<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-Q
--------------------
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995. . . . . . . . .
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 NO.
0-14105
--------------------
MURRAY INCOME PROPERTIES I, LTD.
(Exact Name of Registrant as Specified in its Charter)
TEXAS 75-1946214
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5550 LBJ FREEWAY, SUITE 675, DALLAS, TEXAS 75240
(Address of principal executive offices) (Zip Code)
(214) 991-9090
(Registrant's Telephone Number, including Area Code)
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
----- -----
<PAGE> 2
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED BALANCE SHEETS
================================================================================
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
-------------- ---------------
(unaudited)
<S> <C> <C>
ASSETS
Investment properties, at cost
Land $ 6,232,801 $ 6,232,801
Buildings and improvements 20,089,187 20,060,761
----------- -----------
26,321,988 26,293,562
Less accumulated depreciation 7,649,816 7,225,381
----------- -----------
Net investment properties 18,672,172 19,068,181
Cash and cash equivalents 1,223,983 1,255,015
Accounts and notes receivable,
net of allowance of $26,502 and
$21,446, in 1995 and 1994, respectively 694,924 655,081
Other assets, at cost, net of accumulated
amortization of $338,697 and $306,266
in 1995 and 1994, respectively 264,397 256,049
----------- -----------
$20,855,476 $21,234,326
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 21,517 $ 20,860
Accrued property taxes 121,645 184,447
Security deposits 182,741 153,563
----------- -----------
Total liabilities 325,903 358,870
----------- -----------
Minority interest in joint venture 1,573,296 1,602,538
----------- -----------
Partners' equity:
General Partners:
Capital contributions 1,000 1,000
Cumulative net earnings 168,716 160,647
Cumulative cash distributions ( 290,146) ( 275,744)
----------- -----------
( 120,430) ( 114,097)
----------- -----------
Limited Partners (28,227 Interests):
Capital contributions, net of offering costs 24,570,092 24,570,092
Cumulative net earnings 8,723,826 8,328,460
Cumulative cash distributions (14,217,211) (13,511,537)
----------- -----------
19,076,707 19,387,015
----------- -----------
Total partners' equity 18,956,277 19,272,918
----------- -----------
$20,855,476 $21,234,326
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 3
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income:
Rental $692,708 $672,031 $1,391,696 $1,365,665
Interest 18,784 10,990 36,384 20,706
Termination fee income -0- -0- -0- 18,830
-------- -------- ---------- ----------
711,492 683,021 1,428,080 1,405,201
-------- -------- ---------- ----------
Expenses:
Depreciation 214,159 216,590 424,435 429,581
Property operating 196,296 174,900 379,987 361,068
General and administrative 65,659 65,370 157,409 159,497
Bad debts, net 1,673 4,036 5,056 4,710
-------- -------- ---------- ----------
477,787 460,896 966,887 954,856
-------- -------- ---------- ----------
Earnings before minority interest 233,705 222,125 461,193 450,345
Minority interest in joint venture's
earnings 28,232 26,045 57,758 56,667
-------- -------- ---------- ----------
Net earnings $205,473 $196,080 $ 403,435 $ 393,678
======== ======== ========== ==========
Earnings per limited partnership interest $ 7.13 $ 6.81 $ 14.00 $ 13.67
======== ======== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
---------- ---------- -------------
<S> <C> <C> <C>
Six months ended June 30, 1994:
Balance at December 31, 1993 $(101,640) $19,997,421 $19,895,781
Net earnings 7,873 385,805 393,678
Cash distributions ( 14,401) (705,675) (720,076)
--------- ----------- -----------
Balance at June 30, 1994 $(108,168) $19,677,551 $19,569,383
========= =========== ===========
Six months ended June 30, 1995:
Balance at December 31, 1994 $(114,097) $19,387,015 $19,272,918
Net earnings 8,069 395,366 403,435
Cash distributions ( 14,402) (705,674) (720,076)
--------- ----------- -----------
Balance at June 30, 1995 $(120,430) $19,076,707 $18,956,277
========= =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------------------
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 403,435 $ 393,678
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Bad debts, net 5,056 4,710
Depreciation 424,435 429,581
Amortization of other assets 32,431 38,767
Minority interest in joint venture's earnings 57,758 56,667
Change in assets and liabilities:
Accounts and notes receivable ( 44,899) ( 90,417)
Other assets ( 40,779) ( 84,486)
Accounts payable 657 ( 24,783)
Accrued property taxes and security deposits ( 33,624) ( 21,120)
---------- ----------
Net cash provided by operating activities 804,470 702,597
---------- ----------
Cash flows from investing activities -
additions to investment properties ( 28,426) (125,393)
---------- ----------
Cash flows from financing activities:
Distributions to minority interest in joint venture ( 87,000) ( 87,000)
Cash distributions (720,076) (720,076)
---------- ----------
Net cash used in financing activities (807,076) (807,076)
---------- ----------
Net decrease in cash and cash equivalents ( 31,032) (229,872)
Cash and cash equivalents at beginning of period 1,255,015 1,364,545
---------- ----------
Cash and cash equivalents at end of period $1,223,983 $1,134,673
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
1. BASIS OF ACCOUNTING
The consolidated financial statements include the accounts of the
Partnership and Tower Place Joint Venture (85% owned by the Partnership). All
significant intercompany balances and transactions have been eliminated in
consolidation.
