 (231,100) (2,079,700) (2,310,800)
- - -----------------------------------------------------------------------------
Partners' (deficit) capital,
September 30, 1994 $(106,300) $54,495,600 $54,389,300
- - -----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended September 30, 1994 and 1993
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1994 1993
- - -------------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $1,447,900 $2,734,100
Interest 166,800 62,500
- - -------------------------------------------------------------------------------
1,614,700 2,796,600
- - -------------------------------------------------------------------------------
Expenses:
Depreciation and amortization 350,600 358,300
Property operating 315,100 289,000
Real estate taxes and insurance 146,300 153,600
Repairs and maintenance 147,700 157,400
General and administrative 79,800 70,700
- - -------------------------------------------------------------------------------
1,039,500 1,029,000
- - -------------------------------------------------------------------------------
Income before income from participation in joint venture 575,200 1,767,600
Income from participation in joint venture 159,400 56,900
- - -------------------------------------------------------------------------------
Income before adjustment to provision for value
impairment 734,600 1,824,500
Adjustment to provision for value impairment 13,000
- - -------------------------------------------------------------------------------
Net income $ 734,600 $1,837,500
- - -------------------------------------------------------------------------------
Net income allocated to General Partner $ 89,600 $ 50,100
- - -------------------------------------------------------------------------------
Net income allocated to Limited Partners $ 645,000 $1,787,400
- - -------------------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
(84,886 Units authorized, issued and outstanding) $ 7.60 $ 21.06
- - -------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF INCOME AND EXPENSES
For the nine months ended September 30, 1994 and 1993
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1994 1993
- - ---------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $4,612,100 $5,934,700
Interest 368,000 189,700
- - ---------------------------------------------------------------------------
4,980,100 6,124,400
- - ---------------------------------------------------------------------------
Expenses:
Depreciation and amortization 1,042,200 1,066,200
Property operating 995,200 868,000
Real estate taxes and insurance 560,400 524,900
Repairs and maintenance 543,300 421,500
General and administrative 229,800 249,800
- - ---------------------------------------------------------------------------
3,370,900 3,130,400
- - ---------------------------------------------------------------------------
Income before income from participation in joint
venture 1,609,200 2,994,000
Income from participation in joint venture 272,900 82,900
- - ---------------------------------------------------------------------------
Income before (loss) on sale of property and
provision for value impairment 1,882,100 3,076,900
(Loss) on sale of property (1,275,800)
Provision for value impairment (366,000)
- - ---------------------------------------------------------------------------
Net income $ 606,300 $2,710,900
- - ---------------------------------------------------------------------------
Net income allocated to General Partner $ 218,300 $ 146,300
- - ---------------------------------------------------------------------------
Net income allocated to Limited Partners $ 388,000 $2,564,600
- - ---------------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
(84,886 Units authorized, issued and outstanding) $ 4.57 $ 30.21
- - ---------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1994 and 1993
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1994 1993
- - -----------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 606,300 $2,710,900
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,042,200 1,066,200
Loss on sale of property 1,275,800
Provision for value impairment 366,000
Changes in assets and liabilities:
Decrease in rents receivable 126,900 3,300
Decrease in other assets 104,900 32,000
Increase in accounts payable and accrued expenses 41,500 200,500
(Decrease) in due to Affiliates (22,900) (26,700)
(Decrease) increase in other liabilities (55,200) 20,500
- - -----------------------------------------------------------------------------
Net cash provided by operating activities 3,119,500 4,372,700
- - -----------------------------------------------------------------------------
Cash flows from investing activities:
Net proceeds from sale of property 3,006,400 721,600
Payments for capital and tenant improvements (962,200) (628,400)
Distributions received from joint venture in excess
of income allocated 24,600 136,300
Collection of (funding of) loans to joint venture 59,600 (76,700)
- - -----------------------------------------------------------------------------
Net cash provided by investing activities 2,128,400 152,800
- - -----------------------------------------------------------------------------
Cash flows from financing activities:
Distributions paid to Partners (1,914,700) (1,825,100)
(Decrease) increase in security deposits (8,000) 1,700
- - -----------------------------------------------------------------------------
Net cash (used for) financing activities (1,922,700) (1,823,400)
- - -----------------------------------------------------------------------------
Net increase in cash and cash equivalents 3,325,200 2,702,100
Cash and cash equivalents at the beginning of the
period 9,502,400 6,683,400
- - -----------------------------------------------------------------------------
Cash and cash equivalents at the end of the period $12,827,600 $9,385,500
- - -----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
September 30, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement filed with the Securities and
Exchange Commission on Form S-11. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is incorporated herein by reference.
