<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE
ACT OF 1934
________________
For the fiscal year ended December 31, 1994 COMMISSION FILE NUMBER 0-13563
DAMSON/BIRTCHER REALTY INCOME FUND-I
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Pennsylvania 13-3264491
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
27611 La Paz Road, Laguna Niguel, California 92656
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(Address of principal executive offices) (Zip Code)
</TABLE>
(714) 831-8031
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange
Title of each class on which registered
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<S> <C>
NONE NONE
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</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
NONE
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 twelve months and (2) has been subject to such filing
requirements for the past ninety days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
[ ]
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's registration statement on Form S-11 (Commission
File No. 2-91065), dated June 22, 1985, as supplemented, filed under the
Securities Act of 1933 are incorporated by reference into PART IV of this
report.
<PAGE> 2
DAMSON/BIRTCHER REALTY INCOME FUND-I
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1994
INDEX
<TABLE>
<CAPTION>
Page
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PART I
<S> <C> <C> <C>
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
PART II
Item 5. Market for the Registrant's Limited Partnership
Interests and Related Security Holder Matters . . . . . . . . . . . . . 4
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . 6
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . F-1
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . 12
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . 12
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . 13
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--- Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
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<PAGE> 3
DAMSON/BIRTCHER REALTY INCOME FUND-I
PART I
Item 1. Business
Damson/Birtcher Realty Income Fund-I (the "Partnership") is a limited
partnership formed on May 7, 1984, under the laws of the Commonwealth of
Pennsylvania. The General Partner of the Partnership is Damson/Birtcher
Partners, a general partnership consisting of LF Special Fund II, L.P., a
California limited partnership and Birtcher Partners, a California general
partnership. The Partnership is engaged in the business of operating
income-producing office buildings, research and development facilities,
shopping centers and other commercial or industrial properties acquired by the
Partnership in 1984 and 1985. Each of the Partnership's properties was
specified in its prospectus (Commission File No. 2-91065) dated June 22, 1985,
as amended. See Item 2 for a description of the properties acquired by the
Partnership.
The Partnership commenced operations on December 18, 1984. As of September 17,
1985, the Partnership was fully subscribed and had admitted Limited Partners
with total capital contributions of $97,198,000.
The Partnership acquired the properties during the period from December 19,
1984 through September 18, 1985, entirely for cash, free and clear of mortgage
indebtedness. In September 1987, the Partnership borrowed $4,000,000 pursuant
to a loan agreement secured by a First Deed of Trust on the Certified
Distribution Center in Salt Lake City, Utah. The net proceeds were used
primarily for capital improvements and leasing commissions on certain of the
Partnership's properties, the Partnership's working capital reserves and
certain general and administrative expenses. On July 30, 1993, the Partnership
refinanced this loan to obtain a more favorable interest rate. Additionally,
the Partnership may incur unsecured indebtedness from time to time to
supplement its working capital needs. See Note 5 to Financial Statements in
Item 8.
The Partnership's objectives in operating the properties are: (i) to make
regular quarterly cash distributions to the Partners, of which a portion will
be tax sheltered; (ii) to achieve capital appreciation over a holding period of
at least five years; and (iii) to preserve and protect the Partnership's
capital. An Information Statement, dated May 5, 1993, mandates that the
General Partner shall seek a vote of the Limited Partners no later than
December 31, 1996, regarding prompt liquidation of the Partnership in the event
that properties with appraised values as of January 1993, which constituted at
least one-half of the aggregate appraised values of all Partnership properties
as of that date, are not sold or under contract for sale by the end of 1996.
The Partnership derives most of its revenue from rental income. Both Certified
Warehouse and Transfer Company,Inc. ("Certified") and FIserv, Inc. ("FIserv",
formerly dba Citicorp CIR, Inc.) represent significant portions of such income.
Rental income from Certified totaled $984,000 in 1994, $984,000 in 1993 and
$966,000 in 1992, or approximately 16%, 15% and 13%, respectively, of the
Partnership's total rental income. Rental income from FIserv totaled $886,000
in 1994, $916,000 in 1993 and $1,172,000 in 1992, or approximately 14%, 14% and
16%, respectively, of the Partnership's total rental income.
The Partnership's investments in real estate are subject to competition for
tenants from similar types of properties in the vicinities in which they are
located. The Partnership has no investments in real estate located outside the
United States.
The Partnership has no employees and, accordingly, the General Partner and its
affiliates perform services on behalf of the Partnership in connection with
administering the affairs of the Partnership and operating the Partnership's
properties. The General Partner and its affiliates receive compensation in
connection with such activities. See Item 11 and Note 3 to the Financial
Statements in Item 8 for a description of such charges.
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<PAGE> 4
DAMSON/BIRTCHER REALTY INCOME FUND-I
Item 2. PROPERTIES
<TABLE>
<CAPTION>
Number of
Net Tenant Percentage
Rentable Leases Occupied
Purchase Area in as of as of
Name/Location/Date Acquired Price(1) Description Sq. Ft. 12/31/94 12/31/94
--------------------------- ----------- ----------------------------------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Washington Technical Center, $ 3,874,000 Four business center buildings 50,973 7 96%
Phase I located on 4.87 acres of land.
Renton, Washington
December 19, 1984
Arlington Executive Plaza 7,315,000 Seven single-story office buildings 72,977 26 61%
Arlington Heights, Illinois located on 7.2 acres of land.
February 15, 1985
Certified Distribution Center 9,327,000 Two warehouse/distribution buildings 312,260 2 100%
Salt Lake City, Utah located on 12.65 acres of land.
April 2, 1985
Ladera Shopping Center, 8,543,000 A neighborhood retail shopping center 89,595 17 93%
Phase I located on 10.9 acres of land.
Albuquerque, New Mexico
May 10, 1985
The Cornerstone 17,618,000 A seven-building specialty retail 114,916 26 75%
Tempe, Arizona center located on 10.9 acres of land.
July 19, 1985
Terracentre 20,037,000 A 15-story office building located 95,915 14 54%
Denver, Colorado on .41 acres of land.
September 6, 1985
Oakpointe 9,517,000 Office building located on 6.8 acres 96,213 2 76%
Arlington Heights, Illinois of land.
September 18, 1985
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TOTAL $76,231,000 832,849
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</TABLE>
SEE NOTE TO TABLE ON THE FOLLOWING PAGE.
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<PAGE> 5
DAMSON/BIRTCHER REALTY INCOME FUND-I
Item 2. PROPERTIES (Cont'd.)
NOTE TO TABLE ON THE PRECEDING PAGE
(1) The purchase price does not include an allocable share of the
$4,860,000 of acquisition fees paid to the General Partner.
Also, for certain properties, the purchase price has been
reduced by cash received at acquisition under rental
agreements for non-occupied space.
Item 3. LEGAL PROCEEDINGS
The Partnership is not a party to any material pending legal proceedings, other
than ordinary routine litigation incidental to its business. It is the General
Partner's belief that the outcome of these proceedings, will not be material to
the business, financial condition, or results of operations of the Partnership.
NASD Matter. In a matter not directly involving the Partnership or its General
Partner, in 1991, the National Association of Securities Dealers, Inc. (the
"Association") Business Conduct Committee for the Northern District of
California initiated a complaint against a broker-dealer affiliate of LF
Special Fund II, L.P., (a general partner of the General Partner of the
Partnership), alleging violations of the Association's Rules of Fair Practice.
Specifically, the complaint alleged that the affiliate (i) bought and sold
limited partnership units (but not interests in the Partnership) in the
secondary market, from or to unaffiliated parties, subject to mark-ups or
mark-downs in excess of the Association's guidelines and (ii) failed to
disclose the amount or existence of such mark-ups and mark-downs to buyers and
sellers of limited partnership units. Brent Donaldson and Richard Wollack,
executive officers of LF Special Fund II, L.P., were also named as respondents
in the complaint in their capacities as principals of the affiliate. The
complaint was settled as of January 3, 1992 on the following terms: the
Association made findings, which were neither admitted nor denied, of
violations by the affiliate and Mr. Donaldson of the Association's guidelines
with respect to mark-ups or mark-downs, and of the failure of the affiliate
(but not Mr. Donaldson) to disclose the amount of such mark-ups or mark-downs.
Both allegations were dismissed as to Mr. Wollack. The settlement further
provided that the affiliate would be censured and fined $125,000 and that Mr.
Donaldson would be censured and fined $7,500.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5. MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP INTERESTS AND
RELATED SECURITY HOLDER MATTERS
There is no public market for the limited partnership interests and a market is
not expected to develop as such limited partnership interests are not publicly
traded or freely transferable.
