<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1999
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Commission file number 0-13563
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DAMSON/BIRTCHER REALTY INCOME FUND - I
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(Exact name of registrant as specified in its charter)
Pennsylvania 13-3264491
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
27611 La Paz Road, P.O. Box 30009, Laguna Niguel, California 92607-0009
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(Address of principal executive offices) (Zip Code)
(949) 643-7700
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 12(g), 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding twelve 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 [ ]
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DAMSON/BIRTCHER REALTY INCOME FUND-I
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 1999
INDEX
<TABLE>
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Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Net Assets in Liquidation - June 30, 1999
(Unaudited) and December 31, 1998 (Audited).............................................................. 3
Statements of Changes of Net Assets in Liquidation -
Three and Six Months Ended June 30, 1999 and 1998 (Unaudited)............................................ 4
Notes to Financial Statements (Unaudited)................................................................ 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............................................................ 13
Item 3. Quantitative and Qualitative Market Risk Disclosures..................................................... 19
PART II. OTHER INFORMATION........................................................................................ 19
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DAMSON/BIRTCHER REALTY INCOME FUND-I
STATEMENTS OF NET ASSETS IN LIQUIDATION
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
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ASSETS (Liquidation Basis): (unaudited)
<S> <C> <C>
Properties $32,762,000 $34,431,000
Cash and cash equivalents 611,000 351,000
Accounts receivable, net 29,000 171,000
Other assets 156,000 121,000
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Total Assets 33,558,000 35,074,000
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LIABILITIES (Liquidation Basis):
Accounts payable and accrued liabilities 950,000 896,000
Secured loan payable 2,391,000 2,509,000
Accrued expenses for liquidation (including
prepayment penalty) 873,000 873,000
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Total Liabilities 4,214,000 4,278,000
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Net Assets in Liquidation $29,344,000 $30,796,000
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</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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DAMSON/BIRTCHER REALTY INCOME FUND-I
STATEMENTS OF CHANGES OF NET ASSETS IN LIQUIDATION
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net assets in liquidation
at beginning of period $ 30,926,000 $ 32,052,000 $ 30,796,000 $ 32,026,000
Increase (decrease) during period:
Operating activities:
Property operating income, net 800,000 911,000 1,466,000 1,592,000
Interest income 3,000 1,000 7,000 6,000
General and administrative
expenses (244,000) (273,000) (451,000) (507,000)
Interest expense on mortgage
payable (55,000) (59,000) (111,000) (121,000)
Leasing commissions (55,000) (110,000) (66,000) (218,000)
------------ ------------ ------------ ------------
449,000 470,000 845,000 752,000
------------ ------------ ------------ ------------
Liquidating activities:
Adjustment to the carrying
value of real estate (1,717,000) (2,600,000) (1,717,000) (2,600,000)
Distributions to partners (314,000) -- (580,000) (256,000)
------------ ------------ ------------ ------------
(2,031,000) (2,600,000) (2,297,000) (2,856,000)
------------ ------------ ------------ ------------
Net decrease in assets
in liquidation (1,582,000) (2,130,000) (1,452,000) (2,104,000)
------------ ------------ ------------ ------------
Net assets in liquidation at
end of period $ 29,344,000 $ 29,922,000 $ 29,344,000 $ 29,922,000
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
(1) Accounting Policies
The financial statements of Damson/Birtcher Realty Income Fund-I (the
"Partnership") included herein have been prepared by the General
Partner, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. These financial statements include
all adjustments which are of a normal recurring nature and, in the
opinion of the General Partner, are necessary for a fair presentation.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, pursuant to the
rules and regulations of the Securities and Exchange Commission. These
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Partnership's annual
report on Form 10-K for the year ended December 31, 1998.
Liquidation Basis of Accounting
On February 18, 1997, the Partnership mailed a Consent Solicitation to
the Limited Partners which sought their consent to dissolve the
Partnership and sell and liquidate all of its remaining properties as
soon as practicable, consistent with selling the Partnership's
properties to the best advantage under the circumstances. A majority in
interest of the Limited Partners consented by March 14, 1997. As a
result, the Partnership adopted the liquidation basis of accounting as
of March 31, 1997. The liquidation basis of accounting is appropriate
when liquidation appears imminent, the Partnership can no longer be
classified as a going concern and the net realizable values of the
Partnership's assets are reasonably determinable. The difference
between the adoption of the liquidation basis of accounting as of March
14, 1997 and March 31, 1997 was not material.
Under the liquidation basis of accounting, assets are stated at their
estimated net realizable values and liabilities are stated at their
anticipated settlement amounts. The valuation of assets and liabilities
necessarily requires many estimates and assumptions, and there are
substantial uncertainties in carrying out the dissolution of the
Partnership. The actual values upon dissolution and costs associated
therewith could be higher or lower than the amounts recorded.
Segment Reporting
The Partnership adopted Statement of Financial Accounting Standards No.
131, "Disclosures About Segments of an Enterprise and Related
Information" ("SFAS 131"). SFAS 131 requires, among other items, that a
public business enterprise report a measure of segment profit or loss,
certain specific revenue and expense items, segment assets, information
about the revenues derived from the enterprise's products or services
and major customers. SFAS 131 also requires that the enterprise report
descriptive information about the way that the operating segments were
determined and the products and services provided by the operating
segments. Given that the Partnership is in the process of liquidation,
5
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DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENTS - UNAUDITED (Cont'd.)
(1) Accounting Policies (Cont'd.)
