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, 1998
( ) 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)
1155 Quail Court, Pewaukee, Wisconsin 53072-3703
(Address of principal executive offices)
(414) 695-1400
(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
NATIONAL REAL ESTATE LIMITED PARTNERSHIP INCOME PROPERTIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Balance Sheet (unaudited) - March 31, 1998
and December 31, 1997. . . . . . . . . . . . . . . . . . . . .2
Statement of Operations (unaudited) -
Three months ended
March 31, 1998 and 1997. . . . . . . . . . . . . . . . . . . .3
Statements of Cash Flows (unaudited) -
Three months ended March 31, 1998 and 1997. . . . . . . . . .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 SIGNATURES. . . . . . . . . . . . . . .8-9
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PART I. FINANCIAL INFORMATION
NATIONAL REAL ESTATE LIMITED PARTNERSHIP - IP
(A Wisconsin Limited Partnership)
Balance Sheet
(Unaudited)
March 31, December 31,
1998 1997
ASSETS
Current Assets
Cash $ 875526.38 $ 790168
Other assets 20761.32 14271
Other Assets
Investment properties, at cost
Land 1047695.02 1047695
Buildings and improvements 5649885.29 5649885
6697580.31 6697580
Less accumulated depreciation 2395841.99 2343748
4301738.32 4353832
$ 5198025.02 $ 5158271
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Tenantsecuritydeposits $ 5530.11 $ 5530
Rents received in advance 31211.84 29501
Accrued interest payable to Individual General Partner
617914.85 594982
Accrued expenses and other liabilities 95842.15 80144
Note payable to Individual General
Partner (Note 5) 271020.3 271020
1021519.25 981177
Partners' Capital (deficiency) (Note 5):
GeneralPartners$ -114836.652 $ -114820
Limited Partners (authorized--10,000$
Interests; outstanding--9,034.01 Interests) 4313014.252 4313585
Less 29.86 Interests held in Treasury -21671 -21671
4176505.6 4177094
$ 5198024.85 $ 5158271
See notes to financial statements.
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NATIONAL REAL ESTATE LIMITEDPARTNERSHIP - IP THREE MONTHS ENDED
MARCH 31,
1998 1997
INCOME
Operaing income 231832 211716
Other income 26676.63 25069
Total Income 258500 236785
OPERATING EXPENSES
Property operating expenses 98356.78 119293
Depreciation 52094.28 51471
Interest expense 22932.07 20171
Administrative expense 44748.72 62389
Total Expenses 218131.85 253324
Income(Loss) from operations 40368.27 16539
Other Income (Expenses)
Interest income 545 12856
$ 45824.74 $ -3683
Net Income(Loss)
Net Income (Loss) attributable to
$ 1374.7422 -110
General Partners (3%)
Net Income (Loss) attributable to
$ 44449.9978 $ -3572.51
Limited
Partners(97%)
Per Limited Partnership Interest
$ 4.93661231765 $ -0.39676260391
Outstanding--9,004.15Interests
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NATIONAL REAL ESTATE LIMITED PARTNERSHIP - IP
(A Wisconsin Limited Partnership)
Statement of Cash Flows
(Unaudited)
Three Months Ended
March 31,
1998 1997
Operating Activities
$ 45824.74 $ -3683
Net
income
(loss) forthe period
Adjustments to reconcile net income (loss) to $
net cash used in operating activities: $
Depreciation 52093.99 51471
Changes in operating assets and
liabilities:
Escrow deposits & other assets -6490.32 3435
Tenant security deposits 0.11 -70
Rents received in advance 1710.84 5363
Accrued expenses and other liabilities 38631 23540
NET CASH PROVIDED BY 131771.36 80056
OPERATING ACTIVITIES
Investing activities:
Additions to investment property 0.30999999959 2453
Financing activities:
Distributions to partners -46413.14 -46413
INCREASE IN CASH 85358.53 36096
Cash at beginning of period 790168 785086
$ 875526.53 $ 821182
CASH AT
END OF
PERIOD
See notes to financial statements.
