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, 1996
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
<PAGE>
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PART I
Item 1. Financial Statements
USAA REAL ESTATE INCOME INVESTMENTS I LIMITED PARTNERSHIP
Condensed Balance Sheets
<CAPTION>
March 31,
1996 December 31,
(Unaudited) 1995
<S> <C> <C>
Assets
Rental properties, net $ 10,297,214 10,438,578
Mortgage loan receivable from affiliate -- 5,440,000
Temporary investments at cost which approximates
market value-
Money market fund 989,880 343,834
Cash 52,388 23,003
Cash and cash equivalents 1,042,268 366,837
Accounts receivable 14,699 45,201
Deferred charges, at amortized cost, and other
assets 409,264 410,731
$ 11,763,445 16,701,347
Liabilities and Partners' Equity
Accounts payable, including amounts due to
affiliates of $40,672 and $45,090 $ 62,028 55,379
Accrued expenses and other liabilities 118,672 8,510
Security deposits 64,113 65,996
Total liabilities 244,813 129,885
Partners' equity:
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 87,383 86,257
Cumulative distributions (178,874) 177,220)
(90,491) (89,963)
Limited Partners (54,610 units):
Capital contributions, net of offering costs 25,666,700 25,666,700
Cumulative net income 8,651,028 8,539,514
Cumulative distributions (22,708,605) (17,544,789)
11,609,123 16,661,425
Total Partners' equity 11,518,632 16,571,462
$ 11,763,445 16,701,347
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, 1996 and 1995
(Unaudited)
<CAPTION>
1996 1995
<S> <C> <C>
Income
Rental income $ 338,540 315,141
Interest from mortgage loan (note 1) 52,124 150,723
Less direct expenses, including depreciation
of $141,364 and $116,533 (218,135) (194,687)
Net operating income 172,529 271,177
Interest income 48,046 8,835
Total income 220,575 280,012
Expenses
General and administrative (note 1) 86,148 78,321
Management fee (note 1) 21,787 21,744
Total expenses 107,935 100,065
Net income $ 112,640 179,947
Net income per limited partnership unit $ 2.04 3.26
See accompanying notes to condensed financial statements.
</TABLE>
3
<PAGE>
<TABLE>
USAA REAL ESTATE INCOME INVESTMENTS LIMITED PARTNERSHIP
Condensed Statements of Cash Flows
Three months ended March 31, 1996 and 1995
(Unaudited)
<CAPTION>
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 112,640 179,947
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 141,364 116,533
Amortization 11,053 1,293
Decrease in accounts receivable 30,502 3,177
Increase in deferred charges and other assets (9,586) (102,489)
Increase in accounts payable, accrued expenses
and other liabilities 114,928 104,275
Cash provided by operating activities 400,901 302,736
Cash flows from investing activities:
Additions to rental properties -- (367,941)
Proceeds from mortgage loan receivable 5,440,000 --
Cash provided by (used in) investing activities 5,440,000 (367,941)
Cash flows used in financing activities-
Distributions to partners (5,165,470) (220,647)
Net increase (decrease) in cash and cash equivalents 675,431 (285,852)
Cash and cash equivalents at beginning of year 366,837 795,676
Cash and cash equivalents at end of year $ 1,042,268 509,824
See accompanying notes to condensed financial statements.
</TABLE>
4
<PAGE>
Notes to Condensed Financial Statements
March 31, 1996
(Unaudited)
1. Transactions with Affiliates
A summary of transactions with affiliates follows for the
three months ended March 31, 1996:
Quorum
USAA Real Estate
Real Estate Services
Company Corporation
Reimbursement
of expenses (a) $ 30,424 885
Management fees 21,787 14,586
Lease commissions -- 4,862
Mortgage servicing fees 1,115 --
Interest income (52,124) --
Total $ 1,202 20,333
(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
Reference is made to the financial statements in the Annual
Report filed as part of the Form 10-K for the year ended
December 31, 1995 with respect to significant accounting and
financial reporting policies as well as to other pertinent
information concerning the Partnership. 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 1996 or any other future period.