Segment Reporting (Cont'd.)
the Partnership has identified only one operating business segment
which is the business of asset liquidation. The adoption of SFAS 131
did not have an impact on the Partnership's financial reporting.
Rental income from FISERV, Inc. (formerly d.b.a. Citicorp CIR, Inc.)
totaled $255,000 and $237,000 for the three months ended June 30, 1999
and 1998, or approximately 18% and 16% respectively of the
Partnership's total rental income. For the six months ended June 30,
1999 and 1998, rental income totaled $516,000 and $471,000, or 19% and
16% of the Partnership's total rental income, respectively.
Sale of the Properties
In November 1998, the Partnership entered into a definitive Purchase
and Sale Agreement with Abbey Investments, Inc. to sell all the
Partnership's properties for a range between $34,500,000 and
$36,000,000, depending on final occupancy rates at the time of closing.
However, in January 1999, the agreement was terminated because Abbey
had requested a material reduction in the purchase price, which the
Partnership did not agree to.
On April 30, 1999, the Partnership and Praedium Performance Fund IV
("Praedium") executed a Purchase and Sale Agreement to sell all of the
Partnership's properties except Terracentre to Praedium for
$31,700,000. Praedium deposited $243,100 into escrow, pending
completion of its due diligence inspection and review. Praedium's
contingency period expired on June 14, 1999. During and after the
contingency period, Praedium, in a series of negotiations with the
Partnership, sought reductions in the purchase price of each of the
properties and declined to include the Cornerstone, Ladera-I and
Certified Distribution Center in its offers. During this time, the
General Partner negotiated with Praedium, and also sought other
purchasers for the properties, both individually and as a group.
Finally, in late July 1999, the Partnership declined Praedium's offer
to purchase only Cornerstone, Oakpointe and Washington Tech for a
materially reduced purchase price and terminated its dealings with
Praedium.
Immediately thereafter, on July 29, 1999, the Partnership entered into
a Purchase and Sale Agreement and Joint Escrow Instructions to sell all
of the Partnership's properties except Terracentre, The Cornerstone and
Ladera-I Shopping Center to Rubin Pachulsky Dew Properties, LLC ("Rubin
Pachulsky Dew") for an aggregate purchase price of $14,650,000. Rubin
Pachulsky Dew deposited $356,448 into escrow, which deposit is
nonrefundable except in the event of the Partnership's breach of the
sale agreement. Rubin Pachulsky Dew is a third-party real estate
investment entity that is not affiliated in any way with the
Partnership, its General Partner or any of its principals or
affiliates.
Except for a few technical exceptions, such as the Partnership's breach
of the sale agreement or title issues that cannot be corrected or
insured against by the Partnership to Rubin Pachulsky Dew's
satisfaction, the purchase is not subject to any conditions. It is
currently scheduled to close on September 14, 1999, and both buyer and
seller have agreed to use their best efforts to close the transaction
sooner.
Rubin Pachulsky Dew will hire Birtcher or an affiliate as property
manager for the properties for a fee that is approximately the same as
the current fee paid to the General Partner for property management. In
addition, Rubin Pachulsky Dew will hire Birtcher or an affiliate to
provide certain asset management services for the properties, and pay
an incentive fee approximately equal
6
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DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENTS - UNAUDITED (Cont'd.)
(1) Accounting Policies (Cont'd.)
Sale of the Properties (Cont'd.)
to 10% of the profits, if any, after Rubin Pachulsky Dew has received a
15% return on its investment. The incentive fee, if earned, is not
payable until the last property is sold or four years from date of
purchase, whichever comes first. The property management agreement is
cancelable at any time upon 60 days notice, but the incentive fee will
survive termination of the contract.
Terracentre
On March 24, 1999, the Partnership signed a Purchase and Sale Agreement
to sell Terracentre for $6,450,000 to Halcyon Real Estate, Inc.
("Halcyon"), a local Denver real estate development company. During its
due diligence period Halcyon asked to extend its contingency period to
address zoning and land-use changes with the city of Denver (it
apparently wanted to change the site from office to residential
condominium use). The General Partner did not accept the request for
extension. Halcyon thereupon asked to reduce the purchase price from
$6,450,000 to $4,500,000. The Partnership rejected this request and
terminated its dealings with Halcyon.
On June 18, 1999, the Partnership entered into a Purchase and Sale
Agreement with Charles Callaway ("Callaway"), an unaffiliated Denver
real estate developer and operator, for $6,450,000. The purchaser
deposited $200,000 into escrow on June 21, 1999, all but $50,000 of
which is refundable pending completion of its due diligence
investigation. Unfortunately, at a Denver city council meeting on
August 10, 1999, certain council members discussed condemning
Terracentre in order to expand the adjacent convention center. At this
time, the Callaway transaction is on hold, pending further action by
the City of Denver.
The Cornerstone
On June 29, 1999, the Partnership signed a Purchase and Sale Agreement
and Joint Escrow Instructions to sell the Cornerstone to GDA Real
Estate Services, LLC ("GDA"), a local real estate developer and
operator that is not affiliated in any way with the Partnership, its
General Partner or the General Partner's affiliates, for a sale price
of $8,500,000. GDA deposited $250,000 into escrow on June 30, 1999,
which sum is nonrefundable. Closing of the transaction is currently
scheduled for August 29, 1999. GDA may extend the closing date for an
additional 30 days by depositing an additional nonrefundable payment of
$100,000 into escrow. Prior to the close of the sale, the Partnership
shall deposit into escrow the sum of $230,000 to make certain repairs
to the parking lot.
