SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to
Commission file: Number 0-14453
NATIONAL REAL ESTATE LIMITED PARTNERSHIP INCOME PROPERTIES
(Name of Small Business Issuer in Its Charter)
Wisconsin 39-1503893
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1155 Quail Court, Pewaukee, Wisconsin 53072-3703
(Address of Principal Executive Offices) (Zip Code)
(414) 695-1400
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Interests
(Title of Class)
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
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form
10-KSB. [x]
Issuer's total gross rental revenues for its most recent fiscal year
ended December 31, 1998, were $ 1,015,632.
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates of the Registrant as of February 28, 1999:
indeterminate value as there is no market.*
*For purposes of this disclosure only.
The number of Limited Partnership interests outstanding as of February
28, 1999: 9,004.15
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual report to Partners for the year ended December 31,
1998 are incorporated by reference into Parts I and II.
Definitive Prospectus dated January 31, 1985, as amended to date, is
incorporated by reference into Part III.
TABLE OF CONTENTS
Item No. Page No.
PART I
1. Description of Business. . . . . . . . . . . . . . . . . . . 3
2. Description of 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. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . .5
7. Financial Statements . . . . . . . . . . . . . . . . . . . . .5
8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . . . . .5
PART III
9. Directors, Executive Officers, Promoters, and Control
Persons; Compliance with Section 16(a) of the
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . .6
10. Executive Compensation . . . . . . . . . . . . . . . . . . . .9
11. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . . 10
12. Certain Relationships and Related Transactions . . . . . . . 11
13. Exhibits, List, and Reports on Form 8-K. . . . . . . . . . . 11
PART I
ITEM 1. DESCRIPTION OF BUSINESS
"Business" on pages 1, 2 and 3 of the Partnership's annual report to
Partners for the year ended
December 31, 1998 is incorporated herein by reference.
ITEM 2. DESCRIPTION OF PROPERTIES
"Properties" on pages 3 through 4 of the Partnership's annual report to
Partners for the year
ended December 31, 1998 is incorporated herein by reference.
ITEM 3. LEGAL PROCEEDINGS
"Legal Proceedings" on page 4 of the Partnership's annual report to Partners
for the year ended
December 31, 1998 is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters have been submitted to a vote of security holders during the
fourth quarter ended
December 31, 1998.
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.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S SECURITIES AND RELATED SECURITY HOLDER
MATTERS
a) Market Information
The Partnership has two classes of equity securities: General Partnership
Interests and Limited
Partnership Interests. The General Partnership Interests are held by the
General Partners of the
Partnership. As of December 18, 1986, the Partnership concluded its offering
of Limited Partnership
Interests ("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 any public trading market for the Interests. The
Partnership does provide a
repurchase pool whereby the limited partners may offer to sell their Interests
to the Partnership at a
specified price. Offers to sell are accepted semi-annually if they meet the
criteria established by the
General Partners. As of December 31, 1998, 29.86 Interests have been
repurchased and are held in
Treasury.
b) Security Holders
NUMBER OF RECORD HOLDERS NUMBER OF INTERESTS
TITLE OF CLASS (AS OF FEBRUARY 28, 1999) (AS OF FEBRUARY 28, 1999)
Limited Partner-
ship Interests 1,120 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,
1998, 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 1998 with an aggregate of $315,145 and $9,747 to its Limited
Partners and General
Partners, respectively. Distributions for 1998 were at a rate that equaled
3.5% on the Limited Partners'
capital investment. The General Partners anticipate that the Partnership will
continue to make cash
distributions to its Limited Partners in 1999, 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.
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, cash
from property sales 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%
payable 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); and
(3) the balance, if any, 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, capital expenditures, or distributions to the Limited Partners and
the General Partners in
accordance with the formula for Cash Available for Distribution.
ITEM 6. 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 4 through 7 of the Partnership's annual report to Partners for the year
ended December 31, 1998, is
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS
The financial statements included on pages 8 through 20 of the Partnership's
annual report to
Partners for the year ended December 31, 1998, are incorporated herein by
reference.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no disagreements with Wolf and Company on any matter of accounting
principles or
practices, financial statement disclosure, or auditing scope or procedure.
During 1998, the Partnership changed its independent certified public
accounting firm from Ernst
and Young, LLP to Wolf and Company. See the Partnership's Form 8-K, dated
August 26, 1998, which
Form 8-K is incorporated herein by reference.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT
(a-b) 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 sole stockholder; and EC Corp., a Wisconsin
corporation of which
Stephen P. Kotecki is the sole stockholder. John Vishnevsky and NDII have been
general partners of the
Partnership since its inception. EC Corp. Became a general partner on June 20,
1991. The address of all
the General Partners is 1155 Quail Court, Pewaukee, Wisconsin 53072-3703. The
phone number for
John Vishnevsky and NDII is (414) 691-3122. The phone number for EC Corp. is
(414) 695-1400.
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:
Term
Name Office Held Office (since)
NDII:
John Vishnevsky President, Director 09/30/74
Stephen P. Kotecki Vice President, Secretary, Treasurer 04/12/91
and Director
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 annually by their respective Boards
of Directors. 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
Subsection (d), for a description of the business experience of officers,
directors, and personnel of the
General Partners and affiliates.
There are three 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; 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.
RELATIONSHIP OF GENERAL PARTNERS
AND THEIR AFFILIATES
The following diagram shows the relationship of the
Partnership to various affiliates:
<TABLE>
<S> <C> <C> <C> <C><C> <C> <C> <C><C><C><C><C> <C> <C>
NATIONAL REAL ESTATE LIMITEDPARTNERSHIP INCOME PROPERTIES
(1)
EC CORP Corporate JOHN VISHNEWSKY NATIONALDEVELOPMENT
General Partner IndividualGeneral Partner 100% AND INVESTMENT, INC.
Corporate General Partner
100% 100% (2) 100%
JOHN VISHNEVSKY COMPANY NATIONAL SELECTEDSECURITIES CORP. NRMI
Financial and Real SECURITIES CORP Partnership and
Estate Consulting and Security Sales Property Management
Services Acquisition & Brokerage
</TABLE>
(1) The outstanding stock of EC Corp. is held by Mr. Stephen P. Kotecki (100%).
(2) Until February 6, 1998, the outstanding stock of NRMI was held by Mr.
Edward Carow (51%),
Ms. Anastasia Vishnevsky, Mr. John Vishnevsky's daughter, (25%), and Mr.
Jeffrey Wussow
(24%).
Since February 6, 1998, the outstanding stock is owned 100% by
John Vishnevsky.
(d) Business Experience
The experience of the officers and directors of the corporate General
Partners and of Mr.
Vishnevsky includes the following:
John Vishnevsky (age 75), President and Director of NDII, and as of February
6, 1998, 100%
owner of National Realty Management, Inc. is a graduate of Marquette
University. For over 40 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 a real estate broker and
a securities principal. He has
lectured frequently and 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 following 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, Principles and Don't Feed the Crocodiles.
Stephen P. Kotecki (age 48), Vice President and Director of NDII, and
President, Treasurer, and
Director of EC Corp., 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 (age 51), Vice President, Secretary and Director of EC
Corp., 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 25 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 12 years.
Other personnel of the General Partners, affiliates, or other entities who
were significantly
involved in the Partnership's affairs include the following:
Julie Benoit (age 41), is the Director of Finance for NRMI. Beginning August
25, 1998, she is
responsible for the development of property management policy and
administration of management
activities. She also supervises NRMI accounting services. In her 14 years of
service at NRMI, Ms. Benoit
has functioned as Accounting Manager for NRMI and other affiliated
corporations. She has also served
as administrator of NSSC, an affiliated securities corporation, and has
participated in the syndication of
real estate and property liquidations. Prior to joining NRMI, Ms. Benoit
worked for six years as an
accounting supervisor for the various mortgage subsidiaries of Mortgage
Guarantee Insurance Company
of Milwaukee. She was also an internal auditor for Time Insurance Company. She
has completed four
years at the University of Wisconsin - Milwaukee, majoring in accounting.
David A. Hoeller (age 42), National Director of Operations of NRMI until
August 13, 1998,
when he left the company. Previously, Mr. Hoeller was Chief Financial Officer
of a diversified financial
services corporation which specialized in commercial and consumer installment
lending and servicing, and
mortgage banking. Mr. Hoeller was also manager of its independent automobile
installment servicing
division which serviced in excess of 15,000 loans with debtors located across
the country. Mr. Hoeller
has a total of over 18 years of financial and operational experience in the
financial services industry. Mr.
