<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 March 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: 0-12945
-----------------------------------------------------
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 Certificate and 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>
March 31,
1996 December 31,
(Unaudited) 1995
- --------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $10,237,400 $10,237,400
Buildings and improvements 35,269,000 35,221,500
- --------------------------------------------------------------------------
45,506,400 45,458,900
Accumulated depreciation and amortization (12,870,000) (12,556,200)
- --------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 32,636,400 32,902,700
Cash and cash equivalents 11,841,200 12,268,000
Restricted cash 50,000 25,000
Investment in joint venture 4,681,100 4,620,200
Rents receivable 127,400 169,800
Other assets (including amount due from joint
venture of $785,000) 840,400 817,400
- --------------------------------------------------------------------------
$50,176,500 $50,803,100
- --------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 377,600 $ 491,000
Due to Affiliates 111,300 74,900
Distributions payable 1,273,200 1,273,300
Security deposits 135,500 136,200
Other liabilities 71,500 112,200
- --------------------------------------------------------------------------
1,969,100 2,087,600
- --------------------------------------------------------------------------
Partners' capital:
General Partner (deficit) (131,300) (131,300)
Limited Partners (84,886 Units issued and
outstanding) 48,338,700 48,846,800
- --------------------------------------------------------------------------
48,207,400 48,715,500
- --------------------------------------------------------------------------
$50,176,500 $50,803,100
- --------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the quarter ended March 31, 1996 (Unaudited)
and the year ended December 31, 1995
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital,
January 1, 1995 $(121,300) $51,849,600 $51,728,300
Net income for the year ended
December 31, 1995 471,000 1,326,300 1,797,300
Distributions for the year ended
December 31, 1995 (481,000) (4,329,100) (4,810,100)
- ----------------------------------------------------------------------------
Partners' (deficit) capital,
December 31, 1995 (131,300) 48,846,800 48,715,500
Net income for the quarter ended March
31, 1996 127,200 637,900 765,100
Distributions for the quarter ended
March 31, 1996 (127,200) (1,146,000) (1,273,200)
- ----------------------------------------------------------------------------
Partners' (deficit) capital,
March 31, 1996 $(131,300) $48,338,700 $48,207,400
- ----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended March 31, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1996 1995
- ------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $1,628,800 $1,600,200
Interest 174,200 205,700
Income from participation in joint venture 60,900 69,300
- ------------------------------------------------------------------------
1,863,900 1,875,200
- ------------------------------------------------------------------------
Expenses:
Depreciation and amortization 313,800 338,200
Property operating:
Affiliates 121,800 95,100
Nonaffiliates 229,300 209,200
Real estate taxes 136,400 158,500
Insurance--Affiliate 19,400 21,500
Repairs and maintenance 181,600 159,100
General and administrative:
Affiliates 18,600 16,200
Nonaffiliates 77,900 67,000
- ------------------------------------------------------------------------
1,098,800 1,064,800
- ------------------------------------------------------------------------
Net income $ 765,100 $ 810,400
- ------------------------------------------------------------------------
Net income allocated to General Partner $ 127,200 $ 113,200
- ------------------------------------------------------------------------
Net income allocated to Limited Partners $ 637,900 $ 697,200
- ------------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
(84,886 Units outstanding) $ 7.51 $ 8.21
- ------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the quarters ended March 31, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 765,100 $ 810,400
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 313,800 338,200
(Income) from participation in joint venture (60,900) (69,300)
Changes in assets and liabilities:
Decrease (increase) in rents receivable 42,400 (2,200)
(Increase) in other assets (23,000) (31,700)
(Decrease) increase in accounts payable and accrued
expenses (113,400) 15,200
Increase in due to Affiliates 36,400 53,300
(Decrease) increase in other liabilities (40,700) 2,700
- --------------------------------------------------------------------------------
Net cash provided by operating activities 919,700 1,116,600
- --------------------------------------------------------------------------------
Cash flows from investing activities:
Payments for capital and tenant improvements (47,500) (112,200)
(Increase) in restricted cash (25,000)
Distributions received from joint venture 150,000
- --------------------------------------------------------------------------------
Net cash (used for) provided by investing
activities (72,500) 37,800
- --------------------------------------------------------------------------------
Cash flows from financing activities:
Distributions paid to Partners (1,273,300) (1,037,500)
(Decrease) increase in security deposits (700) 2,300
- --------------------------------------------------------------------------------
Net cash (used for) financing activities (1,274,000) (1,035,200)
- --------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (426,800) 119,200
Cash and cash equivalents at the beginning of the
period 12,268,000 12,560,400
- --------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period $11,841,200 $12,679,600
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
March 31, 1996
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 included in the Registration Statement and
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.
