SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1995
Commission file: #0-14453
National Real Estate Limited Partnership
Income Properties
(Exact name of registrant as specified in its charter)
Wisconsin
39-1503893
(State or other jurisdiction of incorporation or
organization)
(I.R.S. Employer Identification No.)
9800 West Bluemound Road, Milwaukee, Wisconsin
53226-4353
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code:
(414) 453-3498
Securities registered pursuant to Section 12(b) of the
Act:
Names of Each Exchange on Which Registered
None
Title of Each Class
None
Securities registered pursuant to Section 12(g) of the
Act:
Limited Partnership Interests
(Title of Class)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Sections 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
State the aggregate market value of the securities held
by non-affiliates of the Registrant as of February 28,
1996: indeterminate value as there is no market.*
*For purposes of this disclosure only.
The number of Limited Partnership interests outstanding
as of February 28, 1996: 9004.15
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual report to the Partners for the
year ended December 31, 1995 are incorporated by
reference into Parts I, II, III, and IV.
Definitive Prospectus dated January 31, 1985, as
amended to date, is incorporated by reference into Part
IV.
<PAGE>
TABLE OF CONTENTS
Item No. Page No.
PART I
1. Business 3
2. Properties 3
3. Legal Proceedings 3
4. Submission of Matters to a Vote of Security
Holders 3
PART II
5. Market for Partnership's Securities and Related
Security Holder Matters 4
6. Selected Financial Data 5
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
8. Financial Statements and Supplementary Data 5
9. Disagreements on Accounting and Financial
Disclosure 5
PART III
10. Directors and Executive Officers of the
Partnership 6
11. Executive Compensation 9
12. Security Ownership of Certain Beneficial Owners
and
Management 10
13. Certain Relationships and Related Transactions 10
PART IV
14. Exhibits, Financial Statements, Schedules, and
Reports
on Form 8-K 11
<PAGE>
PART I
Item 1. Business
"Business" on pages 1 and 2 of the Partnership's annual
report to Partners for the year ended December 31, 1995
is incorporated herein by reference.
Item 2. Properties
"Properties" on pages 2 through 3 of the Partnership's
annual report to Partners for the year ended December
31, 1995 is incorporated herein by reference.
Item 3. Legal Proceedings
"Legal Proceedings" on page 3 of the Partnership's
annual report to Partners for the year ended December
31, 1995 is incorporated herein by reference.
Item 4. Submission of Matters to a Vote of Security
Holders for the Quarter
Ended December 31, 1995
No matters have been submitted to a vote of security
holders during the fourth quarter ended December 31,
1995.
By virtue of its organization as a limited partnership,
the Limited Partnership Interests do not possess
traditional voting rights. However, as provided in
Article 15 of the Limited Partnership Agreement,
Limited Partners have voting rights for, among other
things, the removal of the General Partners, the
approval of the sale of substantially all of the assets
under certain circumstances, and the initiation of the
dissolution of the Partnership.
<PAGE>
PART II
Item 5. Market for the Partnership's Securities and
Related Security Holder
Matters
a) Market Information
The Partnership's only authorized equity securities are
Limited Partnership Interests ("Interests"). As of
December 18, 1986, the Partnership concluded its
offering of Interests and 9,034.01 Interests had been
sold to the public at a price of $1,000 per Interest.
Management is not aware of a public trading market
having been developed for the Interests. The
Partnership does provide a repurchase pool whereby the
limited partners may tender their limited partnership
interests back to the Partnership at a specified price.
Tenders are accepted semi-annually if they meet the
criteria established by the General Partners. As of
December 31, 1995, 29.86 Interests have been
repurchased and are held in Treasury.
b) Security Holders
Title of Class
Limited Partnership Interests
Number of Record Holders (as of Februery 28, 1996)
1,143
Number of Interests (as of February 28, 1996)
9,004.15
c) Dividends or Similar Distributions
Cash distributions to Limited Partners depend upon
attaining and thereafter maintaining operating income
and expenses of the Partnership at levels permitting
distributions. Distributions of cash, if any, will be
made from: (i) Cash Available for Distribution; (ii)
cash from property sales; and (iii) cash from
Partnership reserve accounts.
"Cash Available for Distribution" is defined in the
Partnership Agreement to include Cash Flow from the
Partnership less amounts set aside for Reserves plus,
through 1987, the amount of any General Partner Loan
for such period. "Cash Flow" is defined as the
Partnership's cash funds provided from operations and
Reserves, including lease payments on net leases from
builders and sellers, without deductions for
depreciation, but after deducting cash funds used to
pay all Operating Expenses, deferred fees, other
expenses, debt payments, capital improvements and
replacements. Mr. Vishnevsky, as Individual General
Partner was required to loan funds to the Partnership
quarterly to the extent necessary to make Cash
Available for Distribution to Limited Partners equal to
8% in 1985, 8.25% in 1986, and 8.5% in 1987, up to a
maximum loan of 3% of the gross proceeds of the
offering. Through December 31, 1995, the Individual
General Partner loaned $271,020 to the Partnership
under this commitment, which is the maximum amount
under the commitment. This commitment expired December
31, 1987. The Individual General Partner shall be
repaid with interest equal to 12% or the prime rate
plus two percentage points, whichever is lower, solely
from sale proceeds. The Partnership continued cash
distributions in 1995 with an aggregate of $139,566 and
$4,315 to its Limited Partners and General Partners,
respectively. Distributions for 1995 were at a rate
that equaled 1.55% on the Limited Partners' capital
investment. The General Partners anticipate that the
Partnership will continue to make cash distributions to
its Limited Partners in 1996, though the level of such
cash distributions will be dependent upon the results
of property operations and there can be no assurance as
to the amount, if any, that may be distributed.
<PAGE>
Cash available for distribution, as defined in the
Agreement, will be distributed 97% to the Limited
Partners and 3% to the General Partners. After the
repayment of any General Partner loans, sales proceeds
will be distributed as follows: (1) 97% to the Limited
Partners and 3% to the General Partners until the
Limited Partners have received (A) 100% of their
initial capital investment and (B) cumulative,
non-compounded distributions of sales proceeds, in
excess of the amount required in (A), and cash
available for distribution equal to 6% per annum on
their initial capital investment, with the 3% to the
General Partners subordinated to payment of the amounts
in (A) and (B) to the Limited Partners; (2) to an
affiliate of the General Partners, an amount equal to
its subordinated real estate commission (up to 3% of
the aggregate selling price of all properties); (3) 88%
to the Limited Partners and 12% to the General
Partners, with such payments to the General Partners
subordinated to a total return to the Limited Partners
of (A) 100% of their initial capital investment plus
(B) a cumulative preference of 10% per annum on their
initial capital investment.
If the General Partners should at any time determine
that the Reserves of the Partnership are in excess of
the amount reasonably necessary under the
circumstances, such Reserves may be reduced and the
amount of such reduction may, in the sole discretion of
the General Partners, be used for payment of expenses,
distributions to the Limited Partners, or investment in
additional properties.
Item 6. Selected Financial Data
"Selected Financial Data" on page 4 of the
Partnership's annual report to Partners for the year
ended December 31, 1995 is incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
"Management's Discussion and Analysis of Financial
Condition and Results of Operations" on pages 5 through
7 of the Partnership's annual report to Partners for
the year ended December 31, 1995 is incorporated herein
by reference.
Item 8. Financial Statements and Supplementary Data
The financial statements included on pages 8 through 19
of the Partnership's annual report to Partners for the
year ended December 31, 1995 are incorporated herein by
reference. The Partnership is not required to report
quarterly results of operations or supplementary
information on the effects of changing prices.