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<PAGE> 6
DAMSON/BIRTCHER REALTY INCOME FUND-I
Item 5. MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP INTERESTS AND
RELATED SECURITY HOLDER MATTERS (Cont'd.)
As of February 28, 1995, the number of holders of the Partnership's interests
is as follows:
<TABLE>
<S> <C>
General Partner 1
Limited Partners 10,953
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10,954
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</TABLE>
The Partnership makes quarterly cash distributions to its partners out of
distributable cash pursuant to the Partnership's Agreement of Limited
Partnership. Distributable cash is generally paid 99% to the Limited Partners
and 1% to the General Partner.
The Partnership has paid the following quarterly cash distributions to its
Limited Partners:
<TABLE>
<CAPTION>
CALENDAR
QUARTERS 1990 1991 1992 1993 1994 1995
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
First $671,000 $730,000 $487,000 $662,000 $370,000 $253,000
Second 856,000 486,000 - 486,000 370,000 -
Third 895,000 486,000 - 350,000 360,000 -
Fourth 730,000 487,000 642,000 370,000 369,000 -
</TABLE>
The Limited Partners and the General Partner are entitled to receive quarterly
cash distributions, as available, in the future.
Item 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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1994 1993 1992 1991 1990
------------ ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total Revenues $ 6,307,000 $6,525,000 $ 7,403,000 $ 7,606,000 $ 7,253,000
============ =========== ============= =========== ===========
Net Income (Loss):
General Partner $ (56,000) $ (2,000) $ (138,000) $ 4,000 $ 6,000
Limited Partners (5,535,000) (193,000) (13,654,000) 374,000 546,000
------------ ----------- ------------- ----------- -----------
$(5,591,000) $ (195,000) $(13,792,000) $ 378,000 $ 552,000
============ =========== ============= =========== ===========
Total Distributions:
General Partner $ 15,000 $ 19,000 $ 11,000 $ 22,000 $ 32,000
============ =========== ============= =========== ===========
Limited Partners $ 1,469,000 $1,868,000 $ 1,129,000 $ 2,189,000 $ 3,152,000
============ =========== ============= =========== ===========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
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1994 1993 1992 1991 1990
------------ ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total Assets $44,292,000 $51,460,000 $54,144,000 $69,157,000 $70,871,000
=========== =========== =========== =========== ===========
Secured Loan Payable $ 3,285,000 $ 3,440,000 $ 4,000,000 $ 4,000,000 $ 4,000,000
=========== =========== =========== =========== ===========
</TABLE>
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<PAGE> 7
DAMSON/BIRTCHER REALTY INCOME FUND-I
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
Since the completion of its acquisition program in September 1985, the
Partnership has been primarily engaged in the operation of its properties. The
Partnership intends to hold its properties as long-term investments, although
properties may be sold at any time, depending upon the General Partner's
judgment of the anticipated remaining economic benefits of continued ownership.
That notwithstanding, the Information Statement, dated May 5, 1993, as
described below, mandates that the General Partner shall seek a vote of the
Limited Partners no later than December 31, 1996, regarding prompt liquidation
of the Partnership in the event that properties with appraised values as of
January 1993 which constituted at least one half of the aggregate appraised
values of all Partnership properties as of that date are not sold or under
contract for sale by the end of 1996. Working capital is and will be
principally provided from the operation of the Partnership's properties and the
working capital reserve established for the properties. The Partnership may
incur mortgage indebtedness relating to such properties by borrowing funds
primarily to fund capital improvements or to obtain financing proceeds for
distribution to the partners.
Distributions for the year ended December 31, 1994, represent net cash flow
generated from operations of the Partnership's properties and interest earned
on the temporary investment of working capital, net of capital reserve
requirements. Future cash distributions will be made to the extent available
from net cash flow generated from operations of the Partnership's properties
and interest earned on the investment of capital reserves, after providing for
capital reserves and payment for capital improvements and repairs to the
Partnership's properties. See Item 5 for a description of the Partnership's
distribution history. The Partnership believes that the cash generated from
its operations will provide the Partnership the funds necessary to meet all of
its ordinary obligations.
Certain of the Partnership's properties are not fully leased. The Partnership
is actively marketing the vacant space in these properties, subject to the
competitive environment in each of the market areas. To the extent the
Partnership is not successful in maintaining or increasing occupancy levels at
these properties, the Partnership's future cash flow and distributions may be
reduced.
The Partnership is currently planning a significant renovation of The
Cornerstone, located in Tempe, Arizona. The Partnership has submitted detailed
construction plans to the City of Tempe for approval, which it expects to
receive within the next 60 days. The General Partner currently estimates the
cost of the planned capital improvements which include exterior facade
modifications, hardscape and softscape changes and signage upgrades, to be
approximately $1,500,000, plus an additional $500,000 for tenant improvements
and leasing commissions. To pay these expenses the Partnership may reduce or
entirely suspend distributions for two or more quarters, as early as the second
quarter 1995.
On June 24, 1993, the Partnership completed its solicitation of written
consents from its Limited Partners. A majority in interest of the
Partnership's Limited Partners approved each of the proposals contained in the
Information Statement, dated May 5, 1993. Those proposals have been
implemented by amending the Partnership Agreement as contemplated by the
Information Statement. The amendments include, among other things, the future
payment of asset management and leasing fees to the General Partner and the
elimination of the General Partner's residual interest and deferred leasing
fees that were previously subordinated to return of the Limited Partners' 9%
Preferential Return. See Item 8, Note 3 to the Financial Statements for
discussion of fees paid to the General Partner for the year ended December 31,
1994.
January 1, 1995 Property Appraisals and Net Asset Value
In accordance with the terms of the Partnership Agreement, each year the
Partnership secures an independent appraisal of each of the partnership's
properties as of January 1. In past years, the independent appraiser has
estimated each property's "Investment Value," utilizing a seven to ten-year
cash flow model to estimate value based upon an income approach.
The amendment to the Partnership Agreement consented to by the Limited Partners
in June 1993 mandates, among other things, that the General Partner seek a vote
of (and provide an analysis and recommendation to) the Limited Partners no
later than December 31, 1996 regarding the prompt liquidation of the
Partnership in the event that properties with (then) current appraised values
constituting at least one-half of the total (then) current appraised values
of all of the Partnership's properties are not sold or under contract for sale
by the end of 1996.
Given this mandate, the General Partner has requested that the appraiser
provide an assessment of value that reflects a shorter investment holding term.
Although the General Partner does not currently have a specific liquidation
plan for the Partnership's properties, it requested that the appraiser assume
that the entire portfolio would be sold over the next four years.
Using the shorter-term investment methodology that is consistent with the
mandate of the 1993 amendment to the Partnership agreement, the appraiser
estimated the value of the Partnership's properties at January 1, 1995 to be
$40,505,000, or $4,167 per $10,000 original investor subscription.
The foregoing appraised value of the properties indicates an estimated
net asset value of the Partnership of $37,997,000 or $3,909 per $10,000 of
original investor subscription. (Net asset value represents the appraised value
of the Partnership's properties, cash, and all other assets, less secured loans
payable and all liabilities.) This equates to a net asset value of $195 per
$500 par value of Partnership Interest. This compares to original purchase
prices aggregating $7,979 and the January 1, 1994 appraised value of $4,842 per
$10,000 of original investor subscription. Had the previously used appraisal
methodology, which assumes a seven to ten-year holding period, been employed,
the estimated net asset value would have been $4,367 per $10,000 of original
investor subscription.
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<PAGE> 8
DAMSON/BIRTCHER REALTY INCOME FUND-I
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Cont'd.)
Capital Resources and Liquidity (Cont'd.)
In September 1987, the Partnership borrowed $4,000,000 pursuant to a loan
agreement secured by a First Deed of Trust on the Certified Distribution Center
in Salt Lake City, Utah. The net proceeds were used primarily for capital
improvements and leasing commissions on certain of the Partnership's
properties, the Partnership's working capital reserves and certain general and
administrative expenses. That loan matured on December 1, 1990, however, the
General Partner obtained a loan extension that was to mature December 1, 1993.
On July 20, 1993, the Partnership obtained a new loan secured by a First Deed
of Trust on the Certified Distribution Center in Salt Lake City, Utah. The new
loan, in the amount of $3,500,000, carries a fixed interest rate of 9% per
annum over a 13-year fully amortizing term. The Partnership's first payment of
$38,000 was paid on September 1, 1993, with monthly installments due
thereafter. Proceeds from the new loan and $500,000 of existing Partnership
cash reserves were used to retire the Partnership's existing debt of
$4,000,000. The General Partner also negotiated a waiver of the prepayment
penalty in the approximate amount of $200,000 that had been due to the previous
lender under the terms of the old mortgage. All other terms and conditions of
the loan documents remained substantially the same.
