FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-14530
DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP
(Exact name of small business issuer as specified in its charter)
Delaware 62-1242144
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
Check whether the issuer (1) 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 .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1995
<S> <C> <C>
Assets
Cash:
Unrestricted $ 1,271,355
Restricted--tenant security deposits 99,281
Accounts receivable 1,977
Escrow for taxes 289,191
Restricted escrows 257,950
Other assets 327,845
Investment properties:
Land $ 4,119,544
Buildings and related personal property 19,273,372
23,392,916
Less accumulated depreciation (8,344,017) 15,048,899
Investment in Joint Venture 306,984
$17,603,482
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 38,306
Tenant security deposits 98,566
Accrued taxes 315,452
Other liabilities 109,681
Mortgage notes payable 11,964,053
Partners' Capital (Deficit)
General partners $ (616,942)
Limited partners (26,776 units
issued and outstanding) 5,694,366 5,077,424
$17,603,482
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
b) DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S>
Revenues: <C> <C> <C> <C>
Rental income $1,072,168 $1,010,349 $3,164,754 $3,008,585
Other income 69,510 61,841 179,374 145,067
Total revenues 1,141,678 1,072,190 3,344,128 3,153,652
Expenses:
Operating 293,522 290,573 895,572 899,189
General and administrative 57,730 52,472 172,773 170,285
Property management fees 55,869 51,759 164,849 155,335
Maintenance 143,611 180,047 379,461 417,950
Depreciation 197,426 185,223 581,702 550,244
Interest 286,790 287,483 860,052 862,537
Property taxes 104,149 102,383 316,931 308,478
Total expenses 1,139,097 1,149,940 3,371,340 3,364,018
Loss on disposition of
property -- -- -- (61,004)
Equity in income of
joint venture 6,671 9,335 38,423 34,987
Net income (loss) $ 9,252 $ (68,415) $ 11,211 $ (236,383)
Net income (loss) allocated
to general partners (3%) $ 278 $ (2,052) $ 336 $ (7,091)
Net income (loss) allocated
to limited partners (97%) 8,974 (66,363) 10,875 (229,292)
$ 9,252 $ (68,415) $ 11,211 $ (236,383)
Net income (loss) per limited
partnership unit $ .34 $ (2.48) $ .41 $ (8.56)
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
c) DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 26,776 $ 1,000 $26,776,000 $26,777,000
Partners' capital (deficit)
at December 31, 1994 26,776 $(608,276) $ 5,974,555 $ 5,366,279
Distributions paid to partners -- (9,002) (291,064) (300,066)
Net income for the nine months
ended September 30, 1995 -- 336 10,875 11,211
Partners' capital (deficit)
at September 30, 1995 26,776 $(616,942) $ 5,694,366 $ 5,077,424
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
d) DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 11,211 $ (236,383)
Adjustments to reconcile net income (loss)
to cash provided by operating activities:
Depreciation 581,702 550,244
Amortization of discounts and loan costs 60,518 54,560
Equity in income of joint venture (38,423) (34,987)
Loss on disposition of property -- 61,004
Change in accounts:
Restricted cash (15,405) (10,268)
Accounts receivable 4,708 39,509
Escrows for taxes and insurance 69,486 (61,991)
Other assets -- --
Accounts payable (65,678) (30,769)
Accrued property taxes (30,329) 54,580
Tenant security deposit liabilities 12,615 11,555
Other liabilities (36,200) 20,968
Net cash provided by
operating activities 554,205 418,022
Cash flows from investing activities:
Property improvements and replacements (215,794) (173,138)
Deposits to restricted escrows (11,722) (14,686)
Receipts from restricted escrows 26,697 198,131
Distributions from joint venture 175,000 93,531
Net cash (used in) provided by
investing activities (25,819) 103,838
Cash flows from financing activities:
Payments on mortgage notes payable (104,419) (95,976)
Due to affiliates -- (307,519)
Distributions paid (300,066) (153,206)
Loan cost -- (40,923)
Net cash used in financing
activities (404,485) (597,624)
Net increase (decrease) in cash 123,901 (75,764)
Cash at beginning of period 1,147,454 1,039,642
Cash at end of period $1,271,355 $ 963,878
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 834,012 $ 807,978
</TABLE>
[FN]
See Accompanying Notes to Financial Statements
e) DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the Managing General Partner, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the nine month
period ended September 30, 1995, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1995. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's annual report on Form 10-KSB for the year ended December 31,
1994.
Certain reclassifications have been made to the 1994 information to conform
to the 1995 presentation.