Item 9. Disagreements on Accounting and Financial
Disclosure
There were no disagreements with Ernst and Young LLP on
any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or
procedure.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the
Partnership
(a-b) Identification of Directors and Executive
Officers
The Partnership has no directors or officers. The
General Partners of the Partnership are John
Vishnevsky; National Development and Investment, Inc.
("NDII"), a Wisconsin corporation of which Mr.
Vishnevsky is the majority stockholder; and EC Corp., a
Wisconsin corporation of which Stephen P. Kotecki is
the majority stockholder. The address of Mr. Vishnevsky
and NDII is 9800 West Bluemound Road, Milwaukee,
Wisconsin, 53226-4353, telephone (414) 453-3498. The
address of EC Corp. is 9800 West Bluemound Road,
Milwaukee, Wisconsin, 53226-4353, telephone (414)
453-5117.
The General Partners manage and control the affairs of
the Partnership and have responsibility and ultimate
authority in all matters affecting its business. The
names of the directors and executive officers of NDII
and EC Corp. are as follows:
Name
Office
Term Held Office (since)
NDII:
John Vishnevsky
President, Director
09/30/74
Stephen P. Kotecki
Vice President, Secretary, Treasurer, and Director
04/12/91
EC Corp.:
Stephen P. Kotecki
President, Treasurer, Director
10/30/92
Thomas Rielly
Vice President, Secretary, Director
12/17/92
Officers of the corporations are elected by their
respective Boards of Directors annually. There is no
arrangement or understanding between or among any of
said directors or officers and any other person
pursuant to which such individual was selected as a
director or officer.
(c) Identification of Certain Significant Persons
The General Partners, in conjunction with their
affiliates, believe that they have sufficient personnel
to fully discharge their responsibilities to the
Partnership. The Partnership employs various
individuals to oversee the Partnership's affairs and
report to the General Partners, but, the Partnership
relies directly on the General Partners for the
management and control of the Partnership's affairs.
See Item 10, Subsection (e), for a description of the
business experience of officers, directors, and
personnel of the General Partners and affiliates.
There are four other organizations which are or were
affiliated with the Individual or Corporate General
Partners whose services are utilized by the
Partnership: National Realty Management, Inc. ("NRMI"),
which provides property and partnership management,
real estate acquisition and real estate brokerage
through delegation of duties agreements with NDII;
Victor Construction, Inc., which has and may in the
future serve as general contractor and perform other
services in connection with renovation and remodeling
work of the Partnership's properties; National Selected
Securities Corp. (formerly NDII Securities Corp.),
which acted as the Managing Dealer for the offering of
Interests in the Partnership; and The John Vishnevsky
Company ("JVCO"), which has provided consulting
services in the areas of real estate investments, joint
ventures, financing, systems, accounting, and internal
controls.
<PAGE>
RELATIONSHIP OF GENERAL PARTNERS
AND THEIR AFFILIATES
The following diagram shows the relationship of the
Partnership to various prior or current affiliates:
NATIONAL REAL ESTATE LIMITED
PARTNERSHIP INCOME PROPERTIES
(1)
EC CORP
Corporate General Partner
JOHN VISHNEVSKY
Individual General Partner 100%
NATIONAL DEVELOPMENT AND INVESTMENT, INC.
Corporate General Partner
100%
JOHN VISHNEVSKY COMPANY
Financial and Real Estate Consulting and Services
100%
NATIONAL SELECTED SECURITIES CORP.
Security Sales
(2)
NRMI
Partnership and Property Management Acquisition &
Brokerage
(3)
VICTOR CONSTRUCTION INC.
Building Contractor
(1) The ownership of EC Corp. is held by Mr. Stephen
P. Kotecki (100%).
(2) The ownership of NRMI is held by Mr. Edward Carow
(51%), Ms. Stasia Vishnevsky (19%), and Mr.
Anthony Van Stralen (30%). It is anticipated that
the services of NRMI will continue to be available
to the Partnership under the terms and conditions
described in the Prospectus.
(3) The ownership of Victor Construction, Inc. is held
by Mr. Edward J. Bushman (71%), Mr. Mark Clements
(9%), Mr. Mark Bruechel (2%) and Ms. Cindy Bushman
(18%). It is anticipated that the services of
Victor will continue to be available to the
Partnership under the terms and conditions
described in the Prospectus.
<PAGE>
(d) Family Relationships
Ms. Stasia Vishnevsky, part owner and Vice President of
NRMI, is the daughter of John Vishnevsky.
(e) Business Experience
The experience of the officers and directors of the
Corporate General Partners includes the following:
John Vishnevsky, President and Director of NDII, (age
72) is a graduate of Marquette University. For over 37
years he has been involved in real estate related
activities such as land development, residential,
apartment, and commercial construction, property
management, and the structuring of limited
partnerships. Mr. Vishnevsky has directed companies
that have developed or constructed projects with a
current market value of over $100 million. He,
corporate entities he controls, or both, act as general
partner for all NDII limited partnerships. These
partnerships have sold in excess of $160 million of
limited partnership interests. Mr. Vishnevsky is
licensed as an insurance broker, a real estate broker,
and a securities principal and he has lectured
frequently and has taught courses in real estate at the
University of Wisconsin-Milwaukee. He has appeared as a
guest on television and radio programs related to real
estate investments. Mr. Vishnevsky is author of the
books: The Art of Financial Independence, The Phantom
Yield of Real Estate Investment, The Great Real Estate
Disaster... The Greatest Real Estate Opportunity,
Getting to Know You, Releasing Your Creativity, and
Principles.
Stephen P. Kotecki, Vice President and Director of
NDII, and President, Treasurer, and Director of EC
Corp. (age 45) is a General Securities Registered
Representative, multi-line licensed insurance agent and
entrepreneur. He is the sole stockholder of EC Corp.
Mr. Kotecki holds a Bachelor of Science Degree with a
major in Political Science from the University of
Wisconsin-Whitewater, and a Master of Science Degree in
Urban Affairs from the University of
Wisconsin-Milwaukee. Mr. Kotecki directed research for
the American Federation of State, County and Municipal
Employees' District Council in Milwaukee County for
over four years. Mr. Kotecki further has experience as
a Regional Criminal Justice Planner and as a Housing
Evaluation Specialist. As a college instructor Mr.
Kotecki lectured courses in Business and Industrial
Relations, Marketing and Investments for over three
years.
Thomas P. Rielly, Vice President, Secretary and
Director of EC Corp., (age 48) is a licensed general
securities principal and a financial and operations
principal. Mr. Rielly has been an active participant in
the financial services industry for 22 years. His
diverse financial services experience includes
professional assignments in the areas of venture
capital, business planning and venture formation,
investment banking, asset management and securities
placement. Mr. Rielly has been associated with National
Development and Investment, Inc., related companies,
and Mr. Vishnevsky for over 9 years.
Other personnel of the General Partners, affiliates, or
other entities who were significantly involved in the
Partnership's affairs include the following:
Edward Carow, President of NRMI, (age 36) has over 17
years experience and an extensive background in
property management, acquisitions, partnership
management, loan workouts, refinancing, and property
sales. Mr. Carow is a licensed real estate broker and
holds the CPM (Certified Property Manager) designation.
Mr. Carow attended the University of Wisconsin for
business, the Waukesha County Technical College for
real estate and he continues to attend trade
conferences and lectures. He has taught courses in
property management and real estate investments for
Milwaukee Area Technical College. He is a member of the
Executive Council of the Institute of Real Estate
Management and was the 1992 President. Some of his
current other commitments include the International
Affairs Committee of the Institute of Real Estate
Management, the Publishing Committee of the Institute
of Real Estate Management and the Advisory Board at the
Waukesha County Technical College.
<PAGE>
Stasia Vishnevsky, Vice President and Media Director of
NRMI, (age 30) supervises marketing, public relations,
and advertising for NRMI-managed properties. Ms.