Hoeller was also with Security Bank SSB, a $3 billion financial institution.
His business and management
experience and responsibilities have included the areas of operations,
financial management, financial
reporting, treasury, taxes, and cost analysis. His banking experience has
included lead development of
prospectus materials, including establishment of a bank holding company
structure and conversion of a
mutual bank to stock ownership. He has also been involved in real estate
sales, partnership syndication,
ownership, and management through various banking subsidiaries. He was also
associated with the
accounting firm of Ernst & Young. He is active in local civic organizations,
including as Trustee of the
Boys and Girls Club. Mr. Hoeller is a certified public accountant and holds
undergraduate degrees in
accounting and finance and an MBA degree from the University of Wisconsin
Edward Carow (age 39), President of NRMI until February 6, 1998, at which
time he left the
company. Mr. Carow has over 19 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
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.
Anastasia Vishnevsky (age 33), Secretary and Media Director of NRMI until
February 6, 1998, at
which time she left the company, supervised marketing, public relations, and
advertising for NRMI-
managed properties. She also produced corporate training and operations
manuals, newsletters, and
training seminars. She attended Elmhurst College for English, and Marquette
University for Broadcast
Communications.
Joan Jenstead (age 64), Director of Property Operations, 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 licensed Wisconsin 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 local chapter 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the best of management's knowledge, there are no violations of
this requirement.
ITEM 10. 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 31, 1998, this interest resulted in net
taxable income to the Individual
General Partner in the amount of approximately $3,994. Cash distributions of
$9,747 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 with affiliates of the
General Partners, as
described in the Prospectus.
Property management fees are payable currently to the General partners or
affiliates of the
General partners. Fees for property management and rental services are being
charged to expense over
the period property management services are being performed.
The General Partners are general partners for other limited partnerships
which have invested in
real estate. The Partnership reimburses affiliates of the General Partner for
the actual cost of goods and
materials used by or for the Partnership in the course of performing the
general functions of the
Partnership. These general functions include certain management, accounting
and other expenses.
National Realty Management, Inc. provides property management, accounting, and
administrative services that are charged to the Partnership. National
Development and Investment, Inc. provides
partnership administrative services that are charged to the Partnership.
The contracts between the Partnership and affiliates provide that the
compensation, price, or fee
payable to such affiliates must be comparable and competitive with the
compensation, price, or fee which
would be charged by unaffiliated 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 11. 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:
Name of Amount and Nature of Percent of
Title of Cl Beneficial Owner Beneficial Ownership Class
Limited Partners Thea J. Peterson 500 Interests
Interests 25 Utopia Circle Individual Ownership 5.55%
Sturgeon Bay, WI 54235
General Partnership John Vishnevsky 1 Interest 100%
Interests 1155 Quail Court Individual Ownership
Pewaukee, WI 53072
(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, 1999.
Name of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class
Limited Partnership John Vishnevsky 29.56 Interests 0.33%
Interests Sole Investment Power
Limited Partnership Stephen P. Kotecki 4 Interests 0.04%
Interests Sole Investment Power
(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 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Neither the General Partners nor their affiliates were indebted to the
Partnership during the year
ended December 31, 1998.
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 9, 10
and 12.
ITEM 13. EXHIBITS, LIST, AND REPORTS ON FORM 8-K
(A) Exhibits
See attached exhibit list which is incorporated by reference.
(B) Reports on Form 8-K for the Quarter ended December 31, 1998
There were no reports on Form 8-K filed during the fourth quarter ending
December 31, 1998.
(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 of the
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) Acquisition Agreement between the Partnership and NDII dated January
31, 1985.
Incorporated by reference from 1985 10-K filed March 28, 1986.
10(c) Organization Expense Agreement between the Partnership and NDII
dated January 31,
1985. Incorporated by reference from 1985 10-K filed March 28, 1986.
10(d) Contracts for Acquisition of Assets
(1) With respect to Lock-It Lockers Mini-Warehouse, Tucson,
Arizona: Incorporated
by reference from Exhibit 2-1 to current 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(e) 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(f) 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(g) Co-General Partner Agreement dated June 20, 1991. Incorporated by
reference from
Exhibit 5-1 to periodic reports on 8-K dated July 26, 1991.
*10(h) Property Management Agreement between the Partnership and NRMI dated
November 1,
1995. Incorporated by reference herein.
*10(i) Sublease Agreement between the Partnership and NRMI dated February
1, 1998.
Incorporated by reference herein.
*13 National Real Estate Limited Partnership Income Properties 1998 annual
report to
Partners is included as an exhibit hereto for those portions of such
annual report
specifically incorporated by reference elsewhere herein.
16 Incorporated by reference to Form 8-K, dated August 26, 1998, disclosing
the change
in Public Accountants.
23 Consent of Independent Auditors.
*27 Financial Data Schedule
(D) Financial Statement Schedules
* Filed with this Report.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
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 26, 1999 By: /S/ John Vishnevsky
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and Investment, Inc.
Corporate General Partner
Dated: March 26, 1999 By: /S/ John Vishnevsky
John Vishnevsky
Chief Financial and Accounting Officer
National Development and Investment, Inc.
Corporate General Partner
In accordance with the Exchange Act, this report has been signed below by the
following persons
on behalf of the Registrant and in the capacities* and on the dates indicated:
/S/ John Vishnevsky President and Director, March 26, 1999
John Vishnevsky National Development and (dated)
Investment, Inc.
/S/ Stephen P. Kotecki Vice President, Secretary, March 26,1999
Stephen P. Kotecki Treasurer and Director (dated)
National Development and
Investment, Inc.
/S/ Stephen P. Kotecki President, Treasurer and March 26, 1999
Stephen P. Kotecki Director (dated)
EC Corp.
/S/ Thomas Rielly Vice President, Secretary March 26, 1999
and Director (dated)
Thomas Rielly EC Corp
* The indicated positions are held in the Corporate General Partners of the
Registrant.
J:\WPDOCS\REPORTS\10K-NIP.jwg
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
NATIONAL REAL ESTATE LIMITED PARTNERSHIP INCOME PROPERTIES
(Registrant)
Dated: 3/26/99 By:
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and Investment, Inc.
Corporate General Partner
Dated: 3/26/99 By:
John Vishnevsky
Chief Financial and Accounting Officer
National Development and Investment, Inc.
Corporate General Partner
In accordance with the Exchange Act, this report has been signed below by the
following persons
on behalf of the Registrant and in the capacities* and on the dates indicated:
President and Director 3/26/99
John Vishnevsky National Development and (dated)
Investment, Inc.
Vice President, Secretary, 3/26/99
Stephen P. Kotecki Treasurer and Director (dated)
National Development and
Investment, Inc.
President, Treasurer and 3/26/99
Stephen P. Kotecki Director (dated)
EC Corp.
Vice President, Secretary 3/26/99
Thomas Rielly and Director (dated)
EC Corp
* The indicated positions are held in the Corporate General Partners of the
Registrant.
EXHIBIT 10(H)
PROPERTY MANAGEMENT AGREEMENT
AGREEMENT MADE, this 1st day of November, 1995 (the "Effective Date") by
and between
National Real Estate Limited Partnership Income Properties, a Wisconsin
limited partnership ("Owner") and National
Realty Management, Inc., a Wisconsin corporation ("NRMI").
I. APPOINTMENT AND ACCEPTANCE. Owner hereby appoints NRMI, and NRMI
hereby
accepts appointment, on the terms and conditions hereinafter stated, as the
exclusive managing agent of the
developments known as: Lock-It Lockers Mini-Warehouses in Tucson and Phoenix,
Cave Creek Mini-Warehouse and
Northridge Commons Shopping Center; consisting of 137,586 net rentable sq. ft.
II. TERM OF AGREEMENT. In the absence of termination under Article VI
below, this
Agreement shall remain in effect for a five-year period from the Effective
Date and thereafter for additional one-year
periods.
III. RESPONSIBILITIES OF NRMI. NRMI shall have the following authority
and shall provide
the following services, and the Owner agrees to pay and assume all expenses in
connection therewith:
A. MANAGEMENT STANDARDS. NRMI agrees to furnish the services of its
organization and to use its skill and judgment in managing the Project(s).
B. EMPLOYEES. NRMI shall hire, discharge, and supervise all employees
required for
the operation and maintenance of the Project(s), and for performance of all
other duties required of it hereunder.
C. ADVERTISING. NRMI shall advertise the Project(s) in a manner which
it deems to
be appropriate and to display signs thereon. NRMI shall not use Owner's name
in any advertising or promotional
material without Owner's prior approval. Advertising and promotional material
shall be prepared in full compliance
with federal, state and municipal fair housing laws, ordinances, regulations
and orders.