Note B Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. Balances and other transactions with
Insignia Financial Group, Inc. and affiliates in 1995 and 1994 are as follows:
Nine Months Ended
September 30,
1995 1994
Property management fees $164,849 $155,335
Data processing services 3,075 3,500
Marketing services 4,072 5,270
Reimbursement for services of affiliates 98,838 105,570
Construction service fees 921 987
The Partnership insures its properties under a master policy through an
agency and insurer unaffiliated with the Managing General Partner. An affiliate
of the Managing General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The current agent
assumed the financial obligations to the affiliate of the Managing General
Partner, who receives payments on these obligations from the agent. The amount
of the partnership's insurance premiums accruing to the benefit of the affiliate
of the Managing General Partner by virtue of the agent's obligations is not
significant.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of four apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 1995 and 1994:
Average
Occupancy
Property 1995 1994
Northsprings Apartments
Atlanta, Georgia 96% 97%
Lakeside Apartments
Charlotte, North Carolina 97% 90%
Bexley House Apartments
Columbus, Ohio 90% 91%
Covington Pointe Apartments
Dallas, Texas 89% 92%
The increase in occupancy at Lakeside is attributable to a strong Charlotte
market, the successful marketing efforts in the Apartment Guide and use of
relocation services. Covington Pointe's occupancy decreased due to the
construction of apartments in the North Dallas market.
The Partnership's net income for the nine months ended September 30, 1995,
was $11,211 compared to a net loss of $236,383 for the corresponding period of
1994. The Partnership's net income for the third quarter of 1995 was $9,252
compared to a net loss of $68,415 for the corresponding period of 1994. The
increase in net income is attributable to an increase in rental revenue and
other income combined with a decrease in maintenance expense and loss on
disposition of property during 1995. Rental revenue has increased due to rate
increases at all of the properties and increased occupancy at Lakeside
Apartments. Other income has increased as a result of increased cleaning and
damage fees at Lakeside Apartments due to the higher occupancy and turnover
rates. Maintenance expense has decreased due to a decrease in required repairs
to the properties in 1995 as these repairs were performed in 1994. Also,
during the second quarter of 1994, the Partnership recognized $61,000 of loss
on disposition of property related to roof replacement.
Offsetting the increase in net income was an increase in general and
administrative expenses due to higher audit fees and administrative costs.
The Partnership owns 17.5% of Sterling Crest Joint Venture. Equity in the
income of the joint venture increased as a result of an increase in net income
of Sterling Crest Joint Venture's investment property, Brighton Crest. Brighton
Crest's net income increased due to an increase in rental rates combined with a
decrease in general and administrative costs incurred for training and travel of
personnel.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expense. As part of this plan, the Managing General Partner attempts to protect
the Partnership from the burden of inflation-related increases in expenses by
increasing rents and maintaining a high overall occupancy level. However, due
to changing market conditions, which can result in the use of rental concessions
and rental reductions to offset softening market conditions, there is no
guarantee that the Managing General Partner will be able to sustain such a plan.
At September 30, 1995, the Partnership had unrestricted cash of $1,271,355
compared to $963,878 at September 30, 1994. Cash flows provided by operating
activities increased as a result of the recognition of net income for the nine
months ended September 30, 1995, versus a net loss for the same period of 1994
as previously discussed. Cash provided by escrows for taxes and insurance
increased due to an increase in tax payments from the escrows as a result of an
increase in the tax assessed values for Covington Pointe and Northsprings. Cash
provided by accounts receivable decreased in 1995 as a result of a tax refund
received during the nine months ended September 30, 1994, for the overpayment of
1993 property taxes by Northsprings. Net cash used in investing activities
increased primarily as a result of an increase in property improvements and
replacements. Receipts from restricted escrows decreased due to the depletion
of reserves during 1994. Net cash used in financing activities decreased due
to the payment of amounts due to affiliates during the first quarter of 1994
which was partially offset by an increase in distributions during 1995.
The sufficiency of existing liquid assets to meet future liquidity and
capital expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The mortgage
indebtedness of $11,964,053, net of discount, is amortized over varying periods
with required balloon payments ranging from July 1996 to October 2003, at which
time the properties will either be refinanced or sold. Future cash
distributions will depend on the levels of net cash generated from operations,
capital expenditure requirements, property sales and the availability of cash
reserves. Distributions to partners during the nine months ended September 30,
1995, were $300,066 versus $153,206 for 1994.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K: None filed during the quarter ended September
30, 1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DAVIDSON INCOME REAL ESTATE, L.P.
By: DAVIDSON DIVERSIFIED PROPERTIES, INC.,
as Managing General Partner
By:/s/ Carroll D. Vinson
Carroll D. Vinson
President
By:/s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: November 8, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Davidson
Income Real Estate LP 1995 Third Quarter 10-QSB and is qualified in its entirety
by reference to such 10-QSB.
</LEGEND>
<CIK> 0000768598
<NAME> DAVIDSON INCOME REAL ESTATE LP
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,271,355
<SECURITIES> 0
<RECEIVABLES> 1,977
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 23,392,916
<DEPRECIATION> 8,344,017
<TOTAL-ASSETS> 17,603,482
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,964,053
<COMMON> 0
0
0
<OTHER-SE> 5,077,424
<TOTAL-LIABILITY-AND-EQUITY> 17,603,482
<SALES> 0
<TOTAL-REVENUES> 3,344,128
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,371,340
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,211
<EPS-PRIMARY> .41
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