Vishnevsky also produces corporate training and
operations manuals, newsletters, and training seminars.
She attended Elmhurst College for English, and
Marquette University for Broadcast Communications.
Joan Jenstead, Director of Property Operations, (age
61) has been involved in the management of over ten
thousand apartment units in addition to commercial and
condominium management nationwide. She is a Certified
Property Manager and a Wisconsin licensed real estate
broker. Ms. Jenstead attended the University of North
Dakota, majoring in Business. In 1984, she was
responsible for the recognition of NRMI as an
Accredited Management Organization (AMO) by the
National Institute of Real Estate Management, (IREM).
In 1988, she served as President of the Institute of
Real Estate Management. She is also a member of the
national faculty of IREM, a faculty member of the
Milwaukee Area Technical College, and a past President
of the Board of Directors for the state of Wisconsin
Technical College Trustee Association. In 1990, Ms.
Jenstead was recognized for her accomplishments in
higher education in "Profiles in Success" published by
the National Center for Higher Education. In 1994 she
was elected to a three year term as a director on the
National Board of the Association of Community College
Trustees.
John Vishnevsky is or was the Individual General
Partner of National Real Estate Limited Partnership-II
(NRELP-II), National Real Estate Limited
Partnership-III (NRELP-III), National Real Estate
Limited Partnership-IV (NRELP-IV), National Real Estate
Limited Partnership-V (NRELP-V), National Real Estate
Limited Partnership-VI (NRELP-VI), National Real Estate
Limited Partnership Income Properties-II (NRELP-IP-II)
and the Partnership, among others. NDII is or was the
corporate general partner of NRELP-IV, NRELP-V,
NRELP-VI, NRELP-IP-II, and the Partnership, among
others. EC Corp. is or was the corporate general
partner of NRELP-VI, NRELP-IP-II and the Partnership,
among others. The Boards of Directors of the
Partnership's Corporate General Partners, NDII and EC
Corp., may be deemed to be interlocking.
Item 11. Executive Compensation
As stated above, the Partnership has no officers or
directors. The officers and directors of the Corporate
General Partners receive no current or proposed direct
remuneration in such capacities, pursuant to any
standard arrangement or otherwise, from either the
Corporate General Partners or from the Partnership,
with the exception of those directors which are not
employees of NDII, EC Corp. and affiliates, to whom an
annual director's fee of $50 per director is paid by
NDII.
Pursuant to the terms of the Limited Partnership
Agreement, net profits and losses from operations and
Cash Available for Distribution are allocated 97% to
the Limited Partners and 3% to the General Partners.
For such 3% interest, the General Partners contributed
$6,000 to the Partnership. For the fiscal period ended
December 3l, 1995, this interest resulted in net
taxable income to the Individual General Partner in the
amount of approximately $3,075. Cash distributions of
$4,315 were made to the Individual General Partner.
Cash available for distribution, as defined in the
Agreement, will be distributed 97% to the Limited
Partners and 3% to the General Partners. After the
repayment of any General Partner loans, sales proceeds
will be distributed as follows: (1) 97% to the Limited
Partners and 3% to the General Partners until the
Limited Partners have received (A) 100% of their
initial capital investment and (B) cumulative,
non-compounded distributions of sales proceeds, in
excess of the amount required in (A), and cash
available for distribution equal to 6% per annum on
their initial capital investment, with the 3% to the
General Partners subordinated to payment of the amounts
in (A) and (B) to the Limited Partners; (2) to an
affiliate of the General Partners, an amount equal to
its subordinated real estate commission (up to 3% of
the aggregate selling price of all properties); (3) 88%
to the Limited Partners and 12% to the General
Partners, with such payments to the General Partners
subordinated to a total return to the Limited Partners
of (A) 100% of their initial capital investment plus
(B) a cumulative preference of 10% per annum on their
initial capital investment.
The Partnership is engaged in various transactions
involving affiliates of the General Partners, as
described in the Prospectus. Notes 2, 6 and 7 of the
Partnership's financial statements of the annual
report to Partners for the year ended December 31, 1995
is incorporated herein by reference.
The contracts between the Partnership and affiliates
provide that the compensation, price, or fee must be
comparable and competitive with the compensation,
price, or fee of any other person whose services could
reasonably be made available to the Partnership. The
General Partners believe compensation to affiliates for
services to the Partnership was on terms no less
favorable to the Partnership than would have been
available through arm's-length negotiations for similar
services from unrelated parties.
Item 12. Security Ownership of Certain Beneficial
Owners and Management
(a) Persons or groups known by the Partnership to own
beneficially more than 5% of the outstanding Interests
of the Partnership are indicated below:
Title of Class
Limited Partnership Interests
Name of Beneficial Owner
Thea J. Peterson
Amount and Nature of Benefiial Ownership
500 Interests
Sole and Joint Investment Power
Percent of Class
5.55%
(b) By virtue of its organization as a limited
partnership, the Partnership has no officers or
directors. The General Partners are responsible for
management of the Partnership, subject to certain
limited democracy rights of the Limited Partners
described in the Limited Partnership Agreement. Persons
or entities performing functions similar to those of
officers and directors of the Partnership, beneficially
own, in the aggregate, the following Interests of the
Partnership as of February 28, 1996.
Title of Class
Limited Partnership Interests
Name of Beneficial Owner
John Vishnevsky
Amount and Nature of Beneficial Ownership
29.56 Interests
Sole Investment Power
Percent of Class
0.33%
Title of Class
Limited Partnership Interests
Name of Beneficial Owner
Stephen P. Kotecki
Amount and Nature of Beneficial Ownership
4 Interests
Sole Investment Power
Percent of Class
0.04%
(c) There is no arrangement known to the Partnership
which may, at a subsequent date, result in a change in
control of the Partnership.
Item 13. Certain Relationships and Related Transactions
Neither the General Partners nor their affiliates were
indebted to the Partnership during the year ended
December 31, 1995.
There were no transactions with management other than
the Partnership's transactions with the General
Partners and affiliates, as described in this report at
Items 10 and 11.
<PAGE>
PART IV
14. Exhibits, Financial Statements, Schedules, and
Reports on Form 8-K
(A) 1. Financial Statements.
a) Financial Statements and Report of Independent
Auditors (incorporated by reference from pages 8
through 19 of the Partnership's annual report to
Partners for the year ended December 31, 1995).
(i) Report of Independent Auditors
(ii) Balance Sheets, December 31, 1995 and 1994
(iii) Statements of Operations, Years Ended
December 31, 1995, 1994, and 1993
(iv) Statements of Changes in Partners' Capital, Years
Ended December 31, 1995, 1994, and 1993
(v) Statements of Cash Flows, Years Ended December 31,
1995, 1994, and 1993
(vi) Notes to Financial Statements
2. Financial Statement Schedules
All schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions, are inapplicable, or the information is
presented in the financial statements or related notes,
and therefore such schedules have been omitted.
3. Exhibits
See attached exhibit list which is incorporated by
reference.
(B) Reports on Form 8-K for the Quarter ended December
31, 1995
There were no reports on Form 8-K filed during the
fourth quarter ending December 31, 1995.
<PAGE>
(C) Exhibits
3(a) Limited Partnership Agreement, incorporated by
reference from Prospectus previously filed with
Registration Statement 2-95072 on Form S-11
effective January 31, 1985.
3(b) Certificate of Limited Partnership incorporated by
reference from Exhibit 3B Registration Statement
2-95072 on Form S-11 filed December 20, 1984.
4 Subscription Agreement Evidencing Ownership of a
Partnership Interest, incorporated by reference
from Prospectus previously filed with Registration
Statement 2-95072 on Form S-11 effective January
31, 1985.
