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, 1999
( ) 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 IncomeProperties
(Exact name of small business issuer as specified in its charter)
Wisconsin 39-1503893
(State or other jurisdictiON (I.R.S.Employer
incorporation or organization) Identification Number)
1155 Quail Court, Pewaukee, Wisconsin 53072-3703
(Address of principal executive offices) (Zip Code)
(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, 1999
and December 31, 1998. . . . . . . . . . . . . . . . . . . . .2
Statement of Operations (unaudited) -
Three months ended March 31, 1999 and 1998. . . . . . . . . .3
Changes in Partners' Capital (unaudited) -
Three months ended March 31, 1999 and 1998 . . . . . . . . . .4
Statements of Cash Flows (unaudited) -
Three months ended March 31, 1999 and 1998. . . . . . . . . .5
Notes to Financial Statements (unaudited) . . . . . . . . . . .6 - 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . .8 - 9
PART II. OTHER INFORMATION AND SIGNATURES. . . . . . . . . . . . .10 - 11
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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,
1999 1998
ASSETS
Current Assets
Cash $855,211 $838,841
Other Assets 15,144 33,058
Other Assets
Investment properties, at cost
Land 1,047,695 1,047,695
Buildings and improvements 5,682,323 5,682,323
_________________________
6,730,018 6,730,018
Less accumulated depreciation 2,614,242 2,561,582
_________________________
4,115,776 4,168,436
_________________________
4,986,131 5,040,335
=========================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Tenant security deposits $6,875 $6,875
Rents received in advance 37,798 49,033
Accrued interest payable to individual 712,825 689,228
General Partner
Accrued expenses and other liabilities 86,599 80,365
Note payable to Individual General Partner 271,020 271,020
(Note 5)
_________________________
1,115,117 1,096,521
Partners' Capital (deficiency):
General Partners ($124,003) ($121,819)
Limited Partners 4,016,688 4,087,304
(authorized
Less 29.86 Interests held in Treasury (21,671) (21,671)
_________________________
3,871,014 3,943,814
_________________________
$4,986,131 $5,040,335
=========================
SEE NOTES TO FINANCIAL STATEMENTS.
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NATIONAL REAL ESTATE LIMITED PARTNERSHIP-IP
(A WISCONSIN LIMITED PARTNERSHIP)
INCOME STATEMENT
(UNAUDITED)
THREE MONTHS ENDED
March 31,
1999 1998
INCOME
Operating income $223,478 $231,823
Other income 25,366 26,677
_________________________________________
Total Income 248,844 258,500
OPERATING EXPENSES
Property operating expenses 113,063 98,357
Depreciation 52,659 52,094
Interest expense 23,597 22,932
Administrative expense 49,538 44,749
_________________________________________
Total Expenses 238,857 218,132
_________________________________________
INCOME (LOSS) FROM OPERATIONS 9,987 40,368
OTHER INCOME (EXPENSES)
_________________________________________
Interest income 10,040 5,457
_________________________________________
NET INCOME (LOSS) $20,027 $45,825
=========================================
Net Income (Loss) $601 $1,375
attributable to
General Partners (3%)
Net Income (Loss) $19,426 $44,450
attributable to
Limited Partners (97%)
Per Limited Partnership Interest
Outstanding-9,004.15 Interests $2.16 $4.94
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SEE NOTES TO FINANCIAL STATEMENTS.
NATIONAL REAL ESTATE LIMITED PARTNERSHIP-IP
(A WISCONSIN LIMITED PARTNERSHIP)
CHANGES IN PARTNERS' CAPITAL
(UNAUDITED)
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Limited General
Partners Partners Total
QUARTER ENDED MARCH 31, 1999
Partners' Equity, beginning $4,065,633 ($121,819) $3,943,814
of quarter
Distributions (90,042) (2,785) (92,827)
Net Income (Loss) 19,426 601 20,027
Partners' Equity, end of quarter $3,995,017 ($124,003) $3,871,014
LIMITED PARTNER'S EQUITY IS NET OF 28.86 INTERESTS HELD IN TREASURY OF
($21,671).
QUARTER ENDED MARCH 31, 1998
Partners' Equity, beginning $4,291,914 ($114,820) $4,177,094
of quarter
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).
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NATIONAL REAL ESTATE LIMITED PARTNERSHIP-IP
(A Wisconsin Limited Partnership)
Statement of Cash Flows
(Unaudited)
Three Months Ended
March 31,
1999 1998
OPERATING ACTIVITIES
Net income (loss) for the period $20,027 $45,825
Adjustments to reconcile net income (loss) to
Net cash used in operating activities:
Depreciation 52,659 52,094
Changes in operating assets and liabilities:
Escrow deposits & other assets 17,914 (6,490)
Tenant security deposits 0 0
Rents received in advance (11,235) 1,711
Accrued expenses and other liabilities 29,832 38,631
________________________
NET CASH PROVIDED BY OPERATING ACTIVITIES 109,197 131,771
INVESTING ACTIVITIES:
Additions to investment property 0 0
FINANCING ACTIVITIES:
Distributions to partners (92,827) (46,413)
________________________
INCREASE IN CASH 16,370 85,358
CASH AT BEGINNING OF PERIOD 838,841 790,169
________________________
CASH AT END OF PERIOD $855,211 $875,527
========================
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, 1999
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, 1998. 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, 1999, 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 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
$13,340 under an agreement with NRMI for the three month period ended
March 31, 1999.
