5
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 September 30, 1997
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 1 of 13
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<CAPTION>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
September 30,
December 31,
1997 1996
ASSETS
<S> <C>
<C>
Cash and cash equivalents $ 1,065,706
$10,273,472
Deferred expenses, net 176,905
204,832
Sale proceeds receivable -
1,661,039
Other assets 12,661
113,818
$ 1,255,272
$12,253,161
LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY)
Accounts payable and accrued expenses $ 326,829 $
552,519
Excess of distributions and losses over cost of
investment in partnership 1,186,283
1,186,283
1,513,112
1,738,802
Partners' capital (deficiency):
General partners (3,270,455)
(3,267,091)
Limited partners ($1,000 per Unit, 78,594 Units issued)
3,012,615 13,781,450
Total partners' capital (deficiency) (257,840)
10,514,359
$ 1,255,272
$12,253,161
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and nine months ended September 30, 1997 and 1996
<CAPTION>
Three months ended Nine
months ended
September 30,
September 30,
1997 1996 1997 1996
<S> <C> <C> <C>
<C>
Revenues:
Hotel operating $ - $1,116,500 $ -
$17,873,765
Interest and other 10,467 176,582
54,683 281,248
Gain on sale of real estate - 42,433,472
- - 42,411,767
10,467 43,726,554 54,683
60,566,780
Expenses:
Hotel operating - 1,356,897 -
12,604,624
Interest - 1,024,900 -
3,079,643
Property operating - - -
33,912
Depreciation - - -
910,874
Amortization 9,309 40,850 27,927
139,259
Equity in net losses of
partnerships - 145,986 -
456,751
General and administrative 56,214 106,214
110,851 346,040
(65,523) 2,674,847
138,778 17,571,103
Income (loss) before minority
interest (55,056) 41,051,707
(84,095) 42,995,677
Minority interest in
loss of joint ventures - 46,884 -
9,352
Net income (loss) $(55,056) $41,098,591 $
(84,095) $43,005,029
Net income (loss) allocated to:
Limited partners $(52,854) $41,134,199 $
(80,731) $42,964,379
General partners (2,202) (35,608)
(3,364) 40,650
$(55,056) $41,098,591 $
(84,095) $43,005,029
Net income (loss) per Unit of
limited partnership interest $ (0.67) $ 523.37 $
(1.03) $ 546.66
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL DEFICIENCY
Nine months ended September 30, 1997
<CAPTION>
Limited General
Partners Partners Total
<S> <C> <C>
<C>
Partners' capital (deficiency)
at January 1, 1997 $ 13,781,450
$(3,267,091) $ 10,514,359
Net loss (80,731)
(3,364) (84,095)
Cash distributions (10,688,104) -
(10,688,104)
Partners' capital (deficiency)
at September 30, 1997 $ 3,012,615
$(3,270,455) $ (257,840)
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 1997 and 1996
<CAPTION>
1997 1996
<S> <C>
<C>
Cash flows from operating activities:
Net (loss) income $ (84,095) $
43,005,029
Adjustments to reconcile net(loss)income to net cash
provided by operating activities:
Depreciation and amortization 27,927
1,050,133
Gain on sale of real estate -
(42,411,767)
Minority interest in joint ventures' operations -
(9,352)
Equity in net losses of partnerships -
456,751
Decrease (increase) in:
Sale proceeds receivable 1,661,039 -
Accounts receivable -
1,478,752
Restricted cash -
3,570,238
Other assets 101,157
263,284
Increase (decrease) in:
Accounts payable and accrued expenses
(225,690) (2,828,641)
Due to affiliates -
(184,359)
Other liabilities -
636
Net cash provided by operating activities
1,480,338 4,390,704
Cash flows from investing activities:
Proceeds from sale of real estate -
73,213,997
Additions to real estate -
(106,350)
Net cash provided by investing activities -
73,107,647
Cash flows from financing activities:
Cash distributions (10,688,104)
(29,313,697)
Repayment of mortgage notes payable -
(42,000,000)
Repayment of loan to affiliates -
(6,200,991)
Net cash used in financing activities
(10,688,104) (77,514,688)
Decrease in cash and cash equivalents (9,207,766)
(16,337)
Cash and cash equivalents at beginning of period
10,273,472 2,072,917
Cash and cash equivalents at end of period $
1,065,706 $ 2,056,580
Supplemental disclosure of cash flow information:
Cash paid for interest $ - $
3,465,102
See accompanying notes to consolidated financial statements.