10(a) Consulting Fee Agreement between the
Partnership and NDII dated January 31, 1985,
incorporated by reference from 1985 10-K
filed March 28, 1986.
10(b) Property Management Agreements between
Partnership and NRMI and between NRMI and
Equity Management Corporation Lock-It Lockers
Tucson, incorporated by reference from 1985
10-K filed March 28, 1986.
10(c) Acquisition Agreement between the Partnership
and NDII dated January 31, 1985, incorporated
by reference from 1985 10-K filed March 28,
1986.
10(d) Organization Expense Agreement between the
Partnership and NDII dated January 31, 1985,
incorporated by reference from 1985 10-K
filed March 28, 1986.
10(e) Contracts for Acquisition of Assets
(1) With respect to Lock-It Lockers Mini-Warehouse,
Tucson, Arizona: Incorporated by reference from Exhibit
2-1 to periodic report on Form 8-K dated May 7, 1985;
July 9, 1985; August 9, 1985; and September 13, 1985.
(2) With respect to Lock-It Lockers Mini-Warehouse,
Phoenix, Arizona: Incorporated by reference from
Exhibit 2-1 to periodic report on Form 8-K dated
January 1, 1986; February 1, 1986; and April 2, 1986.
(3) With respect to Cave Creek Mini-Warehouses,
Phoenix, Arizona: Incorporated by reference Exhibit 2-1
to periodic report on Form 8-K dated April 30, 1987.
(4) With respect to Northridge Commons Shopping
Center, Milwaukee, Wisconsin: Incorporated by reference
Exhibit 2-1 to periodic report on Form 8-K dated May
28, 1987.
10(f) Escrow Agreement dated January 31, 1985,
incorporated by reference from Exhibit 10 to
Amendment No. 1 to Registration Statement
2-95072 effective January 31, 1985.
10(g) Property Management Agreement between
Partnership and NRMI and between NRMI and
Equity Management Corporation, Lock It
Lockers, Phoenix, Arizona: Incorporated by
reference from 1986 10-K filed March 28,
1987.
10(h) Management Consulting Delegation of Duties
Agreement between General Partners and NRMI
dated May 28, 1991. Incorporated by reference
from the 1991 10-K filed March 27, 1992.
10(i) Co-General Partner Agreement incorporated by
reference from Exhibit 5-1 to periodic
reports on 8-K dated July 26, 1991.
10(j) Property Management Agreement between
Partnership and NRMI, dated July 1, 1991.
Incorporated by reference from the 1991 10-K
filed March 27, 1992.
11 Not applicable, see Item 6 of this report.
12 Not applicable
*13 National Real Estate Limited Partnership Income
Properties 1995 annual report to Partners is
included as an exhibit hereto for those portions
of such annual report specifically incorporated by
reference elsewhere herein. Such annual report is
deemed not to be filed as part of this Report.
18 Not applicable
19 Not applicable
22 Not applicable
23 Not applicable
*24 Consent of Independent Auditors filed with this
report.
25 Not applicable
(D) Financial Statement Schedules There are no
schedules to be included herein.
* Filed with this Report.
<PAGE>
Exhibit 24
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this
Annual Report (Form 10-K) of National Real Estate
Limited Partnership Income Properties of our report
dated January 19, 1996, included in the 1995 Annual
Report to Partners of National Real Estate Limited
Partnership Income Properties.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
March 27, 1996
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
(Registrant)
Dated: March 28, 1996
By: /S/ John Vishnevsky
________________________________
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and Investment, Inc.
Corporate General Partner
Dated: March 28, 1996
By: /S/ John Vishnevsky
__________________________________
John Vishnevsky
Chief Financial and Accounting Officer
National Development and Investment, Inc.
Corporate General Partner
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report is signed below by the
following persons on behalf of the Registrant and in
the capacities* and on the dates indicated:
/S/ John Vishnevsky
John Vishnevsky
President and Director
National Development and Investment, Inc.
March 28, 1996
(dated)
/S/ Stephen P. Kotecki
Stephen P. Kotecki
Vice President, Secretary,Treasurer and Director
National Development and Investment, Inc.
March 28, 1996
(dated)
/S/ Stephen P. Kotecki
Stephen P. Kotecki
President, Treasurer and Director
EC Corp.
March 28, 1996
(dated)
/S/ Thomas Rielly
Thomas Rielly
Vice President, Secretary and Director
EC Corp
March 28, 1996
(dated)
* The indicated positions are held in the Corporate
General Partners of the Registrant.
F:\WPDOCS\LETTERS\NIP-ANNL.ELE
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
Business
The Registrant, National Real Estate Limited
Partnership Income Properties (the "Partnership"), is a
limited partnership organized under the Wisconsin
Revised Uniform Limited Partnership Act pursuant to a
Certificate and an Agreement of Limited Partnership,
each dated December 18, 1984. As of December 31, 1995,
the Partnership consisted of an Individual and two
Corporate General Partners and 1,143 Limited Partners
owning 9,004.15 limited partnership interests (the
"Interests") acquired at a public offering price of
$1,000 per Interest ($9,024,556 net of affiliate
discounts). The Interests were sold commencing
January 31, 1985, pursuant to a Registration Statement
on Form S-11 under the Securities Act of 1933
(Registration #2-95072) as amended. The offering of
interests was concluded on December 18, 1986. The
Individual General Partner is John Vishnevsky and the
Corporate General Partners are National Development and
Investment, Inc. ("NDII"), a Wisconsin corporation and
EC Corp., a Wisconsin corporation. All management
decisions are the responsibility of the General
Partners.
The Partnership's primary objective was to acquire
existing commercial space, such as office buildings,
shopping centers, and mini-warehouses, though it was
also permitted to acquire existing residential
properties from non-affiliated sellers. Although the
Partnership intended to acquire existing properties, it
was permitted to acquire properties which were recently
completed. The Partnership's principal investment
objectives are to invest in real estate properties
which will:
1) preserve and protect the Limited Partners' capital
investment;
2) provide quarterly distributions of cash from
operations, commencing December 31, 1985; and
3) provide capital appreciation through increases in
the value of the Partnership's real estate assets.
The Partnership will continue in existence until
December 31, 2004, unless terminated earlier by
disposition of all of its assets or certain other
events. The Partnership will commence to liquidate its
properties as soon as feasibly possible, depending
upon, among other factors, whether the Partnership's
objectives are met, potential capital appreciation,
cash flow, and federal income tax consequences to its
limited partners.
The Partnership owns and operates four investment
properties. During the fiscal year ended December 31,
1985, the Partnership acquired Lock-It Lockers
Mini-Warehouse, a self storage mini-warehouse rental
complex located in Tucson, Arizona ("Tucson Lock-It
Lockers"). Tucson Lock-It Lockers was acquired in four
separate Parcels as follows: Parcel I (21,670 net
rentable square feet) effective May 1, 1985; Parcel II
(15,575 net rentable square feet) effective July 1,
1985; Parcel III (6,845 net rentable square feet)
effective August 1, 1985; and Parcel IV (5,795 net
rentable square feet) effective September 1, 1985. In
1986, the Partnership continued its investment in
properties by acquiring an additional Lock-It Lockers
Mini-Warehouse located in Phoenix, Arizona ("Phoenix
Lock-It Lockers"), in three separate parcels, as
follows: Parcel I (18,600 net rentable square feet)
effective January 1, 1986; Parcel II (17,625 net
rentable square feet) effective February 1, 1986; and
Parcel III (22,541 net rentable square feet including
8,000 net rentable square feet for recreational vehicle
storage) effective April 1, 1986. The Partnership
completed its investment in properties during the
fiscal year ended December 31, 1987, when it purchased
the two following investment properties, a parcel of
land containing one building plus part of a second
building out of a total of five buildings of Cave Creek
Mini Warehouses in Phoenix, Arizona and Northridge
Commons Shopping Center, a community shopping center
located in Milwaukee, Wisconsin. These properties are
described more fully in this report at Properties. Cave
Creek was managed by Enterprise Growth Group ("EGG")
from the time the property was purchased through
October, 1991. As of November 1, 1991, National Realty
Management, Inc. ("NRMI") took over management of the
property. All other Partnership properties were managed
by NRMI since their purchase.