Results of Operations
Year Ended December 31, 1994
The decrease in rental income for the year ended December 31, 1994, as compared
to 1993, was primarily attributable to reduced rental income at Oakpointe and
Washington Technical Center. At Oakpointe, revenue decreased by $71,000,
primarily as a result of two factors. The FIserv, INC. lease was successfully
renegotiated in 1993, in exchange for a reduced rental rate. In addition, the
Illinois Department of Employment Security lease encompassing 14,580 square
feet was terminated in March 1994. The tenant vacated the premises, which
resulted in an occupancy decrease to 76%. At Washington Technical Center,
rental income decreased by $139,000. This decrease was a result of the
following factors: Legent Corporation and Boeing Support Services terminated
their leases upon expiration in October 1993 and Jon Marie Portrait terminated
its lease prior to the scheduled expiration date in late 1993. The
aforementioned decreases were partially offset by an increase in rental income
as a result of successful negotiation on three new leases encompassing 25,698
square feet in September and November 1994 at Washington Technical Center.
Interest income resulted from the temporary investment of Partnership working
capital. Interest and other income was generally comparable to 1993.
The increase in operating expenses for the year ended December 31, 1994, as
compared to 1993, was primarily attributable to the increase in legal and
professional services associated with minor tenant disputes and real estate tax
appeals relating to the Partnership's properties ($88,000).
The increase in real estate taxes for the year ended December 31, 1994, as
compared to 1993, was primarily attributable to an increase in real estate
taxes at Oakpointe and Arlington.
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<PAGE> 9
DAMSON/BIRTCHER REALTY INCOME FUND-I
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Cont'd.)
Results of Operations (Cont'd.)
Year Ended December 31, 1994 (Cont'd.)
General and administrative expenses for the year ended December 31, 1994
include charges of $568,000 from the General Partner and its affiliates for
services rendered in connection with administering the affairs of the
Partnership and operating the Partnership's properties. Also included in
general and administrative expenses were direct charges of $413,000 relating to
audit and tax preparation fees, annual appraisal fees, legal fees, insurance
expense, costs incurred in providing information to the Limited Partners and
other miscellaneous costs.
The decrease in general and administrative expenses for the year ended December
31, 1994, as compared to 1993, was primarily attributable to a decrease in
legal fees and professional services, postage, mailing expenses and printing
costs associated with the amendment of the Partnership Agreement, which
occurred in 1993.
Interest expenses resulted from interest on the first deed of trust on
Certified Distribution Center. The decrease in interest expenses for the year
ended December 31, 1994, as compared to 1993, was attributable to the
retirement of the Partnership's previous loan and a reduced loan balance with a
lower interest rate on the take-out financing arrangement.
Provision is made for impairment loss if the General Partner determines that
the carrying amount of the Partnership's investment in a real estate asset may
not be recoverable. The General Partner obtains third party appraisals on the
Partnership's properties as required by the Partnership Agreement. If these
appraisals indicate that certain of the Partnership's properties have market
values below their then-current carrying values, management considers the
appraisals and analyzes the current and anticipated market conditions of the
respective properties and determines if an impairment has occurred. At
December 31, 1994, after evaluation of Cornerstone Shopping Center, Terracentre
and Oakpointe, management estimated a $5,500,000 impairment of value as
compared to their respective carrying values.
Year Ended December 31, 1993
The decrease in rental income for the year ended December 31, 1993, as compared
to 1992, was primarily attributable to reduced rental income at Oakpointe,
Arlington Executive Plaza, Cornerstone Shopping Center and Washington Technical
Center. At Oakpointe, the FIserv, Inc. lease (encompassing 62,052 square feet)
was successfully renegotiated for an additional six year term in exchange for a
reduced rental rate ($355,000). In addition, Incredible Technologies
terminated its lease upon scheduled expiration in November 1992 ($145,000). At
Arlington Executive Plaza, several tenants terminated their leases prior to or
upon their respective scheduled expirations resulting in a decrease in revenues
of $225,000 for the year ended December 31, 1993, when compared to 1992. At
Cornerstone Shopping Center, early termination of four small leases
encompassing 3,380 square feet, resulted in a lower occupancy rate and decrease
in rental income ($124,000), when compared to 1992. At Washington Technical
Center, Legent Corporation and Boeing Support Services terminated their leases
upon expiration in October 1993 and Jon Marie Portrait terminated its lease
prior to scheduled expiration date resulting in a 40% decrease in the
property's occupancy and a $60,000 decrease in rental income in 1993, when
compared to 1992.
Interest income resulted from the temporary investment of partnership working
capital. The decrease from 1992 to 1993 was attributable to a decrease in
working capital available for short-term investment. The decrease in working
capital was primarily a result of the $500,000 payment to the Partnership's
lender in July 1993. See Item 7, Capital Resources and Liquidity, for further
discussion.
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<PAGE> 10
DAMSON/BIRTCHER REALTY INCOME FUND-I
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Cont'd.)
Results of Operations (Cont'd.)
Year Ended December 31, 1993 (Cont'd.)
The increase in operating expenses for the year ended December 31, 1993, as
compared to 1992, was primarily attributable to an increase in parking
cleaning, snow removal, and repairs and maintenance at Oakpointe. In addition,
legal and professional services related to tax appeals and tenant disputes were
generally higher in 1993, when compared to 1992. The aforementioned increases
were partially offset by a decrease in HVAC repairs and maintenance and parking
lot rental expense at Terracentre.
The decrease in real estate taxes for the year ended December 31, 1993, as
compared to 1992, was primarily attributable to successful tax appeals at
Terracentre, Cornerstone and Oakpointe. The aforementioned decreases were
partially offset by higher tax assessments at Arlington Executive Plaza and
Washington Technical Center.
The decrease in depreciation expenses for the year ended December 31, 1993, as
compared to 1992, was a result of the $13,900,000 adjustment to the carrying
value of real estate assets in 1992. As part of this adjustment, in December
1992, the depreciable bases (buildings and improvements) of Terracentre Office
Building and Arlington Executive Plaza were reduced by $10,700,000 and
$2,100,000, respectively, with the remaining adjustment of $1,100,000 allocated
to land.
General and administrative expenses for the year ended December 31, 1993
include charges of $580,000 from the General Partner and its affiliates for
services rendered in connection with administering the affairs of the
Partnership and operating the Partnership's properties. Also included in
general and administrative expenses were direct charges of $736,000 relating to
audit and tax preparation fees, annual appraisal fees, legal fees, insurance
expense, costs incurred in providing information to the Limited Partners and
other miscellaneous costs.
The increase in general and administrative expenses for the year ended December
31, 1993, as compared to 1992, was primarily attributable to the payment of
asset management fees ($351,000) and leasing fees ($47,000) to the General
Partner and its affiliates pursuant to the amended Partnership Agreement. In
addition, legal and professional services, printing, postage and mailing
expenses increased as a result of the Partnership's solicitation of the Limited
Partners for the Information Statements, dated May 5, 1993.
Interest expenses resulted from interest on the first deed of trust on
Certified Distribution Center. The decrease in interest expenses for the year
ended December 31, 1993, as compared to 1992, was attributable to the
retirement of the Partnership's previous loan and a lower interest rate on the
take-out financing arrangement.
The General Partner elected to terminate the Partnership's Property Management
Agreement with Glenborough Management Corporation ("Glenborough") effective
November 1, 1993. On that date, the General Partner caused the Partnership to
enter a new property management agreement with Birtcher Properties, an
affiliate of the General Partner. Pursuant to the Property Management
Agreement, Birtcher Properties will act as the Partnership's exclusive agent to
operate, rent, manage and maintain the Partnership's properties. In its
capacity as property manager for the Partnership's properties, Birtcher
Properties will perform substantially the same services that Glenborough
performed during the previous two-year period
-9-
<PAGE> 11
DAMSON/BIRTCHER REALTY INCOME FUND-I
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Cont'd.)
Results of Operations (Cont'd.)
Year Ended December 31, 1993 (Cont'd.)
at fees similar to (and not larger than) the fees it used to pay Glenborough,
plus certain costs associated with property management, as before. The
contract is terminable upon a minimum of 60 days' written notice by either
party. As before, the General Partner will continue to oversee the day-to-day
management of the Partnership.
