FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(D)
(As last amended by 34-31905, eff. 4/26/93)
FORM 10-KSB/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [Fee Required]
For the fiscal year ended December 31, 1995
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]
For the transition period.........to.........
Commission file number 0-14530
DAVIDSON INCOME REAL ESTATE, L.P.
(Name of small business issuer 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 (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 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, and no disclosure will be contained, 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]
State issuer's revenues for its most recent fiscal year. $4,506,804
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of December 31, 1995. Market Value information for the
Registrant's partnership interests is not available. Should a trading market
develop for these interest, it is the Managing General Partners's belief that
such trading would not exceed $25,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Prospectus of Registrant dated July 26, 1985 (included in
Registration Statement, No. 2-97539, of Registrant) are incorporated by
reference into Parts I and III.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Davidson Income Real Estate, L.P. (the "Registrant" or "Partnership") is a
Delaware limited partnership organized in April 1985. The general partners of
the Registrant are Davidson Diversified Properties, Inc., a Tennessee
corporation ("Managing General Partner"), David W. Talley and James T. Gunn
(collectively, "Individual General Partners") (collectively, the "General
Partners").
The offering of the Registrant's limited partnership units ("Units")
commenced on July 26, 1985, and terminated on May 30, 1986. The Registrant
received gross proceeds from the offering of $26,776,000 and net proceeds of
$25,700,160.
The Registrant's primary business is to acquire, operate and hold
existing, income-producing residential and commercial real estate properties.
Industry segment information is not relevant. The Registrant does not engage in
any foreign operations nor derive any income from foreign sources.
All of the net proceeds of the offering were invested in the Registrant's
four properties and in a 17.5% joint venture interest which owns one property.
See "Item 2. Description of Properties," below for a description of the
Registrant's properties.
The Registrant receives income from its properties and is responsible for
operating expenses, capital improvements and debt service payments under
mortgage obligations secured by the properties. The Registrant financed its
properties primarily through non-recourse debt. Therefore, in the event of
default, the lender can generally only look to the subject property for recovery
of amounts due.
Both the income and expenses of operating the properties owned by the
Registrant are subject to factors outside of the Registrant's control, such as
oversupply of similar properties resulting from overbuilding, increases in
unemployment or population shifts, reduced availability of permanent mortgage
funds, changes in zoning laws, or changes in patterns or needs of users. In
addition, there are risks inherent in owning and operating residential
properties because such properties are susceptible to the impact of economic and
other conditions outside of the control of the Registrant.
A further description of the Partnership's business is included in
Management's Discussion and Analysis or Plan of Operation included in "Item 6"
of this form 10-KSB.
The Registrant has no employees. Management and administrative services
are performed by the Managing General Partner and by Insignia Management Group,
L.P., an affiliate of Insignia Financial Group, Inc. ("Insignia"). Effective
January 1, 1992, affiliates of Insignia began to provide partnership
administration, asset management, and investor services for the Partnership.
See "Item 12. Certain Relationships and Related Transactions" for an enumeration
of the affiliates and the compensation and reimbursement received from the
Registrant during 1995 and 1994.
The real estate business in which the Partnership is engaged is highly
competitive and the Partnership is not a significant factor in this industry.
The Registrant's real property investments are subject to competition from
similar types of properties in the vicinities in which they are located. In
addition, various limited partnerships have been formed by related parties to
engage in business which may be competitive with the Registrant.
ITEM 2. DESCRIPTION OF PROPERTIES
The following tables set forth the Registrant's investments in properties:
Date of
Property Purchase Type of Ownership Use
Northsprings Apartments 11/13/85 Fee ownership subject Apartment
Atlanta, Georgia to first and second 120 units
mortgages.
Lakeside Apartments 05/20/86 Fee ownership subject Apartment
Charlotte, North Carolina to first mortgage. 216 units
Bexley House Apartments 09/30/86 Fee ownership subject Apartment
Columbus, Ohio to first and second 64 units
mortgages.
Covington Pointe 03/10/87 Fee ownership subject Apartment
Apartments to first and second 180 units
Dallas, Texas mortgages.
Brighton Crest Apartments Phase I Registrant has a 17.5% Apartment
Marietta, Georgia 06/30/87 interest in the Joint 320 units
Venture which has fee
Phase II ownership subject to
12/15/87 first and second
mortgages.