The financial information included in this interim report as
of March 31, 1996 and for the three-month periods ended
March 31, 1996 and 1995 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, 1996, the Partnership had cash of $52,388 and
temporary investments of $989,880. These funds were held in the
working capital reserve for the payment of obligations of the
Partnership. Accounts receivable consisted primarily of amounts
due from tenants at Volusia Point. Deferred charges and other
assets consisted of deferred rent that 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.
On January 31, 1996, the maturity date of the Plaza on the Lake
mortgage loan receivable, the Partnership received $5,440,000
from USAA Real Estate Company, the borrower, in full payment of
the loan. Approximately $5,000,000 of the proceeds from the loan
payoff, or $91.56 per Limited Partnership unit, was distributed
to the Limited Partners during the quarter ended March 31, 1996.
The balance of the proceeds of approximately $440,000 was held by
the Partnership for future operating requirements.
In addition to the special cash distribution of the proceeds of
the mortgage loan receivable, net of reserves, the Partnership
distributed $163,830 to Limited Partners and $1,654 to the
General Partner for a total of $165,484 during the quarter ended
March 31, 1996. Quarterly distributions were decreased beginning
in the first quarter of 1996 due to the reduced cash flow that
occurred subsequent to the repayment of the mortgage loan
receivable and the resulting loss of interest income to the
Partnership. During the ten-year term of the mortgage loan
receivable, the Partnership recorded interest income on the
mortgage loan receivable, including participation income,
averaging approximately $590,000 per year.
The Partnership's commitment of $84,400 for the final phase of
tenant improvements at the Systech building has been deferred.
The funding of the improvements for the remaining 10,200 square
feet of the building will be from the working capital reserve.
Future liquidity is expected to result from cash generated from
operations of the properties, interest on temporary investments
and ultimately through the sale of the properties.
Results of Operations
For the three-month periods ended March 31, 1996 and 1995, 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.
6
<PAGE>
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 decrease in rental properties from December 31, 1995 to March
31, 1996 was attributable to depreciation at the Partnership
properties. Cash and cash equivalents increased during the same
period primarily due to the reserve held by the Partnership from
the proceeds of the mortgage loan. The receipt of prepaid rent
from tenants resulted in the increase in accrued expenses from
December 31, 1995 to March 31, 1996.
The increase in rental income for the three-month period ended
March 31, 1996 over the same three-month period in 1995 was
primarily attributable to the March 1, 1995 commencement of the
single tenant lease at the Systech building. The decrease in
interest income from the mortgage loan in 1996 was the result of
the January 31, 1996 payoff of the receivable. Interest income
on cash held by the Partnership increased during the three-month
period in 1996 as a result of the increase in cash and cash
equivalents. General and administrative expenses increased from
the three-month period ended March 31, 1995 to the three-month
period ended March 31, 1996 due to amortization of lease
commissions for Systech.
7
<PAGE>
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit.
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), (Regis.No. 2-92845)
and incorporated herein by this reference. __
27 Financial Data Schedule 10
(b) A Current Report on Form 8-K was filed on February 13, 1996
regarding the January 31, 1996 receipt by the Partnership of the
principal balance of the mortgage loan receivable of $5,440,000
from USAA Real Estate Company.
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 9, 1996 BY: /s/Edward B. Kelley
Edward B. Kelley
Chairman, President and
Chief Executive Officer
May 9, 1996 BY: /s/Martha J. Barrow
Martha J. Barrow
Vice President -
Administration and
Finance/Treasurer
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,042,268
<SECURITIES> 0
<RECEIVABLES> 14,699
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 10,297,214
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,763,445
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 11,518,632
<TOTAL-LIABILITY-AND-EQUITY> 11,763,445
<SALES> 0
<TOTAL-REVENUES> 390,664
<CGS> 0
<TOTAL-COSTS> 218,135
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 112,640
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 112,640
<EPS-PRIMARY> 2.04
<EPS-DILUTED> 0
</TABLE>
