<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the Securities and Exchange
Act of 1934
Date of Report (Date of earliest event reported): November 18,
1997
Exact name of registrant as specified in its charter: T. ROWE
PRICE REALTY INCOME FUND I, A NO-LOAD LIMITED PARTNERSHIP
State or other Jurisdiction of Incorporation or Organization:
Maryland
I.R.S. Employer Identification No.:52-1363144
Commission File Number: 0-14308
Address of principal executive offices: 100 East Pratt Street,
Baltimore, Maryland 21202
Registrant's telephone number, including area code: 1-800-638-
5660
Former name of former address, if changes since last report:
Not Applicable
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PART II - OTHER INFORMATION
Item 5. OTHER INFORMATION
On November 18, 1997, the Fund distributed its net assets
aggregating $7,529,157 or approximately $83.08 per unit in the
form of a final liquidating distribution. The Fund will be
dissolved prior to the end of 1997.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(a) Financial Statements of Businesses Acquired: Not
applicable
(b) Pro Forma Financial Information: Not applicable
(c) Exhibits
19 - Final Report furnished to Security-Holders,
including Financial Statements of the Partnership.
All other items are omitted because they are not
applicable or the answers are none.
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the registrant has daily caused this
report to be signed on its behalf by the undersigned hereunto
duly authorized.
T. ROWE PRICE REALTY INCOME FUND I,
A NO-LOAD LIMITED PARTNERSHIP
By: T. Rowe Price Realty Income
Fund I Management, Inc., as
General Partner
By: /s/Lucy B. Robins
Lucy B. Robins
Vice President
T. ROWE PRICE
REALTY INCOME
FUND I
A NO-LOAD LIMITED PARTNERSHIP
FINAL REPORT
1997
For information on your
Realty Income Fund account, call:
1-800-962-8300 toll free
410-625-6500 Baltimore area
For information on your
mutual fund account, call:
1-800-225-5132 toll free
410-625-6500 Baltimore area
T. Rowe Price Real Estate Group
100 East Pratt Street
Baltimore, Maryland 21202
Invest With Confidence(registered trademark)
T. Rowe Price
FELLOW PARTNERS:
T. Rowe Price Realty Income Fund I began operations in
1985 for the primary purpose of acquiring a diversified
portfolio of income-producing commercial properties, then
operating and holding them for investment purposes. The Fund
was structured to have a finite life and to be
self-liquidating in order to distribute its cash flow during
the operating stage, pay final fund expenses and liabilities,
distribute net proceeds from the sales of properties, and then
dissolve.
In 1996 we indicated our intention to dispose of all
properties over the next two years. We made this decision
since the properties were at the end of their anticipated
holding periods, and also because of our belief that real
estate market conditions had improved in recent years.
Improvements in the real estate capital markets, and in the
operating performance of various properties, enabled rents to
rise and tenant concessions to decrease. Because of higher
occupancy, increasing cash flow, and better market conditions,
the prospects for a favorable disposition of Fund properties
improved, and we decided to investigate opportunities for the
sale of the remaining properties. The Fund had already sold
Dupont Business Park in 1990, Corporate Square in 1994, and
Spring Creek in 1996.
In January 1997, the Fund was contacted by a buyer
interested in purchasing all of the remaining properties, as
well as those of the other four realty funds sponsored by T.
Rowe Price. On April 11, 1997, after a period of negotiation,
the Fund entered into a purchase and sale agreement to sell
its five remaining properties to the buyer, Glenborough Realty
Trust, for $27,408,000. The Fund was already under contract to
sell two other properties to other buyers; Royal Biltmore
closed in April 1997 and Van Buren in June 1997.
A proposal to approve the sale to Glenborough was
submitted to a vote of the limited partners, and the
transaction was approved by 78% of the partners on September
11, 1997. The sale was closed the following day. Over the life
of the Fund, limited partners as a group realized a cumulative
loss of approximately 3.5%.
Distributions
The Fund paid $240 per unit on September 19, 1997, which
was a substantial portion of the total liquidating
distributions. Depending on the election you made, either the
distribution was invested in the T. Rowe Price mutual fund you
designated, or a check for the amount was sent to you.