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 $5,635,
$2,230, $524, and $2,157, respectively.
5. 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, 1999, interest
totaling $712,825 has
accrued.
6. 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.
7. 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, 1999
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 20,800 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
91.53% for Tucson Lock-It
Lockers; 92.27% for Phoenix Lock-It Lockers; 88.89% for Northridge Commons;
and 89.66% for Cave
Creek Lock-It Lockers. This compares to an average of 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
during the same period of 1998.
The Competition Study and information gathered from the Arizona Mini-Storage
Association show the
greater Tucson area occupancy of just slightly over 91% occupied for Tucson
Lock-It Lockers area and 91%
to 88% occupied for the Phoenix Lock-It Lockers and Cave Creek Lock-It Lockers
area. The market
continues to soften in the Phoenix area due to the over-building of self
storage facilities within a 5-mile radius
of the properties.
Rental rates for the first quarter of 1999 for Phoenix Lock-It Lockers range
from $35 to $235. The market
rental rates have remained the same since the third quarter of 1997. Rental
incentives are offered on selected
locker sizes.
Cave Creek rental rates currently range from $11.00 to $145.00 for the first
quarter of 1999. Current rental
rates for the first quarter of 1999 for Tucson Lock-It Lockers range from
$25.00 to $160.00.
Northridge Commons is being marketed at $12 per square foot. Rental rates for
similar types of retail space
in the Northridge area range from $6 to $15 per square foot.
Northridge Commons currently has 2,500 square feet of vacant space. This
increased from 1,750 sq. ft.
vacant space at December 31, 1998, due to a tenant occupying 750 sq. ft. that
moved during the first quarter
of 1999.
Three Months Ended March 31, 1999, and 1998
Net income decreased $25,798 from $45,825 for the quarter ended March 31,
1998, to $20,027 for the
quarter ended March 31, 1999. This decrease was due to a decrease of total
income of $9,656, an increase
in operating expenses of $20,725, offset by an increase in interest income of
$4,583.
The decrease in total income of $9,656 was due to a decrease in operating
income of $8,345 and a decrease
in other income of $1,311. The decrease in operating income was primarily due
to increased vacancies at all
properties, mainly due to more competitive market conditions. Other income
decreased slightly, mainly due
to a decrease in late charge fees earned.
The increase in operating expenses of $20,725 was primarily due to increased
operating expenses, which
increased from $98,357 to $113,063, for the quarter ended March 31, 1998, and
1999 respectively. Operating
expenses increased as compared to 1998, primarily due to the timing of
advertising in 1999 as compared to
1998 and additional snow removal expenses in 1999 as compared to 1998.
Cash distributions for the quarter ended March 31, 1999, and March 31, 1998,
were $92,827 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, 1999.
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 7, 1999 /S/ John Vishnevsky
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and Investment, Inc.
Corporate General Partner
Date /S/May 7, 1999 /S/ John Vishnevsky
John Vishnevsky
Chief Financial and Accounting Officer
Date /S/May 7, 1999 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 7, 1999
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and Investment, Inc.
Corporate General Partner
Date May 7, 1999
John Vishnevsky
Chief Financial and Accounting Officer
Date May 7, 1999
Stephen P. Kotecki
President
EC Corp
Corporate General Partner
J:\WPDOCS\REPORTS\10Q-NIP-1st qtr.jwg
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 870355
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 870355
<PP&E> 6730018
<DEPRECIATION> 2614242
<TOTAL-ASSETS> 4986131
<CURRENT-LIABILITIES> 131272
<BONDS> 983845
0
0
<COMMON> 0
<OTHER-SE> 3871014<F1>
<TOTAL-LIABILITY-AND-EQUITY> 4986131
<SALES> 0
<TOTAL-REVENUES> 248844
<CGS> 0
<TOTAL-COSTS> 215260
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23597
<INCOME-PRETAX> 0
<INCOME-TAX> 0
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<CHANGES> 0
<NET-INCOME> 20027
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<EPS-DILUTED> 0
<FN>
<F1>REFERS TO GENERAL PARTNERS & LIMITED PARTNERS CAPITAL.
<F2>97% LIMITED PARTNERS INTEREST OUTSTANDING = 9004.15
</FN>
</TABLE>