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles. Under this method of accounting, revenues are
recorded when earned and expenses are recorded when incurred.
The financial information included in these financial statements is unaudited.
However, in management's opinion, all adjustments (consisting of only normal,
recurring accruals) necessary for a fair presentation of the results of
operations for the periods included have been made. Results of operations for
the quarter and nine months ended September 30, 1994 are not necessarily
indicative of the operating results for the year ending December 31, 1994.
Certain reclassifications have been made to the previously reported 1993
financial statements in order to provide comparability with the 1994 financial
statements. These reclassifications have not changed the 1993 results.
The financial statements include the Partnership's interest in four joint
ventures with Affiliated partnerships. These joint ventures were formed for the
purpose of acquiring 100% interests in certain real properties and are operated
under the control of the General Partner. Accordingly, the Partnership's pro
rata share of the ventures' revenues, expenses, assets, liabilities and capital
is included in the financial statements.
Property sales are recorded when title transfers and sufficient consideration
has been received by the Partnership. Upon disposition, the related costs and
accumulated depreciation are removed from the respective accounts. Any gain or
loss is recognized in accordance with generally accepted accounting principles.
Cash equivalents are defined as all highly liquid investments purchased with a
maturity of three months or less.
Investment in joint venture represents the recording of the Partnership's
interest, under the equity method of accounting, in a joint venture with an
Affiliated partnership. The joint venture acquired a preferred majority
interest in a joint venture with the seller of the Lansing, Michigan property.
Under the equity method of accounting, the Partnership records its initial
interest at cost and adjusts its investment account for its share of joint
venture income or loss and its distribution of cash flow.
Reference is made to the Partnership's annual report for the year ended
December 31, 1993, for a description of other accounting policies and
additional details of the Partnership's financial condition, results of
operations, changes in Partners' capital and changes in cash balances for the
year then ended. The details provided in the notes thereto have not changed
except as a result of normal transactions in the interim or as disclosed
herein.
2. RELATED PARTY TRANSACTIONS:
Subsequent to October 19, 1984, the Termination of the Offering, the General
Partner is entitled to 10% of Cash Flow as its Partnership Management Fee. In
accordance with the Partnership Agreement, Net Profits (exclusive of Net
Profits from the sale or disposition of Partnership properties) are allocated
first to the General Partner in an amount equal to the greater of the General
Partner's Partnership Management Fee or 1% of such Net Profits. The balance of
Net Profits, if any, is allocated to the Limited Partners. Net Losses from the
sale or disposition of Partnership properties are allocated: first, prior to
giving effect to any distributions of Sale or Financing Proceeds, to the extent
that the balance in the General Partner's or Limited Partners' capital accounts
exceeds the amount of their Capital Investment (the "Excess Balances"), to the
General Partner and Limited Partners pro rata in proportion to such Excess
Balances until such Excess Balances are reduced to zero; second, to the General
Partner and Limited Partners (in a ratio which their respective positive
capital account balances bear to the aggregate of all positive capital account
balances) until the balance in their capital accounts shall be reduced to zero;
third, the balance, if any, 99% to the Limited Partners and 1% to the General
Partner. In all events the General Partner will be allocated at least 1% of Net
Losses from the sale or disposition of a Partnership property. In addition,
provisions for value impairment are allocated 99% to the Limited Partners and
1% to the General Partner. For the quarter and nine months ended September 30,
1994, the General Partner was entitled to cash distributions and, accordingly,
was allocated Net Profits from operations of approximately $89,600 and
$231,100, respectively. For the nine months ended September 30, 1994, the
General Partner was allocated a Net Loss from the sale of a Partnership
property of $12,800.
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter and nine months ended September 30, 1994 were as follows:
<TABLE>
<CAPTION>
Paid
-----------------
Nine
Quarter Months Payable
- - ---------------------------------------------------------------------------
<S> <C> <C> <C>
Property management and leasing fees $ 89,700 $254,500 $35,600
Reimbursement of property insurance premiums, at
cost 21,300 65,900 None
Real estate commissions (a) None None 40,300
Reimbursement of expenses,
at cost:
(1) Accounting 7,900 23,100 2,000
(2) Investor communication 3,700 12,000 2,000
(3) Legal 23,200 67,300 None
- - ---------------------------------------------------------------------------
$145,800 $422,800 $79,900
- - ---------------------------------------------------------------------------
</TABLE>
(a) As of September 30, 1994 the Partnership owed $40,300 to the General
Partner for real estate commissions earned in connection with the sales of
Partnership properties. These commissions have been accrued but not paid.
