U. S. Securities and Exchange Commission
Washington, DC 20549
FORM 10-QSB
(Mark One)
( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from to
Commission File Number: 0-14453
National Real Estate Limited Partnership
Income Properties
(Exact name of small business issuer as specified in
its charter)
Wisconsin
(State or other jurisdiction of incorporation or
organization)
39-1503893
(I.R.S. Employer Identification Number)
9800 West Bluemound Road
Wauwatosa, Wisconsin 53226-4353
(Address of principal executive offices)
(414) 453-6764
(Issuer's telephone number)
- - - - N/A - - - - -
(Former name, former address and former fiscal year, if
changed since last report)
Check whether the issuer (1) filed all reports required
to be filed by Sections 13 or 15(d) of the Exchange Act
during the past 12 months (or for such shorter period
that the registrant was required to file such reports),
and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Balance Sheet (unaudited) - March 31, 1997
and December 31, 1996 . . . . . . . . . . . . . .2
Statement of Operations (unaudited) -
Three months ended
March 31, 1997 and 1996 . . . . . . . . . . . . .3
Statements of Cash Flows (unaudited) -
Three months ended March 31, 1997 and 1996 . . .4
Notes to Financial Statements (unaudited) . . .5-6
Management's Discussion and Analysis of
Financial Condition and Results of Operation. . .7
PART II. OTHER INFORMATION AND SIGNATURES8. . . -9
<PAGE>
PART I. FINANCIAL INFORMATION
NATIONAL REAL ESTATE LIMITED PARTNERSHIP - IP
(A Wisconsin Limited Partnership)
Balance Sheet
(Unaudited)
March 31 December 31,
1997 1996
ASSETS
Current Assets
Cash $ 805,589 $ 769,494
Escrow deposits and other assets (Note 4)
12,157 15,592
Other Assets
Investment properties, at cost
Land 1,047,695 1,047,695
Buildings and improvements
5,495,080 5,497,533
6,542,775 6,545,228
Less accumulated depreciation
2,179,430 2,127,959
4,363,345 4,417,269
$ 5,181,091 $ 5,202,355
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Tenant security deposits
$ 5,384 $ 5,454
Rents received in advance
31,987 26,624
Accrued interest payable to Individual General Partner
529,615 509,444
Accrued expenses and other liabilities
91,230 87,861
Note payable to Individual General
Partner (Note 6) 271,020 271,020
929,235 900,403
Partners' Capital (deficiency) (Note 5):
General Partners $ (112,579) $ (111,076)
Limited Partners (authorized--10,000
Interests; outstanding--9,034.01 Interests)
4,386,106 4,434,699
Less 29.86 Interests held in Treasury
(21,671) (21,671)
4,251,856 4,301,952
$ 5,181,091 $ 5,202,355
See notes to financial statements.
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP - IP
(A Wisconsin Limited Partnership)
Statement of Operations
(Unaudited)
Three months ended
March 31,
1997 1996
INCOME
Operating income $ 211,716 $246,843
Other income 25,069 12,307
Total Income 236,785 259,150
OPERATING EXPENSES
Property operating expenses 119,293 118,274
Depreciation and amortization 51,471 51,177
Interest expense 20,171 18,359
Administrative expense 62,389 48,597
Total Expenses 253,324 236,407
Income(Loss) from operations (16,539) 22,743
Other Income (expenses)
Interest income 12,856 10,767
Net Income (Loss) (3,683) 33,510
Net Income (Loss) attributable to
General Partners (3%) (110) 1,005
Net Income (Loss) attributable to
Limited Partners (97%) (3,571) 32,505
Per Limited Partnership Interest
Outstanding--9,004.15 Interests
$ (0.40) 3.61
See notes to financial statements.
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP - IP
(A Wisconsin Limited Partnership)
Statement of Cash Flows
(Unaudited)
Three Months Ended
March 31,
1997 1996
Operating Activities
Net income (loss) for the period
$ (3,683) $ 33,510
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 51,471 51,177
Changes in operating assets and
liabilities:
Escrow deposits & other assets
3,435 6,637
Tenant security deposits
(70) 0
Rents received in advance
5,363 (928)
Accrued expenses and other liabilities
23,540 20,251
NET CASH PROVIDED BY (USED IN)
80,056 110,648
OPERATING ACTIVITIES
Investing activities:
Additions to investment property
2,453 (0)
Financing activities:
Distributions to partners
(46,413) (46,413)
INCREASE (DECREASE) IN CASH
36,096 64,235
Cash at beginning of period
785,086 409,508
CASH AT END OF PERIOD
$ 821,182 $ 473,743
See notes to financial statements.