Enclosed with this report is either a check for the final
liquidating distribution or a notice that the amount was
invested in the fund you selected. Information about the final
distribution is contained in the enclosed statement.
You will be receiving Form K-1 tax information for two
periods in 1997. The first period will cover the fiscal year
ended September 30, 1997, and the second from October 1, 1997,
through the Fund's termination. It will be mailed to you early
next year.
Results of Operations
The Fund's net income for the fiscal year ended September
30, 1997, was $3,089,000, which included a gain of $1,433,000
on the sale of properties and income from operations of
$1,656,000. Net income amounted to $31.73 per unit. This
compared with a net loss of $2,603,000 or $25.85 per unit, all
from operations, for the 1996 fiscal year. Airport Perimeter
Business Center, Montgomery Executive Center, Springdale
Commerce Center, The Business Park, and Newport Center
Business Park were sold on September 12, 1997, resulting in
net proceeds of $27,639,000 and a gain of $223,000. The Fund
also recognized a $1,210,000 gain on the sale of Royal
Biltmore in 1997.
Conclusion
We are disappointed that the Fund's performance did not
meet either our original expectations or yours. The late 1980s
and early 1990s proved to be an extremely difficult period for
the entire real estate market, resulting in declining prices
that eventually overwhelmed even the most prudent property
investment strategies.
In recent years as the Fund approached the end of its
intended lifespan, real estate prices began to recover, and we
decided to capitalize on the opportunity to sell the
properties as prices were rising and liquidate the Fund. We
were concerned that as the real estate cycle ran its course,
rising prices would eventually lead to an increased supply of
new properties, which could result in softer prices sometime
later.
Based on the results of the consent solicitation vote, the
vast majority of our limited partners agreed with our decision
to sell the properties and liquidate the Fund at this time. We
would like to thank our investors for their confidence,
support, and cooperation over the years.
Sincerely,
James S. Riepe
Chairman
November 18, 1997
BALANCE SHEETS
(In thousands)
September 30, September 30,
1997 1996
____________ ____________
Assets
Real Estate Property Investments
Land . . . . . . . . . . . . . $ 6,759
Buildings and Improvements . . 29,588
________
36,347
Less: Accumulated Depreciation
and Amortization . . . . . . (9,519)
________
26,828
Held for Sale . . . . . . . . . 8,965
________
35,793
Cash and Cash Equivalents . . . . . $ 7,639 2,290
Receivables (less allowance of $175
in 1996) . . . . . . . . . . . 13 154
Other Assets . . . . . . . . . . . - 492
________ ________
$ 7,652 $ 38,729
________ ________
________ ________
Liabilities and Partners' Capital
Security Deposits and Prepaid
Rents . . . . . . . . . . . . . $ 418
Accrued Real Estate Taxes . . . . . 231
Accounts Payable and Other
Accrued Expenses . . . . . . . $ 126 266
________ ________
Total Liabilities . . . . . . . . . 126 915
Partners' Capital . . . . . . . . . 7,526 37,814
________ ________
$ 7,652 $ 38,729
________ ________
________ ________
The accompanying notes are an integral part of the financial
statements.
STATEMENTS OF OPERATIONS
(In thousands except per-unit amounts)
Years Ended September 30,
1997 1996 1995
__________ _________ _________
Revenues
Rental Income . . . . $ 5,184 $ 6,067 $ 5,927
Interest Income . . . 143 104 116
_______ _______ _______
5,327 6,171 6,043
_______ _______ _______
Expenses
Property Operating
Expenses . . . . 1,472 1,878 1,681
Real Estate Taxes . . 474 660 632
Depreciation and
Amortization . . 785 2,562 2,681
Decline of Property
Values . . . . . 39 3,115 547
Partnership Management
Expenses . . . . 901 559 494
_______ _______ _______
3,671 8,774 6,035
_______ _______ _______
Income (Loss) from Operations
before Real Estate
Sold . . . . . . 1,656 (2,603) $ 8
Gain on Real Estate
Sold . . . . . . 1,433 - -
_______ _______ _______
Net Income (Loss) . . $ 3,089 $(2,603) $ 8
_______ _______ _______
_______ _______ _______
Activity per Limited
Partnership Unit
Net Income (Loss) . . $ 31.73 $(25.85) $ 0.08
_______ _______ _______
_______ _______ _______
Years Ended September 30,
1997 1996 1995
__________ _________ _________
Cash Distributions Declared
from Operations . $ 19.94 $ 21.25 $ 21.00
from Sale Proceeds 329.98 32.34 9.00
_______ _______ _______
Total Distributions
Declared . . . . $ 349.92 $ 53.59 $ 30.00
_______ _______ _______
_______ _______ _______
Units Outstanding . . 90,622 90,622 90,622
_______ _______ _______
_______ _______ _______
The accompanying notes are an integral part of the financial
statements.
