<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, 1995
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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: 0-12538
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First Capital Institutional Real Estate, Ltd. - 1
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(Exact name of registrant as specified in its charter)
Florida 59-2197264
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Riverside Plaza, Suite 950, Chicago, Illinois 60606-2607
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(Address of principal executive offices) (Zip Code)
(312) 207-0020
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(Registrant's telephone number, including area code)
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(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 definitive Prospectus dated October 25, 1982, included
in the Registrant's Registration Statement on Form S-11 (Registration No.
2-79092), is incorporated herein by reference in Part I of this report.
<PAGE>
BALANCE SHEETS
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
March 31,
1995 December 31,
(Unaudited) 1994
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<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 5,501,700 $ 5,501,700
Buildings and improvements 30,705,200 30,590,100
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36,206,900 36,091,800
Accumulated depreciation and amortization (11,062,600) (10,767,200)
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Total investment properties, net of accumulated
depreciation and amortization 25,144,300 25,324,600
Cash and cash equivalents 4,388,700 4,238,600
Rents receivable 134,800 67,300
Other assets 162,000 162,100
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$ 29,829,800 $ 29,792,600
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 364,200 $ 363,000
Due to Affiliates 494,100 447,700
Security deposits 144,900 138,000
Distributions payable 385,200 349,800
Other liabilities 81,000 70,100
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1,469,400 1,368,600
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Partners' (deficit) capital:
General Partners (279,100) (255,700)
Limited Partners (60,000 Units authorized, issued
and outstanding) 28,639,500 28,679,700
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28,360,400 28,424,000
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$ 29,829,800 $ 29,792,600
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</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the quarter ended March 31, 1995
and the year ended December 31, 1994
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital,
January 1, 1994 $(157,900) $29,546,700 $29,388,800
Net (loss) income for the year ended
December 31, 1994 (97,800) 532,200 434,400
Distributions for the year ended December
31, 1994 (1,399,200) (1,399,200)
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Partners' (deficit) capital,
December 31, 1994 (255,700) 28,679,700 28,424,000
Net (loss) income for the quarter ended
March 31, 1995 (23,400) 345,000 321,600
Distributions for the quarter ended March
31, 1995 (385,200) (385,200)
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Partners' (deficit) capital,
March 31, 1995 $(279,100) $28,639,500 $28,360,400
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</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, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Income:
Rental $1,267,000 $1,157,100
Interest 56,500 32,900
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1,323,500 1,190,000
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Expenses:
Depreciation and amortization 295,400 274,300
Property operating:
Affiliates 69,900 57,600
Nonaffiliates 274,800 212,500
Real estate taxes 132,200 120,600
Insurance--Affiliate 15,700 14,800
Repairs and maintenance 155,100 162,400
General and administrative:
Affiliates 13,400 14,400
Nonaffiliates 45,400 39,700
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1,001,900 896,300
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Net income $ 321,600 $ 293,700
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Net (loss) allocated to General Partners $ (23,400) $ (21,800)
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Net income allocated to Limited Partners $ 345,000 $ 315,500
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Net income allocated to Limited Partners per Unit
(60,000 Units authorized, issued and outstanding) $ 5.75 $ 5.26
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</TABLE>
STATEMENTS OF CASH FLOWS
For the quarters ended March 31, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 321,600 $ 293,700
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 295,400 274,300
Changes in assets and liabilities:
(Increase) decrease in rents receivable (67,500) 64,100
Decrease in other assets 100 20,200
Increase (decrease) in accounts payable and accrued
expenses 1,200 (80,100)
Increase in due to Affiliates 46,400 6,200
Increase in other liabilities 10,900 5,100
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Net cash provided by operating activities 608,100 583,500
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Cash flows from investing activities:
Payments for capital and tenant improvements (115,100) (81,300)
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Net cash (used for) investing activities (115,100) (81,300)
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Cash flows from financing activities:
Distributions paid to Partners (349,800) (199,800)
Increase (decrease) in security deposits 6,900 (5,600)
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Net cash (used for) financing activities (342,900) (205,400)
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Net increase in cash and cash equivalents 150,100 296,800
Cash and cash equivalents at the beginning of the
period 4,238,600 4,245,900
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Cash and cash equivalents at the end of the period $4,388,700 $4,542,700
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</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
March 31, 1995
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 ended March 31, 1995 are not necessarily indicative of the
operating results for the year ending December 31, 1995.
The financial statements include the Partnership's 50% interest in three joint
ventures. These joint ventures were formed for the purpose of acquiring
interests in certain real properties and are operated under the control of the
Managing General Partner. Accordingly, the Partnership's pro rata share of the
ventures' revenues, expenses, assets, liabilities and capital is included in
the financial statements.