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
(A Wisconsin Limited Partnership)
Notes to Financial Statements
(Unaudited)
March 31, 1997
1. In the opinion of the General Partners, the
accompanying unaudited financial statements
contain all adjustments (consisting of normal
recurring accruals) which are necessary for a fair
presentation. The statements, which do not include
all of the information and footnotes required by
generally accepted accounting principles for
complete financial statements, should be read in
conjunction with the National Real Estate Limited
Partnership Income Properties annual report for
the year ended December 31, 1996. Refer to the
footnotes of those statements for additional
details on the Partnership's financial condition.
The operating results for the period ended
March 31, 1997, may not be indicative of the
operating results for the entire year.
2. National Real Estate Limited Partnership Income
Properties (the "Partnership") was organized under
the Wisconsin Uniform Limited Partnership Act
pursuant to a Certificate of Limited Partnership
dated December 18, 1984, for the purpose of
investing in residential, commercial, and
industrial real properties. John Vishnevsky and
National Development and Investment, Inc.,
contributed the sum of $6,000 to the Partnership
as General Partners. The Limited Partnership
Agreement had authorized the issuance of 10,000
Limited Partnership Interests (the "Interests") at
$1,000 per Interest with the offering period
commencing January 31, 1985. Upon conclusion of
the offering in December 1986, the Partnership had
raised $9,024,556 in capital representing 9,034.01
Interests.
3. National Realty Management, Inc. (NRMI): The
Partnership incurred property management fees of
$12,990 under an agreement with NRMI for the
period presented.
4. Real estate taxes are charged to operations based
on actual taxes paid for the prior year and are
adjusted for normal annual increases. Taxes for
Tucson Lock-It Lockers, Phoenix Lock-It Lockers,
Cave Creek Lock-It Lockers, and Northridge Commons
are being accrued monthly at $4,869, $2,115, $434,
and $2,753, respectively.
5. Changes in Partners' Equity:
LIMITED PARTNERS
Quarter Ended March 31, 1997
Partner's Equity, beginning of quarter $5,214,749
Distributions (45,021)
Net Income (Loss) 3,571
Partners' Equity, end of quarter $5,173,299
Limited Partner's equity is net of 29.86 interests held
in treasury of ($21,671).
Quarter Ended March 31, 1996
Partner's Equity, beginning of quarter $5,298,976
Distributions (45,021)
Net Income (Loss) 32,505
Partners' Equity, end of quarter $5,286,460
Limited Partner's equity is net of 29.86 interests held
in treasury of ($21,671).
GENERAL PARTNERS
Quarter Ended March 31, 1997
Partner's Equity, beginning of quarter $(86,951)
Distributions (1,392)
Net Income (Loss) 110
Partners' Equity, end of quarter $(88,233)
Quarter Ended March 31, 1996
Partner's Equity, beginning of quarter $(83,678)
Distributions (1,392)
Net Income (Loss) 1,005
Partners' Equity, end of quarter $(84,065)
TOTAL
Quarter Ended March 31, 1997
Partner's Equity, beginning of quarter $5,139,872
Distributions (46,413)
Net Income (Loss) 3,683
Partners' Equity, end of quarter $5,085,066
Quarter Ended March 31, 1996
Partner's Equity, beginning of quarter $5,215,298
Distributions (46,413)
Net Income (Loss) 33,510
Partners' Equity, end of quarter $5,202,395
6. As outlined in the prospectus, the General
Partners agreed to make loans to the Partnership
up to an aggregate of 3% of the gross proceeds of
the offering to the extent necessary to provide
distributions to the limited partners at
annualized rates equal to 8% in 1985, 8.25% in
1986, and 8.5% in 1987. The loan will be repaid
solely from sales proceeds, with compounding
interest equal to the cost of their funds or 12%,
whichever is lower. As of March 31, 1997, interest
totaling $543,351 has accrued.
7. Northridge Commons' tenants pay monthly fixed rent
payments plus estimated charges for taxes, costs
of insurance premiums, administrative costs, and
operating expenses with respect to common areas.