STATEMENTS OF PARTNERS' CAPITAL
(In thousands)
General Limited
Partner Partners Total
________ ________ ________
Balance, September 30,
1994 . . . . . . $ (3,583) $ 50,566 $ 46,983
Net Income . . . . . 1 7 8
Cash Distributions . (165) (1,540) (1,705)
_______ _______ _______
Balance, September 30,
1995 . . . . . . (3,747) 49,033 45,286
Net Loss . . . . . . (260) (2,343) (2,603)
Cash Distributions . (335) (4,534) (4,869)
_______ _______ _______
Balance, September 30,
1996 . . . . . . (4,342) 42,156 37,814
Net Income . . . . . 214 2,875 3,089
Cash Distributions . (627) (33,663) (34,290)
Capital Contribution 913 - 913
Reallocation of Net
Income . . . . . 3,842 (3,842) -
_______ _______ _______
Balance, September 30,
1997 . . . . . . $ 0 $ 7,526 $ 7,526
_______ _______ _______
_______ _______ _______
The accompanying notes are an integral part of the financial
statements.
STATEMENTS OF CASH FLOWS
(In thousands)
Years Ended September 30,
1997 1996 1995
__________ _________ ________
Cash Flows from Operating
Activities
Net Income (Loss) . . $ 3,089 $ (2,603) $ 8
Adjustments to Reconcile Net
Income (Loss) to Net Cash
Provided by Operating
Activities
Depreciation and
Amortization 785 2,562 2,681
Decline of Property
Values . . . 39 3,115 547
Gain on Real Estate
Sold . . . . (1,433) - -
Change in
Receivables 108 138 (159)
Change in Other
Assets . . . 223 (35) (37)
Change in Security
Deposits and Prepaid
Rents . . . (418) 54 7
Change in Accrued Real
Estate Taxes (231) 29 (56)
Change in Accounts
Payable and
Other Accrued
Expenses . . (140) (15) 35
_______ _______ _______
Net Cash Provided by Operating
Activities . . . 2,022 3,245 3,026
_______ _______ _______
Cash Flows from Investing Activities
Proceeds from Property
Dispositions . . 37,921 1,679 -
Investments in Real
Estate . . . . . (1,217) (597) (1,092)
_______ _______ _______
Net Cash Provided by
(Used in) Investing
Activities . . . 36,704 1,082 (1,092)
_______ _______ _______
Years Ended September 30,
1997 1996 1995
__________ _________ _________
Cash Flows from Financing
Activities
Capital Contribution 913 - -
Cash Distributions . (34,290) (4,869) (1,705)
_______ _______ _______
Net Cash Used in Financing
Activities . . . (33,377) (4,869) (1,705)
_______ _______ _______
Cash and Cash Equivalents
Net Change during Year 5,349 (542) 229
At Beginning of Year 2,290 2,832 2,603
_______ _______ _______
At End of Year . . . $ 7,639 $ 2,290 $ 2,832
_______ _______ _______
_______ _______ _______
The accompanying notes are an integral part of the financial
statements.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - THE PARTNERSHIP AND ITS LIQUIDATION
T. Rowe Price Realty Income Fund I, A No-Load Limited
Partnership (the Partnership), was formed in 1984 under the
Maryland Revised Uniform Limited Partnership Act for the
purpose of acquiring, operating and disposing of existing
income-producing commercial and industrial real estate
properties. T. Rowe Price Realty Income Fund I Management,
Inc. is the General Partner.
In accordance with the provisions of the partnership
agreement, income from operations has been allocated and
related cash distributions have been paid to the General and
Limited Partners at the rates of 10% and 90%, respectively.