D. LEASING. NRMI shall seek prospective tenants and maintain a current
list thereof,
and shall in the name of and as Owner's agent, sign, renew, extend, modify,
terminate and/or cancel leases for the
Project(s) or any part thereof without prior approval of Owner. Any
residential lease executed for the Owner by NRMI
shall not exceed a period of one (l) year, subject to any renewal rights, and
shall be on forms provided by NRMI subject
to any modification deemed appropriate.
E. SECURITY DEPOSITS. NRMI shall supervise the collection of tenant.
security
deposits, hold in an account in Owner's name, and refund the same, or such
portion thereof as may be appropriate, at
the expiration of leases.
F. COLLECTION OF RENTS AND OTHER INCOME. NRMI shall exercise
reasonable efforts to collect when due all rents, fees, and receipts
(collectively, the "Rents") due from tenants and from
users, licensees, concessionaires, franchisees and/or lessees of commercial
facilities in the Project(s). The Owner hereby
authorizes and directs NRMI to request, demand, and receive all Rents which
may at any time be or become due to the
Owner. All such Rents shall be deposited in an account in the name of the
Owner at a bank selected by NRMI with
NRMI officers or designees being authorized signatories for withdrawals and
shall be hereafter called the "Operating
Account." NRMI may institute suit on behalf and in the name of or as Agent for
Owner for collection of Rents and/or
eviction of tenants or other parties in default and when expedient, may on
behalf and in the name of or as Agent for
Owner settle, compromise, and release such actions or suits, or reinstate
such tenancies.
G. MAINTENANCE. NRMI shall make or cause to be made and supervise
repairs and
alterations on Owner's behalf, in accordance with appropriate standards of
appearance, including, but not limited to,
interior and exterior cleaning, painting, decorating, plumbing, carpentry, and
such other normal maintenance and repair
work as may be necessary, or appropriate, subject to any written limitations
from Owner. NRMI agrees to secure the
prior approval from the OWNER on all expenditures in excess of $2,500 for any
one item, except monthly or recurring
operating charges and/or emergency repairs, if in the opinion of NRMI such
repairs are necessary to protect the
Project(s) from damage or to maintain services to the tenants as called for in
their leases. NRMI will promptly attempt
to notify Owner of any such emergency expenditures.
H. COMPETITIVE BIDS. Upon Owner's written directive, any maintenance item
exceeding $2,500, (other than recurring operating charges and/or emergency
repairs), shall be awarded on the basis of
competitive bidding, solicited in the following manner:
1. A minimum of three (3) written quotations will be obtained.
2. Each quotation will be solicited in a form so that uniformity
will exist in the
quotations.
3. NRMI will provide Owner with all quotations accompanied by NRMI'S
recommendations. If NRMI advises acceptance of other than the lowest
bidder, NRMI shall furnish reasons in support of its recommendations.
4. Owner shall be free to accept or reject any and all quotations.
I. SERVICE CONTRACTS. NRMI shall negotiate contracts for electricity,
gas, fuel,
water, telephone, window cleaning, rubbish hauling, laundry facilities, cable
television, maintenance and other services
or such of them as NRMI shall deem advisable. All such contracts shall be in
the name of the Owner and prior to
awarding any such contract with a term in excess of one year, NRMI will obtain
authorization from Owner.
J. REAL ESTATE TAXES. Upon Owner's directive, NRMI will obtain and
verify bills
for real estate and personal property taxes, improvement assessments and other
like charges which are or may become
liens against the Project(s) and recommend payment or appeal. Tax expenses
shall be paid from the Operating Account
to the extent of funds available.
K. PROPERTY INSURANCE.
1. NRMI will obtain recommendations for insurance coverage against
damage to the Project(s) or persons which might arise out of the occupancy,
management, operation, or maintenance
of the Project(s). Recommendations will be solicited from qualified commercial
agencies and may include fire, extended
coverage, boiler and machinery, flood, hazard, wind, hail, tornado, hurricane,
and rent loss insurance with a minimum
limit of $1,000,000 in liability coverage. Unless Owner shall otherwise direct
in writing, NRMI will place such
insurance as it determines appropriate for the first year of this Agreement
and pay the premiums out of the Operating
Account when due.
2. Any new or existing liability coverage shall include NRMI as an "additional
insured." The cost to include NRMI as an additional insured shall be
considered an expense of the Owner.
3. Owner will furnish to NRMI certificates evidencing the
existence of public
liability and hazard insurance with a minimum limit of $1,000,000. The
certificate shall have attached thereto an
endorsement that NRMI will be given at least ten (10) days prior written
notice of cancellation of or any material
change in policy. Unless Owner shall provide such certificate, NRMI may, but
shall not be obligated to, place said
insurance for periods after the first year of this Agreement, and pay the
premiums out of the Operating Account. The
hazard insurance shall contain a waiver of Owner's rights of subrogation
against NRMI. Any insurance purchased by
NRMI shall contain this same waiver of subrogation.
4. In the event of a major insurance claim, if requested, NRMI
will make
recommendations to Owner as to how to process the claim. If Owner wishes to
have NRMI represent the Owner in the
settlement of any major insurance claim, (i.e., over $5,000.00) a separate
contract must be negotiated to itemize
authority, limits, duties, and additional compensation for such services by
NRMI.
L. FIDELITY INSURANCE. NRMI shall obtain a fidelity bond with a minimum limit
of $25,000 for all employees who are responsible for the handling of money.
The certificate shall have attached thereto
an endorsement that Owner will be given at least ten (10) days prior written
notice of cancellation of or any material
change in policy.
M. COLLECTION AND DISBURSEMENT OF REVENUE.
1. From the funds collected and deposited by NRMI in the Operating Account,
NRMI shall make the following disbursements at the time NRMI deems appropriate:
(a) Upon written notice from Owner to do so, payments required to be
made monthly by the Owner to any mortgagees or land contract
vendors, including, (without limitation), the amounts due for
principal, interest, mortgage insurance premiums, ground rents,
taxes and assessments, and fire and other hazards insurance
premiums.
(b) All sums otherwise due and payable by the Owner as expenses of
the Project(s) authorized to be incurred by NRMI under the
terms of
this agreement, including compensation payable to NRMI.
2. NRMI shall not be obligated to make any advance to or for the
account of
the Owner or the Project(s) or to pay any sum except out of funds held or
provided as aforesaid, nor shall NRMI be
obligated to incur any liability or obligation in its own name for the account
of the Owner or the Project(s). NRMI shall
only contract for services or supplies as Owner's agent with the contracting
party agreeing to look only to the Owner
for payment. In the event that the balance in the Operating Account is at any
time insufficient to pay obligations then
due, Owner agrees immediately to remit sufficient funds to cover the
deficiency. If, however, NRMI should elect to
advance any funds on behalf of the Owner or Project(s), such advances shall
accrue interest at the rate provided in
Paragraph V.
3. All obligations or expenses incurred by NRMI hereunder shall be
for the
account, on behalf, and at the expense of the Owner. Such obligations and
expenses shall include, but not be limited
to, attorneys' fees, cleaning, and maintenance personnel, handymen, outside
contractors, on-site manager, on-site rental
agents and other on-site personnel, advertising expenses, telephone, mail,
copying and on-site office supplies, and other
expenses incurred in the operation or management of the Project(s).
IV. RECORDS AND REPORTS TO OWNER. NRMI shall maintain adequate and separate
books and records for the Project(s), the entries for which shall be supported
by sufficient documentation to ascertain
that said entries are proper and accurate. Such books and records shall be
maintained by NRMI at NRMI's principal
place of business.
1. Monthly Reports. NRMI shall furnish to Owner no later than 20
days after
the end of each month the following reports:
a. Rent Roll
b. Ledger/Trial Balance
c. Balance Sheet
d. Statement of Operations
2. Records. To support the financial reports, NRMI shall maintain
at NRMI's
place of business copies of the following:
a. All bank statements, bank deposit slips and canceled checks.
b. Bank reconciliations.
c. Cash receipts records.
d. Summaries of adjusting journal entries.
e. Supporting documentation for payroll, payroll taxes, and employee
benefits.
3. Financial Statements. All financial statements and reports will
be prepared
on a cash basis except for monthly accruals for real estate taxes, property
insurance, replacement reserves, and similar
items.
The information set forth in the reports furnished by NRMI to the
Owner are
unaudited and cannot necessarily be used for State and Federal Income Tax
reporting purposes, and Owner should
consult with its own accountant or tax advisor with respect to proper
tax reporting.
