<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
Commission File Number 0-14308
Exact Name of Registrant as Specified in Its Charter: T. ROWE
PRICE REALTY INCOME FUND I, A NO-LOAD LIMITED PARTNERSHIP
State or Other Jurisdicition of Incorporation or Ogranization:
Maryland
I.R.S. Employer Identification No.: 52-1363144
Address of Principal Executive Offices: 100 East Pratt Street,
Baltimore, Maryland 21202
Registrant's Telephone Number, Including Area Code: 1-800-638-5660
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
<PAGE>2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The financial statements of T. Rowe Price Realty Income Fund I, A
No-Load Limited Partnership ("Partnership") are set forth in
Exhibit 19 hereto, which statements are incorporated by reference
herein.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources and Results of Operations
The Partnership's liquidity and capital resources and its results
of operations are discussed in the Chairman's letter to partners
on pages 1-3 of Exhibit 19 hereto, the Partnership's Quarterly
Report to Security-Holders, which letter is hereby incorporated
by reference herein.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits.
19 - Quarterly Report Furnished to Security-Holders,
including Financial Statements of the Partnership.
27 - Financial Data Schedule
All other items are omitted because they are not applicable or
the answers are none.
<PAGE>3
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.
T. ROWE PRICE REALTY INCOME FUND I,
A NO-LOAD LIMITED PARTNERSHIP
By: T. Rowe Price Realty Income Fund I
Management, Inc., General Partner
Date: February 14, 1997 By: /s/Kenneth J. Rutherford
Kenneth J. Rutherford
Vice President
Date: February 14, 1997 By: /s/Joseph P. Croteau
Joseph P. Croteau
Controller, Director and
Principal Financial Officer
for the Partnership
<PAGE>
The Quarterly Report to Limited Partners for the Quarter ended
December 31, 1996 should be inserted here.
QUARTERLY REPORT
FOR THE PERIOD ENDED
DECEMBER 31, 1996
FELLOW PARTNERS:
In our annual report for the fiscal year ended September 30,
1996, we notified you that the estimated unit value of the Fund
had increased 4.7% over the comparable valuation the year before.
It is worth noting this again in light of the tender offers many
of you have received, all at a substantial discount to our
estimated valuation.
While we cannot assure that you will ultimately receive the
exact amount of the estimated unit value, we believe our
valuation process has been sound, and we want you to be as
well-informed as possible about the value of your investment. Our
objective is to supply you with the information you need to make
the best decisions based on your particular circumstances.
We also mentioned in our last report that the amount of your
future distributions will be influenced more by property
dispositions than by operations. Our primary focus at this time
is shifting from the production of income to the strategic
positioning of Fund properties to maximize potential sales
proceeds. Therefore, we expect future distributions from
operations to decrease and distributions from property sales to
become increasingly significant.
Disposition Update
On January 14, 1997, after the close of the reporting period, we
executed a purchase and sale agreement for Royal Biltmore, and
the buyer is currently undertaking a due diligence investigation.
There is no assurance that it will be completed satisfactorily,
but if it is, the sale could close by the end of April.
Van Buren has also attracted buyer interest, but we cannot
determine at this time when a sale will be consummated.
We will, of course, update you on these pending property
dispositions in our next quarterly report.
Cash Distributions
For the first fiscal quarter ended December 31, 1996, the
distribution from operations was $1.00 per unit. Beginning this
fiscal year, distributions will be determined each quarter, based
on cash flows, anticipated capital requirements, and the status
of property dispositions.
Results of Operations
For the three months ended December 31, 1996, the Fund's net
income was $307,000, an increase of $169,000 over the same period
last year. The slight decline in revenues attributable to the
sale of Spring Creek last year was offset to a great extent by
rental income from increased occupancy at Business Park and
Newport Center, as well as to higher rental rates at Royal
Biltmore.