Year Ended December 31, 1992
The decrease in rental income for the year ended December 31, 1992, as compared
to 1991, was attributable to several factors. At Terracentre, rental income
decreased as a result of the scheduled lease expiration of Ralph Parsons
($492,000) in November 1991 and the early lease expiration of Denver Grand Prix
($82,000) and Victor Huff Partnership ($70,000), both of whom experienced
financial difficulties in March and May 1992, respectively. In addition to the
aforementioned, rental rates were reduced at Certified Distribution Center
($148,000), in exchange for a four-year lease term extension with that
property's single tenant. These decreases were partially offset by higher
occupancy levels at Arlington Executive Plaza ($198,000), Washington Technical
Center ($32,000) and a new lease, executed in March 1992 by Metro State College
of Denver ($222,000), encompassing a seven-year term at Terracentre.
Interest income resulted from the temporary investment of Partnership working
capital. The increase from 1991 to 1992 was attributable to increased average
working capital levels available for short-term investment.
The decrease in operating expenses for the year ended December 31, 1992, as
compared to 1991, was primarily the result of reduced on-site property
management expenses at Arlington, The Cornerstone and Terracentre. In
addition, repair and maintenance expenses were lower at Arlington and Oakpointe
during 1992.
The decrease in real estate taxes for the year ended December 31,1992, as
compared to 1991, was primarily attributable to a lower tax assessment at
Arlington. The aforementioned reduction was partially offset by an increase in
taxes at Oakpointe, which resulted from a reassessment in 1992.
General and administrative expenses for the year ended December 31, 1992,
included charges of $213,000 from the General Partner and its affiliates for
services rendered in connection with administering the affairs of the
Partnership and operating the Partnership's properties. Also included in
general and administrative expenses were direct charges of $490,000 related to
audit and tax preparation fees, legal fees, appraisal fees, liability
insurance, costs incurred in providing information to the Limited Partners and
other miscellaneous costs.
The reduction in general and administrative expenses for the year ended
December 31, 1992, as compared to 1991, primarily resulted from reduced legal
fees and other outside services incurred in connection with the Partnership's
strategic review in 1991.
-10-
<PAGE> 12
DAMSON/BIRTCHER REALTY INCOME FUND-I
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Cont'd.)
Results of Operations (Cont'd.)
Year Ended December 31, 1992 (Cont'd.)
At December 31, 1992, after evaluation of Arlington Executive Plaza, and
Terracentre Office Building, management estimated an aggregate $13,900,000
impairment of value as compared to their respective carrying values.
-11-
<PAGE> 13
DAMSON/BIRTCHER REALTY INCOME FUND-I
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Financial Statements:
Balance Sheets as of December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . F-3
Statements of Operations for the Years Ended December 31, 1994,
1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Statements of Changes in Partners' Capital for the Years Ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Statements of Cash Flows for the Years Ended December 31, 1994,
1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
Schedules:
III - Real Estate and Accumulated Depreciation as of
December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-15
</TABLE>
Information required by other schedules called for under Regulation S-X is
either not applicable or is included in the financial statements.
F-1
<PAGE> 14
DAMSON/BIRTCHER REALTY INCOME FUND-I
INDEPENDENT AUDITORS' REPORT
To Damson/Birtcher Partners, as General Partner of
Damson/Birtcher Realty Income Fund-I:
We have audited the financial statements of Damson/Birtcher Realty Income
Fund-I, a limited partnership as listed in the accompanying index. In
connection with our audits of the financial statements, we also have audited
the financial statement schedule listed in the accompanying index. These
financial statements and the financial statement schedule are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Damson/Birtcher Realty Income
Fund-I as of December 31, 1994 and 1993 and the results of its operations and
its cash flows for each of the years in the three-year period ended December
31, 1994, in conformity with generally accepted accounting principles. Also in
our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly,
in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
Orange County, California
January 25, 1995, except as to
Note 8 which is as of
February 28, 1995
F-2
<PAGE> 15
DAMSON/BIRTCHER REALTY INCOME FUND-I
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------
1994 1993
------------ ------------
<S> <C> <C>
ASSETS
------
Investments in real estate, net:
Land $ 10,016,000 $ 11,196,000
Buildings and improvements 57,851,000 61,461,000
------------ ------------
67,867,000 72,657,000
Less accumulated depreciation (25,396,000) (23,258,000)
------------ ------------
42,471,000 49,399,000
Cash and cash equivalents 648,000 1,068,000
Accounts receivable (net of allowance for
doubtful accounts of $19,000 in 1993) 84,000 142,000
Accrued rent receivable 416,000 266,000
Prepaid expenses and other assets 673,000 585,000
------------ ------------
$ 44,292,000 $ 51,460,000
============ ============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Accounts payable and accrued liabilities $ 1,044,000 $ 982,000
Secured loan payable 3,285,000 3,440,000
------------ ------------
Total liabilities 4,329,000 4,422,000
------------ ------------
Partners' capital:
Limited Partners 40,395,000 47,399,000
General Partner (432,000) (361,000)
------------ ------------
39,963,000 47,038,000
------------ ------------
Commitments and contingencies - -
------------ ------------
$ 44,292,000 $ 51,460,000
============ ============
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-3
<PAGE> 16
DAMSON/BIRTCHER REALTY INCOME FUND-I
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1994 1993 1992
----------- ----------- ------------
<S> <C> <C> <C>
REVENUES:
Rental income $ 6,215,000 $6,434,000 $ 7,297,000
Interest and other income 92,000 91,000 106,000
----------- ---------- ------------
Total revenues 6,307,000 6,525,000 7,403,000
----------- ---------- ------------
EXPENSES:
Operating expenses 1,914,000 1,828,000 1,801,000
Real estate taxes 959,000 893,000 1,022,000
Depreciation and amortization 2,241,000 2,326,000 3,384,000
General and administrative 981,000 1,316,000 703,000
Interest 303,000 357,000 385,000
Adjustment to carrying value
of real estate 5,500,000 - 13,900,000
----------- ---------- ------------
Total expenses 11,898,000 6,720,000 21,195,000
----------- ---------- ------------
NET LOSS $(5,591,000) $ (195,000) $(13,792,000)
=========== ========== ============
NET LOSS ALLOCABLE TO:
General Partner $ (56,000) $ (2,000) $ (138,000)
=========== ========== ============
Limited Partners $(5,535,000) $ (193,000) $(13,654,000)
=========== ========== ============
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-4
<PAGE> 17
DAMSON/BIRTCHER REALTY INCOME FUND-I
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1994, 1993 AND 1992
------------------------------------------------------
GENERAL LIMITED
PARTNER PARTNERS TOTAL
---------- ----------- ------------
<S> <C> <C> <C>
Balance, December 31, 1991 $(191,000) $64,243,000 $64,052,000
Net loss (138,000) (13,654,000) (13,792,000)
Distributions (11,000) (1,129,000) (1,140,000)
---------- ------------ ------------
Balance, December 31, 1992 (340,000) 49,460,000 49,120,000
Net loss (2,000) (193,000) (195,000)
Distributions (19,000) (1,868,000) (1,887,000)
---------- ------------ ------------
Balance, December 31, 1993 (361,000) 47,399,000 47,038,000
Net loss (56,000) (5,535,000) (5,591,000)
Distributions (15,000) (1,469,000) (1,484,000)
---------- ------------ ------------
Balance, December 31, 1994 $(432,000) $40,395,000 $39,963,000
========== ============ ============
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-5
<PAGE> 18
DAMSON/BIRTCHER REALTY INCOME FUND-I
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------
1994 1993 1992
------------ ------------ -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(5,591,000) $ (195,000) $(13,792,000)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation and amortization 2,241,000 2,326,000 3,384,000
Adjustment to carrying value of
real estate 5,500,000 - 13,900,000
Changes in:
Accounts receivable 58,000 33,000 74,000
Due from affiliate - 21,000 (21,000)
Accrued rent receivable (150,000) (179,000) (87,000)
Prepaid expenses and other assets (191,000) (175,000) (198,000)
Accounts payable and accrued
liabilities 62,000 (42,000) (81,000)
----------- ------------ -------------
Net cash provided by operating
activities 1,929,000 1,789,000 3,179,000
----------- ------------ -------------
Cash flows from investing activities:
Investments in real estate (710,000) (689,000) (1,021,000)
----------- ------------ -------------
Cash flows from financing activities:
Principal payments on secured
loan payable (155,000) (560,000) -
Distributions (1,484,000) (1,887,000) (1,140,000)
----------- ------------ -------------
Net cash used in financing
activities (1,639,000) (2,447,000) (1,140,000)
----------- ------------ -------------
Net increase (decrease) in cash and
cash equivalents (420,000) (1,347,000) 1,018,000
Cash and cash equivalents,
beginning of year 1,068,000 2,415,000 1,397,000
----------- ------------ -------------
Cash and cash equivalents,
end of year $ 648,000 $ 1,068,000 $ 2,415,000
=========== ============ =============
Supplemental disclosure of cash flow
information:
Cash paid during the year for:
Interest $ 303,000 $ 357,000 $ 385,000
=========== ============ =============
Non-cash transactions:
Repayment of secured loan
payable in 1993 - see Note 5
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-6
<PAGE> 19
DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENTS
(1) Organization and Operations
Damson/Birtcher Realty Income Fund-I (the "Partnership") is a limited
partnership formed on May 7, 1984, under the laws of the Commonwealth
of Pennsylvania, for the purpose of acquiring and operating
income-producing retail, commercial and industrial properties. The
General Partner of the Partnership is Damson/Birtcher Partners, a
general partnership originally consisting of Equity Properties, Inc.