Under the terms of the Partnership Agreement, these commissions will not be
paid until the Limited Partners have received cumulative distributions of
Sale or Refinancing Proceeds equal to 100% of their Original Capital
Contribution plus a cumulative return (including all Cash Flow which has
been distributed to the Limited Partners from the initial date of
investment) of 6% simple interest per annum on their Capital Investment
from the initial date of investment.
3. SALE OF PROPERTY:
On June 8, 1994, the Partnership sold Norwest Plaza (formerly known as United
Bank of Arizona Building) for a total sale price of approximately $3,225,000.
The Partnership incurred selling expenses of approximately $218,600. Proceeds
received by the Partnership from the sale were approximately $3,006,400. The
total loss to the Partnership in connection with this sale was approximately
$1,275,800. For tax purposes the Partnership will record a loss in 1994 of
approximately $314,000 on this sale. The above sale was on all-cash terms with
no further involvement on the part of the Partnership.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the Partnership's annual report for the year ended
December 31, 1993 for a discussion of the Partnership's business.
OPERATIONS
The Statements of Cash Flows presented in the financial statements represent a
reconciliation of the changes in cash balances. Cash Flow, as defined in the
Partnership Agreement, is generally not equal to Partnership net income or cash
flows as determined by generally accepted accounting principles, since certain
items are treated differently under the Partnership Agreement than under
generally accepted accounting principles. Management believes that in order to
facilitate a clear understanding of the Partnership's operations, an analysis
of Cash Flow (as defined in the Partnership Agreement) should be examined in
conjunction with an analysis of net income or cash flows as defined by
generally accepted accounting principles. The amount of Cash Flow and the
return on Capital Investment are not indicative of actual distributions and
actual returns on Capital Investment.
<TABLE>
<CAPTION>
Comparative Cash Flow Results
For the For the
Quarters Ended Nine Months Ended
9/30/94 9/30/93 9/30/94 9/30/93
- - -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Amount of Cash Flow (as
defined in the Partnership
Agreement) $ 1,121,200 $ 2,282,400 $ 3,091,500 $ 4,504,100
Capital Investment $84,886,000 $84,886,000 $84,886,000 $84,886,000
Annualized return on Capital
Investment (Cash Flow/Capital
Investment) 5.28% 10.76% 4.86% 7.07%
- - -------------------------------------------------------------------------------
</TABLE>
The decrease in Cash Flow results for the quarter and nine months ended
September 30, 1994 of approximately $1,161,200 and $1,412,600, respectively,
when compared to the quarter and nine months ended September 30, 1993 was
primarily due to the receipt of $1,162,500 in August 1993 in consideration of
the tenant's buy out of a portion of its lease at Norwest Plaza ("Norwest"). In
addition, Cash Flow decreased due to the sales of the Carlsbad Building
("Carlsbad") and Norwest in August 1993 and June 1994, respectively. The effect
of these sales reduced Cash Flow by approximately $149,900 and $342,500 for the
quarter and nine months ended September 30, 1994, respectively.
As the Partnership enters the disposition phase of its life cycle, Partnership
Cash Flow is generally expected to change as real property interests are sold
since the Partnership no longer receives Cash Flow generated from such real
property interests. Accordingly, rental income, property operating expenses,
repairs and maintenance and real estate taxes are expected to decline, but will
continue to comprise the significant components of Cash Flow and operating
results until the final property sale. Also, during the disposition phase, cash
and cash equivalents increase as sale proceeds are received and decrease as the
Partnership utilizes such proceeds for the purpose of making improvements to
the Partnership's remaining properties. Sale Proceeds are excluded from the
determination of Cash Flow.