SCHEDULE OF PROPERTIES:
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
Northsprings $4,495,342 $1,807,059 5-25 yrs S/L $ 3,826,410
Lakeside 6,247,227 2,423,360 5-25 yrs S/L 5,068,325
Bexley House 3,450,580 1,225,817 5-25 yrs S/L 2,891,763
Covington Pointe 9,271,802 2,955,408 5-25 yrs S/L 7,123,599
$23,464,951 $8,411,644 $18,910,097
See Note A to the financial statements included in "Item 7" for a description
of the Partnership's depreciation policy.
SCHEDULE OF MORTGAGES:
<TABLE>
<CAPTION>
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Property 1995 Rate Amortized Date Maturity
<S> <C> <C> <C> <C> <C>
Northsprings
1st mortgage $ 1,935,054 7.83% 28.67 yrs 10/15/03 $1,701,388
2nd mortgage 61,200 7.83% (1) 10/15/03 61,200
Lakeside 3,827,984 10.75% 7.00 yrs 07/01/96 3,812,335
Bexley House
1st mortgage 1,365,032 7.60% 21.40 yrs 11/15/02 1,052,381
2nd mortgage 45,142 7.60% (1) 11/15/02 45,142
Covington Pointe
1st mortgage 4,740,950 7.83% 28.67 yrs 10/15/03 4,168,660
2nd mortgage 149,940 7.83% (1) 10/15/03 149,940
Total 12,125,302
Less unamortized
discounts (193,199)
$11,932,103
<FN>
(1) Interest only payments.
</TABLE>
Average annual rental rate and occupancy for 1995 and 1994 for each
property:
Average Annual Average
Rental Rates Per Unit Occupancy
Property 1995 1994 1995 1994
Northsprings $8,331 $7,660 96% 97%
Lakeside 5,711 5,429 97% 91%
Bexley House 11,113 10,978 91% 90%
Covington Pointe 9,084 9,061 91% 92%
The Managing General Partner attributes the increase in occupancy at
Lakeside Apartments to a strong Charlotte market, the successful marketing
efforts in the Apartment Guide and use of relocation services.
As noted under "Item 1. Description of Business," the real estate
industry is highly competitive. All of the properties of the Partnership are
subject to competition from other residential apartment complexes in the area.
The Managing General Partner believes that all of the properties are adequately
insured. The multi-family residential properties' lease terms are for one year
or less. No residential tenant leases 10% or more of the available rental
space.
Real estate taxes and rates in 1995 for each property were:
1995 1995
Billing Rate
Northsprings $ 57,533 4.03
Lakeside 78,020 1.31
Bexley House 87,697 8.35
Covington Pointe 206,618 2.56
ITEM 3. LEGAL PROCEEDINGS
The Registrant is unaware of any pending or outstanding litigation that is
not of a routine nature. The Managing General Partner of the Registrant
believes that all such matters will be resolved without a material adverse
effect upon the Partnership's financial condition, results of operations, or
liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of 1995, no matter was submitted to a vote of
security holders through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR PARTNERSHIP EQUITY AND RELATED PARTNER MATTERS
As of December 31, 1995, there was minimal trading of the Units in the
secondary market establishing a high and low value of $152 per unit and $35 per
unit, respectively, as quoted in the January 31, 1995, Stanger Report. There
are 3,149 holders of record owning an aggregate of 26,776 units. No public
trading has developed for the Units, and it is not anticipated that such a
market will develop in the future. Distributions of $600,706 were made in 1995
while distributions of $204,874 were made during 1994. Future distributions
will depend on the levels of cash generated from operations, refinancings,
property sales and the availability of cash reserves. Distributions may also be
restricted by the requirement to deposit net operating income (as defined in the
mortgage notes) from the respective properties to the Reserve Accounts until the
Reserve Accounts are funded amounts equal to $400 per apartment unit for
Northsprings and Covington Pointe and $1,000 per apartment unit for Bexley
House.
Pursuant to the terms of the Partnership Agreement, there are restrictions
on the ability of the Limited Partners to transfer their Units. In all cases,
the General Partners must consent to any transfer.
The Revenue Act of 1987 contained provisions which have an adverse impact
on investors in "publicly traded partnerships." Accordingly, the General
Partners have established a policy of imposing limited restrictions on the
transferability of the Units in secondary market transactions. Implementation
of this policy should prevent a public trading market from developing and may
impact the ability of an investor to liquidate his investment quickly. It is
expected that such policy will remain in effect until such time, if ever, as
further clarification of the Revenue Act of 1987 may permit the Registrant to
lessen the scope of the restrictions.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
The Partnership's net loss for the year ended December 31, 1995, was
$216,376 compared to a net loss of $308,178 for the corresponding period of
1994. The decrease in net loss in 1995 is primarily attributable to increased
rental revenue as a result of a $277 increase in the average annual rental rate
per unit of the Partnership's Investment Properties during 1995 in comparison to
1994, and a 6% increase in occupancy at Lakeside Apartments. (See Item 2.