("EPI"), an indirect, wholly-owned subsidiary of Damson Oil
Corporation and Birtcher Partners, a California general partnership.
In December 1992, EPI withdrew as a general partner of the
Damson/Birtcher Partners and LF Special Fund II, L.P. was added as a
general partner of the General Partner. Under the terms of the
General Partner's Partnership Agreement, Birtcher Partners or its
affiliates, remains responsible for the day-to-day management of the
Partnership's assets.
In January 1993, the General Partner filed an information statement
with the Securities and Exchange Commission seeking consent of the
Limited Partners to amend the Partnership Agreement. On June 24,
1993, the Partnership completed its solicitation of written consent
from its Limited Partners. A majority in interest of the
Partnership's Limited Partners approved each of the proposals
contained in the Information Statements, dated May 5, 1993. Those
proposals have been implemented by the Partnership as contemplated by
the Information Statement as amendments to the Partnership Agreement,
and are reflected in these Financial Statements as such.
The amendment modifies the Partnership Agreement to eliminate the
General Partner's 10% subordinated interest in distributions of
Distributable Cash (net cash from operations) and reduce its
subordinated interest in such distributions from 10% to 1%. The
amendment also modifies the Partnership Agreement to eliminate the
General Partner's 10% subordinated interest in Sale or Financing
Proceeds (net cash from sale or financing of Partnership property) and
to reduce its subordinated interest in such proceeds from 15% to 1%.
In lieu thereof, the Partnership Agreement now provides for the
Partnership's payment to the General Partner of an annual asset
management fee equal initially to .75% of the aggregate appraised
value of the Partnership's properties. At January 1, 1994 and 1993,
the portfolio was appraised at an aggregate value of approximately
$47,060,000 (unaudited) and $46,760,000 (unaudited), respectively.
The factor used to calculate the annual asset management fee will be
reduced by .10% each year beginning after December 31, 1996 (e.g.,
from .75% in 1996 to .65% in 1997).
The amendment modifies the Partnership Agreement to eliminate the
subordination provisions with respect to future leasing fees payable
under that subsection. The amendment also eliminated the deferred
leasing fees earned by the General Partner or its affiliates
(estimated $448,000 as of December 31, 1992) on or after the effective
date of the amendment. Fees for future leasing services rendered by
the General Partner or its affiliates will be payable by the
Partnership on a current basis and would not be subordinated to the
Limited Partners Preferred Return and Adjusted Invested Capital or any
other amount.
The amendment modifies the Partnership Agreement to eliminate the
subordination provision with respect to future property disposition
fees payable under that section. The amendment authorizes payment to
the General Partner and its affiliates of the property disposition fee
as earned. The fee would not be subordinated to the Limited Partners
Preferred Return and Adjusted Invested Capital or any other amount.
F-7
<PAGE> 20
DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
(1) Organization and Operations (Cont'd.)
The disposition fees are to be paid to the General Partner or its
affiliates in an amount equal to 50% of the competitive real estate
brokerage commission that would be charged by unaffiliated
third-parties providing comparable services in the area in which a
property is located, but in no event more than three percent of the
gross sale price of the property, and are to be reduced by the amount
by which any brokerage or similar commissions paid to any unaffiliated
third-parties in connection with the sale of property exceed three
percent of the gross sale price. This amount is not payable, unless
and to the extent that the sale price of the property in question, net
of any other brokerage commissions (but not other costs of sale),
exceeds the appraised value of the property as of January 1, 1993.
The amendment states that the Partnership is no longer authorized to
pay the General Partner or its affiliates any insurance commissions or
any property financing fees. No such commissions or fees have been
paid or accrued by the Partnership since its inception.
The amendment modifies the provisions of the Partnership Agreement
regarding allocations of Partnership income, gain and other tax items
between the General Partner and the Limited Partners primarily to
conform to the changes in the General Partner's interest in
distributions of Distributable Cash and Sale or Financing Proceeds, as
defined, effected by the amendment.
It is not anticipated that the adoption and implementation of the
amendment will have any material adverse effect on future allocations
of income, gain, loss or other tax items to the Limited Partners.
However, if any of the Partnership's properties are sold for a gain, a
special allocation to the General Partner would have the effect of
reducing the amount of Sale or Financing Proceeds otherwise
distributable to the Limited Partners and correspondingly increasing
the amount of such distributions to be retained by the General
Partner. The amount of such distributions to be affected would be
approximately equal to any deficit balance in the General Partner's
capital account in the Partnership at the time of the allocation.
The Limited Partners have certain priorities in the allocation of cash
distributions by the Partnership. Out of each distribution of net
cash, the Limited Partners generally have certain preferential rights
to receive payments that, together with all previous payments to them,
would provide an overall 9% per annum (cumulative non-compounded)
return (a "9% Preferential Return") on their investment in the
Partnership. Any distributions not equaling this 9% Preferential
Return in any quarter are to be made up in subsequent periods if and
to the extent distributable cash is available.
Distributable cash from operations is paid out each quarter in the
following manner: 99% to the Limited Partners and 1% to the General
Partner. These payments are made each quarter to the extent that
there is sufficient distributable cash available.
Sale or financing proceeds are to be distributed, to the extent
available, as follows: (i) To the Limited Partners until all cash
distributions to them amount to a 9% Preferential Return on their
investment cumulatively from the date of their admission to the
Partnership; (ii) then to the Limited Partners in an amount equal to
their investment; and (iii) the remainder, 99% to Limited Partners and
1% to the General Partner.
F-8
<PAGE> 21
DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
(1) Organization and Operations (Cont'd.)
The unpaid 9% Preferential Return to the Limited Partners' aggregates
$55,120,000 as of December 31, 1994.
Income or loss for financial statement purposes is allocated 99% to the
Limited Partners and 1% to the General Partner.
The amendment modifies the Partnership Agreement so as to restrict the
Partnership from entering into a future "Reorganization Transaction"
(as defined in the amendment) sponsored by the General Partner or any
of its affiliates unless such transaction is approved by a
"supermajority" of at least 80% in interest of the Limited Partners and
the General Partner. The amendment also prohibits the modification of
this restriction on Reorganization Transactions without the approval of
at least 80% in interest of the Limited Partners.
The Partnership's original investment objectives contemplated that it
would hold its properties for a period of at least five years, with
decisions about the actual timing of property sales or other
dispositions to be left to the General Partner's discretion based on
the anticipated remaining economic benefits of continued ownership and
other factors. Although the current market for real estate is
depressed, the General Partner is committed to selling the
Partnership's properties as soon as reasonably practicable. To that
end, the amendment mandates that the General Partner seek a vote of the
Limited Partners no later than December 31, 1996 regarding the prompt
liquidation of the Partnership in the event that properties with
appraised values as of January 1993 which constituted at least one-half
of the aggregate appraised value of all Partnership properties as of
that date are not sold or under contract for sale by the end of 1996.
In conjunction with the vote, the General Partner will provide an
analysis and recommendation regarding the advisability of liquidating
the Partnership.
(2) Summary of Significant Accounting Policies
Carrying Value of Real Estate
Provision is made for impairment loss if the General Partner determines
that the carrying amount of the Partnership's investment in a real
estate asset may not be recoverable. The General Partner obtains third
party appraisals on the Partnership's properties as required by the
Partnership Agreement. If these appraisals indicate that certain of
the Partnership's properties have market values below their
then-current carrying values, management considers the appraisals and
analyzes the current and anticipated market conditions of the
respective properties and determines if an impairment has occurred.
At December 31, 1994, after evaluation of the Cornerstone Shopping
Center, Terracentre, and Oakpointe, management estimated a $5,500,000
impairment of value as compared to their respective carrying values.