Except in the case of the liquidating sale of the
Partnership's remaining five properties on September 12, 1997,
sales proceeds have been allocated 4% to the General Partner
and 96% to the Limited Partners. The liquidating sale proceeds
were allocated 100% to the Limited Partners. Gains on property
sales are generally allocated in the same ratio as the
distribution of sale proceeds. Distributions to the General
Partner are, for the most part, made in lieu of separate
management fees.
After the sale of its remaining properties on September
12, 1997, the Partnership entered into its final liquidating
phase. Later in September, the Partnership made a partial
liquidating distribution of $21,749,000 to the Limited
Partners and a final distribution to the General Partner of
$80,000.
The Partnership will declare and make a final liquidating
distribution of its remaining net assets based on final
balances in the partners' capital accounts. This final
distribution will be made by December 31, 1997, to Limited
Partners only and, thereafter, the Partnership will be
dissolved.
The accompanying financial statements for 1997 include
estimates of the costs of liquidating the Partnership. Results
of operations from October 1, 1997, until the date of the
final liquidating distribution are not expected to be
significant and will consist primarily of interest income and
the settlement of receivables and payables.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Partnership's financial statements are prepared in
accordance with generally accepted accounting principles which
requires the use of estimates and assumptions by the General
Partner.
The Partnership reviewed its real estate property
investments for impairment whenever events or changes in
circumstances indicated that the property carrying amounts may
not have been recoverable. Such a review resulted in the
Partnership recording a provision for impairment of the
carrying value of its real estate property investments
whenever the estimated future cash flows from a property's
operations and projected sale were less than the property's
net carrying value.
Depreciation was calculated primarily on the straight-line
method over the estimated useful lives of buildings and
improvements, which range from 5 to 40 years. Lease
commissions and tenant improvements were capitalized and
amortized over the lives of the respective leases using the
straight-line method.
Cash equivalents consist of money market mutual funds, the
cost of which is equivalent to fair value.
The Partnership used the allowance method of accounting
for doubtful accounts. Provisions for uncollectible tenant
receivables in the amounts of $32,000, $186,000, and $20,000
were recorded in fiscal 1997, 1996, and 1995, respectively.
Bad debt expense is included in Property Operating Expenses.
Rental income was recognized on a straight-line basis over
the term of each lease. Rental income accrued, but not yet
billed, was included in Other Assets and aggregated $276,000
at September 30, 1996.
Under provisions of the Internal Revenue Code and
applicable state taxation codes, partnerships are generally
not subject to income taxes; therefore, no provision has been
made for any income taxes in the accompanying financial
statements.
NOTE 3 - PROPERTY VALUATIONS
At the beginning of fiscal 1996, the Partnership adopted
Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," which changed the
Partnership's method of accounting for its real estate
property investments when circumstances indicated that the
carrying amount of a property might not have been recoverable.
Measurement of an impairment loss on an operating property
subsequent to adoption was based on the estimated fair value
of the property, which became the property's new cost basis,
rather than the sum of expected future cash flows. Properties
held for sale subsequent to adoption were no longer
depreciated but continued to be reflected at the lower of
historical cost or estimated fair value less anticipated
selling costs.
Based upon a review of market conditions, estimated
holding period and future performance expectations of each
property, the General Partner determined that the net carrying
values of certain properties held for operations were likely
not fully recoverable. Charges recognized for such impairments
aggregated $3,189,000 in fiscal 1996 and $354,000 in fiscal
1995.
With respect to properties held for sale, the partnership
assessed property carrying values and recognized net declines
of $39,000 in fiscal 1997 and $193,000 in fiscal 1995 and a
net recovery of $74,000 in fiscal 1996.
NOTE 4 - PROPERTY DISPOSITIONS
On April 30, 1996, the Partnership sold Spring Creek and
received net proceeds of $1,679,000. The net book value of
this property at the time of disposition was also $1,679,000,
after accumulated depreciation expense and previously recorded
declines in property value. Therefore, no gain or loss was
recognized on the property sale.
On April 30, 1997, the Partnership sold Royal Biltmore for
net proceeds of $6,286,000. The net book value of the property
at the date of sale was $5,076,000 after accumulated
depreciation expense and previously recorded declines in
property value. Accordingly, the Partnership recognized a
$1,210,000 gain on the sale of this property in the third
quarter of fiscal 1997.