GDA is represented by a third party broker in the transaction. The
broker will be paid an amount not to exceed $171,000 from the sale
proceeds. GDA will not hire the General Partner or any affiliate to
perform asset management or property management services for this
property after close of the sale. The Partnership has granted Rubin
Pachulsky Dew an option to purchase the Cornerstone for the same price
and on the same terms as GDA, should the GDA purchase fail for any
reason.
7
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DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENTS - UNAUDITED (Cont'd.)
(1) Accounting Policies (Cont'd.)
Sale of the Properties (Cont'd.)
Ladera-I
On August 9, 1999, the Partnership signed a Purchase and Sale Agreement
and Joint Escrow Instructions to sell Ladera-I shopping center to CA
New Mexico, LLC, a wholly-owned subsidiary of CenterAmerica Trust
("CenterAmerica"), a Houston-based real estate investment trust that is
not affiliated in any way with the Partnership, its General Partner or
the General Partner's affiliates. The purchase price is $4,424,000.
CenterAmerica deposited $79,000 into escrow on August 10, 1999, which
sum is fully refundable pending completion of its due diligence. The
due diligence contingency period is scheduled to end on September 7,
1999, with closing to occur on September 22, 1999.
CenterAmerica is represented by a third party broker in the
transaction. The broker will be paid an amount not to exceed $176,960
from the sale proceeds. CenterAmerica will not hire the General Partner
or any affiliate to perform asset management or property management
services for this property after close of the sale.
Adjustment to the Carrying Value of Real Estate
During the three months ended June 30, 1999, the General Partner
determined that the carrying values of Ladera-I Shopping Center and
Oakpointe were in excess of their respective estimated net realizable
values, less estimated selling cost. As a result, their carrying values
were adjusted by $1,217,000 and $500,000, to $4,203,000, and
$5,812,000, respectively.
Earnings 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. 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.
(2) 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 three months ended June
30, 1999 and 1998, the
8
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DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENTS - UNAUDITED (Cont'd.)
(2) Transactions with Affiliates (Cont'd.)
Partnership incurred approximately $52,000 and $50,000, respectively.
Such costs were $85,000 and $90,000 for the six months there ended.
An affiliate of the General Partner provides property management
services with respect to the Partnership's properties and receives a
fee for such services not to exceed 3% of the gross receipts from the
properties under management. Such fees amounted to approximately
$42,000 and $44,000 for the three months ended June 30, 1999 and 1998,
and $85,000 and $85,000, respectively for the six months there ended.
In addition, an affiliate of the General Partner received $85,000 and
$87,000 for the three months ended June 30, 1999 and 1998,
respectively, as reimbursement of costs of on-site property management
personnel and other reimbursable costs. For the six months there ended,
such reimbursements were $171,000 and $161,000, respectively.
As previously reported, 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 were 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 amended Partnership Agreement provides for the Partnership's
payment to the General Partner of an annual asset management fee equal
to .45% for 1999 and .55% for 1998 of the aggregate appraised value of
the Partnership's properties as determined by independent appraisal
undertaken in January of 1998 and by the General Partner's estimate of
fair value for 1999. Such fees for the three months ended June 30, 1999
and 1998, amounted to $39,000 and $52,000, respectively. For the six
months there ended, these fees amounted to $79,000 and $105,000,
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 leases. Fees for leasing services for the
three months ended June 30, 1999 and 1998, amounted to $17,000 and
$12,000, respectively. For the six months there ended, such fees were
$18,000 and $35,000, respectively.
(3) Commitments and Contingencies
Litigation
So far as is known to the General Partner, neither the Partnership nor
its properties are subject to any material pending legal proceedings,
except for the following:
Bigelow/Diversified Secondary Partnership's Fund 1990 Litigation
On March 25, 1997, a limited partner named Bigelow/Diversified
Secondary Partnership Fund 1990 filed a purported class action lawsuit
in the Court
9
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DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENT - UNAUDITED (Cont'd.)
(3) Commitments and Contingencies (Cont'd.)
Litigation (Cont'd.)
Bigelow Diversified Secondary Partnership Fund 1990 litigation
(Cont'd.)
of Common Pleas of Philadelphia County against Damson/Birtcher
Partners, Birtcher Investors, Birtcher/Liquidity Properties, Birtcher
Investments, L.F. Special Fund II, L.P., L.F. Special Fund I, L.P.,
Arthur Birtcher, Ronald Birtcher, Robert Anderson, Richard G. Wollack
and Brent R. Donaldson alleging breach of fiduciary duty and breach of
contract and seeking to enjoin the Consent Solicitation dated February
18, 1997. On April 18, 1997, the court denied the plaintiff's motion
for a preliminary injunction. On June 10, 1997, the court dismissed the
plaintiff's complaint on the basis of lack of personal jurisdiction and
forum non conveniens.
On June 13, 1997, the Partnership's affiliated partnerships,
Damson/Birtcher Realty Income Fund-II and Real Estate Income Partners
III, and their general partner, Birtcher/Liquidity Properties, filed a
complaint for declaratory relief in the Court of Chancery in Delaware
against Bigelow/Diversified Secondary Partnership Fund 1990 L.P. The
complaint seeks a declaration that the vote that the limited partners
of Damson/Birtcher Realty Income Fund-II and Real Estate Income
Partners III took pursuant to the respective consent solicitations
dated February 18, 1997 was effective to dissolve the respective
partnerships and complied with applicable law, that the actions of the
General Partner in utilizing the consent solicitations to solicit the
vote of the limited partners did not breach any fiduciary or
contractual duty to such limited partners, and an award of costs and
fees to the plaintiffs. The defendant has answered the complaint. The
parties have initiated discovery. No motions are pending at this time.