At December 31, 1992, after evaluation of the Arlington Executive Plaza
and Terracentre, management estimated an aggregate $13,900,000
impairment of value as compared to their respective carrying values.
F-9
<PAGE> 22
DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
(2) Summary of Significant Accounting Policies (Cont'd.)
Cash and Cash Equivalents
The Partnership invests its excess cash balances in short-term
investments (cash equivalents). These investments are stated at cost,
which approximates market, and consist of money market, certificates of
deposit and other non-equity-type cash investments. Cash equivalents
at December 31, 1994 and 1993, totaled $609,000 and $1,031,000,
respectively. Cash equivalents are defined as temporary non-equity
investments with original maturities of three months or less, which can
be readily converted into cash and are not subject to changes in market
value.
Depreciation
Depreciation expense is computed using the straight-line method. Rates
used in the determination of depreciation are based upon the following
estimated useful lives:
<TABLE>
<CAPTION>
Years
---------
<S> <C>
Buildings 30
Building improvements 3 to 30
</TABLE>
Revenue Recognition
Rental income pertaining to operating lease agreements which specify
scheduled rent increases or free rent periods, is recognized on a
straight-line basis over the period of the related lease agreement.
Income Taxes
Income taxes are not levied at the Partnership level, but rather on the
individual partners; therefore, no provision or liability for Federal
and State income taxes has been reflected in the accompanying financial
statements.
F-10
<PAGE> 23
DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
(2) Summary of Significant Accounting Policies (Cont'd.)
Income Taxes (Cont'd.)
Following are the Partnership's assets and liabilities as determined in
accordance with generally accepted accounting principles ("GAAP") and
for federal income tax reporting purposes at December 31:
<TABLE>
<CAPTION>
1994 1993
--------------------------------- ---------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
(UNAUDITED) (UNAUDITED)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Total Assets $44,292,000 $59,659,000 $51,460,000 $63,527,000
Total Liabilities $ 4,329,000 $ 4,329,000 $ 4,422,000 $ 4,422,000
</TABLE>
Following are the differences between Financial Statement and tax
return income:
<TABLE>
<CAPTION>
1994 1993 1992
------------ ------------ --------------
<S> <C> <C> <C>
Net income (loss) per Financial Statements $(5,591,000) $ (195,000) $ (13,792,000)
Adjustment to carrying value of real
estate 5,500,000 - 13,900,000
Depreciation differences on investments in
real estate (888,000) (883,000) (20,000)
Other (196,000) (113,000) (79,000)
------------ ------------ --------------
Taxable income (loss) per Federal tax
return (unaudited) $(1,175,000) $(1,191,000) $ 9,000
============ ============ ==============
</TABLE>
Significant Customers
Rental income from Certified Warehouse and Transfer Company, Inc.,
totaled $984,000 in 1994, $984,000 in 1993 and $966,000 in 1992, or
approximately 16%, 15% and 13%, respectively, of the Partnership's
total rental income. Rental income from FIserv, Inc. (formerly dba
Citicorp CIR, Inc.) totaled $886,000 in 1994, $916,000 in 1993 and
$1,172,000 in 1992, or approximately 14%, 14% and 16%, respectively,
of the Partnership's total rental income.
Earnings and Distributions Per Unit
The Partnership Agreement does not designate investment interests in
units. All investment interests are calculated on a "percent of
Partnership" basis, in part to accommodate original reduced rates on
sales commissions for subscriptions in excess of certain specified
amounts. A Limited Partner who was charged a reduced sales commission
or no sales commission was credited with proportionately larger
Invested Capital and therefore had a disproportionately greater
interest in the capital and revenues of the Partnership than a Limited
Partner who paid commissions at a higher rate.
F-11
<PAGE> 24
DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
(2) Summary of Significant Accounting Policies (Cont'd.)
Earnings and Distributions Per Unit (Cont'd.)
As a result, the Partnership has no set unit value as
all accounting, investor reporting and tax information is based upon
each investor's relative percentage of Invested Capital. Accordingly,
earnings or loss per unit is not presented in the accompanying
financial statements.
Reclassifications
Certain reclassifications have been made to conform prior year amounts
to the 1994 presentation.
(3) Transactions with Affiliates
The Partnership has no employees and, accordingly, the General Partner
and its affiliates perform services on behalf of the Partnership in
connection with administering the affairs of the Partnership. The
General Partner and affiliates are reimbursed for their general and
administrative costs actually incurred and associated with services
performed on behalf of the Partnership. For the years ended December
31, 1994, 1993 and 1992, the Partnership was charged with
approximately $191,000, $182,000 and $213,000, respectively, of such
expenses.
On November 1, 1993, the General Partner elected to terminate the
Partnership's property management agreement with an unaffiliated third
party. On that date, the General Partner entered into a new property
management agreement with Birtcher Properties, an affiliate of the
General Partner. The contract encompasses terms at least as favorable
to the Partnership as the terminated contract with the unaffiliated
third party, and is terminable by the Partnership upon 60 days' notice
to Birtcher Properties. Fees paid to the General Partner's affiliate
for services are not to exceed 3% of the gross receipts from the
properties under management. Such fees amounted to approximately
$167,000 in 1994 and $32,000 in 1993. In addition, the affiliate of
the General Partner received $303,000 in 1994 and $49,000 in 1993, as
reimbursement of costs for on-site property management personnel and
other reimbursable costs.
The amended Partnership Agreement provides for the Partnership's
payment to the General Partner of an annual asset management fee equal
to .75% of the aggregate appraised value of the Partnership's
properties as determined by independent appraisal undertaken in
January of each year. Such fees for the year ended December 31, 1994
and 1993, amounted to $353,000 and $351,000, respectively. In
addition, the amended Partnership Agreement provides for payment to
the General Partner of a leasing fee for services rendered in
connection with leasing space in a Partnership property after the
expiration or termination of any lease of such space including renewal
options. Fees for leasing services for the year ended December 31,
1994 and 1993, amounted to $24,000 and $47,000, respectively.
F-12
<PAGE> 25
DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
(4) Commitments and Contingencies
Litigation
The Partnership is not a party to any material pending legal
proceedings other than ordinary routine litigation incidental to its
business. It is the General Partner's belief, that the outcome of
these proceedings will not be material to the business, financial
condition, or results of operations of the Partnership.
Future Minimum Annual Rentals
The Partnership has determined that all leases which had been executed
as of December 31, 1994, are properly classified as operating leases
for financial reporting purposes. Future minimum annual rental income
to be received under such leases as of December 31, 1994, are as
follows:
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------
<S> <C>
1995 $ 4,608,000
1996 4,133,000
1997 3,654,000
1998 2,570,000
1999 2,247,000
Thereafter 5,322,000
-----------
$22,534,000
===========
</TABLE>
Certain of these leases also provide for, among other things: tenant
reimbursements to the Partnership of certain operating expenses;
payments of additional rents in amounts equal to a set percentage of
the tenant's annual revenue in excess of specified levels; and
escalations in annual rents based upon the Consumer Price Index.
(5) Secured Loan Agreement
In September 1987, the Partnership borrowed $4,000,000 pursuant to a
loan agreement secured by a First Deed of Trust on the Certified
Distribution Center in Salt Lake City, Utah. That loan matured on
October 1, 1990, however, the General Partner obtained a loan
extension that was to mature December 1, 1993. On July 30, 1993, the
Partnership obtained a new loan secured by a First Deed of Trust on
the Certified Distribution Center in Salt Lake City, Utah. The new
loan, in the amount of $3,500,000, carries a fixed interest rate of 9%
per annum over a 13-year fully amortizing term. The Partnership's
first payment of $38,000 was paid on September 1, 1993, with monthly
installments due thereafter. Proceeds from the new loan, along with
$500,000 of existing Partnership cash reserves, were used to retire
the Partnership's existing debt of $4,000,000. The General Partner
also negotiated a waiver of the prepayment penalty in the approximate
amount of $200,000 that had been due to the previous lender under the
terms of the old mortgage. All other terms and conditions of the loan
documents remained substantially the same. Future principal payments
to the lender under the new loan as of December 31, 1994, are as
follows:
F-13
<PAGE> 26
DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
(5) Secured Loan Agreement (Cont'd.)