Preparation of the Partnership's 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.
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 ended March 31, 1996 are not necessarily indicative of the
operating results for the year ending December 31, 1996.
The financial statements include the Partnership's 50% interest in four joint
ventures with Affiliated partnerships. These joint ventures were formed for the
purpose of each acquiring a 100% interest in certain real property and are
operated under the common control of the General Partner. Accordingly, the
Partnership's pro rata share of the ventures' revenues, expenses, assets,
liabilities and Partners' capital is included in the financial statements.
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 recorded its initial
interest at cost and adjusts its investment account for its share of joint
venture income or loss and its distributions of cash flow (as defined in the
joint venture agreement).
Commercial rental properties held for investment are recorded at cost, net of
any provisions for value impairment, and depreciated (exclusive of amounts, if
any, allocated to land and value impairments) on the straight-line method over
their estimated useful lives. Upon classifying a commercial rental property as
held for disposition, no further depreciation or amortization of such property
is provided for in the financial statements. Lease acquisition fees are
recorded at cost and amortized over the life of the lease. Maintenance and
repair costs are expensed against operations as incurred; expenditures for
improvements are capitalized to the appropriate property accounts and
depreciated over the estimated life of the improvements.
During the first quarter of 1996, the Partnership adopted Financial Accounting
Standards Board Statement No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" (the "Standard"). The
Standard established guidance for determining if the value of defined assets
are impaired, and if so, how impairment losses should be measured and reported
in the financial statements. The Standard also addressed the accounting for
long-lived assets that are expected to be disposed of. The adoption of the
Standard did not have a material effect on the Partnership's financial
statements.
Cash equivalents are considered all highly liquid investments with maturity of
three months or less when purchased.
Certain reclassifications have been made to the previously reported 1995
statements in order to provide comparability with the 1996 statements. These
reclassifications have no effect on net income or Partners' (deficit) capital.
Reference is made to the Partnership's annual report for the year ended
December 31, 1995 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 otherwise disclosed herein.
2. RELATED PARTY TRANSACTIONS:
In accordance with the Partnership Agreement, subsequent to October 19, 1984,
the Termination of the Offering, the General Partner is entitled to 10% of
distributable Cash Flow (as defined in the Partnership Agreement) as a
Partnership Management Fee. In addition, 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; second, the
balance, if any, to the Limited Partners. Net Profits from the sale or
disposition of a Partnership property are allocated: first, prior to giving
effect to any distributions of Sale Proceeds from the transaction, to the
General Partner and the Limited Partners with negative balances in their
capital accounts pro rata in proportion to such respective negative balances,
to the extent of the total of such negative balances; second, to the General
Partner, in an amount necessary to make the balance in its capital account
equal to the amount of Sale Proceeds to be distributed to the General Partner
with respect to the sale or disposition of such property and third, the
balance, if any, to the Limited Partners. Net Losses (exclusive of Net Losses
from the sale, disposition or provision for value impairment of Partnership
properties) are allocated 1% to the General Partner and 99% to the Limited
Partners. Net Losses from the sale, disposition or provision for value
impairment of Partnership properties are allocated: first, prior to giving
effect to any distributions of Sale Proceeds from the transaction, to the
extent that the balance in the General Partner's capital account exceeds its
Capital Investment or the balance in the capital accounts of the Limited
Partners exceeds the amount of their Capital Investment (the "Excess
Balances"), to the General Partner and the Limited Partners pro rata in
proportion to such Excess Balances until such Excess Balances are reduced to
zero; second, to the General Partner and the Limited Partners and among them
(in the 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. Notwithstanding the
foregoing, in all events there shall be allocated to the General Partner not
less than 1% of Net Profits and Net Losses from the sale, disposition or
provision for value impairment of a Partnership property. For the quarter ended
March 31, 1996, the General Partner was entitled to a Partnership Management
Fee, and accordingly, allocated Net Profits, of $127,200.