In September 1998, Bigelow/Diversified Secondary Partnership 1990
informed the Partnership that it was filing suit in the Delaware
Chancery Court against Damson/Birtcher Partners, Birtcher Investors,
Birtcher Liquidity Properties, Birtcher Investments, BREICORP, LF
Special Fund I, LP, LF Special Fund II. LP, Arthur Birtcher, Ronald
Birtcher, Robert Anderson, Richard G. Wollack and Brent R. Donaldson
alleging a purported class action on behalf of the limited partners of
Damson/Birtcher Realty Income Fund-I, Damson/Birtcher Realty Income
Fund-II and Real Estate Income Partners III alleging breach of
fiduciary duty and incorporating the allegations set forth in the
previously dismissed March 25, 1997 complaint filed in the Court of
Chancery of Philadelphia County. Plaintiff has engaged in preliminary
discovery and the parties have held settlement discussions. No motions
are pending at this time.
Rex Garton, et al. v. Damson/Birtcher Partners, et al.
This action was filed on September 25, 1998 in the District Court of
Oklahoma County for the State of Oklahoma against the Partnership's
general partner, Damson/Birtcher Partners, other related defendants and
numerous unrelated defendants. Damson/Birtcher Partners and other
related defendants were brought into the action in late December 1998,
when they were served
10
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DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENT - UNAUDITED (Cont'd.)
(3) Commitments and Contingencies (Cont'd.)
Litigation (Cont'd.)
Rex Garton, et al. v. Damson/Birtcher Partners, et al. (Cont'd.)
with the Second Amended Petition. The other related defendants are
Birtcher Partners, Birtcher Properties, The Birtcher Group, Birtcher
American Properties, Arthur B. Birtcher, Ronald E. Birtcher, LF Special
Fund II, L.P., and Liquidity Fund Asset Management Inc., but The
Birtcher Group and Birtcher American Properties have not been served
with process and have not appeared in the action. The Partnership
itself is not named as a defendant. The case is a class action brought
on behalf of investors in the Partnership who purchased limited
partnership interests from May 7, 1984 to September 17, 1985. The
Second Amended Petition alleges breach of contract, intentional and
negligent misrepresentation, breach of fiduciary duties, and violations
of various Oklahoma and federal statutes in connection with the sale of
the limited partnership interests. Plaintiff seeks unspecified
compensatory damages and $10 million in punitive damages.
Damson/Birtcher Partners and the related defendants have removed the
case to the United States District Court for the Western District of
Oklahoma, and have filed a motion to dismiss the case for lack of
personal jurisdiction or, alternatively, to transfer the action to the
United States District Court for the Central District of California,
for the convenience of the parties and witnesses and in the interests
of justice. Plaintiff's motion to remand the case back to the Oklahoma
state court was denied. The motion to dismiss or transfer is pending.
Damson/Birtcher Partners and the related defendants intend to present a
vigorous defense on the merits of plaintiff's claims, should this be
necessary.
Madison Partnership and ISA Partnership Litigation
On April 2, 1999, Madison Partnership Liquidity Investors XVI, LLC and
ISA Partnership Liquidity Investors filed a purported class and
derivative action in the California Superior Court in Orange County,
California against Damson Birtcher Partners, Birtcher/Liquidity
Properties, Birtcher Partners, Birtcher Investors, Birtcher
Investments, Birtcher Limited, Breicorp LP Special Fund II, L.P.,
Liquidity Fund Asset Management, Inc., Robert M. Anderson, Brent R.
Donaldson, Arthur B. Birtcher, Ronald E. Birtcher, and Richard G.
Wollack, Defendants, and Damson/Birtcher Realty Income Fund-I,
Damson/Birtcher Realty Income Fund-II, and Real Estate Income Partners
III, Nominal Defendants. The complaint asserts claims for breach of
fiduciary duty and breach of contract. The gravamen of the complaint is
that the General Partners of these limited partnerships have not
undertaken all reasonable efforts to expedite liquidation of the
Partnerships' properties and to maximize the returns to the
Partnerships' limited partners. The complaint seeks unspecified
monetary damages, attorneys' fees and litigation expenses, and an order
for dissolution of the Partnerships and appointment of an independent
liquidating trustee. The Partnership has moved to dismiss the case on
the grounds that the pending Bigelow class action, discussed above,
raises essentially the same claims. If the case is not dismissed, the
Partnership intends to present a vigorous defense.
11
<PAGE> 12
DAMSON/BIRTCHER REALTY INCOME FUND-I
NOTES TO FINANCIAL STATEMENT - UNAUDITED (Cont'd.)
(4) Accrued Expenses for Liquidation
Accrued expenses for liquidation as of June 30, 1999, include estimates
of costs to be incurred in carrying out the dissolution and liquidation
of the Partnership. These costs include estimates of legal fees,
accounting fees, tax preparation and filing fees, other professional
services and the pre-payment penalty associated with the anticipated
early retirement of the mortgage loan secured by the Certified
Distribution Center property. The actual costs could vary significantly
from the related provisions due to the uncertainty related to the
length of time required to complete the liquidation and dissolution and
the complexities which may arise in disposing of the Partnership's
remaining assets.