The real estate investment business is highly
competitive. The Partnership's properties are in
competition for tenants with numerous other alternative
sources for storage or shopping center space.
The Partnership is not dependent upon any single tenant
for its operating success. The Partnership does not
foresee any events or market trends which would have a
materially adverse affect upon the Partnership's
revenues, except for increased competition for tenants,
which is discussed in the section entitled Results of
Operations of this report.
During 1995, the Partnership employed four full-time
and six part-time on-site personnel in the following
capacities: four managers, two rental agents and four
cleaning/maintenance persons. In addition, due to the
centralized nature of the Partnership's accounting and
management systems, another 19 employees provided
various accounting and management services to this and
other partnerships. These persons worked an average of
approximately 2.3 hours per week for this Partnership.
Detailed time records of all personnel are maintained
which form the basis for charges to the Partnership.
All on-site and partnership employees are supervised by
NRMI under its Management Consulting Delegation of
Duties and Property Management Agreements with the
Partnership.
The Partnership is engaged solely in the business of
investing in and managing real estate. Its business is
believed by management to fall entirely within a single
industry segment. The business of the Partnership is
not seasonal, although the Partnership's properties may
experience cyclical fluctuations in occupancy levels in
the rental markets where they are located.
Properties
The properties in which the Partnership has invested
are owned in fee simple, described more fully at Notes
to Financial Statements (Note 3). The principal factors
which the General Partners believe affect rental rates
and occupancy levels include location, ease of access,
amenities, and the quality of property management.
Tucson Lock-It Lockers
Tucson Lock-It Lockers is located on 2.057 fully
improved acres at 6560 East Tanque Verde Road, Tucson,
Arizona. Tucson Lock-It Lockers consists of seven
single-story buildings which were constructed in 1976.
Tucson Lock-It Lockers has an aggregate of 49,885 net
rentable square feet (57,710 gross) with a unit mix
that varies. Management has the ability to subdivide
some of the larger units in accordance with market
demand. Features of Tucson Lock-It Lockers include fire
walls and exterior passage doors constructed of
solid-core steel hinged in steel frames. Security at
Tucson Lock-It Lockers is provided by a resident
manager and a fenced perimeter with single-gate access.
In addition to the seven warehouse buildings, there is
an on-site office/apartment, and limited customer
parking spaces are available.
Phoenix Lock-It Lockers
Phoenix Lock-It Lockers is located on 3.1 fully
improved acres at 10250 North 19th Avenue, Phoenix,
Arizona. The complex consists of three single-story
buildings containing a total of 593 units and 30
outside RV spaces which were constructed in 1976.
Phoenix Lock-It Lockers has an aggregate of 62,016 net
rentable square feet (66,200 gross) with a unit mix
that varies. Management has the ability to subdivide
some of the larger units according to market demand.
Features of the complex include fire walls and exterior
passage doors constructed of solid-core steel hinged in
steel frames. Security in the complex is provided by
electronic surveillance cameras with a motion detector
that provides the resident manager with the ability to
monitor the property during the day and night. There is
also a fenced perimeter with a single-gate access to
the property which provides additional security. In
addition to the three warehouse buildings, there is an
on-site office/apartment, and customer parking spaces
are available.
Cave Creek Mini-Warehouse
Cave Creek Mini-Warehouse is located at 1201 East
Cinnabar Avenue, Phoenix, Arizona, on approximately 1.7
acres (the "Complex"). The 747 unit complex consists of
three individual one story and two individual two story
buildings. The Partnership's acquisition consists of
one one-story building and part of one two-story
building of the Project, of which construction was
completed in 1985. The Partnership has an interest in
the remaining portions of the Project for access and
use of the business office facilities. Security in the
Project is provided by a resident manager and a fenced
perimeter with single-gate access.
The Project has an aggregate of approximately 46,028
net rentable square feet. The Partnership's property
contains approximately 8,236 net rentable square feet,
or approximately 18% of the total net rentable square
feet of the Project. Units can be subdivided, if
appropriate, in light of current demand; therefore, the
total unit count may fluctuate. At the time of
purchase, the Partnership's property was divided into
91 units.
Northridge Commons
Northridge Commons is a community shopping center
located at 8310-8360 West Brown Deer Road, Milwaukee,
Wisconsin, on an outparcel at a major entrance to
Northridge Mall, a 1,100,000 square foot regional mall,
making Northridge Commons part of a shopping cluster.
Constructed in 1981, Northridge Commons is a masonry
building consisting of 7 retail service outlets. Most
of the building is 100 feet deep, creating store
dimensions of 20'x100' and 25'x100'. Northridge Commons
has an aggregate of approximately 20,780 net rentable
square feet. All current tenant leases are "triple net"
agreements, one of which includes provisions for
additional percentage rent, and all but one lease
provides for increases in base rental rates during the
lease terms. Northridge Commons' anchor tenant,
Talbots, is a national women's clothing chain. Asking
rents are $10.00 per square foot triple net leases,
which is in line with the competition.
The Tucson, Phoenix, and Milwaukee real estate rental
markets are highly competitive. For a further
discussion of occupancy rates, see Management's
Discussion and Analysis of Financial Condition and
Results of Operations contained in this report.
Additional mini-warehouse projects and shopping malls
may be built within the Tucson, Phoenix, and Milwaukee
areas, which may compete directly with the
Partnership's properties.
Legal Proceedings
The Partnership is not a party to any material pending
legal proceedings other than ordinary routine
litigation incidental to its business.
<PAGE>
Selected Financial Data
As of and for the Year Ended December 31,
Selected Operations
Statement Data: 1995 1994
1993 1992 1991
Operating Revenues $944,538 $812,522
$790,615 $762,349 $742,926
Operating Expenses 879,266 772,026
771,343 761,310 735,501
Income from Operation 65,272 40,496
19,272 1,039 7,425
Other Income 26,473 12,256
6,958 5,058 9,581
Net Income $ 91,745 $ 52,752
$ 26,230 $ 6,097 $17,006
General Partners' Share
of Net Income $ 2,752 $ 1,583
$787 $183 $510
Limited Partners' Share
of Net Income 88,993 $ 51,169
25,443 5,914 16,496
Net Income per Limited
Partnership Interest 9.88 5.66
2.82 .66 1.83
Distribution per Limited
Partnership Interest 15.50 14.00
14.00 14.00 26.50
Selected Balance
Sheet Data:
Total Assets $5,972,760 $5,968,526
$5,999,173 $6,045,501 $6,136,427
Long-Term Debt -0- -0-
-0- -0- -0-
Partners' Capital $5,144,027 $5,196,163
$5,273,368 $5,377,095 $5,500,955
<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
The Partnership commenced an offering to the public on
January 31, 1985, of up to 15,000 Interests at $1,000
per Interest pursuant to a Registration Statement on
Form S-11 under the Securities Act of 1933. A total of
3,767.26 Interests were sold in 1985 ($3,760,356). From
January 1, 1986, to December 18, 1986, at which time
the offering was concluded, an additional 5,266.75
Interests were sold ($5,264,200). After deducting
offering costs, the Partnership had $8,026,434 with
which to purchase the investment properties, described
in this report at Properties, to pay costs related to
purchasing such properties and to meet capital
requirements for operations.