Description of Properties for further discussion.) Other income has increased
as a result of increased cleaning and damage fees at Lakeside Apartments due to
the higher occupancy and turnover rates, and increased lease cancellation fees
at Covington Pointe Apartments due to tenant turnover.
Partially offsetting the decrease in net loss was an increase in
maintenance expense of $69,734 and an increase in loss on disposal of property
of $17,324. Maintenance expense increased due to maintenance projects and
asbestos removal performed at the properties in 1995. Lakeside and Northsprings
Apartments completed major landscaping projects to improve the properties'
appearances. Northsprings incurred additional maintenance expense due to the
removal of asbestos found at the property. Roofs were replaced at both
Northsprings and Lakeside Apartments during 1995 resulting in the loss on
disposal of property. The loss on disposal of property during 1994 also
resulted from roof replacements.
The Partnership owns 17.5% of Sterling Crest Joint Venture. Equity in the
income of the joint venture increased $14,395 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 and an
increase in other income due to increased lease cancellation fees.
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.
Liquidity and Capital Resources
At December 31, 1995, the Partnership had unrestricted cash of $875,770
compared to $1,147,454 at December 31, 1994. Net cash provided by operating
activities decreased as a result of the decrease in accounts payable and accrued
property taxes due to the timing of payments. 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 year ended December 31, 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 and a decrease in cash from receipts from
restricted escrows. Receipts from restricted escrows decreased due to the
depletion of reserves during 1994. Net cash used in financing activities
increased due to an increase in distributions during 1995 which was partially
offset by the payment of amounts due to affiliates during the first quarter of
1994.
The Partnership has no material capital programs scheduled to be performed
in 1996, although certain routine capital expenditures and maintenance expenses
have been budgeted. These capital expenditures and maintenance expenses will be
incurred only if cash is available from operations or is received from the
capital reserve accounts.
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 properties 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 $11,932,103, 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. Refinancing for
the debt encumbering Lakeside Apartments which matures in July 1996 is currently
being discussed with the existing lender, however, there is no assurance that
the refinancing discussions will ultimately be successful. 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 paid to partners during the years ended December 31,
1995 and 1994, were $600,706 and $262,393.
ITEM 7. FINANCIAL STATEMENTS
DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP
LIST OF CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors
Consolidated Balance Sheet - December 31, 1995
Consolidated Statements of Operations - Years ended December 31, 1995
and 1994
Consolidated Statements of Changes in Partners Capital (Deficit) -
Years ended December 31, 1995 and 1994
Consolidated Statements of Cash Flows - Years ended December 31, 1995
and 1994
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Davidson Income Real Estate, L.P.
We have audited the accompanying consolidated balance sheet of Davidson Income
Real Estate, L.P. (A Limited Partnership) as of December 31, 1995, and the
related consolidated statements of operations, changes in partners' capital
(deficit) and cash flows for each of the two years in the period ended December
31, 1995. 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.