12
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DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Liquidity and Capital Resources
Since the completion of its acquisition program in September 1985, the
Partnership has been engaged in the operation of its properties. The
Partnership's original objective had been to hold its properties as
long-term investments. However, an Information Statement, dated May 5,
1993, mandated that the General Partner 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 were not
sold or under contract for sale by the end of 1996. Given the mandate
of the May 5, 1993 Information Statement, as of December 31, 1995, the
General Partner decided to account for the Partnership's properties as
assets held for sale, instead of for investment. In a Consent
Solicitation dated February 18, 1997, the Partnership solicited and
received the consent of the Limited Partners on March 14, 1997 to
dissolve the Partnership and sell and liquidate all of its remaining
properties as soon as practicable, consistent with selling the
Partnership's properties to the best advantage under the circumstances.
The Partnership's properties were held for sale throughout 1998 and
continue to be held for sale.
In November 1998, the Partnership entered into a definitive Purchase
and Sale Agreement with Abbey Investments, Inc. to sell all the
Partnership's properties for a range between $34,500,000 and
$36,000,000, depending on final occupancy rates at the time of closing.
However, in January 1999, the agreement was terminated because Abbey
had requested a material reduction in the purchase price, which the
Partnership did not agree to.
On April 30, 1999, the Partnership and Praedium Performance Fund IV
("Praedium") executed a Purchase and Sale Agreement to sell all of the
Partnership's properties except Terracentre to Praedium for
$31,700,000. Praedium deposited $243,100 into escrow, pending
completion of its due diligence inspection and review. Praedium's
contingency period expired on June 14, 1999. During and after the
contingency period, Praedium, in a series of negotiations with the
Partnership, sought reductions in the purchase price of each of the
properties and declined to include the Cornerstone, Ladera-I and
Certified Distribution Center in its offers. During this time, the
General Partner negotiated with Praedium, and also sought other
purchasers for the properties, both individually and as a group.
Finally, in late July 1999, the Partnership declined Praedium's offer
to purchase only Cornerstone, Oakpointe and Washington Tech for a
materially reduced purchase price and terminated its dealings with
Praedium.
Immediately thereafter, on July 29, 1999, the Partnership entered into
a Purchase and Sale Agreement and Joint Escrow Instructions to sell all
of the Partnership's properties except Terracentre, The Cornerstone and
Ladera-I Shopping Center to Rubin Pachulsky Dew Properties, LLC ("Rubin
Pachulsky Dew") for an aggregate purchase price of $14,650,000. Rubin
Pachulsky Dew deposited $356,448 into escrow, which deposit is
nonrefundable except in the event of the Partnership's breach of the
sale agreement. Rubin Pachulsky Dew is a third-party real estate
investment entity that is not affiliated in any way with the
Partnership, its General Partner or any of its principals or
affiliates.
Except for a few technical exceptions, such as the Partnership's breach
of the sale agreement or title issues that cannot be corrected or
insured against by the Partnership to Rubin Pachulsky Dew's
satisfaction, the purchase is not subject to any conditions. It is
currently scheduled to close on September 14, 1999, and both buyer and
seller have agreed to use their best efforts to close the transaction
sooner.
13
<PAGE> 14
DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Cont'd.)
Liquidity and Capital Resources (Cont'd.)
Rubin Pachulsky Dew will hire Birtcher or an affiliate as property
manager for the properties for a fee that is approximately the same as
the current fee paid to the General Partner for property management. In
addition, Rubin Pachulsky Dew will hire Birtcher or an affiliate to
provide certain asset management services for the properties, and pay
an incentive fee approximately equal to 10% of the profits, if any,
after Rubin Pachulsky Dew has received a 15% return on its investment.
The incentive fee, if earned, is not payable until the last property is
sold or four years from date of purchase, whichever comes first. The
property management agreement is cancelable at any time upon 60 days
notice, but the incentive fee will survive termination of the contract.
Terracentre
On March 24, 1999, the Partnership signed a Purchase and Sale Agreement
to sell Terracentre for $6,450,000 to Halcyon Real Estate, Inc.
("Halcyon"), a local Denver real estate development company. During its
due diligence period Halcyon asked to extend its contingency period to
address zoning and land-use changes with the city of Denver (it
apparently wanted to change the site from office to residential
condominium use). The General Partner did not accept the request for
extension. Halcyon thereupon asked to reduce the purchase price from
$6,450,000 to $4,500,000. The Partnership rejected this request and
terminated its dealings with Halcyon.
On June 18, 1999, the Partnership entered into a Purchase and Sale
Agreement with Charles Callaway ("Callaway"), an unaffiliated Denver
real estate developer and operator, for $6,450,000. The purchaser
deposited $200,000 into escrow on June 21, 1999, all but $50,000 of
which is refundable pending completion of its due diligence
investigation. Unfortunately, at a Denver city council meeting on
August 10, 1999, certain council members discussed condemning
Terracentre in order to expand the adjacent convention center. At this
time, the Callaway transaction is on hold, pending further action by
the City of Denver.
The Cornerstone
On June 29, 1999, the Partnership signed a Purchase and Sale Agreement
and Joint Escrow Instructions to sell the Cornerstone to GDA Real
Estate Services, LLC ("GDA"), a local real estate developer and
operator that is not affiliated in any way with the Partnership, its
General Partner or the General Partner's affiliates, for a sale price
of $8,500,000. GDA deposited $250,000 into escrow on June 30, 1999,
which sum is nonrefundable. Closing of the transaction is currently
scheduled for August 29, 1999. GDA may extend the closing date for an
additional 30 days by depositing an additional nonrefundable payment of
$100,000 into escrow. Prior to the close of the sale, the Partnership
shall deposit into escrow the sum of $230,000 to make certain repairs
to the parking lot.