The Partnership does not have any permanent, long-term
financing nor any other financing on its investment
properties and does not intend to incur any during the
Partnership's life. The Partnership plans continued
capital expenditures for roof replacements and repairs
for Lock-it-Lockers Tucson and Phoenix Lock-it-Lockers
in 1996. The Partnership does not have any other
present or planned material commitments for capital
expenditures.
The General Partners committed to make loans to the
Partnership to the extent necessary for the Partnership
to make cash distributions to the Limited Partners
equal to 8% in 1985, 8.25% in 1986, and 8.5% in 1987.
However, the maximum the General Partner was required
to loan was equal to 3% of the gross offering proceeds.
Through December 31, 1995, the Individual General
Partner loaned $271,020 to the Partnership under this
commitment, which is the maximum amount under the
commitment. The General Partners' loan shall be repaid
with interest equal to 12% or the prime rate plus two
percentage points, whichever is lower, solely from sale
proceeds of the investment properties. As of December
31, 1995, $433,571 of interest had accrued on the
General Partners' loan. During 1995, the Partnership
continued distributions with a total of $139,566 to its
Limited Partners and $4,315 to the General Partners.
The distributions for 1995 equalled 1.55% of the
Limited Partners investment. The pay rates prior to
1988 were supplemented by the General Partner Loans, as
described above, and the operating results of the
properties have not advanced as originally projected.
The Partnership's ability to maintain and or increase
distributions during 1996 is dependent upon the results
of property operations and therefore no assurance as to
the distribution amount, if any, can be made.
Cash generated by the Partnership's investment
properties and the sale of such properties are expected
to provide funds for the Partnership liquidity needs
and any cash distributions to the Limited Partners.
Results of Operations
The Partnership operated four investment properties
during 1995. The Partnership began operations in 1985
and made additional property purchases in 1986 and
1987.
Rental rates at Tucson Lock-It Lockers ranged from $19
to $150 in 1995, depending on the size of the unit,
compared to $13 to $143 in 1994 and $12 to $143 in
1993. Occupancy during December 1995 at Tucson Lock-It
Lockers was 97.3%, which is comparable to December 1994
at 97.9% and December 1993 at 97%. Average occupancy at
Tucson Lock-It Lockers was 98.9% during 1995, compared
to 98.7% in 1994 and 93% in 1993. It is necessary to
upgrade the property to stay competitive. Renovations
scheduled for 1996 include asphalt repair and exterior
painting. Marketing efforts are directed primarily
toward Yellow Pages advertising.
Rental rates are based on unit size at Phoenix Lock-It
Lockers and ranged from $11 to $225 in 1995, from $13
to $235 in 1994, and $11 to $190 in 1993. December
occupancy in 1995 was 98%, while in 1994 and 1993 it
was 97% and 91% respectively. Average annual occupancy
at the property has increased with rates of 99%, 98%
and 90% in 1995, 1994 and 1993, respectively.
Renovations planned for 1996 include asphalt work and
landscaping. Management uses the Yellow Pages for
advertising. The staff also visits local businesses.
Some monthly rental rates at Cave Creek Lock-It Lockers
increased in April 1995. Asking rents as of
December 31, 1995 ranged from $10 to $165, based on
unit size compared to $9 to $165 in 1994 and $9 to $98
in 1993. December occupancy in 1995 was 96.2%, 98.5% in
1994, and 98% in 1993. Average annual occupancy was
98%, 99%, and 97% in 1995, 1994, and 1993 respectively.
Marketing efforts are directed primarily through the
use of Yellow Pages advertising. Renovations planned
for 1996 include roof repairs, painting, and fence
replacements.
Northridge Commons experienced average annual occupancy
of 86% during 1995, compared to 60% in 1994, and 81% in
1993. Occupancy for December 1995 was 100%. This
compares to the December rate of 64% in 1994 and 64% in
1993. Northridge Commons is located in a high traffic
area with excellent visibility, however there are
concerns regarding the increase of crime in the area.
Even though Northridge Commons is currently 100%
occupied, the immediate area is still experiencing high
vacancies.
Revenues for Tucson Lock-It-Lockers increased in 1995
compared to 1994 because of higher rental rates and
improved collection. Expenses increased due to higher
personnel, administrative, and real estate taxes.
Overall 1995 net operating income was higher than 1994.
In 1994, revenues rose at Tucson Lock-It Lockers due to
higher rental rates. Net operating income was higher in
1994 than it was in 1993 because expenses remained in
line with 1993 while revenues increased due to higher
rental rates.
In 1995, net operating income of Phoenix
Lock-It-Lockers was higher in comparison to 1994 due to
an increase in rental rates. In 1995, operating
expenses rose compared to 1994 due to increased
renovations and personnel expenses. 1994 net operating
income at Phoenix Lock-It Lockers has increased
significantly compared to 1993 as rents were raised and
delinquencies greatly decreased. 1994 operating
expenses rose compared to 1993 due to increased
renovations and maintenance expenses.
In 1995, net operating income of Cave Creek
Lock-It-Lockers increased over 1994 as rental rates
increased. 1995 operating expenses increased compared
to 1994 due to increased maintenance expense. 1994 net
operating income at Cave Creek increased over 1993 as
rental rates have increased significantly and vacancies
and delinquencies have decreased. Overall operating
expenses have increased compared to 1993 due to
increases in taxes and administrative expense.
Northridge Commons' revenues increased in 1995 compared
to 1994 due to increased occupancy. Expenses rose due
to commissions paid to commercial real estate brokers
and a general increase in personnel expense. Operating
expenses in 1994 were lower than 1993 expenses due to a
decrease in property taxes and maintenance costs.
Revenues in 1994 declined significantly from 1993 due
to increased vacancies and delinquent rent.
Reference is made to Notes 2 and 6 of the Partnership's
financial statements for a discussion of various fees
charged to the Partnership and the amounts charged to
the Partnership by affiliates in 1995.
Inflation
The General Partners believe the Partnership's ability
to increase rental rates would offset any adverse
effects from inflation on the Partnership's cost of
operations. Inflation may also tend to cause capital
appreciation of the Partnership's properties over a
period of time as rental rates and replacement costs of
properties continue to increase. However, the effects
of inflation in real estate may be influenced by
general or local economic conditions. Future results
are subject to uncertainty and the ability of the
Partnership to achieve certain results is largely
beyond the control of the General Partners and their
affiliates.
Impact of Recently Issued Accounting Standards
In March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards
(SFAS) No. 121. "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of." SFAS No. 121 addresses situations where
information indicated that a company might be unable to
recover, through future operations or sale, the
carrying amount of long-lived assets. SFAS No. 121
requires that long-lived assets that are used in
operations be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying
amount of the assets might not be recoverable. SFAS No.
121 is effective for the Partnership in 1996. The
impact to the Partnership's financial statements is not
expected to be material.
<PAGE>
Report of Independent Auditors
The Partners
National Real Estate Limited Partnership Income
Properties
We have audited the accompanying balance sheets of
National Real Estate Limited Partnership Income
Properties (the Partnership) as of December 31, 1995
and 1994, and the related statements of operations,
changes in partners' capital and cash flows for each of
the three years in the period ended December 31, 1995.