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter ended March 31, 1996 were as follows:
<TABLE>
<CAPTION>
Paid Payable
- ------------------------------------------------------------------------
<S> <C> <C>
Property management and leasing fees $ 86,700 $ 42,900
Reimbursement of property insurance premiums, at cost None 19,400
Real estate commissions (a) None 40,300
Reimbursement of expenses, at cost:
--Accounting 13,600 5,800
--Investor communication 6,100 2,900
--Legal 16,800
- ------------------------------------------------------------------------
$123,200 $111,300
- ------------------------------------------------------------------------
</TABLE>
(a) As of March 31, 1996, 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.
In accordance with the Partnership Agreement, the Partnership will not pay
the General Partner or any Affiliate a real estate commission from the sale
of a Partnership property until Limited Partners have received cumulative
distributions of Sale or Financing Proceeds equal to 100% of their Original
Capital Contribution, plus a cumulative return (including all Cash Flow (as
defined in the Partnership Agreement) which has been distributed to the
Limited Partners from the initial investment date) of 6% simple interest
per annum on their Capital Investment from the initial investment date.
4
<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, 1995, for a discussion of the Partnership's business.
OPERATIONS
The table below is a recap of the Partnership's share of certain operating
results of each of its remaining properties for the quarters ended March 31,
1996 and 1995. The discussion following the table should be read in conjunction
with the Financial Statements and Notes thereto appearing in this report.
<TABLE>
<CAPTION>
Comparative
Operating Results
(a)
For the Quarters
Ended
3/31/96 3/31/95
- ---------------------------------------
<S> <C> <C>
FOXHALL SQUARE BUILDING (50%)
Rental revenues $ 413,900 $425,400
- ---------------------------------------
Property net income $ 144,800 $125,100
- ---------------------------------------
Average occupancy 84% 85%
- ---------------------------------------
LAKEWOOD SQUARE SHOPPING
CENTER (50%)
Rental revenues $ 326,700 $312,800
- ---------------------------------------
Property net income $ 154,000 $157,700
- ---------------------------------------
Average occupancy 96% 83%
- ---------------------------------------
ELLIS BUILDING (50%)
Rental revenues $ 288,000 $288,600
- ---------------------------------------
Property net income $ 89,800 $ 77,900
- ---------------------------------------
Average occupancy 93% 96%
- ---------------------------------------
MARKET PLACE AT RIVERGATE
SHOPPING CENTER
Rental revenues $ 281,200 $240,100
- ---------------------------------------
Property net income $ 123,000 $125,600
- ---------------------------------------
Average occupancy 100% 91%
- ---------------------------------------
BANANA RIVER SQUARE SHOPPING
CENTER
Rental revenues $ 191,700 $203,000
- ---------------------------------------
Property net income $ 66,200 $ 88,600
- ---------------------------------------
Average occupancy 97% 95%
- ---------------------------------------
12621 FEATHERWOOD BUILDING
(50%)
Rental revenues $ 127,300 $130,300
- ---------------------------------------
Property net income $ 48,700 $ 44,100
- ---------------------------------------
Average occupancy 100% 100%
- ---------------------------------------
</TABLE>
(a) Excludes certain income and expense items which are not directly related to
individual property operating results such as interest income, general and
administrative expenses and income from participation in joint venture.
Net income decreased $45,300 for the quarter ended March 31, 1996 when compared
to the quarter ended March 31, 1995. The decrease in net income was due to: 1)
decreased interest income of $31,500 as a result of a decrease in the amounts
available for and rates available on the Partnership's short-term investments;
2) diminished operating results at Banana River Square Shopping Center ("Banana
River") of $22,400 and 3) increased general and administrative expenses of
$13,300 due to an increase in professional fees and salaries. Partially
offsetting the decrease was improved operating results at Foxhall Square
Building ("Foxhall"), 12621 Featherwood Building ("Featherwood") and Ellis
Building ( "Ellis") totaling $36,200.