On June 26, 1997, the Partnership sold Van Buren for net
proceeds of $3,996,000. The net book value of the property at
the date of sale was also $3,996,000 after accumulated
depreciation expense and previously recorded declines in
property value. Therefore, no gain or loss was recognized on
the property sale.
On September 12, 1997, the Partnership sold its five
remaining properties-Airport Perimeter, Business Park,
Montgomery, Newport Center, and Springdale-to a single,
third-party buyer for net proceeds of $27,639,000. The sale
was approved by a majority of the Limited Partners on
September 11, 1997. The net book value of the five properties
was $27,416,000 after accumulated depreciation expense and
previously recorded declines in property values. Accordingly,
the Partnership recognized a $223,000 gain on the sale of the
these properties in the fourth quarter of fiscal 1997.
NOTE 5 - TRANSACTIONS WITH RELATED PARTIES
As discussed in Note 1, the General Partner received 10%
of distributable cash from operations and a portion of the
proceeds from property dispositions as compensation for
services rendered in managing the Partnership. The General
Partner earned $90,000, $214,000, and $211,000 from operations
in fiscal 1997, 1996, and 1995, respectively. In addition, the
General Partner earned $411,000, $122,000 and $34,000 in
fiscal 1997, 1996, and 1995, respectively, from property
dispositions.
In accordance with the partnership agreement, certain
operating expenses are reimbursable to the General Partner.
The General Partner's reimbursement of such expenses totaled
$275,000, $162,000, and $123,000 for communications and
administrative services performed on behalf of the Partnership
in fiscal 1997, 1996, and 1995, respectively.
An affiliate of the General Partner earned a normal and
customary fee of approximately $5,000, $4,000, and $9,000 from
the money market mutual funds in which the Partnership made
its cash investments during fiscal 1997, 1996, and 1995,
respectively.
The partnership agreement includes provisions limiting the
capital contribution that the General Partner is required to
make upon the liquidation of the Partnership if, at that time,
the General Partner's capital account has a deficit balance.
The maximum contribution of $913,000 was made by the General
Partner to the Partnership on September 24, 1997. After making
the contribution, the General Partner's capital account still
had a deficit balance and a reallocation of net income equal
to the remaining deficit balance was made to the General
Partner from the Limited Partners in accordance with the terms
of the partnership agreement.
LaSalle Advisors Limited Partnership (LaSalle) was the
Partnership's advisor and was compensated for its advisory
services directly by the General Partner. LaSalle was
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 totaled
$127,000, $150,000, and $150,000 in fiscal 1997, 1996, and
1995, respectively.
An affiliate of LaSalle earned $229,000, $227,000, and
$205,000 in fiscal 1997, 1996, and 1995, respectively, for
property management fees and leasing commissions on tenant
renewals and extensions at several of the Partnership's
properties.
NOTE 6 - RECONCILIATION OF FINANCIAL STATEMENT TO TAXABLE
INCOME
As described in Note 2, the Partnership has not incurred
any income tax liability; however, certain timing differences
exist between net income (loss) for financial statement and
federal income tax purposes. These differences (in thousands)
are summarized below:
1997 1996 1995
_________ _________ _________
Net income (loss) reported
in financial
statements . . . $ 3,089 $(2,603) $ 8
Declines of property
values . . . . . (8,926) 3,115 547
Differences in bases of
properties sold . 96 (1,296) -
Other items . . . . . (502) 152 58
________ _________ ________
Taxable income (loss) $ (6,243) $ (632) $ 613
________ _________ ________
________ _________ ________
INDEPENDENT AUDITORS' REPORT
To the Partners
T. Rowe Price Realty Income Fund I,
A No-Load Limited Partnership:
We have audited the accompanying balance sheets of T. Rowe
Price Realty Income Fund I, A No-Load Limited Partnership as
of September 30, 1997 and 1996, and the related statements of
operations, partners' capital and cash flows for each of the
years in the three-year period ended September 30, 1997. These
financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of T. Rowe Price Realty Income Fund I, A No-Load
Limited Partnership as of September 30, 1997 and 1996, and the
results of its operations and its cash flows for each of the
years in the three-year period ended September 30, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
October 14, 1997
