UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________.
Commission File Number: 0-18151
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
(Exact name of registrant as specified in governing instrument)
Delaware 13-3286866
(State of organization) (IRS Employer Identification No.)
2 World Trade Center, New York, NY 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 392-1054
Former name, former address and former fiscal year, if changed since last
report: not applicable
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No <PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31, December 31,
1995 1994
ASSETS
<S> <C> <C>
Real estate, at cost:
Buildings and improvements $ 55,817,333 $ 55,690,646
Land and land improvements 13,161,632 13,161,632
68,978,965 68,852,278
Accumulated depreciation 22,978,549 22,452,497
46,000,416 46,399,781
Cash and cash equivalents, at cost
which approximates market ($5,498,790 and
$4,042,780 restricted as of March 31, 1995
and December 31, 1994, respectively) 6,122,943 4,706,167
Deferred expenses, net 1,577,495 1,655,347
Accounts receivable 2,141,109 1,870,771
Other assets 424,981 465,922
$ 56,266,944 $ 55,097,988
LIABILITIES AND PARTNERS' CAPITAL DEFICIENCY
Mortgage notes payable $ 54,893,325 $ 54,936,984
Accounts payable and accrued expenses 2,981,504 3,270,432
Due to affiliates 6,901,646 6,712,665
Other liabilities 577,128 509,280
Excess of distributions and losses over
cost of investment in unconsolidated partnerships 6,962,876 6,704,781
Minority interests 1,262,552 1,243,540
73,579,031 73,377,682
Partners' capital deficiency:
General partners (3,221,526) (3,260,230)
Limited partners ($1,000 per Unit,
78,594 Units issued) (14,090,561) (15,019,464)
Total partners' capital deficiency (17,312,087) (18,279,694)
$ 56,266,944 $ 55,097,988
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended March 31, 1995 and 1994
<CAPTION>
1995 1994
<S> <C> <C>
Revenues:
Hotel operating $ 8,368,407 $ 8,120,050
Rental 372,026 531,088
Interest and other 30,136 41,364
8,770,569 8,692,502
Expenses:
Hotel operating 5,480,167 5,470,533
Interest 1,317,445 1,257,657
Property operating 49,228 142,227
Depreciation 526,052 844,993
Amortization 67,645 85,184
Equity in net losses of unconsolidated partnerships 258,095 205,275
General and administrative 85,318 99,311
7,783,950 8,105,180
Income before minority interest 986,619 587,322
Minority interest in earnings of consolidated
partnerships (19,012) (10,707)
Net income $ 967,607 $ 576,615
Net income per unit of limited
partnership interest $ 11.82 $ 7.04
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL DEFICIENCY
Three months ended March 31, 1995
<CAPTION>
Limited General
Partners Partners Total
<S> <C> <C> <C>
Partners' capital deficiency
at January 1, 1995 $(15,019,464) $(3,260,230) $(18,279,694)
Net income 928,903 38,704 967,607
Partners' capital deficiency
at March 31, 1995 $(14,090,561) $(3,221,526) $(17,312,087)
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 1995 and 1994
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 967,607 $ 576,615
Adjustments to reconcile net loss to net
cash flow from operating activities:
Depreciation and amortization 593,697 930,177
Equity in net losses of unconsolidated partnerships 258,095 205,275
Minority interests in joint ventures' operations 19,012 10,707
Decrease (increase) in:
Accounts receivable (270,338) (662,521)
Deferred expenses 10,207 (134,677)
Other assets 40,941 50,256
Increase (decrease) in:
Accounts payable and accrued expenses (288,928) (294,819)
Due to affiliates 62,733 (30,432)
Other liabilities 67,848 (8,767)
Net cash provided by (used in) operating activities 1,460,874 641,814
Cash flows from investing activities:
Investments in real estate (126,687) (155,360)
Cash flows from financing activities:
(Repayment of) proceeds from mortgage notes payable (43,659) 44,027
Borrowings from affiliates 126,248 87,104
Net cash provided by financing activities 82,589 131,131
Increase in cash and cash equivalents 1,416,776 617,585
Cash and cash equivalents at beginning of period 4,706,167 3,642,942
Cash and cash equivalents at end of period $ 6,122,943 $ 4,260,527
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,082,069 $ 1,272,376
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Notes to Consolidated Financial Statements
1. The Partnership
Dean Witter Realty Growth Properties, L.P. (the "Partnership") was formed
as a limited partnership in 1985 under the laws of the State of Delaware.