</TABLE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Notes to Consolidated Financial Statements
1. The Partnership
Dean Witter Realty Growth Properties, L.P. (the
"Partnership") is a limited partnership formed 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").
The financial statements include the accounts of the
Partnership, and in 1996, Braker Associates and Bayport
Ltd.'s investment in the Bayport Plaza Hyatt hotel on a
consolidated basis. The Partnership's interests in
Bayport Ltd.'s investment in the Bayport Plaza office
building and, in 1996, Peninsula/DW Associates are
accounted for on the equity method.
At September 30, 1997, the Partnership's remaining
property investment consisted of a 45.79% indirect
interest in the Bayport Plaza office building through a
joint venture (the "Joint Venture"). On October 20,
1997, the office building was sold (see Note 2).
Pursuant to the Partnership Agreement, the sale
effectuated the dissolution of the Partnership and,
accordingly, the Partnership is in the process of
winding up its affairs. The Partnership is in the
process of determining the expenses of liquidation and
reserves, if any, required to wind up its affairs and
terminate. Once such expenses and reserves are
determined, the Partnership will distribute its cash in
excess of the required amounts to Limited Partners.
The Partnership's records are maintained on the accrual
basis of accounting for financial reporting and tax
purposes.
Net income (loss) per Unit amounts are calculated by
dividing net income (loss) allocated to Limited
Partners, in accordance with the Partnership Agreement,
by the weighted average number of Units outstanding.
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Notes to Consolidated Financial Statements
In the opinion of management, the accompanying
financial statements, which have not been audited,
include all adjustments necessary to present fairly the
results for the interim period. Except for the gain on
real estate sold in 1996, such adjustments consist only
of normal recurring accruals.
These financial statements should be read in
conjunction with the annual financial statements and
notes thereto included in the Partnership's annual
report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31,
1996. Operating results of interim periods may not be
indicative of the operating results for the entire
year.
The Financial Accounting Standards Board has recently
issued several accounting pronouncements. Statement
No. 128, "Earnings per Share" establishes standards for
computing and presenting earnings per share, and
statement No. 129 "Disclosure of Information about
Capital Structure" establishes standards for disclosing
information about an entity's capital structure. These
two standards will be effective for the Partnership's
1997 year-end financial statements. Statement No. 130,
"Reporting Comprehensive Income" establishes standards
for reporting and display of comprehensive income and
its components. Statement No. 131, "Disclosures about
Segments of an enterprise and Related Information"
establishes standards for the way that public business
enterprises report information about operating segments
in annual financial statements and requires that those
enterprises report selected information about operating
segments in interim financial reports issued to
shareholders. It also establishes standards for related
disclosures about products and services, geographic
areas, and major customers. These two standards are
effective for the Partnership's 1998 financial
statements.
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Notes to Consolidated Financial Statements
Management of the Partnership does not believe that
these new standards will have any effect on the
Partnership's computation or presentation of net income
or net income per unit of limited partnership interest,
or its disclosures of capital structure, or other
disclosures.
2. Bayport Plaza Office Building
The excess of distributions and losses over cost of
investments in partnership is attributable to the
Partnership's investment in the Bayport Plaza office
building. During the nine months ended September 30,
1997, the office building had revenues of $4,161,131,
operating expenses of $3,720,923 and net income of
$440,208. Under the terms of the Joint Venture
agreement, all of the property's income and cash flow
from operations in 1997 and 1996 were allocated to
another partner.
Pursuant to an agreement dated as of September 23,
1997, as amended, the Joint Venture agreed to sell the
office building to Aetna Life Insurance Company for
$45,700,000. The Partnership owns a 45.79% indirect
general partnership interest in the Joint Venture, as a
result of its 99% general partnership interest in
Bayport, Ltd., which owns a 46.25% general partnership
interest in the Joint Venture.
The closing of the sale took place on October 20, 1997.
The purchase price was received in cash at closing.
Approximately $20,000,000 of the sales proceeds were
used to repay the existing mortgage loan encumbering
the property, including accrued interest thereon and
prepayment premium. The remaining cash proceeds, net
of closing costs, were allocated to the Partnerhip
(approximately $7,104,000) and to an unaffiliated
partner (approximately $17,172,000) pursuant to the
provisions of the Joint Venture agreement.
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Notes to Consolidated Financial Statements
3. Related Party Transactions
Prior to 1995, the Partnership borrowed funds from an
affiliate of Realty. These borrowings were repaid in
the second and third quarters of 1996. Interest
expense, calculated at the prime rate, was $224,461 for
the six months ended June 30, 1996.