4. Examination By Owner. All records, books and accounts shall be
subject to
examination at reasonable hours by any authorized representative of the Owner.
Owner also reserves the right to
perform any and all additional audit tests relating to NRMI's activities,
either at the Project(s), or at the office of NRMI,
provided such audit tests are related to those activities performed by NRMI
for Owner. Any and all such audits will
be at the sole expense of Owner.
5. Owner Advance Funds. Owner shall advance operating funds in the amount
of $2,500 to NRMI to open the Operating Account upon commencement of this
Property Management Agreement.
V. COMPENSATION FOR MANAGERIAL SERVICES. For the services rendered hereunder,
NRMI shall be entitled to a monthly management fee, (the "Fee"), equal to six
percent (6%) of gross receipts from the
Lock-It Lockers Mini-Warehouses in Tucson and Phoenix and Cave Creek
Mini-Warehouse, and three percent (3%)
of gross receipts from Northridge Commons Shopping Center. Gross receipts from
the Project(s) shall include revenue
from all sources, but excluding revenue from the sale of capital items or
refinancing. Such compensation is due on the
5th of each month. NRMI shall also be reimbursed for all sums permitted or
required to be advanced by it to or for the
benefit of the Project(s). Interest will be charged on all property management
fees not paid on the due date. Interest shall
accrue at the rate of 1% over prime. Prime shall mean the minimum rate of
interest in effect at Firstar Bank (f/k/a First
Wisconsin National Bank of Milwaukee) for its most responsible commercial
borrowers for 90-day loans and shall be
determined and adjusted at the last day of each month.
VI. TERMINATION.
A. TERMINATION BY 60 DAYS NOTICE. Either the Owner or NRMI may elect to
terminate this Agreement at the close of business on the last calendar day of
any month by giving written notice of
termination to the other party not less than sixty (60) days prior thereto
provided, however, if this Agreement is
terminated by Owner during the first five (5) years after the Effective Date
of the Agreement for any reason whatsoever,
except (1) a breach of NRMI's obligations hereunder that has not been cured
within 30 days after written notice from
Owner or (2) a sale of the Project(s) or the termination, liquidation, or
dissolution of the Owner as specified at
Paragraph VI. (B) below. NRMI shall be entitled to the compensation for
managerial services as defined above in
Paragraph V, for each month remaining in the five year period (the "Monthly
Termination Fee"), in addition to any
other compensation due to NRMI hereunder. The Monthly Termination Fee shall be
an amount equal to the gross
receipts of the Project(s) for the last full twelve calendar months prior to
the termination of NRMI as managing agent
divided by twelve. The total of the Monthly Termination Fee shall be paid in
one lump sum no later than 30 days
following NRMI's termination. If this agreement is terminated by Owner for any
breach of NRMI's obligations
hereunder which is not cured within 30 days following written notice thereof
from Owner, NRMI shall receive no
compensation other than as provided in Paragraph V.
B. SALE OF PROPERTY OR DISSOLUTION OF OWNER. The Owner shall notify
NRMI at least sixty (60) days before an anticipated transfer of title of the
Project(s) or any portion thereof or before
the effective date of the termination, liquidation or dissolution of the
Owner. This agreement shall terminate on the
effective date of such transfer of title or liquidation, termination or
dissolution of the Owner. At the request of Owner
prior to such sale, termination, liquidation or dissolution, NRMI shall
prepare and make available to Owner such data
concerning the Project(s) including tenant lists, rent schedules, security
deposits and cost data as are reasonably
requested under the circumstances.
C. RETURN OF RECORDS. On termination of this Agreement, a copy of all records
in the possession of NRMI pertaining to the operation of the Project(s)
together with all supplies or other items of
property owned by the Owner, and in NRMI'S possession, shall be forthwith
delivered to the Owner at Owner's expense,
provided Owner shall have paid all fees due NRMI; and thereafter neither party
shall have any further rights or
obligations under this Agreement, except for claims relating to personal
injury of tenants or invitees or activities or
transactions by NRMI on behalf of Owner taking place prior to such termination
(for which Owner shall remain
responsible in accordance with the terms of this Agreement).
VII. COOPERATION WITH OWNER'S ACCOUNTANT. NRMI shall cooperate with the
Owner's accountant and shall, from time to time, upon request, provide such
accountant with such information as is
or may be reasonably required to prepare certified annual financial reports
for and at the expense of the Owner.
VIII. OFFICE AT THE PROJECT(S). NRMI, may maintain a management office
within the
Project(s) and the Owner shall not be entitled to a rental charge for the same.
IX. NOTICES. All notices and periodic statements required under this
Agreement shall be in
writing and shall be given to the Owner or NRMI at the address set forth below
or at such other address as they
individually may specify thereafter in writing:
OWNER: NATIONAL REAL ESTATE LIMITED PARTNERSHIP INCOME
PROPERTIES
9800 West Bluemound Road
Wauwatosa, Wisconsin 53226
NRMI: NATIONAL REALTY MANAGEMENT, INC.
9800 West Bluemound Road
Wauwatosa, Wisconsin 53226
X. COVENANTS OF OWNER. In connection with NRMI's duties hereunder and
all of its
activities in and around the Project(s), Owner promises and agrees to:
A. Indemnify, defend and save NRMI harmless from all loss, liability,
costs, expenses,
claims, demands, and/or causes of action (whether valid or invalid) arising
directly or indirectly in connection with the
Project(s), including but not limited to those based upon claim for damage to
property, injuries to or the death of any
tenant, employee or other person whomsoever;
B. Pay all expenses incurred by NRMI, including, without limitation,
attorney's fees for
counsel employed to represent NRMI or Owner, or both, in connection with any
claims by or against tenants or
involving any constitutional provision, statute, ordinance, law or regulation
of any governmental body pertaining to fair
employment, Federal Fair Credit Reporting Act, environmental protection, or
fair housing, including, without limitation,
those prohibiting or making illegal discrimination on the basis of race,
creed, color, religion, or national origin in the
sale, rental or other disposition of housing or any services rendered in
connection therewith (unless NRMI is finally
adjudicated to have deliberately violated the law or to have acted in a
personal as opposed to representative capacity
at the time of such violation).
XI. MISCELLANEOUS.
A. Owner acknowledges that NRMI does not assume and is given no
responsibility for
compliance of any building on the Project(s) or any equipment therein with the
requirements of any statute, ordinance,
law or regulation of any governmental body or of any public authority or
official thereof having jurisdiction, except to
notify Owner promptly or forward to Owner promptly any written complaints,
warnings, notices or summonses received
by it relating to such matters. The Owner represents that to the best of its
knowledge the Project(s) and such equipment
comply with all such requirements and authorizes NRMI to disclose the
ownership of the Project(s) to any such officials
and agrees to indemnify and hold harmless NRMI its representatives, servants
and employees, of and from all loss,
cost, expense and liability whatsoever which may be imposed on them or any of
them by reason of any present or future
violation of such laws, ordinances, statutes or regulations.
B. COOPERATION. Should any claims, suits or other legal proceedings be
made or
instituted by any person against Owner or title holder of the Property which
arise out of any of the matters relating to
this Agreement, NRMI shall give to Owner all pertinent information and
reasonable assistance in the defense or other
disposition thereof.
XII. SEVERABILITY. The rights and obligations specified herein are
intended to be construed as
separate and independent from any other prior, contemporaneous or subsequent
agreements among the Parties hereto.
If any of the provisions of this Agreement are judicially held to be invalid,
the remainder of this Agreement shall not
be affected.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
date and year first
above written.
OWNER: NATIONAL REAL ESTATE LIMITED PARTNERSHIP INCOME PROPERTIES
9800 West Bluemound Road
Wauwatosa, Wisconsin 53226
By: National Development and Investment, Inc
Corporate General Partner
By: /S/ John Vishnevsky
John Vishnevsky, President
Attest: /S/ Stephen P. Kotecki
Stephen P. Kotecki, Secretary
By: EC Corp.,
Corporate General Partner
By: /S/ Stephen Kotecki
Stephen Kotecki, President
Attest: /S/ Thomas Rielly
Thomas Rielly, Secretary
By: /S/ John Vishnevsky
John Vishnevsky,
Individual General Partner
MANAGER: NATIONAL REALTY MANAGEMENT, INC.