Excluding the effect of the tenant's buyout at Norwest and the sales of
Carlsbad and Norwest, Cash Flow results increased for the quarter and nine
months ended September 30, 1994 by approximately $151,200 and $92,400,
respectively. Factors which contributed to these increases were: 1) increased
rental revenues at the Market Place at Rivergate ("Rivergate"), Banana River
Square Shopping Center ("Banana River") and the Ellis Building ("Ellis"); 2) a
decrease in real estate taxes at Foxhall Square Building ("Foxhall") of
approximately $75,600 due primarily to the receipt in August 1994 of a real
estate tax refund relating to the 1992/1993 tax year; 3) increased interest
income earned on short-term investments of approximately $104,300 and $178,300,
respectively, due to an increase in funds available for such investments and 4)
decreased general and administrative expenses due to lower accounting fees as a
result of the several properties being sold by the Partnership. Partially
offsetting the increases in Cash Flow was an increase in the Partnership's
share of property operating expenses, real estate taxes and insurance and
repairs and maintenance expenses at the 12621 Featherwood Building
("Featherwood") of approximately $227,900 resulting from the expiration of the
prior tenant's lease at Featherwood which was previously recorded on a net
basis.
Rental revenues at Foxhall for the nine months ended September 30, 1994 and
1993 were approximately $1,169,900 and $1,239,700, respectively, and for the
quarters ended September 30, 1994 and 1993 were approximately $394,600 and
$401,400, respectively. The decreases for both periods were primarily due to
decreased tenant expense reimbursements in 1994. The quarterly and nine-month
average occupancy rates at Foxhall increased slightly from 82% during 1993 to
85% during 1994.
Rental revenues at Lakewood Square Shopping Center for the nine months ended
September 30, 1994 and 1993 were approximately $869,000 and $883,300,
respectively, and for the quarters ended September 30, 1994 and 1993 were
approximately $279,400 and $281,500, respectively. The decrease for the nine
months ended September 30, 1994 was primarily due to a decrease in insurance
escalation income, as well as granting refunds to tenants in 1994 for an
overestimate of 1993 insurance escalation billings. The quarterly and nine-
month average occupancy rates were 84% and 83%, respectively, in 1994 and 82%
and 85%, respectively, in 1993.
Rental revenues at Ellis for the nine months ended September 30, 1994 and 1993
were approximately $827,000 and $802,700, respectively, and for the quarters
ended September 30, 1994 and 1993 were approximately $291,800 and $277,500,
respectively. The increase in rental revenues was primarily due to an increase
in occupancy during the quarter and nine months ended September 30, 1994. The
quarterly and nine-month average occupancy rates were 98% and 93%,
respectively, in 1994 and 89% and 91%, respectively, in 1993.
Rental revenues at Banana River for the nine months ended September 30, 1994
and 1993 were approximately $515,000 and $501,600, respectively, and for the
quarters ended September 30, 1994 and 1993 were approximately $172,800 and
$167,700, respectively. The quarterly and nine-month average occupancy rate
remained relatively stable at 94% in 1994 and 95% and 94%, respectively in
1993.
Rental revenues at Rivergate for the nine months ended September 30, 1994 and
1993 were approximately $626,900 and $501,900, respectively, and for the
quarters ended September 30, 1994 and 1993 were approximately $215,900 and
$176,000 respectively. This increase in rental revenues was primarily due to an
increase in the quarterly and nine-month average occupancy rates from 83% and
74%, respectively, during 1993 to 90% and 86%, respectively, during 1994.
Rental revenues at Featherwood for the nine months ended September 30, 1994 and
1993 were approximately $331,900 and $340,700, respectively, and for the
quarters ended September 30, 1994 and 1993 were approximately $102,900 and
$113,600, respectively. The property remained 100% occupied during 1993 and
1994. On July 18, 1994, the Partnership purchased a parcel of land adjacent to
the Featherwood building for approximately $8,100 to be used for an expanded
parking facility as required under the sole tenant's lease.
Rental revenues at Norwest for the nine months ended September 30, 1994 and
1993 were approximately $272,400 and $1,549,800, respectively. This decrease
was primarily due to the receipt of $1,162,500 in August 1993 in consideration
of the tenant's buy out of a portion of its lease at Norwest. In addition,
rental revenues decreased due to the sale of the property in June 1994.
To increase occupancy levels at the Partnership's properties, the General
Partner, through its Affiliated asset and property management groups, continues
to take the necessary actions deemed appropriate for the properties discussed
above. Some of these actions include: 1) implementation of marketing programs,
including hiring of third-party leasing agents or providing on-site leasing
personnel, advertising, direct mail campaigns and development of building
brochures; 2) early renewal of existing tenants and addressing any expansion
needs these tenants may have; 3) promotion of local broker events and
networking with local brokers; 4) networking with national level retailers; 5)
cold-calling other businesses and tenants in the market area and 6) providing
rental concessions or competitively pricing rental rates depending on market
conditions.