8. In accordance with FASB Statement No. 121,
"Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed
Of," the Partnership records impairment losses on
long-lived assets used in operations when events
and circumstances indicate that the assets might
be impaired and the undiscounted cash flows
estimated to be generated by those assets are less
than the carrying amounts of those assets. During
1996, the Partnership determined that an
impairment to the asset value of a retail shopping
center known as Northridge Commons had occurred,
resulting from the loss of a significant anchor
tenant and deteriorating market conditions caused
by an economically depressed area where the
property is located. Based on these factors, the
Partnership wrote down assets with a carrying
value of approximately $1,880,000 by $785,000 to
their estimated fair value. Fair value was based
on estimated future cash flows to be generated
from the property, discounted at a market rate of
interest.
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
(A Wisconsin Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
March 31, 1997
The Partnership currently owns and operates four
investment properties; Tucson Lock-It Lockers, a 49,885
net rentable square foot mini warehouse complex in
Tucson, Arizona; Phoenix Lock-It Lockers, a 58,766 net
rentable square foot mini warehouse complex in Phoenix,
Arizona; a portion of Cave Creek Lock-It Lockers
containing 8,236 of 46,028 net rentable square feet in
Phoenix, Arizona; and Northridge Commons, a 20,700 net
rentable square foot community shopping center in
Milwaukee, Wisconsin.
Occupancy based upon net rentable square feet for the
first quarter averaged 95.03% for Tucson Lock-It
Lockers; 96.03% for Phoenix Lock-It Lockers; 67.19% for
Northridge Commons; and 94.12% for Cave Creek Lock-It
Lockers. This compares to an average of 98.4% for
Tucson Lock-It Lockers; 97.5% for Phoenix Lock-It
Lockers; 100% for Northridge Commons; and 92.3% for
Cave Creek Lock-It Lockers during the same period of
1996.
There is a considerable amount of vacant retail space
in strip malls in the area. Northridge Commons does
have advantages over some of the competing space. The
new pylon sign installed by CellularOne has given the
property greater visibility and all tenants have seen
an increase in business due to this signage. Northridge
Commons tenants also have direct street access. The
6,792 square foot unit vacated by Talbots in the fourth
quarter of 1996 has been rented to GCO, a franchiser of
wholesale carpet and flooring, with an additional 2,000
square feet effective May 1, 1997. The five year lease
has an early termination option after three years if
the Partnership will amortize over three years, a
broker fee and tenant improvements totalling $125,552.
During the first quarter of 1997 rental revenue for
Cave Creek Lock-It Lockers increased compared to the
first quarter of 1996 due to increased rental rates.
Rental revenues decreased in the first quarter of 1997
for Tucson Lock-It Lockers and Cave Creek Lock-It
Lockers compared to the same quarter of 1996 due to
increased competition. Northridge Commons rental
revenues also decreased for the same period due to a
loss of the anchor tenant.
Operating expenses during the first quarter of 1997
decreased compared to the operating expenses during the
same quarter in 1996 due to lower maintenance costs at
Tucson Lock-It and Cave Creek Lock-It Lockers.
The Partnership continued cash distributions to its
partners with distributions totaling $46,413 for the
first quarter of 1997. These distributions are required
to be allocated 97% to Limited Partners ($45,021) and
3% to the General Partners ($1,392).
<PAGE>
PART II. OTHER INFORMATION
Item 6(b). Reports on Form 8-K
There were no reports on Form 8-K for the quarter ended
March 31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto
duly authorized.
National Real Estate Limited Partnership
Income Properties
(Registrant)
Date April 18, 1997
/S/ John Vishnevsky
________________________________
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and Investment, Inc.
Corporate General Partner
Date /S/April 18, 1997
/S/ John Vishnevsky
__________________________________
John Vishnevsky
Chief Financial and Accounting Officer
Date /S/April 18, 1997
Stephen P. Kotecki
__________________________________
Stephen P. Kotecki
President
EC Corp
Corporate General Partner
B:\NIP-1QTR
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
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<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
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<PP&E> 6542775
<DEPRECIATION> 2179430
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0
0
<COMMON> 0
<OTHER-SE> 4251856<F1>
<TOTAL-LIABILITY-AND-EQUITY> 5181091
<SALES> 235785
<TOTAL-REVENUES> 248641
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 253324
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 0
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