The Managing General Partner of the Partnership is Dean Witter Realty
Growth Properties Inc., which is wholly-owned by Dean Witter Realty Inc.
("Realty").
Assets of the Partnership are subject to substantial leverage. All
mortgage notes payable are secured by the real estate and are not general
obligations of the Partnership.
The Partnership's current cash balances are being reserved primarily for
debt service, working capital, and the replacement of certain furniture,
fixtures and equipment at the hotel pursuant to the hotel loan and
management agreements. Other than these reserves, the Partnership's
current cash reserves are nominal.
The financial statements include the accounts of the Partnership, Bayport
Ltd.'s investment in the Bayport hotel, and Braker Associates on a
consolidated basis. The Partnership's investments in Peninsula/DW
Associates and the Bayport office building are accounted for on the
equity method.
The Partnership's records are maintained on the accrual basis of
accounting for financial reporting and tax purposes.
Net income per Unit amounts are calculated by dividing net income
allocated to Limited Partners, in accordance with the Partnership
Agreement, by the weighted average number of units outstanding.
In the opinion of management, the accompanying financial statements,
which have not been audited, include all adjustments, consisting only of
normal recurring accruals, necessary to present fairly the results for
the interim periods.
2. Real Estate and Investments in Partnerships
In December 1994, the partnership which owns the four office/R&D
buildings at Braker Center was in default on its loan. The partnership
has two general partners; i) L.S. Braker Associates ("Braker
Associates"), a subsidiary of the Partnership, and ii) an unaffiliated
partner. The unaffiliated general partner caused the partnership to file
for protection under Chapter 11 of the United States Bankruptcy Code.
Braker Associates had not consented to the filing and the unaffiliated
general partner has initiated litigation to compel it to do so. The
ultimate outcome of the partnership's Chapter 11 reorganization is
uncertain.
Hyatt Hotel Corporation, which manages the hotel at Bayport Plaza, had
not met the performance criteria defined in the hotel management
agreement. Accordingly, in 1994, the Partnership initiated legal action
against Hyatt to enforce the termination provision and certain other
provisions under the management agreement.
In May, 1995, the Partnership and Hyatt agreed to modify the management
agreement. Under the terms of the new agreement, Hyatt would be entitled
to an annual fee equal to a percentage of the hotel's net revenues in
excess of annual debt service, not to exceed an overall percentage cap.
In addition, Hyatt has agreed to certain expense reductions that should
increase the hotel's cash flow, and the Partnership has agreed to prepay
$3 million of the senior debt with cash accumulated at the Hotel.
3. Related Party Transactions
The Partnership borrowed funds from an affiliate of Realty to fund
property operating deficits and capital expenditures at certain
properties. Interest expense, calculated at the prime rate, was $62,931
and $39,642 for the three months ended March 31, 1995 and 1994,
respectively. The prime rate was 9.0% at March 31, 1995. At March 31,
1995 and 1994, the balances due to the affiliate, including accrued
interest, were $2,898,580 and $2,668,888, respectively.