LIQUIDITY AND CAPITAL RESOURCES
The increase in the Partnership's cash position as of September 30, 1994 when
compared to December 31, 1993 was primarily the result of the receipt of net
Sale Proceeds on the sale of Norwest and amounts being retained from Cash Flow
to supplement working capital reserves exceeding expenditures made for capital
and tenant improvements. Liquid assets of the Partnership at September 30, 1994
were comprised of amounts held for working capital purposes.
Net cash provided by operating activities decreased from $4,372,700 for the
nine months ended September 30,1993 to $3,119,500 for the nine months ended
September 30, 1994. The decrease was primarily due to the decrease in Cash Flow
as discussed above and the timing of payment of certain Partnership expenses,
partially offset by the collection of past due receivables.
Net cash provided by investing activities increased from $152,800 for the nine
months ended September 30, 1993 to $2,128,400 for the nine months ended
September 30, 1994. The increase was due to the receipt of $3,006,400 from the
sale of Norwest in 1994, partially offset by an increase in payments made in
1994 for capital and tenant improvements.
On June 8, 1994, the Partnership sold Norwest for a total sale price of
approximately $3,225,000. The Partnership incurred selling expenses of
approximately $218,600. Net proceeds received by the Partnership from the sale
were approximately $3,006,400.
During the nine months ended September 30, 1994, the Partnership spent
approximately $962,200 for building and tenant improvements and has budgeted to
spend an additional $350,000 during the remainder of 1994. Of the remaining
budgeted amount, approximately $150,000 and $70,000 relates to anticipated
capital and tenant improvements and leasing costs expected to be incurred at
Foxhall and Holiday Office Park North and South, respectively. The General
Partner believes these expenditures are necessary to maintain occupancy levels
in very competitive markets.
Net cash used for financing activities increased approximately $99,300 for the
nine months ended September 30, 1994 when compared to the nine months ended
September 30, 1993. This change was primarily due to a increase in
distributions paid to Partners in 1994 when compared to 1993.
The General Partner continues to take a conservative approach to projections of
future rental income and to maintain higher levels of cash reserves for the
Partnership. The higher levels of cash reserves are needed due to the
anticipated capital and tenant improvements necessary to be made to the
Partnership's properties during the next several years. As a result of this,
the Partnership has retained the proceeds from the sale of Norwest and
continues to reserve amounts from Cash Flow to supplement working capital
reserves. For the quarter and nine months ended September 30, 1994, Cash Flow
retained to supplement working capital reserves approximated $225,200 and
$780,700, respectively.
Distributions to Limited Partners for the quarter ended September 30, 1994 were
declared at an annualized rate of 3.8% on total Capital Investment. Cash
distributions are made 60 days after the quarter-end. The amount of future
distributions to the Limited Partners will ultimately be dependent upon the
performance of the Partnership's investments as well as the amount of Cash Flow
retained for future cash requirements. Therefore, there can be no assurance of
the availability or the amount of future Cash Flow for distribution to
Partners.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
- - ------- ---------------------------------
(a) Exhibits: None
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the quarter ended
September 30, 1994.
<PAGE>
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.
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 2
BY: FIRST CAPITAL FINANCIAL CORPORATION
GENERAL PARTNER
Date: November 11, 1994 By: /s/ DOUGLAS CROCKER II
----------------- --------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: November 11, 1994 By: /s/ NORMAN M. FIELD
----------------- --------------------------------------
NORMAN M. FIELD
Vice President - Finance and Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000727087
<NAME> FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD.-2
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 12,827,600
<SECURITIES> 25,000
<RECEIVABLES> 143,800
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,996,400
<PP&E> 47,145,700
<DEPRECIATION> 10,868,600
<TOTAL-ASSETS> 56,041,300
<CURRENT-LIABILITIES> 1,388,400
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 54,389,300
<TOTAL-LIABILITY-AND-EQUITY> 56,041,300
<SALES> 0
<TOTAL-REVENUES> 4,980,100
<CGS> 0
<TOTAL-COSTS> 2,098,900
<OTHER-EXPENSES> 229,800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,609,200
<INCOME-TAX> 0
<INCOME-CONTINUING> 606,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 606,300
<EPS-PRIMARY> 4.57
<EPS-DILUTED> 4.57
</TABLE>
