UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1995
or
[ ]Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 0-13227
USAA Real Estate Income Investments I Limited Partnership
(Exact name of registrant as specified in its charter)
California 74-2325025
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8000 Robert F. McDermott Fwy., IH 10 West, Suite 600,
San Antonio, Texas 78230-3884
(Address of principal executive offices) (Zip Code)
(210) 498-7391
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
[X] Yes [ ] No
1
<PAGE>
PART I
Item 1. Financial Statements
<TABLE>
Condensed Balance Sheets
<CAPTION>
March 31,
1995 December 31,
(Unaudited) 1994
<S> <C> <C>
Assets
Rental properties, net $ 10,671,928 10,420,520
Mortgage loan receivable from affiliate 5,440,000 5,440,000
Temporary investments, at cost which
approximates market value:
USAA Mutual Fund, Inc. -- 9,315
Money market fund 503,386 780,568
503,386 789,883
Cash 6,438 5,793
Cash and cash equivalents 509,824 795,676
Accounts receivable 32,727 35,904
Deferred charges and other assets, at amortized cost 377,977 276,781
$ 17,032,456 16,968,881
Liabilities and Partners' Equity
Accounts payable, including amounts due to
affiliates of $43,933 and $35,140 $ 112,771 72,614
Accrued expenses 88,957 20,668
Security deposits 64,637 68,808
Total liabilities 266,365 162,090
Partners' equity
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 81,585 79,785
Cumulative distributions (170,601) (168,394)
(88,016) (87,609)
Limited Partners (54,610 units):
Capital contributions, net of offering costs 25,666,700 25,666,700
Cumulative net income 8,076,876 7,898,729
Cumulative distributions (16,889,469) (16,671,029)
16,854,107 16,894,400
Total Partners' equity 16,766,091 16,806,791
$ 17,032,456 16,968,881
See accompanying notes to condensed financial statements.
</TABLE>
2
<PAGE>
<TABLE>
USAA Real Estate Income Investments I Limited Partnership
Condensed Statements of Income
Three months ended March 31, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <
Income
Rental income $ 315,141 195,056
Interest from mortgage loan (note 1) 150,723 149,810
Less direct expenses, including depreciation of
$116,533 and $105,606 (194,687) (210,446)
Net operating income 271,177 134,420
Interest income (note 1) 8,835 11,405
Total income 280,012 145,825
Expenses
General and administrative (note 1) 78,321 68,716
Management fee (note 1) 21,744 3,130
Total expenses 100,065 71,846
Net income $ 179,947 73,979
Net income per limited partnership unit $ 3.26 1.34
See accompanying notes to condensed financial statements.
</TABLE>
3
<PAGE>
<TABLE>
USAA Real Estate Income Investments I Limited Partnership
Condensed Statements of Cash Flows
Three months ended March 31, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 179,947 73,979
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 116,533 105,606
Amortization 1,293 1,040
Decrease (increase) in accounts receivable 3,177 (519)
Increase in deferred charges and other assets (102,489) (16,843)
Increase in accounts payable, accrued expenses
and other liabilities 104,275 12,849
Loss on early retirement of assets -- 2,465
Cash provided by operating activities 302,736 178,577
Cash flows used in investing activities-
Additions to rental properties (367,941) (205,498)
Cash flows used in financing activities-
Distributions to partners (220,647) (220,646)
Net decrease in cash and cash equivalents (285,852) (247,567)
Cash and cash equivalents at beginning of period 795,676 1,577,808
Cash and cash equivalents at end of period $ 509,824 1,330,241
See accompanying notes to condensed financial statements.
</TABLE>
4
<PAGE>
Notes to Condensed Financial Statements
March 31, 1995
(Unaudited)
1. Transactions with Affiliates
Quorum
USAA USAA Real Estate
Mutual Real Estate Services
Fund, Inc. Company Corporation
Reimbursement
of expenses $ -- 31,321 4,142
Management fees -- 21,744 11,864
Lease commissions -- -- 5,834
Mortgage servicing -- 3,400 --
Interest income (18) (150,723) --
Total $ (18) (94,258) 21,840
(a) Reimbursement of expenses represents amounts paid or
accrued as reimbursement of expenses incurred on behalf
of the Partnership at actual cost and does not include
any mark-up or items normally considered as overhead.
2. Other
The notes to the financial statements on pages 12 through 15
of the Partnership's 1994 annual report are an integral part
of these financial statements. Information furnished in this
report reflects all normal recurring adjustments which are, in
the opinion of management, necessary for a fair presentation
of the results for the interim periods presented. Further,
the operating results presented for these interim periods are
not necessarily indicative of the results which may occur for
the remaining nine months of 1995 or any other future period.
The financial information included in this interim report as
of March 31, 1995 and for the three-month periods ended March
31, 1995 and 1994 has been prepared by management without
audit by independent certified public accountants who do not
express an opinion thereon. The Partnership's annual report
includes audited financial statements.
5
<PAGE>
PART I
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At March 31, 1995, the Partnership had cash of $6,438 and temporary
investments of $503,386. Accounts receivable consisted primarily
of amounts due from tenants at Volusia Point. Deferred charges and
other assets consisted of deferred rent which resulted from
recognition of income as required by generally accepted accounting
principles, and lease commissions. Accounts payable included
amounts due to affiliates for management fees and reimbursable
expenses.
During the quarter ended March 31, 1995, the Partnership
distributed $218,440 to Limited Partners and $2,207 to the General
Partner for a total of $220,647. Distributions were decreased in
1994 from amounts paid in prior years in order to maintain a
reserve for capital expenditures for leasing and property
maintenance. In addition to those expenditure needs, cash flow at
the Systech building decreased when the previous single tenant
lease expired in August 1993.