9800 West Bluemound Road
Wauwatosa, Wisconsin 53226
By: /S/ Edward G. Carow
Edward G. Carow, President
Attest: /S/ Anastasia Vishnevsky
Anastasia Vishnevsky, Secretary
POWER OF ATTORNEY
KNOW BY ALL MEN BY THESE PRESENTS, National Real Estate Limited
Partnership Income
Properties and National Development and Investment, Inc. has(ve) made,
constituted, and appointed, and, by these
presents do(es) hereby make, constitute, and appoint National Realty
Management, Inc., 9800 West Bluemound Road,
Milwaukee, Wisconsin 53226, a true and lawful attorney for it (them) in its
(their) name, place, and stead to execute
and to file any Tax Returns due on and after November 1, 1995, under the
provisions of the Social Security Act, now
in force or future amendments thereto.
Dated at Wauwatosa, Wisconsin this 1st day of November, 1995.
NATIONAL REAL ESTATE LIMITED
PARTNERSHIP INCOME PROPERTIES
By: X /S/ John Vishnevsky
John Vishnevsky,
Executed in presence of: President of National Development and
Investment, Inc. Corporate
X /S/ General Partner
(Witness)
X /S/
Attest: X /S/ Stephen P. Kotecki
(Witness)
Stephen P. Kotecki, Secretary
By: X /S/ John Vishnevsky
John Vishnevsky, Individual General
Partner
By: X /S/ Stephen P.Kotecki
Stephen P Kotechi, President of EC
Corp., Corporate General
Attest: X /S/Thomas Rielly
Thomas Rielly, Secretary
NATIONAL DEVELOPMENT AND
INVESTMENT, INC., a Wisconsin corporation
By: X /S/ John Vishnevsky
John Vishnevsky,President of
Attest: X /S/Stephen P. Kotecki
Stephen P. Kotecki, Secretary
EC CORP., a Wisconsin corporation
By: X/S/ Stephen Kotecki
Stephen Kotecki, President
Attest: X /S/ Thomas Rielly
Thomas Rielly, Secretary
STATE OF WISCONSIN )
) ss.
MILWAUKEE COUNTY )
Personally came before me this 1st day of November, 1995, that
above-named John Vishnevsky and
Stephen P. Kotecki, to me known (or satisfactorily proven) to be the persons
who executed the foregoing instrument
as President and Secretary of National Development and Investment, Inc., a
Wisconsin corporation and corporate
general partner of National Real Estate Limited Partnership Income Properties,
a Wisconsin limited partnership, and
acknowledged to me that they executed the same as President and Secretary of
National Development and
Investment, Inc. for the purposes therein contained, being duly authorized to
do so.
X
Notary Public in and for the State of Wisconsin
Printed Name: Joyce A. Blazer
My Commission ( ) is permanent; or
(x) expires: 7-5-96
(Notarial Seal)
STATE OF WISCONSIN )
) ss.
MILWAUKEE COUNTY )
Personally came before me this 1st day of November, 1995, that the
above-named John Vishnevsky to me known (or satisfactorily proven) to be the
person who executed the foregoing instrument as individual general partner of
National Real Estate Limited Partnership Income Properties, a Wisconsin limited
partnership and acknowledged to me that he executed the same as such individual
general partner of said partnership for the purposes therein contained, being
duly authorized to do so.
X
Notary Public in and for the State of Wisconsin
Printed Name: Joyce A. Blazer
My Commission ( ) is permanent; or
(x) expires: 7-5-96
(Notarial Seal)
STATE OF WISCONSIN )
) ss.
MILWAUKEE COUNTY )
Personally came before me this 1st day of November, 1995, that
above-named Stephen Kotecki and
Thomas Rielly, to me known (or satisfactorily proven) to be the persons who
executed the foregoing instrument as
President and Secretary of EC Corp., a Wisconsin corporation and corporate
general partner of National Real Estate
Limited Partnership Income Properties, a Wisconsin limited partnership, and
acknowledged to me that they executed
the same as President and Secretary of EC Corp. for the purposes therein
contained, being duly authorized to do so.
X
Notary Public in and for the State of Wisconsin
Printed Name: Joyce A. Blazer
My Commission ( ) is permanent; or
(x) expires: 7-5-96
(Notarial Seal)
J:\WPDOCS\REPORTS\10K-NIP.jwg
EXHIBIT 10(I)
SUBLEASE
1. PARTIES. This Sublease, effective as of February 1st, 1998, is made by
and between National Realty
Management, Inc. (herein called "Sublessor") and National Real Estate
Limited Partnership Income
Properties, a Wisconsin limited partnership (herein called "Sublessee" or
"Partnership").
2. PREMISES. Sublessor hereby subleases to Sublessee and Sublessee hereby
subleases from Sublessor
for the term, at the rental, and upon all the conditions set forth
herein, that certain real property
situated in the County of Waukesha, State of Wisconsin commonly knows as
1155 Quail Court,
Pewaukee, WI 53072 and consisting of an undivided 12.517% interest therein.
Said real property, including the land and all improvement thereon, is
hereinafter called the "Premises".
3. TERM.
3.1 TERM. The term of this Sublease shall be for four (4) years and seven
(7) months
commencing as of February 1, 1998 and ending on August 31, 2002 unless sooner
terminated pursuant to
any provision hereof.
4. RENT. Sublessee shall pay to Sublessor as rent for the Premises, equal
monthly payments of $ 909.92,
in advance, on the 1st day of each month of the term hereof. Rent for any
month during the term of
this Sublease shall be the unconditional obligation of the Partnership.
Rent shall be payable in lawful
money of the United States to Sublessor at the address stated herein or
to such other persons or at
such other places as Sublessor may designate in writing.
5. USE.
5.1. USE. The Premises shall be used and occupied only for office space.
5.2. COMPLIANCE WITH LAW.
(a) Sublessor warrants to Sublessee that the Premises, in its existing
state, but
without regard to the use which Sublessee will use the Premises, does not
violate any applicable building code
regulation or ordinance at the time that this Sublease is executed.
(b) Sublessee shall, at Sublessee's expense, comply promptly with all applicable
statutes, ordinances, rules, regulations, orders, restrictions of record, and
requirements in effect during the
term or any part of the term hereof regulating this use by Sublessee of the
Premises.
5.3. CONDITION OF PREMISES. Except as provided in paragraph 5.2(a)
Sublessee hereby accepts
the Premises in their condition existing as of the date of the execution
hereof, subject to all applicable zoning,
municipal, county and state laws, ordinances, and regulations governing and
regulating the use of the
Premises, and accepts this sublease subject thereto and to all matters
disclosed thereby and by any exhibits
attached hereto.
6. MASTER LEASE.
6.1. Sublessor is the lessee of the Premises by virtue of a lease,
hereinafter referred to as
the "Master Lease," a copy of which is attached hereto marked Exhibit 1, dated
August 8, 1997 wherein
National Realty Office Building LLC is the lessor, hereinafter referred to as
the Master Lease.
6.2. This Sublease is and shall be at all times subject and subordinate
to the Master Lease.
6.3. The terms, conditions and respective obligations of Sublessor and
Sublessee to each
other under this Sublease shall be the terms and conditions of the Master Lese
except for those provisions
of the Master Lease which are directly contradicted by this Sublease in which
event the terms of this Sublease
document shall control over the Master Lease. Therefore, for the purposes of
this Sublease, wherever in the
Master Lease the word "Lessor" is used it shall be deemed to mean the
Sublessor herein and wherever in the
Master Lease the word "Lessee" is used it shall be deemed to mean the
Sublessee herein.
6.4. During the term of this Sublease and for all periods subsequent for
obligations which
have arisen prior to the termination of this Sublease, Sublessee does hereby
expressly assume and agree to
perform and comply with, for the benefit of Sublessor and Lessor, each and
every obligation of Sublessor
under the Master Lease except that Sublessee's monetary obligations are
limited to 12.517% of the total
monetary obligations set forth in the Master Lease.
6.5. The obligations that Sublessee has assumed under paragraph 6.4
hereof are hereinafter
referred to as the "Sublessee's Assumed Obligations". The obligations that
Sublessee has not assumed under
paragraph 6.4 hereof are hereinafter referred to as the "Sublessor's
Remaining Obligations".
6.6. Sublessee shall hold Sublessor free and harmless of and from all
liability, judgments, costs,
damages, claims or demands including reasonable attorneys fees, arising out of
Sublessee's failure to comply
with or perform Sublessee's Assumed Obligations.
6.7. Sublessor agrees to maintain the Master Lease during the entire term
of this Sublease,
subject, however, to any earlier termination of the Master Lease without the
fault of the Sublessor, and to
comply with or perform Sublessor's Remaining Obligations and to hold Sublessee
free and harmless of and
from all liability, judgments, costs, damages, claims or demands arising out
of Sublessor's failure to comply
with or perform Sublessor's Remaining Obligations.