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NATIONAL REAL ESTATE LIMITED PARTNERSHIP INCOME PROPERTIES
(A WISCONSIN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1998
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, 1997. 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, 1998, 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 authorizes 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
$14,092 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 $5,274,
$2,184, $434, and $2,429, respectively.
5. Changes in Partners' Equity: Limited General
Partners Partners Total
Quarter Ended March 31, 1998
Partner's Equity, beginning of quarter $4,291,914 $(114,820) $4,177,094
Distributions ( 45,021) ( 1,392) ( 46,413)
Net Income (Loss) 44,450 1,375 45,825
Partners' Equity, end of quarter $4,291,343 $(114,837)$4,176,506
Limited Partner's equity is net of 29.86 interests held in
treasury of ($21,671).
Quarter Ended March 31, 1997
Partner's Equity, beginning of quarter $4,413,028 $(111,076)$4,301,952
Distributions ( 45,021)( 1,392)( 46,413)
Net Income (Loss) ( 3,572) 111 ( 3,683)
Partners' Equity, end of quarter $4,364,435 $(112,579)$4,251,856
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 March 31, 1998, interest
totaling $617,915 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.
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, 1998
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.
National Real Estate Limited Partnership Income Properties-II ("NRELPIP-II")
owns the remaining portion
of Cave Creek Lock-It-Lockers. NRELPIP-II is a Wisconsin limited partnership,
affiliated with the General
partners.
Occupancy based upon net rentable square feet for the first quarter averaged
96.74% for Tucson Lock-It
Lockers; 96.02% for Phoenix Lock-It Lockers; 91.55% for Northridge Commons;
and 93.28% for Cave
Creek Lock-It Lockers. This compares to an average of 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
during the same period of 1997.
Partnership net income increased $49,508 for the quarter ended March 31, 1998,
as compared to the quarter
ended March 31, 1997. The increase in net income was due to an increase in
operating income of $20,107,
an increase in other income of $1,608, and a decrease in operating expenses of
$35,192. These increases to
net income were slightly offset by a decrease in interest income of $7,399.
Operating income increased $20,107 from $211,716 in the first quarter of 1997
to $231,823 for the first
quarter of 1998. This increase in operating income was primarily due to the
reduced vacancies at Northridge
Commons as a result of management's increased efforts to lease available space.
The decrease in operating expenses of $35,192 was primarily the result of
reduced property operating
expenses and reduced administrative expenses. Operating expenses decreased
primarily due to the reduced
pest control expenses at the Tucson Lock-It-Lockers facility and the timing of
yellow pages advertising at
the Cave Creek Lock-It-Lockers. Administrative expenses decreased primarily
due to the timing of audit fees
incurred.
Cash distributions for the quarter ended March 31, 1998, and March 31, 1997,
were $46,413 and $46,413,
respectively. These distributions were allocated, as required, 97% to the
Limited partners and 3% to the
General Partners.
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, 1998.
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/May 15, 1998 /S/ John Vishnevsky
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and Investment, Inc.
Corporate General Partner
Date /S/May 15, 1998 /S/ John Vishnevsky
John Vishnevsky
Chief Financial and Accounting Officer
Date /S/May 15, 1998 Stephen P. Kotecki
Stephen P. Kotecki
President
EC Corp
Corporate General Partner
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 May 15, 1998
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and Investment, Inc.
Corporate General Partner
Date May 15, 1998
John Vishnevsky
Chief Financial and Accounting Officer
Date May 15, 1998
Stephen P. Kotecki
President
EC Corp
Corporate General Partner
J:\WPDOCS\LETTERS\Nip
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 896,287
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 896,287
<PP&E> 6,697,580
<DEPRECIATION> 2,395,842
<TOTAL-ASSETS> 5,198,025
<CURRENT-LIABILITIES> 1,021,519
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,176,506<F1><F2><F3>
<TOTAL-LIABILITY-AND-EQUITY> 5,198,025
<SALES> 0
<TOTAL-REVENUES> 258,500
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 195,200
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,932
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,368
<EPS-PRIMARY> 4.94<F2><F3>
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<F1>Refers to General Partners and Limited Partners Capital.
<F2>97% Limited Partners - Interest Outstanding
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