Rental revenues increased $28,600 or 1.8% for the quarterly periods under
comparison due to increases in the average occupancy rate at Marketplace at
Rivergate Shopping Center ("Rivergate") and Lakewood Square Shopping Center
("Lakewood"). Partially offsetting the increase in rental revenues was: 1)
decreased rental revenues at Foxhall resulting from a decrease in revenues
generated from its parking garage facility and 2) decreased tenant
reimbursements for real estate taxes at Banana River resulting from 1995
payments received from tenants in excess of their share of actual 1995 real
estate tax expense.
Property operating expenses increased by $46,800 for the quarter ended March
31, 1996 when compared to the quarter ended March 31, 1995. The primary factors
which caused the increase were: 1) increased security costs at Featherwood and
Lakewood; 2) increased professional fees and utilities at Foxhall, Rivergate
and Banana River; 3) increased leasing fees at Rivergate as a result of the
increase in occupancy and 4) expenditures at Banana River due to the settlement
of an outstanding sales and use tax audit.
Repairs and maintenance expense increased $22,500 for the quarter ended March
31, 1996 when compared to the quarter ended March 31, 1995. The primary factors
which caused the increase for the quarterly periods under comparison were: 1)
increased architectural costs at Lakewood and 2) increased costs associated
with snow removal, plumbing and minor improvements at Rivergate.
Depreciation and amortization expense decreased $24,400 for the quarters under
comparison primarily due to the provisions for value impairment recorded for
several Partnership properties for the year ended December 31, 1995.
Real estate tax expense decreased $22,100 for the quarter ended March 31, 1996
when compared to the quarter ended March 31, 1995, primarily due to a decrease
in the assessed valuations of Foxhall and Featherwood. Partially offsetting the
decrease was increased real estate tax expense at Rivergate due to the fact
that 1995 real estate tax expense included the 1995 receipt of a refund of a
portion of 1993/1994 real taxes.
The Partnership's allocated share of net income at Holiday decreased $8,400 for
the quarter ended March 31, 1996 when compared to the quarter ended March 31,
1995. This decrease was primarily due to increased repairs and maintenance and
property operating expense. Partially offsetting this decrease was increased
rental revenues.
Insurance expense remained stable for the quarterly periods under comparison.
To increase and/or maintain occupancy levels at the Partnership's properties,
the General Partner, through its Affiliated asset and property management
groups, continues to take the following actions: 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
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
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
One of the Partnership's objectives is to dispose of its properties when market
conditions allow for the achievement of the maximum possible sales price. In
the interim, the Partnership continues to manage and maintain its remaining
properties. Notwithstanding the Partnership's intention relative to property
sales, another primary objective of the Partnership is to provide cash
distributions to Partners from Partnership operations. To the extent cumulative
cash distributions exceed net income, such excess distributions are treated as
a return of capital. Cash Flow (as defined in the Partnership Agreement) is
generally not equal to Partnership net income or cash flows as defined by
generally accepted accounting principles ("GAAP"), since certain items are
treated differently under the Partnership Agreement than under GAAP. Management
believes that 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 GAAP. The following table includes a reconciliation of Cash Flow
(as defined in the Partnership Agreement) to cash flow provided by operating
activities as defined by GAAP. Such amounts are not indicative of actual
distributions to Partners and should not necessarily be considered as an
alternative to the results disclosed in the Statements of Income and Expenses
and Statements of Cash Flows.
<TABLE>
<CAPTION>
Comparative
Cash Flow Results
For the Quarters Ended
3/31/96 3/31/95
- -------------------------------------------------------------------------------
<S> <C> <C>
Cash Flow (as defined in the Partnership Agreement) $ 1,121,200 $ 1,236,900
Less: Cash Flow from joint venture (103,200) (157,600)
Items of reconciliation:
Decrease (increase) in current assets 19,400 (33,900)
(Decrease) increase in current liabilities (117,700) 71,200
- -------------------------------------------------------------------------------
Net cash provided by operating activities $ 919,700 $ 1,116,600
- -------------------------------------------------------------------------------
Net cash (used for) provided by investing activities $ (72,500) $ 37,800
- -------------------------------------------------------------------------------
Net cash (used for) financing activities $(1,274,000) $(1,035,200)
- -------------------------------------------------------------------------------
</TABLE>
The decrease in Cash Flow (as defined in the Partnership Agreement) of $115,700
for the quarter ended March 31, 1996 when compared to the quarter ended March
31, 1995 was primarily due to the decrease in net income, as previously
discussed, exclusive of depreciation and amortization.