7. CONSENT OF MASTER LESSOR.
7.1. In the event that the Master Lease requires that Sublessor obtain
the consent of Master
Lessor to any subletting by Sublessor then, this Sublease shall not be
effective unless, within ten (10) days
of the date hereof, Master Lessor signs this Sublease thereby giving its
consent to this Subletting.
7.2. In the event that Master Lessor does give such consent then:
(a) Such consent will not release Sublessor of its obligations or alter
the primary
liability of Sublessor to pay the rent and perform and comply with all of the
obligations of Sublessor to be
performed under the Master Lease.
(b) The acceptance of rent by Master Lessor from Sublessee or any one
else liable
under the Master Lease shall not be deemed a waiver by Master Lessor of any
provisions of the Master
Lease.
(c) The consent to this Sublease shall not constitute a consent to any
subsequent subletting or assignment.
(d) In the event of any default of Sublessor under the Master Lease,
Master Lessor
may proceed directly against Sublessor, any guarantors or any one else liable
under the Master Lease or this
Sublease without first exhausting Master Lessor's remedies against any other
person or entity liable thereon
to Master Lessor.
(e) Master Lessor may consent to subsequent sublettings and assignments
of the
Master Lease or this Sublease or any amendments or modifications thereto
without notifying Sublessor or
any one else liable under the Master Lease and without obtaining their consent
and such action shall not
relieve such persons from liability.
(f) In the event that Sublessor shall default in its obligations under
the Master
Lease, then Master Lessor, at its option and without being obligated to do so,
may require Sublessee to attorn
to Master Lessor in which event Master Lessor shall undertake the obligations
of Sublessor under this
Sublease from the time of the exercise of said option to termination of this
Sublease but Master Lessor shall
not be liable for any prepaid rents nor any security deposit paid by
Sublessee, nor shall Master Lessor be
liable for any other defaults of the Sublessor under the Sublease.
7.4. The signature of the Master Lessor at the end of this document shall
constitute its
consent to the terms of this Sublease.
Executed at National Realty Management,
on April 30,1998 Inc., Sublessor
address 1155 Quail Court
Pewaukee, WI 53072 By: X /S/ John Vishnevsky
John Vishnevsky, President
Executed at National Real Estate Limited
on April 30, 1998 Partnership Income
address 1155 Quail Court Properties, a Wisconsin limited
partnership,Sublessee
Pewaukee, WI 53072
By: National Development and
Investment, Inc.,
its general partner
By: X /S/ John Vishnevsky
John Vishnevsky, President
Executed at By: X /S/ William J. Finn
on William J. Finn, Owner of
address 5451 N. Kent 1155 Quail Court, Master Lessor.
Whitefish Bay, WI 53217
J:\WPDOCS\REPORTS\10K-NIP.jwg
EXHIBIT 13
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 Uniform Limited
Partnership Act pursuant to a
Certificate and an Agreement of Limited Partnership, each dated December 18,
1984. As of December 31,
1998, the Partnership consisted of an Individual and two Corporate General
Partners and 1,120 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 except at Northridge
Commons where one tenant occupied 42.3% of the total rentable square footage.
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 1998, the Partnership employed three full-time and six part-time
on-site personnel in the
following capacities: three managers, four rental agents and two
cleaning/maintenance persons. In addition,
due to the centralized nature of the Partnership's accounting and management
systems, another 16 employees
provided various accounting and management services to this and other
partnerships. 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.
The General Partners are general partners for other limited partnerships that
have invested in real
estate which may be competitive with the Partnership.
There may be conflicts of interest between the Partnership and the General
Partners at such time as
the Partnership attempts to sell its properties or may compete for tenants
with the Partnership's investments.
If properties are being sold, the General Partners will attempt to give equal
exposure to competing properties
and will sell solely on the basis of purchaser preference. The General
Partners will establish asking prices
based upon market conditions. The General Partners will follow a policy of
renting first on the basis of the
tenants' preference and then on the basis of greatest vacancy. In the hiring
of resident building managers, the
General Partners will follow a policy of filling the oldest vacancy first.
The Partnership, by virtue of its ownership in real estate, is subject to
federal and state laws and
regulations covering various environmental issues. The General Partners are
not aware of any potential
liability related to environmental issues or conditions that would be material
to the Partnership.
The Partnership is working to resolve the Year 2000 problem. Currently,
management has developed
an action plan whereby all critical functions are evaluated for compliance.
This includes contacting service
providers and performing testing to obtain assurance that critical functions
will be compliant.
Management does not expect the cost of the Year 2000 compliance procedures to
be material to the
Partnership. In addition, management believes that it is unlikely that a Year
2000 problem would have a
material effect on the operations of the Partnership.
Management is working on a contingency plan should an unforeseen Year 2000
problem occur. This
would include a back-up procedure to ensure that all critical functions
continue even during a Year 2000
crisis. Management believes it to be unlikely that a contingency plan will
need to be utilized.
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 ownership consists of
one one-story building and part
of one two-story building of the Complex, of which construction was completed
in 1985. The Partnership
has an interest in the remaining portions of the Complex for access and use of
the business office facilities.
National Real Estate Limited Partnerships Income Properties II, another
limited partnership of which the
General Partners are general partners, owns the other portion. Security in the
Complex is provided by a
resident manager and a fenced perimeter with single-gate access.
The Complex has an aggregate of approximately 46,000 net rentable square
feet. The Partnership's
property contains approximately 8,200 net rentable square feet, or
approximately 18% of the total net
rentable square feet of the Complex. Units can be subdivided, if appropriate,
in light of 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
20,800 net rentable square feet. All current tenant leases are "triple net"
agreements. Asking rents are $8.00
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.
The General Partners believe that the Partnership is adequately covered by
insurance on the
properties.
LEGAL PROCEEDINGS
The Partnership is not a party to any material pending legal proceedings.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Information contained in this Annual Report on Form 10-KSB contains
-looking statements'
within the meaning of the Private Securities Litigation Reform Act of 1995,
which can be identified by
the use of forward-looking terminology such as -looking statements, including
certain risks and
uncertainties, that could cause actual results to differ materially from those
contemplated in such forward-
looking statements. Such factors, which could adversely affect the
Partnership's ability to obtain these
results, include, among other things, (i) the volume of transactions and
prices for real estate in the real
estate markets generally, (ii) a general or regional economic downturn which
could create a recession in
the real estate markets, (iii) the Partnership's debt level and its ability to
make interest and principal
payments, (iv) an increase in expenses related to new initiatives, investments
in people and technology,
and service improvements, (v) the success of the new initiatives and
investments and (vi) other factors
described elsewhere in this Annual Report.
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
to incur capital expenditures for roof replacement and repairs for Tucson
Lock-it-Lockers in 1999. Roofing
and paving work is scheduled for the Phoenix Lock-It-Lockers. These
expenditures will cost approximately
$60,000 and will be funded from the cash flow of operations. The Partnership
does not have any other
present or planned material commitments for capital improvements.
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, 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, 1998, the Individual General Partner
loaned $271,020 to the
Partnership under this commitment, which is the maximum amount under the
commitment. The General
Partner's 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, 1998,
$689,228 of interest had accrued on the General Partner loan. During 1998, the
Partnership continued
distributions with a total of $315,145 to its Limited Partners and $9,747 to
the General Partners. The
distributions for 1998 equaled 3.5% 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 1999 is dependent upon the results of property operations or sales of
properties 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's liquidity needs and any cash
distributions to the Limited Partners. At
the current time, the General Partners are evaluating the possible sale of
Northridge Commons. No other
activity related to the sale of properties has occurred.
RESULTS OF OPERATIONS
The Partnership operated four investment properties during 1998. The
Partnership began operations
in 1985 and made additional property purchases in 1986 and 1987.
Rental rates in 1998 at Tucson Lock-It Lockers ranged from $28 to $160 in
1998, and $25 to $155 in
1997, depending on the size of the unit. Average occupancy at Tucson Lock-It
Lockers was 96% during
1998, compared to 97% in 1997. Marketing efforts are directed primarily toward
Yellow Pages advertising
which is the main source of traffic. Signs on Tanque Verde have been upgraded
in order to lead prospective
clients around the corner to the main entrance. There is a marketing program
in place with neighboring
businesses where we share coupon advertising at several locations. Management
participates in the Tanque
Verde Business Association and continues to participate in their marketing and
advertising programs.
Competition studies done by management and those done by The Arizona Mini
Storage Association show
a Tucson area occupancy of around 93%. We are doing better than the
neighboring facilities. Newer facilities
being built in the area have slightly effected our occupancy. Most of the
competition has higher rents because
of their amenities, controlled access gates, and air-cooled lockers.