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------
<S> <C>
1995 $ 169,000
1996 185,000
1997 202,000
1998 221,000
1999 242,000
Thereafter 2,266,000
----------
$3,285,000
==========
</TABLE>
(6) Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1994 1993
---------- --------
<S> <C> <C>
Real estate taxes $ 759,000 $707,000
Accounts payable and other 285,000 275,000
---------- --------
$1,044,000 $982,000
========== ========
</TABLE>
(7) Allowance for Doubtful Accounts
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- ---------
<S> <C> <C> <C>
Balance at beginning of year $ 19,000 $ 26,000 $ 21,000
Additions charged to expense 4,000 17,000 77,000
Write-offs (23,000) (24,000) (72,000)
-------- -------- --------
Balance at end of year $ - $ 19,000 $ 26,000
======== ======== ========
</TABLE>
(8) Subsequent Event
On February 28, 1995, the Partnership made an aggregate cash
distribution of $253,000 to its Limited Partners.
F-14
<PAGE> 27
DAMSON/BIRTCHER REALTY INCOME FUND-I
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1994
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
----------- ------------ ------------------------- ------------------------ ------------------------------------
Initial Cost Costs Capitalized Gross Amount at Which
to Partnership Subsequent Carried at Close of Period
(c) to the Acquisition (b)
------------------------- ------------------------ ------------------------------------
Description Encumbrances Land Buildings and Improvements Carrying Land Buildings and Total
(a) Improvements Costs Improvements (e)
(d),(b)
----------- ------------ ------- ------------- ------------ --------- ------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Washington $ - $ 865 $ 3,252 $ 834 $ (85) $ 859 $ 4,007 $ 4,866
Technical
Center,
Phase I
Renton, WA
Arlington - 1,004 6,748 1,769 (2,400) 693 6,428 7,121
Executive
Plaza
Arlington
Heights, IL
Certified 3,285 1,160 8,751 - - 1,160 8,751 9,911
Distribution
Center
Salt Lake
City, UT
Ladera - 2,107 6,971 272 (10) 2,097 7,243 9,340
Shopping
Center,
Phase I
Albuquerque,
NM
The - 4,620 14,115 1,356 (4,200) 3,597 12,294 15,891
Cornerstone
Tempe, AZ
Terracentre - 1,458 19,939 1,992 (14,200) 491 8,698 9,189
Denver, CO
Oakpointe - 1,249 8,852 2,560 (1,112) 1,119 10,430 11,549
Arlington
Heights, IL
------ ------- ------- ------ -------- ------- ------- -------
TOTAL $3,285 $12,463 $68,628 $8,783 $(22,007) $10,016 $57,851 $67,867
====== ======= ======= ====== ======== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Col. A Col. F Col. H Col. I
----------- ------------ -------- -----------
Description Accumulated Date Depreciable
(a) Depreciation Acquired Life
(e) (f)
----------- ------------ -------- -----------
<S> <C> <C> <C>
Washington $ 1,520 12/19/84 30 years
Technical
Center,
Phase I
Renton, WA
Arlington 3,108 02/15/85 30 years
Executive
Plaza
Arlington
Heights, IL
Certified 2,843 04/02/85 30 years
Distribution
Center
Salt Lake
City, UT
Ladera 2,340 05/10/85 30 years
Shopping
Center,
Phase I
Albuquerque,
NM
The 5,451 07/19/85 30 years
Cornerstone
Tempe, AZ
Terracentre 6,088 09/06/85 30 years
Denver, CO
Oakpointe 4,046 09/18/85 30 years
Arlington
Heights, IL
-------
TOTAL $25,396
=======
</TABLE>
NOTE: Column G is not applicable.
See notes to schedule on following page.
F-15
<PAGE> 28
DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO SCHEDULE III
(a) For a description of the properties, see "Item 2. Properties."
(b) Provision is made for impairment loss if the General Partner
determines that the carrying amount of the Partnership's investment in
a real estate asset may not be recoverable. The General Partner
obtains third party appraisals on the Partnership's properties as
required by the Partnership Agreement. If these appraisals indicate
that certain of the Partnership's properties have market values below
their then-current carrying values, management considers the
appraisals and analyzes the current and anticipated market conditions
of the respective properties and determines if an impairment has
occurred.
At December 31, 1994, after evaluation of the Cornerstone Shopping
Center, Terracentre, and Oakpointe, management estimated a $5,500,000
impairment of value as compared to their respective carrying values.
At December 31, 1992, after evaluation of the Arlington Executive
Plaza and Terracentre, management estimated an aggregate of
$13,900,000 impairment of value as compared to their respective
carrying values.
The aggregate cost of land, buildings and improvements for Federal
income tax purposes (unaudited) was $90,755,000 as of December 31,
1994. The difference between the aggregate cost of land, buildings
and improvements for tax reporting purposes as compared to financial
reporting purposes is primarily attributable to: (1) amounts received
under rental agreements for non-occupied space, which were recorded as
income for tax reporting purposes but were recorded as a reduction of
the corresponding property basis for financial reporting purposes, and
(2) the adjustment to the carrying value of the real estate which was
recorded as a reduction of the corresponding property basis for
financial statement purposes and has no effect for tax reporting
purposes.
(c) The initial cost to the Partnership includes acquisition fees paid to
the General Partner. The Partnership's cost has also been reduced by
amounts received from sellers at acquisition under rental agreements
for non-occupied space.
(d) Amounts represent funds received from sellers subsequent to
acquisition under rental agreements for non-occupied space and include
adjustments to carrying value of real estate.
F-16
<PAGE> 29
DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO SCHEDULE III (Cont'd.)
(e) RECONCILIATION OF REAL ESTATE
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of year $72,657,000 $71,968,000 $84,847,000
Additions during the year:
Improvements 710,000 689,000 1,021,000
Reductions during the year:
Adjustment to the carrying
value of real estate (5,500,000) - (13,900,000)
----------- ----------- -----------
Balance at end of year $67,867,000 $72,657,000 $71,968,000
=========== =========== ===========
</TABLE>
RECONCILIATION OF ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of year $23,258,000 $21,045,000 $17,837,000
Depreciation expense 2,138,000 2,213,000 3,208,000
----------- ----------- -----------
Balance at end of year $25,396,000 $23,258,000 $21,045,000
=========== =========== ===========
</TABLE>
(f) Depreciation expense is computed based upon the following estimated
useful lives:
<TABLE>
<CAPTION>
Years
--------
<S> <C>
Buildings 30
Building improvements 3 to 30
</TABLE>
F-17
<PAGE> 30
DAMSON/BIRTCHER REALTY INCOME FUND-I
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None. PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership and the General Partner have no directors or executive
officers. The General Partner of the Partnership is Damson/Birtcher Partners,
a California general partnership of which Birtcher Partners, a California
general partnership, and LF Special Fund II, L.P., a California limited
partnership, are the general partners. Under the terms of the Partnership
Agreement, Birtcher Partners is responsible for the day-to-day management of
the Partnership's assets.
The general partner of LF Special Fund II, L.P., is Liquidity Fund Asset
Management, Inc., a California corporation affiliated with Liquidity Financial
Group, L.P. The principals and officers of Liquidity Fund Asset Management,
Inc. are as follows:
o Richard G. Wollack, Chairman of the Board
o Brent R. Donaldson, President
o Deborah M. Richard, Chief Financial Officer
The general partner of Birtcher Partners is Birtcher Investments, a California
general partnership. Birtcher Investments' general partner is Birtcher
Limited, a California limited partnership and its general partner is BREICORP,
a California corporation. The principals and relevant officers of BREICORP are
as follows:
o Ronald E. Birtcher, Co-Chairman of the Board
o Arthur B. Birtcher, Co-Chairman of the Board
o Robert M. Anderson, Executive Director
Item 11. EXECUTIVE COMPENSATION
The following table sets forth the fees, compensation and other expense
reimbursements paid to the General Partner and its affiliates in all capacities
for each year in the three-year period ended December 31, 1994.
-12-
<PAGE> 31
DAMSON/BIRTCHER REALTY INCOME FUND-I
Item 11. EXECUTIVE COMPENSATION (Cont'd.)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1994 1993 1992
---------- -------- --------
<S> <C> <C> <C>
General Partner's 1% share of
distributable cash $ 15,000 $ 19,000 $ 11,000
Asset management fees 353,000 351,000 -
Property management fees(1) 167,000 32,000 -
Leasing fees 24,000 47,000 -
Property management expense
reimbursements(1) 303,000 49,000 -
Other expense reimbursements 191,000 182,000 213,000
---------- -------- --------
TOTAL $1,053,000 $680,000 $224,000
========== ======== ========
</TABLE>
(1) The General Partner did not provide property management services to
the Partnership's properties from November 1, 1991 through October 31,
1993, and consequently, the General Partner did not receive any
similar compensation during the first ten months of 1993, and fiscal
year ended December 31, 1992.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of January 31, 1995 there was no entity or individual holding more than 5%
of the limited partnership interests of the Registrant.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information concerning transactions to which the Registrant was or is to be
a party in which the General Partner or its affiliates had or are to have a
direct or indirect interest, see Notes 1 and 3 to the Financial Statements in
Item 8, which information is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
a) 1. and 2. Financial Statements and Financial Statements Schedules:
See accompanying Index to Financial Statements and Schedules to Item
8, which information is incorporated herein by reference.