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 includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. 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 the Partnership at December 31,
1995 and 1994, and the results of its operations and
its cash flows for each of the three years in the
period ended December 31, 1995, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
January 19, 1996
Milwaukee, Wisconsin
<PAGE>
Balance Sheets
December 31
1995 1994
Assets
Cash $ 599,315 $ 409,508
Escrow deposits and other assets
10,032 17,420
Investment properties, at cost:
Land 1,267,695 1,267,695
Buildings and improvements
6,018,410 5,992,076
7,286,105 7,259,771
Accumulated depreciation
1,922,692 1,718,173
5,363,413 5,541,598
$5,972,760 $5,968,526
Liabilities and partners' capital
Liabilities:
Tenant security deposits
$ 5,454 $ 7,823
Rents received in advance
32,343 31,530
Accrued interest payable to Individual General Partner 433,571
361,303
Accrued expenses and other liabilities
86,345 100,687
Note payable to Individual General Partner
271,020 271,020
828,733 772,363
Partners' capital:
General Partners (deficit)
(85,815) (84,252)
Limited Partners (authorized 10,000 interests;
issued 9,034.01 interests)
5,251,513 5,302,086
Less cost of Limited Partner interests held in Treasury
(29.86 interests)
(21,671) (21,671)
5,229,842 5,280,415
5,144,027 5,196,163
$5,972,760 $5,968,526
<PAGE>
Statements of Operations
Year ended December 31
1995 1994 1993
Operating revenues:
Rentals $892,562 $764,437 $758,643
Other 51,976 48,085 31,972
944,538 812,522 790,615
Operating expenses:
Operating 206,817 172,709 161,594
Administrative 177,046 162,799 163,803
Maintenance 79,903 46,138 40,284
Depreciation 204,545 202,311 198,996
Interest 72,217 54,558 44,286
Property taxes 126,779 121,355 150,153
Advertising 11,959 12,156 12,227
879,266 772,026 771,343
Income from operations
65,272 40,496 19,272
Interest income
26,473 12,256 6,958
Net income
$ 91,745 $52,752 $26,230
Net income attributable to General Partners (3%)
$ 2,752 $1,583 $787
Net income attributable to Limited Partners (97%)
88,993 51,169 25,443
$ 91,745 $52,752 $26,230
Net income per Limited Partnership Interest
$9.88 $5.66 $2.82
<PAGE>
Statements of Changes in Partners' Capital
General
Partners
Limited
Partners
Cost of Limited Partners' Interests Held in Treasury
Total
Balances at January 1, 1993
$(78,828)
$5,477,594
$(21,671)
$5,377,095
Distributions to Partners
(3,897)
(126,060)
-
(129,957)
Net income for the year
787
25,443
-
26,230
Balances at December 31, 1993
(81,938)
5,376,977
(21,671)
5,273,368
Distributions to Partners
(3,897)
(126,060)
(129,957)
Net income for the year
1,583
51,169
52,752
Balances at December 31, 1994
(84,252)
5,302,086
( 21,671)
5,196,163
Distributions to Partners
(4,315)
(139,566)
(143,881)
Net income for the year
2,752
88,993
91,745
Balances at December 31, 1995
$(85,815)
$5,251,513
$(21,671)
$5,144,027
( ) Denotes deficit or deduction.
<PAGE>
Statements of Cash Flows
Year ended December 31
1995 1994 1993
Operating activities
Net income for the year
$ 91,745 $ 52,752 $ 26,230
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
204,519 202,311 198,996
Changes in operating assets and liabilities:
Escrow deposits and other assets
7,388 (1,860) 154
Tenant security deposits
(2,369) 565 (919)
Rents received in advance
813 (4,388) 13,312
Accrued expenses and other liabilities
57,926 50,381 45,006
Net cash provided by operating activities
360,022 299,761 282,779
Investing
Additions to investment properties
(26,334) (65,141) (33,030)
Financing activity
Distributions to Partners
(143,881) (129,957) (129,957)
Increase in cash
189,807 104,663 119,792
Cash at beginning of year
409,508 304,845 185,053
Cash at end of year
$599,315 $409,508 $304,845
<PAGE>
Notes to Financial Statements
December 31, 1995
1. Organization and Basis of Accounting
Organization
National Real Estate Limited Partnership Income
Properties (the Partnership) was organized as a limited
partnership under the laws of the State of Wisconsin
pursuant to a Certificate and an Agreement of Limited
Partnership (the Agreement) dated December 18, 1984,
for the purpose of investing primarily in commercial
real property and began operations in May 1985. The
Partnership is to be dissolved on or before December
31, 2004.
The Partnership consists of three General Partners,
National Development and Investment, Inc., John
Vishnevsky, and EC Corp., and 1,143 Limited Partners at
December 31, 1995. Mr. Vishnevsky is the president and
majority stockholder of National Development and
Investment, Inc. EC Corp. was admitted to the
Partnership effective July 26, 1991, as approved by the
Limited Partners. See also Note 7.
Basis of Accounting
The Partnership records are maintained on the basis of
accounting utilized for federal income tax reporting
purposes. The accompanying financial statements have
been prepared from such records adjusted to the accrual
basis of accounting, including adjustments for
differences in depreciation methods. Certain accrual
and tax basis amounts are summarized as follows:
1995
Accrual Basis Tax Basis
1994
Accrual Basis Tax Basis
1993
Accrual Basis Tax Basis
(In Thousands)
Total assets
$5,973 $5,943
$5,969 $6,000
$5,999 $6,105
Partners' capital:
General Partners (deficit)
(86) (102)
(84) (101)
(82) (98)
Limited Partners
5,230 5,638
5,280 5,678
5,355 5,763
Net income (loss):
General Partners
3 3
2 1
1
Limited Partners
89 99
51 41
25 (3)
<PAGE>
Notes to Financial Statements (continued)
2. Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that
affect the reported amounts of assets and liabilities
at the date of the financial statements. Estimates also
affect the reported amounts of revenue and expenses
during the reporting period. Although estimates are
considered to be fairly stated at the time that the
estimates are made, actual results could differ from
those estimates.
Depreciation
Depreciation is computed by the straight-line method
using estimated useful lives of 10 to 30 years for the
buildings and improvements and 5 to 10 years for
related equipment.
For federal income tax purposes, the Partnership
provides for depreciation of buildings and improvements
over 15 to 39 years and related equipment over 5 to 7
years using straight-line and accelerated methods.
Fees to Affiliates
Acquisition fees and property management fees are
payable to the General Partners or affiliates of the
General Partners. These amounts are charged to expense
as follows:
Acquisition Fees
Real estate acquisition fees for selection,
negotiation, and purchase of Partnership properties
have been capitalized and allocated to land and
buildings and improvements based on appraised values.
The portions allocated to buildings and improvements
are being depreciated over the respective useful lives
of the buildings and improvements.
Property Management Fees
Fees for property management and rental services are
being charged to expense over the period property
management services are being performed.
In addition, underwriting commissions, underwriting
fees and reimbursed syndication costs paid to the
General Partners or affiliates of the General Partners
have been recorded as a charge to Limited Partners'
capital.
<PAGE>
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
Allocations and Distributions
Pursuant to the Agreement, net income and loss from
operations (exclusive of those from the sale or
disposition of Partnership properties) are to be
allocated 97% to the Limited Partners and 3% to the
General Partners. Any gains from the sale or
disposition of Partnership properties are to be
allocated first to the General Partners and Limited
Partners with deficit net capital accounts; then to the
Limited Partners in an amount equal to their initial
capital investment plus any amount remaining to be paid
and paid under their cumulative preference; then to the
General Partners in an amount equal to the proceeds of
such sale distributed to them; and all remaining
amounts are to be allocated to the Limited Partners
provided that at least 3% of the gain from sale or
disposition would be allocated to the General Partners.
Losses from the sale or other disposition of
Partnership properties are to be allocated 97% to the
Limited Partners and 3% to the General Partners.