Rental rates are based on unit size at Phoenix Lock-It Lockers and ranged
from $35 to $235 in 1998,
and $31 to $235 in 1997. Average annual occupancy at the property was 95% for
1998 and 97% in 1997.
Management uses the Yellow Pages for advertising as well as using client
referral coupons, and offering
discounts to existing clients for bringing us new clients. Our manager has
been attending the Sunnyslope
Business Association meetings in an attempt to capture more business rentals
and to keep up with the
business networking in the area. Rate increases will need to remain
conservative. Our management
competition study and information gathered from the Arizona Mini Storage
Association indicate the
surrounding area is 92% occupied. The market continues to soften in the
Phoenix area because of
overbuilding of self-storage facilities in the immediate area of the property.
The business suites are 100%
occupied, with all suites on at least a one year lease.
At Cave Creek Lock-It Lockers asking rents ranged from $13 to $145 in 1998
and from $15 to $135
in 1997, based on unit size. An increase was put into place in the fourth
quarter of 1998. This is an increase
on selected lockers of up to 5%. The increase in income has been a direct
result of rent increases given to
existing tenants, bringing them to current market level. Average annual
occupancy was 93% and 95% in 1998
and 1997 respectively. Marketing efforts are directed primarily through the
use of Yellow Pages advertising,
which is the main source of traffic. Management uses resident referral coupons
for all current tenants, offering
a discount if they send us new clients. The managers are marketing the lockers
to neighboring businesses and
apartment communities, using neighborhood business coupon flyers. The General
Partners believe marketing
efforts and excellent customer service will continue to help occupancy
remain strong.
The marketplace for Cave Creek Lock-It-Lockers continues to soften. Our
management competition
study and information received from the Arizona Mini Storage Association
indicates a high vacancy rate will
continue throughout the surrounding area and immediate neighborhood. We are
being affected by lower
interest rates that are allowing our tenants to purchase homes with their own
storage space, and by continued
over-building of storage facilities.
Northridge Commons experienced average annual occupancy of 90% during 1998,
compared to 76%
in 1997. Occupancy for December 1998 was 91.6% which was the same occupancy
rate for December 1997.
Northridge Commons' occupancy began improving when Georgia Carpet Company
opened their new store
in November 1997.
Competition studies show that rental rates in the Northridge area are
marketed at $6 to $12 per square
foot with $8 appearing to be a median. There is still significant vacancy in
the area but there have been some
positive developments. There are some large square footage stores, or "big
box" stores, going into the area
that carry a large selection of items for their merchandising focus. At
Northridge Commons, as of December
31, 1998, 8.4% or 1,750 square feet of space was vacant. Subsequently, by
February 1999, an additional
tenant has vacated, increasing vacancies to 12% or 2,500 square feet.
Management is actively working to rent
the vacant space.
Net income for the Partnership improved $30,818 or 51% from $60,794 in 1997
to $91,612 in 1998.
The increase was due to an increase in operating revenues of $73,179 and an
increase in interest income of
$21,806, offset by an increase in operating expenses of $64,167.
Total operating revenues increased $73,179 or 7.8% from 1997 to 1998.
Operating revenues for 1998
were $198,650 for Northridge Commons, $398,047 for Tucson Lock-It Lockers,
$359,846 for Phoenix
Lock-It Lockers, and $53,080 for Cave Creek Lock-It Lockers. Prior year
operating revenues were $130,740
for Northridge Commons, $393,679 for Tucson Lock-It Lockers, $363,181 for
Phoenix Lock-It Lockers,
and $54,231 for Cave Creek Lock-It Lockers. Revenues for Northridge Commons
improved due to reduced
vacancies in 1998 as compared to 1997. Revenues for the other properties were
consistent with those of the
prior year. Other operating revenues of the Partnership were $6,009 and $622
for 1998 and 1997,
respectively.
The increase in operating expenses of $64,167 is primarily due to increased
maintenance, general
operating, and interest expenses. Maintenance expenses increased approximately
$31,000, primarily due to
exterior painting and repairs, primarily at the Phoenix Lock-It Lockers.
General operating expenses increased
$12,328, primarily due to an increase in personnel related costs. Interest
expense increased $8,707, primarily
due to the compounding of interest on the note payable due the individual
general partner. Slight increases
in administrative, property taxes, advertising costs, and depreciation make up
the balance of the increase.
Interest income increased $21,806, primarily due to approximately $10,000 of
interest earned in 1997,
not recorded until 1998.
Reference is made to Notes 2 and 7 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 1998.
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.
Report of Independent Auditors
To The Partners of
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
We have audited the accompanying balance sheet of National Real Estate Limited
Partnership Income
Properties (the Partnership) as of December 31, 1998, and the related
statements of operations,
partners' capital (deficit) and cash flows for the year then ended. 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. The financial statements of the
Partnership as of December
31, 1997, were audited by other auditors whose report dated January 20, 1998,
expressed an
unqualified opinion on those statements.
We conducted our audit 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
audit provides 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, 1998, and the results of
its operations and its
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
WOLF AND COMPANY-MILWAUKEE, S.C.
CERTIFIED PUBLIC ACCOUNTANTS
Milwaukee, Wisconsin
February 4, 1999
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
BALANCE SHEET
DECEMBER 31, 1998
Cash and cash equivalents $ 838,841
Escrow deposits and other assets 33,058
Investment properties, at cost:
Land 1,047,695
Building and improvements 5,682,323
----------
6,730,018
Accumulated depreciation (2,561,582)
-----------
4,168,436
----------
$5,040,335
============
Liabilities and Partners' capital (deficit)
Liabilities:
Tenant security deposits $ 6,875
Deferred rent 49,033
Accrued interest payable to Individual
General Partner 689,228
Accrued expenses and other liabilities 80,365
Note payable to individual General Partner 271,020
---------
1,096,521
Partners' capital:
General Partners (deficit) (121,819)
Limited Partners (authorized-10,000 interests;
issued-9,9034.01 interest) 4,087,304
Less cost of Limited Partner interests held in
Treasury (29.86 interests) (21,671)
-----------
3,943,814
-----------
$5,040,335
===========
The accompanying notes are an intergral part of these financial statements.
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
STATEMENTS OF OPERATIONS
Year ended Decmeber 31
1998 1997
-------------------------
Operating revenues:
Rentals $ 906,425 $850,711
Others 109,207 91,742
--------- --------
1,015,632 942,453
Operating expenses:
Operating 241,581 229,253
Administrative 193,229 188,495
Maintenance 84,402 52,941
Depreciation 217,834 215,789
Interest 94,246 85,539
Property taxes 127,347 123,845
Advertising 19,704 18,314
--------- -------
978,343 914,176
--------- --------
Income from operations 37,289 28,277
Interest income 54,323 32,517
------- --------
Net income (loss) $ 91,612 $ 60,794
======== =========
Net income (loss) attributable to General
Partners (3%) $ 2,748 $ 1,824
Net income (loss) attributable to Limited
Partners (97%) 88,864 58,970
--------- --------
91,612 60,794
========= ========
Net income (loss) per Limited
Partnership Interest $ 9.87 $ 6.55
========== ========
The accompanying notes are an intergral part of these financial statements.
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
Statement of Partners' Capital (Deficit)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
Cost of
Partner
General Limited Interests Held Total
Partners Partners in Treasury
_______________________________________________
Balances at January 1, 1997 $ (111,076) $ 4,434,699 $ (21,671) $4,301,952
Distriburions to Partners (5,568) (180,084) (185,652)
Net income for the year 1824 58,970 60,794
-----------------------------------------------
BAlances at December 31, 1997 (114,820) 4,343,585 (21,671) 4,177,094
Distributions to Partners (9,747) (315,145) (321,892)
Net income for the year 2,748 88,864 91,612
----------------------------------------------
Balances at December 31, 1998 $ (121,819) $ 4,087,304 $ (21,671) $3,943,814
==============================================
The accompanying notes are an intergral part of these financial statements.
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
STATEMENTS OF CASH FLOWS
Year Ended December 31
1998 1997
Net income for the year $ 91,612 $ 60,794
Adjustments to reconcile net income to net cash
provided by activities:
Depreciation 217,834 215,789
Changes in operationg assets and liabilities:
Escrow deposits and other assets (18,787) 1,321
Tenant security deposits 1,345 76
Defferred rent 19,532 2,877
Accrued expenses and other liabilities 94,467 77,821
--------- --------
Net cash provided by operating activities 406,003 358,678
Additions to investment properties (32,438) (152,352)
Destributions to Partners (324,892) (185,652)
--------- ---------
Increase (decrease) in cash and cash equivalents 48,673 20,674
Cash and cash equivalents at beginning of year 760,168 769,494
-------- --------
Cash and cash equivalents at end of year 838,841 790,168
========= ========
The accompanying notes are an intergral part of these financial statements.