-13-
<PAGE> 32
DAMSON/BIRTCHER REALTY INCOME FUND-I
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K (Cont'd.)
3. Exhibits:
Articles of Incorporation and Bylaws
(a) The Amended and Restated Agreement of Limited
Partnership incorporated by reference to
Exhibit A to the Partnership's prospectus
contained in the Partnership's registration
statement on Form S-11 (Commission File No.
2-91065), dated June 22, 1985, as
supplemented filed under the Securities Act
of 1933.
10. Material Contracts
(a) Revised Property Management Agreement dated
April 2, 1985 between Birtcher Properties and
the Registrant for Certified Distribution
Center. Incorporated by reference to Exhibit
19(a)(4) of the Partnership's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 1985. (SUPERSEDED)
(b) Property Management Agreement dated May 10,
1985, between Birtcher Properties and the
Registrant for Ladera Shopping Center.
Incorporated by reference to Exhibit 19(a)(6)
of the Partnership's Quarterly Report on Form
10-Q for the quarter ended June 30, 1985.
(SUPERSEDED)
(c) Property Management Agreement dated July 17,
1985, between Birtcher Properties and the
Registrant for The Cornerstone. Incorporated
by reference to Exhibit 19(a)(8) of the
Partnership's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1985.
(SUPERSEDED)
(d) Property Management Agreement dated September
6, 1985, between Birtcher Properties and the
Registrant for Terracentre. Incorporated by
reference to Exhibit 19(a)(10) of the
Partnership's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1985.
(SUPERSEDED)
(e) Property Management Agreement dated September
16, 1985, between Birtcher Properties and the
Registrant for Oakpointe (formerly Lincoln
Atrium Center). Incorporated by reference to
Exhibit 19(a)(12) of the Partnership's
Quarterly Report on Form 10-Q for the quarter
ended September 30, 1985. (SUPERSEDED)
-14-
<PAGE> 33
DAMSON/BIRTCHER REALTY INCOME FUND-I
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K (Cont'd.)
(f) Property Management Agreement dated October
24, 1991, between Glenborough Management
Corporation and the Registrant for Arlington
Executive Plaza, Certified Distribution
Center, The Cornerstone, Ladera-I Shopping
Center, Oakpointe, Terracentre and Washington
Technical Center. Incorporated by reference
to Exhibit 1 of the Partnership's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 1991. (SUPERSEDED)
(g) Agreement for Partnership administrative
services dated October 24, 1991, between
Glenborough Management Corporation and the
Registrant for the services described
therein. Incorporated by reference to
Exhibit 2 of the Partnership's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 1991. (SUPERSEDED)
(h) Property Management Agreement, dated October
29, 1993, between Birtcher Properties and the
Registrant for Arlington Executive Plaza,
Certified Distribution Center, The
Cornerstone, Ladera-I Shopping Center,
Oakpointe, Terracentre, and Washington
Technical Center. Incorporated by reference
to Exhibit 1 of the Partnership Quarterly
Report on Form 10-Q for the quarter ended
September 30, 1993.
27 Financial Data Schedule
b) Reports on Form 8-K:
None.
-15-
<PAGE> 34
DAMSON/BIRTCHER REALTY INCOME FUND-I
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DAMSON/BIRTCHER REALTY INCOME FUND-I
By: DAMSON/BIRTCHER PARTNERS By: BIRTCHER PARTNERS,
(General Partner) a California general partnership
By: BIRTCHER INVESTMENTS,
a California general partnership,
General Partner of Birtcher Partners
By: BIRTCHER LIMITED,
a California limited partnership,
General Partner of Birtcher
Investments
By: BREICORP,
a California corporation,
formerly known as Birtcher
Real Estate Inc., General
Partner of Birtcher Limited
Date: March 30, 1995 By: /s/ Robert M. Anderson
----------------------
Robert M. Anderson
Executive Director
BREICORP
By: LF Special Fund II, L.P.,
a California limited partnership
By: Liquidity Fund Asset Management, Inc.,
a California corporation, General
Partner of LF Special Fund II, L.P.
Date: March 30, 1995 By: /s/ Brent R. Donaldson
--------------------------
Brent R. Donaldson
President
Liquidity Fund Asset Management,
Inc.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of
Damson/Birtcher Partners (General Partner of the Registrant) and in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Arthur B. Birtcher Co-Chairman of the Board - March 30, 1995
---------------------- BREICORP
Arthur B. Birtcher
/s/ Ronald E. Birtcher Co-Chairman of the Board - March 30, 1995
---------------------- BREICORP
Ronald E. Birtcher
/s/ Richard G. Wollack Chairman of Liquidity Fund March 30, 1995
---------------------- Asset Management, Inc.
Richard G. Wollack
</TABLE>
-16-
<PAGE> 35
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
------- ----------- -----------
<S> <C> <C>
3(a) The Amended and Restated Agreement of Limited Partnership incorporated by reference to Exhibit A to the
Partnership's prospectus contained in the Partnership's registration statement on Form S-11 (Commission
File No. 2-91065), dated June 22, 1985, as supplemented filed under the Securities Act of 1933 .............
10(a) Revised Property Management Agreement dated April 2, 1985 between Birtcher Properties and the Registrant
for Certified Distribution Center. Incorporated by reference to Exhibit 19(a)(4) of the Partnership's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1985. (SUPERSEDED) ...........................
10(b) Property Management Agreement dated May 10, 1985, between Birtcher Properties and the Registrant for Ladera
Shopping Center. Incorporated by reference to Exhibit 19(a)(6) of the Partnership's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1985. (SUPERSEDED) ................................................
10(c) Property Management Agreement dated July 17, 1985, between Birtcher Properties and the Registrant for The
Cornerstone. Incorporated by reference to Exhibit 19(a)(8) of the Partnership's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1985. (SUPERSEDED) ...........................................
10(d) Property Management Agreement dated September 6, 1985, between Birtcher Properties and the Registrant for
Terracentre. Incorporated by reference to Exhibit 19(a)(10) of the Partnership's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1985. (SUPERSEDED) ...........................................
10(e) Property Management Agreement dated September 16, 1985, between Birtcher Properties and the Registrant for
Oakpointe (formerly Lincoln Atrium Center). Incorporated by reference to Exhibit 19(a)(12) of the
Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30, 1985. (SUPERSEDED) ........
10(f) Property Management Agreement dated October 24, 1991, between Glenborough Management Corporation and the
Registrant for Arlington Executive Plaza, Certified Distribution Center, The Cornerstone, Ladera-I Shopping
Center, Oakpointe, Terracentre and Washington Technical Center. Incorporated by reference to Exhibit 1 of
the Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30, 1991. (SUPERSEDED) ....
10(g) Agreement for Partnership administrative services dated October 24, 1991, between Glenborough Management
Corporation and the Registrant for the services described therein. Incorporated by reference to
Exhibit 2 of the Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30, 1991.
(SUPERSEDED) .. ............................................................................................
10(h) Property Management Agreement, dated October 29, 1993, between Birtcher Properties and the Registrant for
Arlington Executive Plaza, Certified Distribution Center, The Cornerstone, Ladera-I Shopping Center,
Oakpointe, Terracentre, and Washington Technical Center. Incorporated by reference to Exhibit 1 of the
Partnership Quarterly Report on Form 10-Q for the quarter ended September 30, 1993 .........................
27 Financial Data Schedule.....................................................................................
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) BALANCE
SHEET AND STATEMENT OF OPERATIONS OF DAMSON BIRTCHER REALTY INCOME FUND - I AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-K.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 648,000
<SECURITIES> 0
<RECEIVABLES> 84,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 911,000
<PP&E> 67,867,000
<DEPRECIATION> 25,396,000
<TOTAL-ASSETS> 44,292,000
<CURRENT-LIABILITIES> 1,213,000
<BONDS> 3,116,000
<COMMON> 0
0
0
<OTHER-SE> 39,963,000
<TOTAL-LIABILITY-AND-EQUITY> 44,292,000
<SALES> 0
<TOTAL-REVENUES> 6,307,000
<CGS> 0
<TOTAL-COSTS> 6,095,000
<OTHER-EXPENSES> 5,500,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 303,000
<INCOME-PRETAX> (5,591,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,591,000)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
