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 June 30, 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
39-1503893
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
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) - June 30, 1997
and December 31, 19962
Statement of Operations (unaudited) -
Three months and six months ended
June 30, 1997 and 19963
Statements of Cash Flows (unaudited) -
Six months ended June 30, 1997 and 19964
Notes to Financial Statements (unaudited)5-6
Management's Discussion and Analysis of
Financial Condition and Results of Operation7
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)
June 30, December 31,
1997 1996
ASSETS
Current Assets
Cash $ 840,773 $ 769,494
Escrow deposits and other assets (Note 4) 19,580 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 2,230,900 2,127,959
4,311,875 4,417,269
$ 5,172,228 $ 5,202,355
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Tenant security deposits $ 5,389 $ 5,454
Rents received in advance 37,728 26,624
Accrued interest payable to Individual General Partner
550,307 509,444
Accrued expenses and other liabilities 68,267 87,861
Note payable to Individual General
Partner (Note 6) 271,020 271,020
932,711 900,403
Partners' Capital (deficiency) (Note 5):
General Partners $ (112,949) $ (111,076)
Limited Partners (authorized--10,000
Interests; outstanding--9,034.01 Interests) 4,374,135
4,434,699
Less 29.86 Interests held in Treasury (21,671) (21,671)
4,239,515 4,301,952
$ 5,172,227 $ 5,202,355
See notes to financial statements.
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP - IP
(A Wisconsin Limited Partnership)
Statement of Cash Flows
(Unaudited)
Three Months Ended
June 30,
1997 1996
Operating Activities
Net income (loss) for the period $ 30,390 $ 54,945
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 102,941 102,354
Changes in operating assets and
liabilities:
Escrow deposits & other assets (3,988) 5,572
Tenant security deposits (65) 0
Rents received in advance 11,104 3,827
Accrued expenses and other liabilities 21,269
34,886
NET CASH PROVIDED BY (USED IN) 161,651
201,585
OPERATING ACTIVITIES
Investing activities:
Additions to investment property 2,453 (0)
Financing activities:
Distributions to partners (92,826) (92,826)
INCREASE (DECREASE) IN CASH 71,278 108,759
Cash at beginning of period 785,086 409,508
CASH AT END OF PERIOD $ 856,364 $ 518,267
See notes to financial statements.
<PAGE>NATIONAL REAL ESTATE LIMITED PARTNERSHIP -
IP
(A WISCONSIN LIMITED PARTNERSHIP)
Statement of Operations
(Unaudited)
Three months ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
INCOME
Operating income $ 215,666 $ 188,352
427,383 435,195
Other income 21,270 57,937 46,340
70,244
Total Income 236,937 246,289
473,723 505,439
OPERATING EXPENSES
Property operating expenses 99,530 119,117
218,823 237,392
Depreciation and amortization 51,470 51,177
102,941 102,353
Interest expense 40,863 18,684 40,863
37,043
Administrative expense 41,633 41,768
104,022 90,364
Total Expenses 233,495 230,746
466,649 467,153
Income(Loss) from operations 3,442 15,543
7,074 38,286
Other Income (expenses)
Interest income 13,589 5,892
23,316 16,660
Net Income (Loss) $ 17,031 $ 21,434
30,390 54,946
Net Income (Loss) attributable to
General Partners (3%) $ 511 $ 643
912 1,648
Net Income (Loss) attributable to
Limited Partners (97%) $ 16,520 $ 20,792
29,478 53,298
Per Limited Partnership
Interest
Outstanding--9,004.15 Interests $ 1.83 $ 2.31
$ 3.27 $ 5.92
See notes to financial statements
<PAGE>NATIONAL REAL ESTATE LIMITED PARTNERSHIP INCOME PROPERTIES
(A Wisconsin Limited Partnership)
Notes to Financial Statements
(Unaudited)
June 30, 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 June 30,
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 $26,565 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 General
Partners Partners
Total
Quarter Ended June 30, 1997
Partner's Equity, beginning of quarter $5,173,299
$(88,233) $5,085,066
Distributions ( 45,021) (
1,392) ( 46,413)
Net Income (Loss) 29,479
912 30,391
Partners' Equity, end of quarter $5,157,757
$(88,713) $5,069,044
Limited Partner's equity is net of 29.86 interests held in treasury of
($21,671).
<PAGE> Quarter Ended June 30, 1996
Partner's Equity, beginning of quarter $5,238,997
$(86,951) $5,125,795
Distributions ( 45,021) (
1,392) ( 46,413)
Net Income (Loss) 20,792
643 33,510
Partners' Equity, end of quarter $5,214,768
$(86,951) $5,139,892
Limited Partner's equity is net of 29.86 interests held in treasury of
($21,671).
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 June 30,
1997, interest totaling $557,322 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
June 30, 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 second quarter averaged
98.74% for Tucson Lock-It Lockers; 97.19% for Phoenix Lock-It Lockers; 55.11%
for Northridge Commons; and 94.51% 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 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 August 1, 1997. An additional 2,500 square foot unit became
vacant on June 1, 1997, and is presently being marketed at $13.88/sq.ft.
During the second quarter of 1997 rental revenue for Cave Creek Lock-It
Lockers increased compared to the second quarter of 1996 due to increased
rental rates. Rental revenues also increased in the second quarter of 1997 for
Tucson Lock-It Lockers and Phoenix Lock-It Lockers compared to the same
quarter of 1996. Northridge Commons rental revenues also decreased for the
same period due to a loss of the anchor tenant.
Operating expenses during the second 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 Northridge Commons. Tucson Lock-It Lockers and
Cave Creek Lock-It Lockers upgraded their computer systems this year.
The Partnership continued cash distributions to its partners with
distributions totaling $46,413 for the second 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 June 30, 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 /S/August 1, 1997 /S/ John
Vishnevsky
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and Investment,
Inc.
Corporate General Partner
Date /S/August 1, 1997 /S/ John
Vishnevsky
John Vishnevsky
Chief Financial and Accounting
Officer
Date /S/August 1, 1997 Stephen P.
Kotecki
Stephen P. Kotecki
President
EC Corp
Corporate General Partner
<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 August 1,
1997
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and Investment,
Inc.
Corporate General Partner
Date August 1,
1997
John Vishnevsky
Chief Financial and Accounting
Officer
Date August 1,
1997
Stephen P. Kotecki
President
EC Corp
Corporate General Partner
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