Certain reclassifications have been made to the previously reported 1994
statements in order to provide comparability with the 1995 statements. These
reclassifications have not changed the 1994 results.
Cash equivalents are considered all highly liquid investments purchased with a
maturity of three months or less.
Reference is made to the Partnership's annual report for the year ended
December 31, 1994, 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.
2. RELATED PARTY TRANSACTIONS:
Subsequent to March 31, 1983, the Termination of the Offering, the General
Partners are entitled to 10% of Cash Flow as their Partnership Management Fee,
provided that the Limited Partners first receive specified annual returns on
their Original Capital Contributions. In accordance with the Partnership
Agreement, Net Profits (exclusive of depreciation and Net Profits from the sale
or disposition of Partnership properties) are allocated first to the General
Partners in an amount equal to the greater of the General Partners' Partnership
Management Fee or 1% of such Net Profits. The balance of Net Profits, if any,
is allocated to the Limited Partners. Net Losses (exclusive of depreciation and
Net Losses from the sale or disposition of Partnership properties) are
allocated 1% to the General Partners and 99% to the Limited Partners. All
depreciation shall be allocated 10% to the General Partners and 90% to the
Limited Partners. The General Partners were not entitled to cash distributions
for the quarter ended March 31, 1995. During the quarter ended March 31, 1995,
the General Partners were allocated Net Losses of $23,400.
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter ended March 31, 1995 are as follows:
<TABLE>
<CAPTION>
Paid Payable
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<S> <C> <C>
Property management and leasing fees $39,200 $ 71,000
Reimbursement of property insurance premiums, at cost None 15,700
Real estate commissions (a) None 403,000
Reimbursement of expenses, at cost:
(1) Accounting 6,200 2,000
(2) Investor communication 4,800 2,400
(3) Legal 2,400 None
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$52,600 $494,100
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</TABLE>
(a) As of March 31, 1995, the Partnership owed $403,000 to the Managing 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.
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, 1994, for a discussion of the Partnership's business.
OPERATIONS
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
four remaining properties. Notwithstanding the Partnership's intention
relative to property sales, another primary objective of the Partnership is to
provide cash distributions to Limited Partners from Cash Flow generated by
Partnership operations. To the extent cash distributions exceed net income,
such excess distributions will be treated as a return of capital. 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 by 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
Quarters Ended
3/31/95 3/31/94
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<S> <C> <C>
Amount of Cash Flow (as defined by the Partnership
Agreement) $ 617,000 $ 568,000
Capital Investment $44,010,000 $44,010,000
Annualized return on Capital Investment (Annualized
Cash Flow/Capital Investment) 5.61% 5.16%
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</TABLE>
The increase in Cash Flow of approximately $49,000 for the quarter ended March
31, 1995 when compared to the quarter ended March 31, 1994 was primarily due
to increased Cash Flow results at Peachtree Palisades Office Building
("Peachtree"), the 12621 Featherwood Building ("Featherwood") and Lakewood
Square Shopping Center ("Lakewood") of approximately $25,900, $19,200, and
$11,900, respectively. Also contributing to the increase in Cash Flow was an
increase in interest income earned on short-term investments of $23,600.
Partially offsetting the increase in Cash Flow results was decreased Cash Flow
results at the Foxhall Square Building ("Foxhall") of approximately $29,500.
Rental revenues at Peachtree for the quarters ended March 31, 1995 and 1994
were approximately $398,500 and $310,500, respectively. Rental revenues
increased from 1994 to 1995 due to an increase in the average quarterly
occupancy rate. The average quarterly occupancy rate for the quarter ended
March 31, 1995 was 93% as compared to 77% for the quarter ended March 31,
1994. Also contributing to the increase in Cash Flow for this property was a
decrease in repairs and maintenance of $9,200. Partially offsetting the
increase in Cash Flow for this property was an increase in property operating
expenses of approximately $69,100 primarily due to increases in utilities,
salaries and management fees.
Rental revenues at Featherwood for the quarters ended March 31, 1995 and 1994
were approximately $130,300 and $114,500, respectively. Rental revenues
increased from 1994 to 1995 due to increases in base rental and escalation
income. The average quarterly occupancy rate remained at 100% for the quarter
ended March 31, 1995 and the quarter ended March 31, 1994. Also contributing
to the increase in Cash Flow results for this property was a decrease in
property operating expenses of approximately $4,500. Partially offsetting the
increase in Cash Flow for this property was an increase in repairs and
maintenance of approximately $1,100.