Realty performs administrative functions, processes
investor transactions and prepares tax information for
the Partnership. For the nine months ended September
30, 1997 and 1996, the Partnership incurred expenses of
$57,145 and $134,070, respectively, for these services.
These amounts are included in general and
administrative expenses.
4. Litigation
Various public partnerships sponsored by Realty
(including the Partnership and its Managing General
Partner) are defendants in a
number of class action lawsuits pending in state and
federal courts. The complaints allege a variety of
claims, including breach of fiduciary duty, fraud,
misrepresentation and related claims, and seek
compensatory and other damages and equitable relief.
The defendants intend to vigorously defend the actions.
It is impossible to predict the effect, if any, the out
come of these actions might have on the Partnership's
financial statements.
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 five properties. One of
the properties was lost through foreclosure in 1992;
all of the remaining properties were sold prior to 1997
except the Bayport Plaza office building, which was
sold on October 20, 1997. (See Note 2 to the
consolidated financial statements). The Partnership
received approximately $7,104,000, its share of the
net cash proceeds from the sale.
Prior to the sale of the office building, the
Partnership realized no cash flow from the Joint
Venture, as available cash flow was distributed 100% to
another partner, in accordance with the provisions of
the Joint Venture agreement,
The Partnership Agreement provides that the Partnership
shall terminate upon the sale of the Partnership's last
investment, and that dissolution shall be effective on
the day on which the event arises giving rise to the
dissolution. Accordingly, the Partnership dissolved,
pursuant to the terms of its Partnership Agreement,
effective October 20, 1997. The Partnership intends to
proceed to wind up its affairs, and upon conclusion of
liquidation, terminate its existence by filing a
certificate of cancellation in the office of the
Delaware Secretary of State.
The Partnership is in the process of determining the
expenses of liquidation and reserves, if any, required
to wind up its affairs and terminate. Once such
expenses and reserves are determined, the
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Partnership will distribute its cash in excess of the
required amounts to Limited Partners. The amount and
timing of the distribution is uncertain.
All of the net proceeds received by the Partnership
from the sales of the Partnership's investments, other
than the proceeds from the Bayport Plaza office
building, have been distributed to the Limiter
Partners.
Total cash distributed to the Limited Partners over the
life of the Partnership will be less than the capital
contributed by the Limited Partners.
Except as discussed herein and in the consolidated
financial statements, the Managing General Partner is
not aware of any trends, or events, commitments or
uncertainties that may have a material impact on
liquidity.
Operations
Fluctuations in the Partnership's operating results for
the three- and nine-month periods ended September 30,
1997 compared to 1996 are primarily attributable to the
following:
The sale of the Bayport Plaza Hyatt Hotel in the third
quarter of 1996 and of the Partnership's joint venture
interest in the Peninsula Office Park in the fourth
quarter of 1996 resulted in the elimination of all
operating revenues and expenses, interest expense,
depreciation, equity in losses of partnerships, and the
decrease in amortization in 1997. The Partnership was
not entitled to an allocation of income from the
Bayport Plaza office building in 1997 and 1996.
General and administrative expenses decreased in 1997
compared to 1996 as a result of the reduction of
operating activities of the Partnership.
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
The Bayport Plaza office building was 100% leased at
September 30, 1997. The property was sold October 20,
1997. (See Note 2 to the consolidated financial
statements).
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.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
An exhibit index has been filed as part of
this Report on Page E1.
(b) Reports on Form 8-K - none.
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: November , 1997 By: /s/ E. Davisson Hardman,
Jr. E. Davisson Hardman,
Jr.
President
Date: November , 1997 By: /s/ Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Exhibit Index
Quarter Ended September 30, 1997
Exhibit
No. Description
27 Financial Data Schedule
E1
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEPT-30-1997
<CASH> 1,065,706
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,255,272<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (257,840)<F2>
<TOTAL-LIABILITY-AND-EQUITY> 1,255,272<F3>
<SALES> 0
<TOTAL-REVENUES> 54,683<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 138,778<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (84,095)
<INCOME-TAX> 0
<INCOME-CONTINUING> (84,095)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (84,095)
<EPS-PRIMARY> (1.03)<F6>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash, total assets include net deferred expenses of
$176,905, and other assets of $12,661.
<F2>Represents partners' capital deficiency.
<F3>Liabilities include investments in unconsolidated partnerships of
$1,186,283 and accounts payable and other liabilities of $326,829.
<F4>Represents interest and other revenue.
<F5>Total expense includes amortization of $27,927 and
general and administrative of $110,851.
<F6>Represents net income per Unit of limited partnership interest.
</FN>
</TABLE>