Cash available for distribution, as defined in the
Agreement, will be distributed 97% to the Limited
Partners and 3% to the General Partners. After the
repayment of any General Partner loans, sales proceeds
will be distributed as follows: (1) 97% to the Limited
Partners and 3% to the General Partners until the
Limited Partners have received (A) 100% of their
initial capital investment and (B) cumulative,
non-compounded distributions of sales proceeds, in
excess of the amount required in (A), and cash
available for distribution equal to 6% per annum on
their initial capital investment, with the 3% to the
General Partners subordinated to payment of the amounts
in (A) and (B) to the Limited Partners; (2) to an
affiliate of the General Partners, an amount equal to
its subordinated real estate commission (up to 3% of
the aggregate selling price of all properties); (3) 88%
to the Limited Partners and 12% to the General
Partners, with such payments to the General Partners
subordinated to a total return to the Limited Partners
of (A) 100% of their initial capital investment plus
(B) a cumulative preference of 10% per annum of their
initial capital investment.
Net Income Per Limited Partnership Interest
Net income per Limited Partnership interest is based on
97% of net income as allocated to the Limited Partners
divided by the weighted average number of interests
outstanding during the year.
Pending Accounting Change
In March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards
(SFAS) No. 121. "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of." SFAS No. 121 addresses situations where
information indicates that a company might be unable to
recover, through future operations or sale, the
carrying amount of long-lived assets. SFAS No. 121
requires that long-lived assets that are used in
operations be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying
amount of the assets might not be recoverable. SFAS No.
121 is effective for the Partnership in 1996. The
impact to the Partnership's financial statements is not
expected to be material.
<PAGE>
Notes to Financial Statements (continued)
3. Investment Properties
Investment properties consist of the following at
December 31, 1995:
Description
Initial Cost to Partnership
Land Building and Improvements
Costs Capitalized Subsequent to Acquisition of
Buildings and Improvements
(In Thousands)
Lock-It-Lockers Mini-Warehouses
Tucson, Arizona
$ 253 $ 1,748
$137
Lock-It-Lockers Mini-Warehouses
Phoenix, Arizona
222 1,999
47
Northridge Commons Shopping Center Milwaukee, Wisconsin
699 1,747
37
Cave Creek Phase I Mini-Warehouses
Phoenix, Arizona
94 301
2
$1,268 $5,795
$223
Gross Amount at Which Carried
Description
Land Buildings and Improvements Total
AccumulatedDepreciation
(In Thousands)
Lock-It-Lockers Mini-Warehouses
Tucson, Arizona
$253 $1,885 $2,138
$636
Lock-It-Lockers Mini-Warehouses
Phoenix, Arizona
222 2,046 2,268
686
Northridge Commons Shopping Center
Milwaukee, Wisconsin
699 1,784 2,483
513
Cave Creek Phase I Mini-Warehouses
Phoenix, Arizona
94 303 397
88
$1,268 $6,018 $7,286
$1,923
<PAGE>
Notes to Financial Statements (continued)
3. Investment Properties (continued)
Description
Date of Construction Date Acquired
Lock-It-Lockers Mini-Warehouses Tucson, Arizona
1976 May 1985
Lock-It-Lockers Mini-Warehouses Phoenix, Arizona
1976 January 1986
Northridge Commons Shopping Center Milwaukee, Wisconsin
1981 May 1987
Cave Creek Phase I Mini-Warehouses Phoenix, Arizona
1985 April 1987
There were no encumbrances on the investment properties
at December 31, 1995. The aggregate cost of the
investment properties is the same for financial
reporting and federal income tax purposes. The
accumulated depreciation reported for federal income
tax purposes is $2,950,846 at December 31, 1995.
A reconciliation of the cost and accumulated
depreciation of the investment properties for financial
reporting purposes follows:
Year ended December 31
1995 1994 1993
(In Thousands)
Cost:
Balance at beginning of year
$7,260 $7,195 $7,162
Additions to investment properties
26 65 33
Balance at end of year
$7,286 $7,260 $7,195
Accumulated depreciation:
Balance at beginning of year
$1,718 $1,516 $1,317
Provision for the year
205 202 199
Balance at end of year
$1,923 $1,718 $1,516
4. Income Taxes
The Partnership has received an opinion from legal
counsel that it will be classified as a partnership for
federal income tax purposes. Therefore, Partnership
losses or income and taxes attributable thereto will be
the responsibility of the various Partners and no
provision for income taxes has been made in the
Partnership's financial statements.
<PAGE>
Notes to Financial Statements (continued)
4. Income Taxes (continued)
Differences between the net income as reported herein
and the net income (loss) reported for federal income
tax purposes arise primarily from timing differences
related to depreciation and other accrual basis
adjustments. The following is a reconciliation of the
reported net income and the net income (loss) reported
for federal income tax purposes:
Year ended December 31
1995 1994 1993
Net income as reported in the financial statements
$91,745 $52,752 $26,230
Add (deduct):
Depreciation
(61,580) (64,547) (73,914)
Accrual basis adjustments
72,322 54,471 44,285
Net income (loss) reported for federal income tax
purposes
$102,487 $42,676 $(3,399)
5. Leases
The Partnership is the lessor of a shopping center
under operating leases expiring in various years to
2000. Certain of the shopping center leases provide for
contingent rentals based on specified percentages of
gross sales of the tenants. Contingent rentals from
operating leases amounted to $11,468 in 1995, $10,345
in 1994 and $3,923 in 1993.
At December 31, 1995, future minimum lease payments
receivable under noncancellable operating leases with
remaining terms of one year or more are as follows:
1996 $64,000
1997 42,000
1998 36,000
1999 36,000
2000 14,000
$192,000
6. Transactions with Affiliated Parties
The General Partners are general partners for other
limited partnerships which have invested in real
estate. The Partnership also shares certain management
and accounting employees and other expenses with the
Corporate General Partner and other entities that are
controlled by the Individual General Partner and has
executed contracts providing for the following fees
payable to such entities:
<PAGE>
Notes to Financial Statements (continued)
6. Transactions with Affiliated Parties (continued)
National Realty Management, Inc. (NRMI)
NRMI charged the Partnership for property management
fees ($50,026 1995; $45,220 1994; $39,820 1993).
Individual General Partner
The Individual General Partner charged the Partnership
for interest ($72,217 1995; $54,471 1994;
$44,286 1993).
The note payable to Individual General Partner is
payable from proceeds from sale or other disposition of
investment properties, with interest payable monthly at
a bank's prime rate plus 2% or 12%, whichever is lower
(10.5% at December 31, 1995). No interest was paid in
any year with respect to the note payable to Individual
General Partner.
Charges by affiliated parties in 1996 are estimated by
management to approximate $50,000 for property
management fees. Interest costs on the note payable to
Individual General Partner are not presently estimable
by management.
7. Financial Difficulties of Individual General Partner
The Individual General Partner had experienced
financial difficulties in prior years. Due to actions
taken by the Individual General Partner in 1995, his
financial difficulties, if any, no longer appear to be
a threat to the Partnership.
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP INCOME
PROPERTIES
John Vishnevsky
Chief Operating and Executive Officer
John Vishnevsky
Chief Financial and Accounting Officer
General Partners:
John Vishnevsky
National Development and Investment, Inc.
John Vishnevsky
President and Director
Stephen P. Kotecki
Vice President, Secretary, Treasurer
and Director
EC Corp.
Stephen P. Kotecki
President, Treasurer and Director
Thomas Rielly
Vice President, Secretary and Director
Of the above officers and directors of the Corporate
General Partner, Mr. Thomas Rielly is the only person
not an employee of National Development and Investment,
Inc., its affiliates, or EC Corp.
The Partnership Form 10-K for 1995 which is filed with
the Securities and Exchange Commission, will be
furnished at no charge to partners upon written request
directed to: National Development and Investment, Inc.,
Attn: Partnership Management, 9800 West Bluemound Road,
Milwaukee, WI 53226-4353.
B:\NIPELE
<PAGE>