A new single tenant lease between the Partnership and Systech
Corporation commenced March 1, 1995. The initial lease term is
five years with a three year renewal option at prevailing market
rental rates. Systech Corporation moved into almost 43,000 square
feet of the building in mid February 1995 and will move into the
remaining 10,200 square feet of the building by March 1996. The
rental rate per square foot is lower than the rental rate for the
previous tenant and reflects current rental market conditions in
the area surrounding the property. Beginning in 1996, in addition
to rent, the tenant will pay property operating expenses which
exceed those of 1995, the base year. The majority of the tenant
improvements for the Systech Corporation has been paid as of March
31, 1995. The Partnership's commitment for $84,400 for the final
tenant improvements on the remaining 10,200 square feet of the
building is expected to be paid during the first quarter of 1996
and will be funded from working capital reserves.
Future liquidity is expected to result from cash generated from
operations of the properties and ultimately through the sale of
such properties. In addition, repayment of the mortgage loan
receivable, including participation income based on gross revenues
of Plaza on the Lake, the property underlying the mortgage, is
expected in accordance with the terms of the loan agreement.
6
<PAGE>
Continuing losses incurred at Plaza on the Lake are not expected to
have a material effect on the financial condition of USAA Real
Estate Company, the borrower. The loan agreement also provides for
participation in profits from the sale of the underlying assets
securing the mortgage loan receivable; however, it is not
determinable at this time whether any profits will result from the
sale of the underlying assets or whether such a sale will occur.
Results of Operations
For the three-month periods ended March 31, 1995 and 1994, income
was generated from rental income from the income producing
properties, interest income and participation income earned on the
mortgage loan and interest income earned on the funds invested in
temporary investments. As there was no lease in force at the
Systech building from August 1993 through February 1995, no income
was generated by that property during that period of time.
Expenses incurred during the same periods were associated with
operations of the Partnership's properties and various other costs
required for administration of the Partnership.
The increase in rental properties and depreciation expense from
December 31, 1994 to March 31, 1995 was attributable to the
addition of tenant improvements at the Systech building. Cash and
cash equivalents decreased during the same period due to payment of
distributions to Partners and expenditures for tenant improvements
and lease commissions at the Systech building. The increase in
deferred charges during this period resulted from the payment of
lease commissions at the Systech building and additions of deferred
rent at Volusia Point and the Systech building.
The increase in accounts payable from December 31, 1994 to March
31, 1995 consisted primarily of the retainage due to the general
contractor for improvements at the Systech building. Prepaid rent
at the Systech building and property tax accruals at both
properties in the Partnership accounted for the increase in accrued
expenses during the same time period.
Net income for the three months ended March 31, 1995 was higher
than the comparable period in 1994 due to an increase in revenue
and a decrease in operating expenses at both partnership
properties. Occupancy was higher at Volusia Point in January and
February 1995 than in the same months of 1994, generating higher
revenue in 1995. Percentage rent at Volusia Point was also higher
in the first quarter of 1995 than in the first quarter of 1994.
With the March 1, 1995 lease commencement, rental revenue at the
Systech building was also higher in the first quarter of 1995 over
the same period in 1994.
The majority of the decrease in operating expenses for the three-
month period ended March 31, 1995 over the three-month period ended
March 31, 1994 was related to repairs and maintenance at Volusia
Point and the Systech building and advertising costs associated
with re-tenanting efforts for the Systech building.
The increase in administrative expenses for the current three-month
period was primarily attributable to the payment of lease
commissions at Volusia Point and an increase in Partnership postage
charges and the mortgage loan servicing fee. The portfolio
management fee is based on cash flow from operations of the
Partnership adjusted for cash reserves and fluctuated accordingly.
7
<PAGE>
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Sequentially
Exhibit Numbered
No. Description Page
4 Restated Certificate and Agreement of Limited
Partnership dated as of October 18, 1984,
incorporated as Exhibit A to the Partnership's
Prospectus dated November 16, 1984, filed
pursuant to Rule 424(b), and incorporated
herein by this reference. __
27 Financial Data Schedule 10
(b) During the quarter ended March 31, 1995, there were no Current
Reports on Form 8-K filed.
8
<PAGE>
FORM 10-Q
SIGNATURES
USAA REAL ESTATE INCOME INVESTMENTS I LIMITED PARTNERSHIP
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.
USAA REAL ESTATE INCOME INVESTMENTS I
LIMITED PARTNERSHIP (Registrant)
BY: USAA INVESTORS I, INC.,
General Partner
May 11, 1995 BY: /s/Edward B. Kelley
Edward B. Kelley
Chairman, President and
Chief Executive Officer
May 11, 1995 BY: /s/Martha J. Barrow
Martha J. Barrow
Vice President -
Administration and
Finance
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 509,824
<SECURITIES> 0
<RECEIVABLES> 32,727
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 10,671,928
<DEPRECIATION> 0
<TOTAL-ASSETS> 17,032,456
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 16,766,091
<TOTAL-LIABILITY-AND-EQUITY> 17,032,456
<SALES> 0
<TOTAL-REVENUES> 465,864
<CGS> 0
<TOTAL-COSTS> 194,687
<OTHER-EXPENSES> 100,065
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 179,947
<INCOME-TAX> 0
<INCOME-CONTINUING> 179,947
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 179,947
<EPS-PRIMARY> 3.26
<EPS-DILUTED> 0
</TABLE>