The decrease in the Partnership's cash position of $426,800 as of March 31,
1996 when compared to December 31, 1995 was primarily the result of
distributions paid to Partners and expenditures for capital, tenant improvement
and leasing costs exceeding net cash provided by operating activities. Liquid
assets of the Partnership as of March 31, 1996 were comprised of amounts held
for working capital purposes.
The decrease of $196,900 in net cash provided by operating activities for the
quarter ended March 31, 1996 when compared to the quarter ended March 31, 1995
was primarily due to the decrease in Cash Flow (as defined in the Partnership
Agreement) and the timing of the collection of tenants' rental payments and the
payment of Partnership expenses.
Net cash provided by (used for) investing activities changed from $37,800 for
the quarter ended March 31, 1995 to $(72,500) for the quarter ended March 31,
1996 primarily due to the first quarter 1996 distribution from the joint
venture not being received until May 1996, partially offset by decreased
payments made for capital, tenant improvement and leasing costs at the
Partnership's properties. The Partnership maintains working capital reserves to
pay for capital expenditures such as capital, tenant improvement and leasing
costs. During the quarter ended March 31, 1996, the Partnership spent $47,500
for capital, tenant improvement and leasing costs and has budgeted to spend an
additional $925,000 during the remainder of 1996. Of the remaining budgeted
amount, approximately $420,000, $360,000 and $75,000, relates to anticipated
capital, tenant improvement and leasing costs expected to be incurred at
Foxhall, Lakewood and Banana River, respectively. In addition, approximately
$510,000 is budgeted to be advanced to the Partnership's joint venture
investment in Holiday for capital, tenant improvement and leasing costs. Actual
amounts expended in 1996 may vary depending on a number of factors including
leasing activity and other market conditions throughout the year. The General
Partner believes these expenditures are necessary to increase and/or maintain
occupancy levels in very competitive markets, maximize rental rates charged to
new and renewing tenants and prepare the remaining properties for eventual
disposition.
The increase of $238,800 in net cash (used for) financing activities for the
quarter ended March 31, 1996 when compared to the quarter ended March 31, 1995
was due primarily to an increase in distributions paid to Partners in 1996.
The General Partner continues to take a conservative approach to projections of
future rental income in its determination of adequate levels of cash reserves
due to the anticipated capital, tenant improvement and leasing costs necessary
to be made at the Partnership's properties during the next several years. For
the quarter ended March 31, 1996, the Partnership included $152,000 of
previously undistributed Cash Flow (as defined in the Partnership Agreement) in
its distribution to Partners.
Distributions to Limited Partners for the quarter March 31, 1996 were declared
in the amount of $1,146,000, or $13.50 per Unit. Cash distributions are made 60
days after the last day of each fiscal quarter. The amount of future
distributions to Partners will ultimately be dependent upon the performance of
the Partnership's investments as well as the General Partner's determination of
the amount of cash necessary to supplement working capital reserves to meet
future liquidity requirements of the Partnership. Accordingly, there can be no
assurance as to the amount and/or availability of cash for future distributions
to Partners.
6
<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
March 31, 1996.
<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: May 13, 1996 By: /s/ DOUGLAS CROCKER II
--------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: May 13, 1996 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
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 11,891,200
<SECURITIES> 0
<RECEIVABLES> 127,400
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,699,700
<PP&E> 45,506,400
<DEPRECIATION> 12,870,000
<TOTAL-ASSETS> 50,176,500
<CURRENT-LIABILITIES> 1,857,300
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 48,207,400
<TOTAL-LIABILITY-AND-EQUITY> 50,176,500
<SALES> 0
<TOTAL-REVENUES> 1,863,900
<CGS> 0
<TOTAL-COSTS> 688,500
<OTHER-EXPENSES> 96,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 765,100
<INCOME-TAX> 0
<INCOME-CONTINUING> 765,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 765,100
<EPS-PRIMARY> 7.51
<EPS-DILUTED> 7.51
</TABLE>