GDA is represented by a third party broker in the transaction. The
broker will be paid an amount not to exceed $171,000 from the sale
proceeds. GDA
14
<PAGE> 15
DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Cont'd.)
Liquidity and Capital Resources (Cont'd.)
The Cornerstone (Cont'd.)
will not hire the General Partner or any affiliate to perform asset
management or property management services for this property after
close of the sale. The Partnership has granted Rubin Pachulsky Dew an
option to purchase the Cornerstone for the same price and on the same
terms as GDA, should the GDA purchase fail for any reason.
Ladera-I
On August 9, 1999, the Partnership signed a Purchase and Sale Agreement
and Joint Escrow Instructions to sell Ladera-I Shopping Center to CA
New Mexico, LLC, a wholly-owned subsidiary of CenterAmerica Trust
("CenterAmerica"), a Houston-based real estate investment trust that is
not affiliated in any way with the Partnership, its General Partner or
the General Partner's affiliates. The purchase price is $4,424,000.
CenterAmerica deposited $79,000 into escrow on August 10, 1999, which
sum is fully refundable pending completion of its due diligence. The
due diligence contingency period is scheduled to end on September 7,
1999, with closing to occur on September 22, 1999.
CenterAmerica is represented by a third party broker in the
transaction. The broker will be paid an amount not to exceed $176,960
from the sale proceeds. CenterAmerica will not hire the General Partner
or any affiliate to perform asset management or property management
services for this property after close of the sale.
Although there can be no assurance that the proposed sales of the
properties will be completed, if the sales are completed at the stated
prices, the limited partners will receive total aggregate sale proceeds
of approximately $302 per $1,000 originally invested in the
Partnership.
The General Partner's estimate of sales proceeds does not take into
account the expenditure of Partnership cash reserves, operating
expenses or net income or loss of the Partnership for any period prior
to the time the remaining properties are sold, which could affect the
amount of sales proceeds available for distribution. Therefore, the
actual proceeds to be received by the limited partners may vary
materially, up or down, from the estimate.
Regular distributions through June 30, 1999 represent 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 principally to the extent of
cash flow attributable to operations and sales of the Partnership's
properties and interest earned on the investment of capital reserves,
after loan repayments, payment for capital improvements to the
Partnership's properties and providing for capital reserves.
15
<PAGE> 16
DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Cont'd.)
Liquidity and Capital Resources (Cont'd.)
On July 30, 1993, the Partnership obtained a loan secured by a First
Deed of Trust on the Certified Distribution Center in Salt Lake City,
Utah. The loan, in the amount of $3,500,000, carries a fixed interest
rate of 9% per annum over a 13-year fully amortizing term and a
prepayment penalty of approximately $700,000 at current interest rates.
In March 1996, the Partnership entered into a loan agreement pursuant
to which it could borrow up to $1,500,000 (similar to a credit line
arrangement), evidenced by a note secured by a first deed of trust and
financing statement on the Ladera I Shopping Center in Albuquerque, New
Mexico. Pursuant to the note and loan agreement, the Partnership
borrowed $700,000 in March 1996. The net proceeds of the foregoing loan
were used to fund a portion of the renovation and tenant improvements
at The Cornerstone and tenant improvements at Oakpointe. The
Partnership made interest only payments at the rate of 1% over prime
(the loan rate was 9.25%) through November 1996, when the entire
balance was paid off utilizing a portion of the proceeds from the sale
of Arlington Executive Plaza. The Partnership has the ability to borrow
against this credit facility (up to $1,500,000) through April 2002
should its cash requirements necessitate.
Other Matters
The Partnership is in the process of liquidating its remaining assets.
It is anticipated that a sale of those assets will occur on or before
January 1, 2000. It is the opinion of the General Partner that the
value of those assets is not subject to any valuation risk as a result
of year 2000 issues, other than general economic climate issues that
may arise. Based on current information, the cost of addressing
potential year 2000 problems is not expected to have a material adverse
impact on the Partnership's financial position, results of operations
or cash flows in future periods. As of June 30, 1999, the investor
services system used to track the limited partners' interests,
distributions and tax information has been tested and appears to be
free of year 2000 bugs. The Partnership's properties are under review
utilizing the Building Owners and Managers Association ("BOMA")
industry standards as a guideline for necessary corrections and the
Partnership's accounting systems are undergoing a software upgrade to
correct any year 2000 issues to be completed in August 1999. The cost
of the upgrades are being borne by the General Partner and will not be
reimbursed by the Partnership. In addition, the General Partner has
made inquiries of its banks, all of which indicate that any problems
have been addressed adequately by those institutions.
Even if attempts to correct any deficiencies in the Partnership's
software are unsuccessful, the General Partner anticipates that in the
short term it could convert its systems to standard spreadsheet or data
base programs at nominal costs.
Results of Operations for the Three Months Ended June 30, 1999
Because the Partnership is in the process of liquidating its remaining
16
<PAGE> 17
DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Cont'd.)
Results of Operations for the Three Months Ended June 30, 1999
(Cont'd.)
assets, a comparison of the results of operations is not practical. As
the Partnership's assets (properties) are sold, the results of
operations will be generated from a smaller asset base, and are
therefore not comparable. The Partnership's operating results have been
reflected on the Statements of Changes of Net Assets in Liquidation.