Fund expenses declined by a more dramatic $184,000 due to
two primary factors. As we previously explained, properties held
for sale are no longer depreciated, which accounted for
approximately $111,000 of the decline in expenses during the
quarter. Also, an additional decline of $59,000 was attributable
to lower operating expenses at Montgomery due to lower
depreciation and bad debt expense. We expect these favorable
comparisons to continue throughout the fiscal year.
At the property level, the average leased status of Fund
properties remained unchanged at 89% from the first fiscal
quarter last year. We completed renewal and expansion leases at
Airport Perimeter covering nearly 20,000 square feet, lifting the
leased status of this property five percentage points during the
quarter. In December, Delta Airlines reached an agreement with
Atlanta Hartsfield International Airport on proposed runway
expansion plans. With the largest carrier at the airport in
agreement, we hope to have a clearer idea of the impact and
timing of these plans on our property.
New, renewal, and expansion leases covering more than 10% of
Fund properties boosted Fund leased status two percentage points
overall from the end of the last quarter. This figure includes an
increase in leased status at Montgomery in the first fiscal
quarter. In our last report, we discussed our policy of focusing
on large users with sound credit for the 22,000 square feet of
full-floor space. While occupancy at the property was still
behind the overall market occupancy rate, leasing activity in
this market close to the nation's capital has been rising.
The increase in the Fund's net cash outflows compared with
the first fiscal quarter of 1996 was largely due to the greater
cash distributions declared for the fourth fiscal quarter, which
were paid in November 1996.
Outlook
We continue to make progress toward the disposition of the Fund's
properties during the next two years. Some of you have asked why
we are beginning to sell now, just as the market has been
exhibiting signs of strengthening.
Our primary goal is to take advantage of rising property
values as the Fund nears the end of its planned lifespan. As real
estate markets have been improving during the past few years, we
have used the opportunity to capture higher prices for investors.
As usually happens in improving markets, the turnaround in
real estate is broadly encouraging an increasing supply of new
properties, which could eventually lead to an oversupply and
softer prices down the road. This is normal as the real estate
cycle runs its course. While we do not expect a recession in
either real estate or the general economy to emerge in the near
future, the country's economic expansion is almost six years old
and is approaching an advanced stage, by historical measures.
It is possible that by selling Fund properties during the
next few years, we might miss some further advances in real
estate values. However, with prices currently rising due to
strong tenant and investor demand, supply growing in many
markets, and the Fund nearing the end of its planned lifespan, we
believe it is prudent to sell into that strength while prices are
on the upswing.
Sincerely,
James S. Riepe
Chairman
February 7, 1997
Real Estate Investments (Dollars in thousands)
Average Leased Contribution
Leased Status Status to Net Income
_____________ _____________ _____________
Gross Three Months Three Months
Leasable Ended Ended
Property Area December 31, December 31, December 31,
Name (Sq. Ft.) 1996 1995 1996 1995 1996
_________ _________ __________ _____ _____ _____ _____
Airport
Perimeter 121,000 77 72% 74% $ 4 $ 30
Montgomery 116,300 71 73 70 (41) 3
Springdale 144,000 100 100 94 74 68
The Business
Park 157,200 99 96 99 39 63
Newport
Center 62,400 99 94 98 41 43
_______ ___ ____ ____ _____ _____
600,900 89 87 87 117 207
Held for Sale
Royal 71,400 96 98 94 40 138
Biltmore
Van Buren 173,900 92 92 92 44 97
_______ ___ ____ ____ _____ _____
846,200 90 89 89 201 442
Properties Sold - - - - 38 -
Fund Expenses
Less Interest
Income - - - - (101) (135)
_______ ___ ___ ____ _____ _____
Total 846,200 90% 89% 89% $138 $307
CONDENSED BALANCE SHEETS
Unaudited
(In thousands)
December 31, September 30,
1996 1996
___________ ____________
Assets
Real Estate Property Investments
Land. . . . . . . . . . . . . . . . . $ 6,759 $ 6,759
Buildings and Improvements. . . . . . 29,807 29,588
_________ __________
36,566 36,347
Less: Accumulated Depreciation
and Amortization . . . . . . . . . (9,966) (9,519)
__________ __________
26,600 26,828
Held for Sale. . . . . . . . . . . 8,961 8,965
__________ __________
35,561 35,793
Cash and Cash Equivalents. . . . . . 501 2,290
Accounts Receivable (less
allowances of $38 and $175). . . . . 178 154
Other Assets . . . . . . . . . . . . 434 492
__________ __________
$ 36,674 $ 38,729
__________ __________
__________ __________
Liabilities and Partners' Capital
Security Deposits and Prepaid
Rents. . . . . . . . . . . . . . . . $ 334 $ 418
Accrued Real Estate Taxes. . . . . . 84 231
Accounts Payable and Other Accrued
Expenses . . . . . . . . . . . . . . 213 266
__________ __________
Total Liabilities. . . . . . . . . . 631 915
Partners' Capital. . . . . . . . . . 36,043 37,814
__________ __________
$ 36,674 $ 38,729
__________ __________
__________ __________
See accompanying notes to condensed financial statements.