Rental income is recognized as earned under the leases. Accordingly, the
Partnership accrues rental income for the full period of occupancy using the
straight line method over the related terms. At June 30, 1995 and December 31,
1994, $483,192 and $463,485, respectively, of accounts receivable related to
such accruals.
Other assets consist primarily of deferred leasing costs which are
amortized using the straight line method over the lives of the related leases.
Depreciation is provided over the estimated useful lives of the respective
assets using the straight line method. The estimated useful lives of the
buildings and improvements range from three to twenty-five years.
The Partnership periodically reevaluates the propriety of the carrying
amounts of investment properties to determine whether current events and
circumstances warrant an adjustment to such carrying amounts. Such evaluations
are performed utilizing annual appraisals performed by independent appraisers
as well as internally developed estimates of expected undiscounted future cash
flows. In the event the carrying value of an individual property exceeds
expected future undiscounted cash flows, the property is written down to the
most recently appraised value. Since inception of the Partnership, none of the
Partnership's properties have required write downs.
No provision for income taxes has been made as the liabilities for such
taxes are those of the individual Partners rather than the Partnership. The
Partnership files its tax return on the accrual basis used for Federal income
tax purposes.
Earnings per limited partnership interest are based upon the limited
partnership interests outstanding at period-end and the net earnings allocated
to the Limited Partners in accordance with the Partnership Agreement.
For purposes of reporting cash flows, the Partnership considers all
certificates of deposit and highly liquid debt instruments with original
maturities of three months or less to be cash equivalents.
2. PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits or losses
of the Partnership and cash distributions are generally allocated 98% to the
Limited Partners and 2% to the General Partners. Cash distributions from the
sale or refinancing of a property are allocated as follows:
(a) First, all Cash Distributions from Sales or Refinancings shall be allocated
99% to the Limited Partners and 1% to the Non-corporate General Partner
until the Limited Partners have been returned their Original Invested
Capital from Cash Distributions from Sales or Refinancings, plus their
Preferred Return from Cash Distributions from Operations or Cash
Distributions from Sales or Refinancings, or both.
6
<PAGE> 7
================================================================================
(b) Next, all Cash Distributions from Sales or Refinancings shall be
allocated 1% to the Non-corporate General Partner and 99% to the Limited
Partners and the General Partners. Such 99% will be allocated (i) first
to the Corporate General Partner in an amount equal to any unpaid Cash
Distributions from Operations subordinated to the Limited Partners' 7%
non-cumulative annual return and (ii) thereafter, 80% to the Limited
Partners and 20% to the General Partners.
Cash Distributions from Sales or Refinancings (other than the 1% of Cash
Distributions from Sales or Refinancings payable to the Non-corporate
General Partner) payable to the General Partners shall be allocated 62
1/2% to the Non-corporate General Partner and 37 1/2% to the Corporate
General Partner.
3. INVESTMENT PROPERTIES
The Partnership owns and operates Mountain View Plaza, a shopping center
located in Scottsdale, Arizona, and Castle Oaks Village, a shopping center
located in Castle Hills (San Antonio), Texas. In addition, the Partnership
owns an 85% interest in Tower Place Joint Venture, a joint venture which owns
Tower Place Festival Shopping Center located in Pineville (Charlotte), North
Carolina. The remaining 15% interest in the joint venture is owned by Murray
Income Properties II, Ltd. ("MIP II"), an affiliated real estate limited
partnership. The Tower Place Joint Venture Agreement provides that the
Partnership will share profits, losses, and cash distributions according to the
Partnership's 85% ownership interest in the joint venture.