For the three months ended June 30, 1999, the Partnership generated
$800,000 of net operating income from operations of its properties. The
decrease in net operating income for the three months ended June 30,
1999 when compared to the same period in 1998 was attributable to
several factors. At The Cornerstone, $94,000 of uncollectable tenant
rent was written off and the property incurred $41,000 of additional
operating expenses in 1999 as compared to 1998. In addition, in 1997
the Partnership wrote off $75,000 in bad debt expenses that were later
recovered in 1998 at The Cornerstone. That subsequent collection caused
a one-time increase in operating income for 1998 when compared to 1999.
These decreases were partially offset by increased rental revenue from
Washington Technical Center ($28,000) and Oakpointe ($50,000) and
increased operating expense reimbursements at Terracentre ($21,000).
Interest income resulted from the temporary investment of Partnership
working capital. For the three months ended June 30, 1999, interest
income was approximately $3,000.
General and administrative expenses for the three months ended June 30,
1999, include charges of $109,000 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 for the three
months ended June 30, 1999, are direct charges of $135,000, relating to
audit fees, tax preparation fees, legal fees and professional services,
costs incurred in providing information to the Limited Partners and
other miscellaneous costs.
The decrease in general and administrative expenses for the three
months ended June 30, 1999, as compared to the corresponding period in
1998, was primarily attributable to decreases in the General Partner's
liability insurance, asset management fees, consulting and appraisal
fees during 1999. The aforementioned decreases were partially offset by
an increase in legal fees incurred.
During the three months ended June 30, 1999, the General Partner
determined that the carrying values of Ladera-I Shopping Center and
Oakpointe were in excess of their respective estimated net realizable
values, less estimated selling cost. As a result, their carrying values
were adjusted by $1,217,000 and $500,000, to $4,203,000, and
$5,812,000, respectively.
Accrued expenses for liquidation as of June 30, 1999, includes
estimates of costs to be incurred in carrying out the dissolution and
liquidation of the Partnership. These costs include estimates of legal
fees, accounting fees, tax preparation and filing fees, professional
services, the general partner's liability insurance and the pre-payment
penalty associated with the anticipated early retirement of the
mortgage loan secured by the Certified Distribution Center property.
The actual costs could vary significantly from the related provisions
due to the uncertainty related
17
<PAGE> 18
DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Cont'd.)
Results of Operations for the Three Months Ended June 30, 1999
(Cont'd.)
to the length of time required to complete the liquidation and
dissolution and the complexities which may arise in disposing of the
Partnership's remaining assets.
Interest expense resulted from interest on the first deed of trust on
Certified Distribution Center.
18
<PAGE> 19
DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 3. QUANTITATIVE AND QUALITATIVE MARKET RISK DISCLOSURES
The Partnership is not exposed to interest rate changes because its
only obligation outstanding at year-end carries a fixed interest rate
and the Partnership expects to sell its properties within a short
period of time. The Partnership's interest rate risk management
objective is to limit the impact of interest rate changes on earnings
and cash flows and to lower its overall borrowing costs. To achieve its
objectives, the Partnership borrows primarily at fixed rates. The
Partnership does not enter into derivative or interest rate
transactions for speculative purposes.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Bigelow Diversified Secondary Partnership Fund 1990 litigation
On March 25, 1997, a limited partner named Bigelow/Diversified
Secondary Partnership Fund 1990 filed a purported class action lawsuit
in the Court of Common Pleas of Philadelphia County against
Damson/Birtcher Partners, Birtcher Investors, Birtcher/Liquidity
Properties, Birtcher Investments, L.F. Special Fund II, L.P., L.F.
Special Fund I, L.P., Arthur Birtcher, Ronald Birtcher, Robert
Anderson, Richard G. Wollack and Brent R. Donaldson alleging breach of
fiduciary duty and breach of contract and seeking to enjoin the Consent
Solicitation dated February 18, 1997. On April 18, 1997, the court
denied the plaintiff's motion for a preliminary injunction. On June 10,
1997, the court dismissed the plaintiff's complaint on the basis of
lack of personal jurisdiction and forum non conveniens.
On June 13, 1997, the Partnership's affiliated partnerships,
Damson/Birtcher Realty Income Fund-II and Real Estate Income Partners
III, and their general partner, Birtcher/Liquidity Properties, filed a
complaint for declaratory relief in the Court of Chancery in Delaware
against Bigelow/Diversified Secondary Partnership Fund 1990 L.P. The
complaint seeks a declaration that the vote that the limited partners
of Damson/Birtcher Realty Income Fund-II and Real Estate Income
Partners III took pursuant to the respective consent solicitations
dated February 18, 1997 was effective to dissolve the respective
partnerships and complied with applicable law, that the actions of the
General Partner in utilizing the consent solicitations to solicit the
vote of the limited partners did not breach any fiduciary or
contractual duty to such limited partners, and an award of costs and
fees to the plaintiffs. The defendant has answered the complaint. The
parties have initiated discovery. No motions are pending at this time.