CONDENSED STATEMENTS OF OPERATIONS
Unaudited
(In thousands except per-unit amounts)
Three Months Ended
December 31,
1996 1995
__________ __________
Revenues
Rental Income. . . . . . . . . . . . $ 1,467 $ 1,480
Interest Income. . . . . . . . . . . 20 22
__________ __________
1,487 1,502
__________ __________
Expenses
Property Operating Expenses. . . . . 455 451
Real Estate Taxes. . . . . . . . . . 109 174
Depreciation and Amortization. . . . 461 616
Partnership Management Expenses. . . 155 123
__________ __________
1,180 1,364
__________ __________
Net Income . . . . . . . . . . . . . $ 307 $ 138
__________ __________
__________ __________
Activity per Limited Partnership
Unit
Net Income . . . . . . . . . . . . . $ 3.05 $ 1.37
__________ __________
__________ __________
Cash Distributions Declared. . . . . $ 1.00 $ 4.75
__________ __________
__________ __________
Units Outstanding. . . . . . . . . . 90,622 90,622
__________ __________
__________ __________
See accompanying notes to condensed financial statements.
CONDENSED STATEMENT OF PARTNERS' CAPITAL
Unaudited
(In thousands)
General Limited
Partner Partners Total
__________ _________ _________
Balance,
September 30, 1996 . . . . $ (4,342) $ 42,156 $ 37,814
Net Income . . . . . . . . 31 276 307
Cash Distributions . . . . (125) (1,953) (2,078)
__________ _________ _________
Balance,
December 31, 1996. . . . . $ (4,436) $40,479 $36,043
_________ _________ _________
_________ _________ _________
See accompanying notes to condensed financial statements.
CONDENSED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands)
Three Months Ended
December 31,
1996 1995
___________ ___________
Cash Flows from Operating
Activities
Net Income . . . . . . . . . . . $ 307 $ 138
Adjustments to Reconcile Net
Income to Net Cash
Provided by Operating Activities
Depreciation and
Amortization . . . . . . . . . 461 616
Increase in Accounts Receivable,
Net of Allowances. . . . . . . (24) (163)
Decrease in Other Assets . . . 58 81
Decrease in Security Deposits and
Prepaid Rents. . . . . . . . . (84) (1)
Decrease in Accrued Real
Estate Taxes . . . . . . . . . (147) (69)
Change in Accounts Payable and
Other Accrued Expenses . . . . (53) 5
__________ __________
Net Cash Provided by Operating
Activities . . . . . . . . . . . 518 607
Cash Flows Used in Investing
Activities
Investments in Real Estate . . . (229) (196)
Cash Flows Used in Financing
Activities
Cash Distributions . . . . . . . (2,078) (1,756)
__________ __________
Cash and Cash Equivalents
Net Decrease during Period . . . (1,789) (1,345)
At Beginning of Year . . . . . . 2,290 2,832
__________ __________
At End of Period . . . . . . . . $ 501 $ 1,487
__________ __________
__________ __________
See accompanying notes to condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Unaudited
The unaudited interim condensed financial statements reflect all
adjustments which are, in the opinion of management, necessary
for a fair statement of the results for the interim periods
presented. All such adjustments are of a normal, recurring
nature.