4. OTHER
Information furnished in this interim report reflects all adjustments
consisting of normal recurring adjustments, which, in the opinion of
management, are necessary to reflect a fair presentation of the results for the
periods presented.
The financial information included in this interim report as of June 30,
1995 and for the three and six months ended June 30, 1995 and 1994 has been
prepared by management without audit by independent public accountants who do
not express an opinion thereon. The Partnership's annual report contains
audited consolidated financial statements. The notes to the consolidated
financial statements in the Partnership's 1994 annual report are an integral
part of the consolidated financial statements presented herein.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1995, the Partnership had cash and cash equivalents of
$1,223,983. Such amounts represent cash generated from operations and working
capital reserves.
Rental income from leases with escalating rental rates is accrued using the
straight line method over the related lease terms. At June 30, 1995 and
December 31, 1994, $483,192 and $463,485, respectively, of accounts receivable
related to such accruals. Accounts receivable also consist of tenant
receivables, receivables for rent collected (but not yet remitted by the
property management companies), and interest receivable on short-term
investments. The increase in accounts receivable of $44,899 from December 31,
1994 to June 30, 1995 is primarily due to an increase in receivables for rent
collected (but not yet remitted by the property management companies) at Tower
Place Festival Shopping Center and Castle Oaks Shopping Center, and receivables
related to the accruals described above at Tower Place Festival Shopping Center
and Mountain View Plaza Shopping Center. As of June 30, 1995 and December 31,
1994, the Partnership had allowances of $26,502 and $21,446, respectively, for
uncollectible accounts receivable.
The decrease of $62,802 in accrued property taxes from December 31, 1994
to June 30, 1995 is primarily due to the payment of 1994 property taxes for the
Partnership's properties.
During the three months ended June 30, 1995, the Partnership made Cash
Distributions from Operations totaling $360,038, (which was reduced by $17,586
related to 1994 North Carolina state income taxes paid on behalf of the
partners in connection with the operation of Tower Place Joint Venture) related
to the three month period ended March 31, 1995. Subsequent to June 30, 1995,
the Partnership made Cash Distributions from Operations of $360,038 relating to
the three months ended June 30, 1995. The distributed funds were derived from
the net cash flow generated from operations of the Partnership's properties and
from interest earned, net of administrative expenses, on funds invested in
short-term money market instruments.
Future liquidity is currently expected to result from cash generated from
the operations of the Partnership's properties (which could be affected
negatively in the event of weakened occupancies, and/or rental rates), interest
earned on funds invested in short-term money market instruments and ultimately
through the sale of the Partnership's properties.
8
<PAGE> 9
RESULTS OF OPERATIONS
Rental income increased $26,031 for the six months ended June 30, 1995 as
compared to the same period in 1994. The following information details the
rental income generated, bad debt expense incurred, and average occupancy for
the periods shown for each of the Partnership's properties.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Mountain View Plaza Shopping Center
Rental income $ 228,580 $200,856 $437,992 $408,457
Bad debt expense $ -0- $ 367 $ 926 $ 367
Average occupancy 98% 94% 98% 95%
Castle Oaks Village Shopping Center
Rental income $ 64,634 $ 90,064 $140,630 $181,396
Bad debt expense (recovery) $ 3,187 $ 2,624 $ 6,267 $ (1,046)
Average occupancy 64% 87% 71% 89%
Tower Place Festival Shopping Center
Rental income $399,494 $381,111 $813,074 $775,812
Bad debt expense (recovery) $ (1,514) $ 1,045 $ (2,137) $ 5,389
Average occupancy 96% 93% 96% 91%
</TABLE>
Rental income at Mountain View Plaza increased $29,535 for the six months
ended June 30, 1995 as compared to the same period in 1994 due to higher
occupancy and increased tenant reimbursements for common area maintenance costs
and real estate taxes.
Occupancy at Mountain View Plaza in Scottsdale, Arizona averaged 98% during
the quarter ended June 30, 1995, unchanged from the previous quarter. One
tenant who occupies 1,353 square feet renewed its lease for five years and
another tenant who occupies 880 square feet renewed its lease for three years.
Subsequent to the end of the quarter, a new lease for 1,033 square feet was
signed and this tenant will take occupancy during the third quarter. The
shopping center will be painted during the third quarter and work should be
completed by mid-August. As of June 30, Mountain View Plaza was 98% occupied.