Additionally, in conjunction with a 1991 refinancing of the hotel at
Bayport Plaza, an affiliate of Realty guaranteed a maximum of $5,350,000
of the first mortgage debt. Advances made by the guarantor to the first
mortgage lender under this guaranty (which constitute loans from the
guarantor to the Partnership which must be repaid by the Partnership)
equalled $2,166,098 through March 31, 1995 and 1994. Consequently, the
remaining potential liability of the guarantor to the lender under the
guaranty as of March 31, 1995 was $3,183,902. Taking into account
interest accruals, at the prime rate, as a result of these advances under
the guaranty, the Partnership owed the guarantor $2,681,414 and
$2,477,268 as of March 31, 1995 and 1994, respectively. No portion of
this indebtedness to the affiliate has been repaid to date.
The Managing General Partner is entitled to receive a management fee
based on a percentage of distributable cash. Because there was no
distributable cash flow, the Managing General Partner did not receive a
fee for the three months ended March 31, 1995 or 1994. As of March 31,
1995 and 1994, $422,987 remained unpaid.
Realty performs administrative functions, processes investor transactions
and prepares tax information for the Partnership. For the three months
ended March 31, 1995 and 1994, Realty incurred $58,470 and $56,736,
respectively, for these services. As of March 31, 1995 and 1994, the
balances due to Realty were $898,665 and $601,386, respectively.
An affiliate of the Partnership's joint venture partner at Braker Center
had funded shortfall loans to the property. In 1994, the balance due to
the affiliate of $19,200 was repaid.<PAGE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Partnership raised $78,594,000 in a public offering which was
terminated in 1986. The Partnership has no plans to raise additional
capital.
The Partnership used the proceeds from the offering to make leveraged
investments in four properties (one of which was lost through foreclosure
in July 1992). No additional investments are planned.
Many real estate markets are stabilizing or improving, primarily due to
the continued absence of significant construction activity. However, the
recovery of the office market has been and may continue to be slow
because tenant demand is weak as a result of continued downsizing by many
major corporations. Increases in import/export sales could provide
support for continuing absorption of space. Improvement in the economy
and a lack of new construction in the hotel market is slowly resulting
in increased occupancy and room rates.
Real estate markets are generally divided into sub-markets by geographic
location and property type. Not all sub-markets have been affected
equally by the above factors.
The Partnership's liquidity depends upon cash flow from operations of its
properties and expenditures for tenant improvements and leasing
commissions in connection with the leasing of vacant space. For the
three months ended March 31, 1995, all the Partnership's property
investments generated positive cash flow from operations. The
Partnership expects that its property investments will continue to
generate positive cash flow for the remainder of 1995.
The Partnership's current cash balances are being reserved primarily for
debt service, working capital, and the replacement of certain furniture,
fixtures and equipment at the hotel pursuant to the hotel loan and
management agreements. Other than these reserves, the Partnership's
current cash reserves are nominal.
In May 1994, the partnerships that own the Peninsula Office Park
properties completed an extension and modification agreement for mortgage
loans on the properties. Under this agreement, the lender agreed to
reduce the interest accrual and pay rates under the loans to 9.5%, and
8.25%, respectively, and to extend the maturity dates to December 1,
1996. The borrowers may further extend the maturity dates of the
modified loans if they make partial paydowns of the mortgage debt.
During the revised loan term, the borrowers are prohibited from making
cash distributions to the Partnership and the Partnership's joint venture
partner.
As of March 31, 1995, the Partnership has borrowed $5,574,992, including
accrued and unpaid interest, from an affiliate of the Managing General
Partner.
The Partnership has not paid a distribution to the Partners since the
fourth quarter of 1990. Through March 31, 1995, the General Partners
have deferred cash distributions totaling $262,316.
See also Note 2 to the consolidated financial statements in Item 1.
Operations
Fluctuations in the Partnership's operating results for the three months
ended March 31, 1995, as compared to 1994 are primarily attributable to
the following:
The increase in hotel operating revenue is primarily the result of
increased food and beverage income. Increases in food and beverage
expenses were offset by decreased management fees.
The decrease in rental income and property operating expenses are
attributable to the sale of one of the warehouses at Braker Center in
March 1994.
Depreciation expense decreased primarily due to lower depreciation
charges at the hotel at Bayport Plaza.