The unaudited interim financial information contained in the
accompanying condensed financial statements should be read in
conjunction with the financial statements contained in the fiscal
1996 Annual Report to Partners.
NOTE 1 - TRANSACTIONS WITH RELATED PARTIES
As compensation for services rendered in managing the affairs of
the Partnership, the General Partner receives 10% of cash
available for distribution from operations and a portion of the
proceeds from property dispositions. The General Partner's share
of cash available for distribution from operations totaled
$10,000 for the first three months of fiscal 1997.
In accordance with the partnership agreement, certain
operating expenses are reimbursable to the General Partner. The
General Partner's reimbursement of such expenses totaled $45,000
for communications and administrative services performed on
behalf of the Partnership during the first three months of fiscal
1997.
An affiliate of the General Partner earned a normal and
customary fee of $1,000 from the money market mutual funds in
which the Partnership made its interim cash investments during
the first three months of fiscal 1997.
LaSalle Advisors Limited Partnership ("LaSalle") is the
Partnership's advisor and is compensated for its advisory
services directly by the General Partner. LaSalle is reimbursed
by the Partnership for certain operating expenses pursuant to its
contract with the Partnership to provide real estate advisory,
accounting and other related services to the Partnership.
LaSalle's reimbursement for such expenses during the first three
months of 1997 totaled $38,000.
The partnership agreement includes provisions limiting the
maximum contribution the General Partner can be required to fund
upon the dissolution and termination of the Partnership if, at
that time, the General Partner's capital account has a negative
balance. The maximum contribution is approximately $913,000. If
after making such a contribution, the General Partner's capital
account still has a negative balance, a reallocation of income
equal to the remaining negative balance will be made to the
General Partner from the Limited Partners.
An affiliate of LaSalle earned $60,000 in the first three
months of fiscal 1997 for property management fees and leasing
commissions on tenant renewals and extensions for several of the
Partnership's properties.
NOTE 2 - PROPERTIES HELD FOR SALE
The General Partner is actively marketing the Royal Biltmore and
Van Buren properties, the carrying amounts of which are
classified as held for sale in the accompanying December 31,
1996, balance sheet. Results of operations for these properties
were $236,000 and $83,000 for the three months ended December 31,
1996 and 1995, respectively. Additionally, Spring Creek was sold
in April 1996 and contributed $38,000 to the results of
operations for the three months ended December 31, 1995.
NOTE 3 - SUBSEQUENT EVENT
The Partnership declared a quarterly cash distribution of $1.00
per unit to Limited Partners of the Partnership as of the close
of business on December 31, 1996. The Limited Partners will
receive $91,000, and the General Partner will receive $10,000.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the
unaudited condensed financial statements of T. Rowe Price Realty
Income Fund I,
A No-Load Limited Partnership included in the accompanying Form
10-Q for the
period ended December 31, 1996 and is qualified in its entirety
by reference to
such financial statements.
</LEGEND>
<CIK> 0000752743
<NAME> T. ROWE PRICE REALTY INCOME FUND I, A NO-LOAD LIMITED
PARTNER
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 501,000
<SECURITIES> 0
<RECEIVABLES> 216,000
<ALLOWANCES> 38,000
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 45,527,000
<DEPRECIATION> 9,966,000
<TOTAL-ASSETS> 36,674,000
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 36,043,000<F2>
<TOTAL-LIABILITY-AND-EQUITY> 36,674,000
<SALES> 0
<TOTAL-REVENUES> 1,487,000
<CGS> 0
<TOTAL-COSTS> 1,180,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F3>
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 307,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 307,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 307,000
<EPS-PRIMARY> 0<F4>
<EPS-DILUTED> 0
<FN>
<F1>Not contained in registrant's unclassified balance sheet.
<F2>Partners' capital.
<F3>Not reported at interim.
<F4>Not applicable. Net income per limited partnership unit is
$3.05.
</FN>
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