Rental income at Castle Oaks decreased $40,766 for the six months ended
June 30, 1995 as compared to the same period in 1994 primarily due to a
decrease in occupancy and lower tenant reimbursements for real estate taxes.
Occupancy at Castle Oaks Village in Castle Hills (San Antonio), Texas
averaged 64% during the quarter ended June 30, 1995, a 13% decrease from the
previous quarter. In June a tenant who occupied 1,960 square feet moved to
another space within the shopping center which contains 2,100 square feet. In
May a restaurant which occupied 4,500 square feet vacated its space prior to
the expiration of its lease and the General Partners are attempting to collect
what is owed under the lease. Management is currently negotiating with a
prospective tenant to lease this space; however, there can be no assurance that
these negotiations will result in a signed lease. As of June 30, Castle Oaks
Village was 60% occupied.
9
<PAGE> 10
Rental income at Tower Place increased $37,262 for the six months ended
June 30, 1995 as compared to the same period in 1994 primarily due to an
increase in occupancy offset by lower tenant reimbursements for common area
maintenance cost and real estate taxes.
Occupancy at Tower Place Festival in Pineville (Charlotte), North Carolina
averaged 96% during the quarter ended June 30, 1995, a one percent increase
over the previous quarter. In April a tenant who occupied 1,604 square feet
vacated its space upon expiration of its lease. This space was subsequently
leased to a new tenant who took occupancy in May. Two new leases totalling
3,700 square feet were signed and these tenants took occupancy in April. Two
tenants who occupy a total of 2,450 square feet renewed their leases for three
years and one tenant who occupies 3,220 square feet renewed its lease for five
years. As of June 30, Tower Place Festival was 97% occupied.
Depreciation is provided over the estimated useful lives of the respective
assets using the straight line method. The estimated useful lives of the
buildings and improvements range from three to twenty-five years.
Property operating expenses consist primarily of real estate taxes,
property management fees, insurance costs, utility costs, repair and
maintenance costs, leasing and promotion costs, and amortization of deferred
leasing costs. The increase in property operating expenses of $18,919 for the
six months ended June 30, 1995 as compared to the same period in 1994 is
primarily due to higher repair and maintenance costs at Tower Place and higher
real estate taxes at Mountain View Plaza. Mountain View Plaza's total
operating expenses decreased, with decreases in repair and maintenance costs
being offset by higher real estate taxes. Castle Oaks' total operating
expenses decreased primarily because of decreases in repair and maintenance
costs. Tower Place's total operating expenses increased with increases in
repair and maintenance costs, property management fees and utility costs being
offset by lower legal fees.
General and administrative expenses incurred are related to legal and
accounting expenses, rent, investor services costs, salaries and benefits and
various other costs required for the administration of the Partnership,
including reimbursements of shared direct operating costs to Murray Income
Properties II, Ltd. General and administrative expenses decreased $2,088 for
the six months ended June 30, 1995 as compared to the same period in 1994
primarily because of lower amortization of organization costs.
Bad debt expenses remained flat for the six months ended June 30, 1995 as
compared to the same period in 1994 with increases at Mountain View Plaza and
Castle Oaks being offset by recoveries at Tower Place.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K filed during the quarter ended June 30, 1995:
None
11
<PAGE> 12
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.
MURRAY INCOME PROPERTIES I, LTD.
By: Murray Realty Investors VIII, Inc.
A General Partner
Date: August 9, 1995 By: /s/ Mitchell Armstrong
--------------------------------
Mitchell Armstrong
President
Chief Financial Officer
12
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
27 Financial Data Schedule.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MURRAY
INCOME PROPERTIES I, LTD. AND CONSOLIDATED JOINT VENTURE BALANCE SHEET AND
STATEMENT OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1995.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,223,983
<SECURITIES> 0
<RECEIVABLES> 721,426
<ALLOWANCES> 26,502
<INVENTORY> 0
<CURRENT-ASSETS> 1,918,907
<PP&E> 26,321,988
<DEPRECIATION> 7,649,816
<TOTAL-ASSETS> 20,855,476
<CURRENT-LIABILITIES> 143,162
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 18,956,277
<TOTAL-LIABILITY-AND-EQUITY> 20,855,476
<SALES> 0
<TOTAL-REVENUES> 711,492
<CGS> 0
<TOTAL-COSTS> 410,455
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,673
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 205,473
<INCOME-TAX> 0
<INCOME-CONTINUING> 205,473
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 205,473
<EPS-PRIMARY> 7.13
<EPS-DILUTED> 7.13
</TABLE>