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1998
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 1,120 Limited Partners at December 31, 1998.
Mr. Vishnevsky is the
president and sole stockholder of National Development and Investment, Inc.
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 generally accepted accounting principles (GAAP) basis of
accounting, including
adjustments for differences in depreciation methods. Certain accrual and tax
basis amounts are
summarized as follows:
1998 1997
GAAP Tax GAAP Tax
Basis Basis Basis Basis
(In Thousands)
Total assets $ 5,040 $ 4,606 $5,158 $ 5,775
Partners' capital
General Partners (deficit) (122) (113) (115) (107)
Limited Partners 4,087 5,298 4,292 5,484
Net income (loss)
General Partners 3 4 2 2
Limited Partners 89 129 59 6
____________________________________________________________________________
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
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 amounts
reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.
CASH AND CASH EQUIVALENTS
The Partnership considers all short-term investments which have original
maturities of three months
or less when purchased to be cash equivalents.
INVESTMENT PROPERTY
Investment property is stated at cost. 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.
The Partnership evaluates the investment property periodically for indication
of impairment including
recurring operating losses and other significant adverse changes in the
business climate that affect
the recovery of the recorded asset value. If investment property is
considered impaired, a loss is
provided to reduce the net carrying value of the asset to its estimated fair
value. Management is not
aware of any indicator that would result in any significant impairment loss
for the year ended
December 31, 1998.
FEES TO AFFILIATES
Property management fees are payable currently to the General Partners or
affiliates of the General
Partners. Fees for property management and rental services are being charged
to expense over the
period property management services are being performed.
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR YEAR ENDED DECEMBER 31, 1998
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 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.
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR YEAR ENDED DECEMBER 31, 1998
3. INVESTMENT PROPERTIES
Investment properties consist of the following at December 31, 1998:
Costs Capitalized
Subsequent to
Initial Cost to Partnership Acquisiton of
Buildings and Building and
Description Land Improvements Improvements
(In Thousands)
Lock-it-Lockers Mini-Warehouses
Tucson, Arizona $ 253 $ 1,748 $ 157
Lock-It-Lockers Mini-Warehouses
Phoenix, Ariona 222 1,999 90
Northridge Commons Shopping Center
Milwaukee, Wisconsin 699 1,747 202
Cave Creek-Phase I Mini-Warehouses
Phoenix, Arizona 94 301 3
------------------------------------------
$ 1,268 $ 5,795 $ 452
==========================================
Gross Amount at Which Carried
Buildings and Accumulated
Description Land Improvements Total Depreciation
(In Thousands)
Lock-it-Lockers Mini-Warehouses
Tucson, Arizona $ 253 $ 1,905 $ 2,158 $ 830
Lock-It-Lockers Mini-Warehouses
Phoenix, Ariona 222 2,089 2,311 899
Northridge Commons Shopping Center
Milwaukee, Wisconsin 479 1,384 1,863 174
Cave Creek-Phase I Mini-Warehouses
Phoenix, Arizona 94 304 398 119
------------------------------------------
$ 1,048 $ 5,682 $ 6,730 $ 2,562
==========================================
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR YEAR ENDED DECEMBER 31, 1998
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, Ariona 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, 1998.
The accumulated depreciation reported for federal income tax purposes is
$3,780,900 at December 31, 1998.
A reconciliation of the cost and accumulated depreciation of the investment
properties for financial reporting purposes follows:
Year ended December 31
1998 1997
(In Thousands)
Cost:
Balance at beginning of year $ 6,698 $ 6,545
Additions to investment properties 32 153
------ -------
Balance at end of year $ 6,730 $ 6,698
======== ========
Accumulated depreciation:
Balance at beginning of year $ 2,344 $ 2,128
Provision for the year 218 216
------ -----
Balance at end of year $ 2,562 $ 2,344
====== =====
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR YEAR ENDED DECEMBER 31, 1998
4. IMPAIRMENT OF ASSETS
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.
5. INCOME TAXES
The Partnership pays no income taxes. Partnership losses or income and taxes
attributable thereto
will be the responsibility of the various Partners.
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 GAAP
basis adjustments. The following is a reconciliation of the reported net
income (loss) and the net
income reported for federal income tax purposes:
Year emded December 31
1998 1997
Net income (loss) reported in th efinancial statements $ 91,612 $ 60,794
Add (deduct):
Depreciation (52,729) (78,217)
Other 94,245 85,539
-------- -------
Net income reported for federal income tax purposes $ 133,128 $ 68,116
======== =======
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR YEAR ENDED DECEMBER 31, 1998
6. LEASES
The Partnership is the lessor of a shopping center under operating leases
expiring in various
years to 2002. 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 $0 in 1998 and $0 in 1997.
At December 31, 1998, future minimum lease payments receivable under
noncancellable operating leases with remaining terms of one year or
more are as follows:
1999 $ 119,983
2000 107,225
2001 85,528
2002 68,508
2003 -
7. TRANSACTIONS WITH AFFILIATED PARTIES
The General Partners are general partners for other limited partnerships which
have invested
in real estate. The Partnership reimburses affiliates of the General Partner
for the actual cost
of goods and materials used by or for the Partnership in the course of
performing the general
functions of the Partnership. These general functions include certain
management,
accounting and other expenses. The Partnership has executed contracts
providing for the
following fees payable to such entities:
NATIONAL REALTY MANAGEMENT, INC. (NRMI)
NRMI charged the Partnership for property management fees
($53,675--1998 and $53,705--1997). Monthly fees represent 6% of gross
receipts from the Lock-It-Lockers Mini-Warehouses
in Tucson and Phoenix and Cave Creek Mini-Warehouse, and 3% of gross
receipts from
Northridge Commons Shopping Center.
The Partnership also paid $50,844 and $56,923 in 1998 and 1997, respectively,
for the
reimbursement of accounting and administrative expenses incurred by NRMI on
behalf of the
Partnership.
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR YEAR ENDED DECEMBER 31, 1998
7. TRANSACTIONS WITH AFFILIATED PARTIES (CONTINUED)
NATIONAL DEVELOPMENT AND INVESTMENT, INC.
The Partnership paid National Development and Investment, Inc. (NDII) for the
reimbursement of expenses totaling $109,101 and $93,363 in 1998 and 1997,
respectively,
for administrative expenses incurred on behalf of the Partnership.
INDIVIDUAL GENERAL PARTNER
The note payable to the Individual General Partner is payable from proceeds of
the sale or
other disposition of investment properties, with interest compounded monthly
at a bank's prime rate plus 2% (9.75% at December 31, 1998) or 12%,
whichever is lower. The
Partnership incurred interest ($94,246--1998 and $85,539--1997) in connection
with this
note. No interest was paid in any year with respect to this note.
8. FAIR VALUES OF FINANCIAL INSTRUMENTS
CASH, CASH EQUIVALENTS AND DEBT
The carrying amount reported in the balance sheet for cash and cash
equivalents and debt
approximates its fair value due to the short term nature of each.
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-KSB) of National Real
Estate Limited Partnership Income Properties of our report dated February 4,
1999, included in the
1998 Annual Report to Partners of National Real Estate Limited Partnership
Income Properties.
/S/ WOLF & COMPANY
Milwaukee, Wisconsin
March 26, 1999
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-KSB for 1998 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, 1155 Quail Court,
Pewaukee, Wisconsin
53072-3703.
J:\WPDOCS\REPORTS\10K-NIP.jwg
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 871899
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6730018
<PP&E> 0
<DEPRECIATION> 2561582
<TOTAL-ASSETS> 5040335
<CURRENT-LIABILITIES> 136273
<BONDS> 960248
0
0
<COMMON> 0
<OTHER-SE> 3943814<F1>
<TOTAL-LIABILITY-AND-EQUITY> 5040335
<SALES> 0
<TOTAL-REVENUES> 1015632
<CGS> 0
<TOTAL-COSTS> 884097
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 94246
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 91612
<EPS-PRIMARY> .987<F2>
<EPS-DILUTED> 0
<FN>
<F1>REFERS TO GENERAL PARTNERS + LIMITED PARTNERS CAPITAL.
<F2>97% LIMITED PARTNERS - INTEREST OUTSTANDING = 9004.15
</FN>
</TABLE>