Equity in net losses of partnerships increased as a result of increased
operating expenses at Peninsula Office Park.
A summary of the hotel, office and warehouse/research and development
building markets where the Partnership's properties are located and the
performance of each property is as follows:
The hotel market in the Westshore area of Tampa Bay, FL continued to
improve during the three months ended March 31, 1995 as a result of
improvements in the economy and a lack of new supply. As of March 31,
1995, average occupancy was 83%. As described above, revenues and
profits at the Bayport Plaza Hyatt Regency Hotel increased during the
first quarter of 1995.
The Bayport Plaza Office Building, located in the same project as the
Hotel, is in an improved office market due to a lack of new construction.
The market vacancy rate for Class A buildings in the Westshore market is
approximately 11%. However, the downtown Tampa market is significantly
weaker, and this may adversely impact the Westshore market. However,
during the first three months of 1995, occupancy at the property
increased from 90% to 92%.
Braker Center, located in the Austin, TX industrial market, consists of
four office/research and development buildings, a warehouse and vacant
land. The industrial building market in Austin remains strong. The
current market vacancy rate is 5%, which has resulted in new development
of warehouse space. An estimated 559,000 square feet of new warehouse
space is currently under construction. As of March 31, 1995, occupancy
at the four office/research and development buildings remained at
approximately 85% and the occupancy at the warehouse is 100%.
The office market in San Mateo, CA, the location of Peninsula Office
Park, is an improving market characterized by declining vacancy rates
(approximately 7% at March 31, 1995), steady leasing activity,
diminishing availability of space greater than 20,000 square feet, and
no new speculative construction. As of March 31, 1995, occupancy at the
six office buildings is approximately 99%. However, the 17,000 square
foot restaurant is vacant.
Inflation
Inflation has been consistently low during the periods presented in the
financial statements and, as a result, has not had a significant effect
on the operations of the Partnership or its properties.
<PAGE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - not applicable.
Item 2. Changes in Securities - not applicable.
Item 3. Defaults upon Senior Securities - not applicable.
Item 4. Submission of Matters to a Vote of Security Holders -
not applicable.
Item 5. Other Information - not applicable.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits - not applicable.
b) Reports on Form 8-K - not applicable.
<PAGE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DEAN WITTER REALTY GROWTH
PROPERTIES, L.P.
By: Dean Witter Realty Growth
Properties Inc.
Managing General Partner
Date: May 12, 1995 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: May 12, 1995 By: /s/Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Registrant is a limited partnership which invests in real estate and real
estate joint ventures. In accordance with industry practice, its balance
sheet is unclassified. For full information, refer to the accompanying
unaudited financial statements.
</LEGEND>
<CIK> 0000765923
<NAME> DEAN WITTER REALTY GROWTH PROPERTIES L.P.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 6,122,943
<SECURITIES> 0
<RECEIVABLES> 2,141,109
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 56,266,944<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (17,312,087)<F2>
<TOTAL-LIABILITY-AND-EQUITY> 56,266,944<F3>
<SALES> 0
<TOTAL-REVENUES> 8,770,569<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,485,517
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,317,445
<INCOME-PRETAX> 967,607
<INCOME-TAX> 0
<INCOME-CONTINUING> 967,607
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 967,607
<EPS-PRIMARY> 11.82<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net investments
in real estate of $46,000,416, net deferred expenses of $1,577,495 and
other assets of $424,981.
<F2>Represents partners' capital deficiency.
<F3>Liabilities include mortgage notes payable of $54,893,325,
investments in unconsolidated Partnerships of $6,962,876, due to
affiliates of $6,901,646, minority interests of $1,262,552,
accounts payable and other liabilities of $3,558,632.
<F4>Total revenue includes hotel operating revenue of $8,368,407, rental
revenue of $372,026 and interest and other revenue of $30,136.
<F5>Represents net loss per Unit of limited partnership interest.
</FN>
</TABLE>