Rental revenues at Lakewood for the quarters ended March 31, 1995 and 1994
were approximately $312,800 and $309,800, respectively. Rental revenues
increased from 1994 to 1995 due to an increase in base rent charged to new and
renewing tenants. The average quarterly occupancy rate remained relatively
stable at 83% for the quarter ended March 31, 1995 compared to 84% for the
quarter ended March 31, 1994. Also contributing to the increase in Cash Flow
results for this property were decreases in property operating expenses and
repairs and maintenance expenses of approximately $5,700 and $3,200,
respectively.
Rental revenues at Foxhall for the quarters ended March 31, 1995 and 1994 were
approximately $425,400 and $422,200, respectively. The average quarterly
occupancy rate at Foxhall has remained relatively stable at 85% for the
quarters ended March 31, 1995 and 1994. Offsetting the increase in rental
revenues were increases in real estate taxes, property operating expenses and
repairs and maintenance expenses of approximately $10,500, $18,300 and $3,900,
respectively.
To increase occupancy levels at the Partnership's properties, the Managing
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 March 31, 1995 when
compared to December 31, 1994 was primarily the result of net cash provided by
operating activities exceeding distributions paid to Limited Partners and
expenditures made for capital and tenant improvements. The liquid assets of
the Partnership as of March 31, 1995 represent working capital reserves and
undistributed Cash Flow.
Net cash provided by operating activities increased approximately $24,600
during the quarter ended March 31, 1995 when compared to the quarter ended
March 31, 1994. The increase was primarily due to the timing in 1994 of the
payment of certain Partnership expenses as well as to the increase in Cash
Flow results as discussed above.
Net cash used for investing activities increased approximately $33,800 for the
quarter ended March 31, 1995 when compared to the quarter ended March 31,
1994. This increase was due to an increase in expenditures for capital and
tenant improvements to the Partnership's properties. During the quarter ended
March 31, 1995, the Partnership spent approximately $115,100 for building and
tenant improvements and has budgeted to spend an additional $1,386,000 during
the remainder of 1995, consisting of approximately $794,000, $360,000 and
$232,000 for Peachtree, Lakewood and Foxhall, respectively. The Managing
General Partner believes these expenditures are necessary to maintain
occupancy levels in very competitive markets and ready the remaining
properties for disposition.
Net cash used for financing activities increased approximately $137,500 for
the quarter ended March 31, 1995 when compared to the quarter ended March 31,
1994. This increase was due primarily to an increase in distributions paid to
Limited Partners, partially offset by an increase in the net collection of
tenant security deposits.
The Managing General Partner continues to take a conservative approach to
projections of future rental income and to maintain higher levels of cash
reserves due to the anticipated capital and tenant improvements necessary to
be made at the Partnership's properties during the next several years. As a
result of this, the Partnership continues to reserve amounts from Cash Flow to
supplement working capital reserves. For the quarter ended March 31, 1995 Cash
Flow retained to supplement working capital reserves approximated $231,800.
Distributions to Limited Partners for the quarter ended March 31, 1995 were
declared at an annualized rate of 3.50% of Capital Investment. Cash
distributions are made 60 days after quarter end. The amount of future
distributions to Limited Partners will ultimately be dependent upon the
performance of the Partnership's investments, as well as the amount of Cash
Flow withheld for future cash requirements. Therefore, there can be no
assurance of the availability or the amount of Cash Flow for distribution to
investors.
5
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K:
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(a) Exhibits: Financial Data Schedule.
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the quarter ended
March 31, 1995.
<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. - 1
BY: FIRST CAPITAL FINANCIAL CORPORATION
MANAGING GENERAL PARTNER
Date: May 12, 1995 By: /s/ DOUGLAS CROCKER II
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DOUGLAS CROCKER II
President and Chief Executive Officer
Date: May 12, 1995 By: /s/ NORMAN M. FIELD
------------ ---------------------------------------
NORMAN M. FIELD
Vice President - Finance and Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 4,388,700
<SECURITIES> 0
<RECEIVABLES> 134,800
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,523,500
<PP&E> 36,206,900
<DEPRECIATION> 11,062,600
<TOTAL-ASSETS> 29,829,800
<CURRENT-LIABILITIES> 840,500
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 28,360,400
<TOTAL-LIABILITY-AND-EQUITY> 29,829,800
<SALES> 0
<TOTAL-REVENUES> 1,323,500
<CGS> 0
<TOTAL-COSTS> 647,700
<OTHER-EXPENSES> 58,800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 321,600
<INCOME-TAX> 0
<INCOME-CONTINUING> 321,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 321,600
<EPS-PRIMARY> 5.75
<EPS-DILUTED> 5.75
</TABLE>