In September 1998, Bigelow/Diversified Secondary Partnership 1990
informed the Partnership that it was filing suit in the Delaware
Chancery Court against Damson/Birtcher Partners, Birtcher Investors,
Birtcher Liquidity Properties, Birtcher Investments, BREICORP, LF
Special Fund I, LP, LF Special Fund II. LP, Arthur Birtcher, Ronald
Birtcher, Robert Anderson, Richard G. Wollack and Brent R. Donaldson
alleging a purported class action on behalf of the limited partners of
Damson/Birtcher Realty Income Fund-I, Damson/Birtcher Realty Income
Fund-II and Real Estate Income Partners III alleging breach of
fiduciary duty and incorporating the allegations set forth in the
previously dismissed March 25, 1997 complaint filed in the Court of
Chancery of Philadelphia County. Plaintiff has engaged in
19
<PAGE> 20
DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 1. LEGAL PROCEEDINGS (Cont'd.)
Bigelow Diversified Secondary Partnership Fund 1990 litigation
(Cont'd.)
preliminary discovery and the parties have held settlement discussions.
No motions are pending at this time.
Rex Garton, et al. v. Damson/Birtcher Partners, et al.
This action was filed on September 25, 1998 in the District Court of
Oklahoma County for the State of Oklahoma against the Partnership's
general partner, Damson/Birtcher Partners, other related defendants and
numerous unrelated defendants. Damson/Birtcher Partners and other
related defendants were brought into the action in late December 1998,
when they were served with the Second Amended Petition. The other
related defendants are Birtcher Partners, Birtcher Properties, The
Birtcher Group, Birtcher American Properties, Arthur B. Birtcher,
Ronald E. Birtcher, LF Special Fund II, L.P., and Liquidity Fund Asset
Management Inc., but The Birtcher Group and Birtcher American
Properties have not been served with process and have not appeared in
the action. The Partnership itself is not named as a defendant. The
case is a class action brought on behalf of investors in the
Partnership who purchased limited partnership interests from May 7,
1984 to September 17, 1985. The Second Amended Petition alleges breach
of contract, intentional and negligent misrepresentation, breach of
fiduciary duties, and violations of various Oklahoma and federal
statutes in connection with the sale of the limited partnership
interests. Plaintiff seeks unspecified compensatory damages and $10
million in punitive damages.
Damson/Birtcher Partners and the related defendants have removed the
case to the United States District Court for the Western District of
Oklahoma, and have filed a motion to dismiss the case for lack of
personal jurisdiction or, alternatively, to transfer the action to the
United States District Court for the Central District of California,
for the convenience of the parties and witnesses and in the interests
of justice. Plaintiff's motion to remand the case back to the Oklahoma
state court was denied. The motion to dismiss or transfer is pending.
Damson/Birtcher Partners and the related defendants intend to present a
vigorous defense on the merits of plaintiff's claims, should this be
necessary.
Madison Partnership and ISA Partnership Litigation
On April 2, 1999, Madison Partnership Liquidity Investors XVI, LLC and
ISA Partnership Liquidity Investors filed a purported class and
derivative action in the California Superior Court in Orange County,
California against Damson Birtcher Partners, Birtcher/Liquidity
Properties, Birtcher Partners, Birtcher Investors, Birtcher
Investments, Birtcher Limited, Breicorp LP Special Fund II, L.P.,
Liquidity Fund Asset Management, Inc., Robert M. Anderson, Brent R.
Donaldson, Arthur B. Birtcher, Ronald E. Birtcher, and Richard G.
Wollack, Defendants, and Damson/Birtcher Realty Income Fund-I,
Damson/Birtcher Realty Income Fund-II, and Real Estate Income Partners
III, Nominal Defendants. The complaint asserts claims for breach of
fiduciary duty and breach of contract. The gravamen of the complaint is
that the General Partners of these limited partnerships have not
undertaken all reasonable efforts to expedite liquidation of the
Partnerships' properties and to maximize the returns to the
Partnerships' limited partners. The complaint seeks unspecified
monetary damages, attorneys' fees and litigation expenses, and an order
for dissolution of
20
<PAGE> 21
DAMSON/BIRTCHER REALTY INCOME FUND-I
ITEM 1. LEGAL PROCEEDINGS (Cont'd.)
Madison Partnership and ISA Partnership Litigation (Cont'd.)
the Partnerships and appointment of an independent liquidating trustee.
The Partnership has moved to dismiss the case on the grounds that the
pending Bigelow class action, discussed above, raises essentially the
same claims. If the case is not dismissed, the Partnership intends to
present a vigorous defense.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
27 - Financial Data Schedule
b) Reports on Form 8-K:
None filed in quarter ended June 30, 1999.
21
<PAGE> 22
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.
<TABLE>
<S> <C>
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: August 15, 1999 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: August 15, 1999 By: /s/ Brent R. Donaldson
-----------------------------
Brent R. Donaldson
President
Liquidity Fund Asset Management, Inc.
</TABLE>
22
<PAGE> 23
EXHIBIT INDEX
<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 STATEMENT OF
NET ASSETS IN LIQUIDATION OF DAMSON BIRTCHER REALTY INCOME FUND I AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 611,000
<SECURITIES> 0
<RECEIVABLES> 29,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 796,000
<PP&E> 32,762,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 33,558,000
<CURRENT-LIABILITIES> 1,823,000
<BONDS> 2,391,000
0
0
<COMMON> 0
<OTHER-SE> 29,344,000
<TOTAL-LIABILITY-AND-EQUITY> 33,558,000
<SALES> 0
<TOTAL-REVENUES> 0<F1>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0<F1>
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0<F1>
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1>STATEMENT OF OPERATION IS NOT PRESENTED IN LIQUIDATION BASIS OF ACCOUNTING.
</FN>
</TABLE>