We conducted our audits 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 the
Partnership's management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Davidson Income Real Estate, L.P. (A Limited Partnership) as of December 31,
1995, and the consolidated results of its operations and its cash flows for each
of the two years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 15, 1996
DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
December 31, 1995
Assets
Cash:
Unrestricted $ 875,770
Restricted--tenant security deposits 102,759
Accounts receivable 10,305
Escrow for taxes 281,203
Restricted escrows 258,607
Other assets 312,709
Investment properties: (Notes C & F)
Land $ 4,119,544
Buildings and related personal property 19,345,407
23,464,951
Less accumulated depreciation (8,411,644) 15,053,307
Investment in Joint Venture (Note B) 325,423
$17,220,083
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 202,856
Tenant security deposits 102,001
Accrued taxes 294,315
Other liabilities 139,611
Mortgage notes payable (Note C) 11,932,103
Partners' Capital (Deficit)
General partners $ (632,817)
Limited partners (26,776 units
issued and outstanding) 5,182,014 4,549,197
$17,220,083
See Accompanying Notes to Consolidated Financial Statements
DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994
<S> <C> <C>
Revenues:
Rental income $ 4,268,191 $ 4,055,151
Other income 238,613 198,319
Total revenues 4,506,804 4,253,470
Expenses:
Operating 1,212,521 1,204,562
General and administrative 240,034 226,802
Property management fees 221,930 210,096
Maintenance 657,389 587,655
Depreciation 782,111 738,544
Interest 1,144,555 1,150,523
Property taxes 432,678 414,433
Total expenses 4,691,218 4,532,615
Loss on disposal of property (88,825) (71,501)
Equity in income of joint venture (Note B) 56,863 42,468
Net loss (Note D) $ (216,376) $ (308,178)
Net loss allocated to general partners (3%) $ (6,491) $ (9,245)
Net loss allocated to limited partners (97%) (209,885) (298,933)
$ (216,376) $ (308,178)
Net loss per limited partnership unit $ (7.84) $ (11.16)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
<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, 1993 26,776 $(592,299) $ 6,471,630 $ 5,879,331
Distributions paid
to partners -- (6,732) (198,142) (204,874)
Net loss for the year
ended December 31, 1994 -- (9,245) (298,933) (308,178)
Partners' capital (deficit)
at December 31, 1994 26,776 (608,276) 5,974,555 5,366,279
Distributions paid
to partners -- (18,050) (582,656) (600,706)
Net loss for the year
ended December 31, 1995 -- (6,491) (209,885) (216,376)
Partners' capital (deficit)
at December 31, 1995 26,776 $(632,817) $ 5,182,014 $ 4,549,197
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
1995 1994
Cash flows from operating activities:
Net loss $ (216,376) $ (308,178)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 782,111 738,544
Amortization of discounts and loan costs 80,020 74,597
Equity in income of joint venture (56,863) (42,468)
Loss on disposition of property 88,825 71,501
Change in accounts:
Restricted cash (18,883) (11,364)
Accounts receivable (3,620) 46,195
Escrow for taxes 77,474 (109,258)
Accounts payable (20,177) 16,482
Accrued property taxes (51,466) 102,630
Tenant security deposit liabilities 16,050 13,439
Other liabilities (23,093) 66,168
Net cash provided by operating activities 654,002 658,288
Cash flows from investing activities:
Property improvements and replacements (373,563) (294,654)
Deposits to restricted escrows (10,117) (17,415)
Receipts from restricted escrows 24,435 350,723
Distributions from joint venture 175,000 93,531
Net cash (used in) provided by
investing activities (184,245) 132,185
Cash flows from financing activities:
Payments on mortgage notes payable $ (140,735) $ (129,344)
Due to affiliates -- (250,000)
Distributions paid (600,706) (262,393)
Loan cost -- (40,924)
Net cash used in financing activities (741,441) (682,661)
Net (decrease) increase in cash (271,684) 107,812
Cash at beginning of period 1,147,454 1,039,642
Cash at end of period $ 875,770 $1,147,454
Supplemental disclosure of cash flow information:
Cash paid for interest $1,064,535 $1,075,926
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY
Property improvements and replacements
Accounts payable was adjusted $108,255 and $10,794 at December 31, 1995, and
December 31, 1994, respectively, for non-cash amounts in connection with
property improvements and replacements.
See Accompanying Notes to Consolidated Financial Statements
DAVIDSON INCOME REAL ESTATE LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization: Davidson Income Real Estate, L.P. (the "Partnership or
"Registrant") is a Delaware limited partnership organized in April 1985 to
acquire and operate residential and commercial real estate properties.
Principles of Consolidation: The financial statements of the Partnership
include all of the accounts of the Partnership, Bexley House, L.P., and Davidson
IRE Associates, L.P. The Partnership owns 99.99% of Bexley House, L.P., and
99.99% of Davidson IRE Associates, L.P. All significant interpartnership
balances have been eliminated.
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.
Allocations to Partners: Net income (loss) of the Partnership and taxable
income (loss) are allocated 97% to the limited partners and 3% to the general
partners. Distributions from distributable cash from operations are allocated
among the limited partners and the general partners in accordance with the
agreement of limited partnership. Distributions of cash from operations per
limited partnership unit were $21.76 and $7.40 for 1995 and 1994, respectively.
The weighted average number of limited partnership units outstanding for 1995
and 1994 was 26,776 units.
Net income (loss) of the Partnership and taxable income (loss) are allocated 97%
to the limited partners and 3% to the general partners, except for such amounts
which are allocated prior to the Partnership meeting the minimum close
requirements as defined in the partnership agreement. Distributions of
available cash from operations are allocated 97% to the limited partners and 3%
to the general partners. Cash from sales or refinancing are allocated 97% to
limited partners and 3% to general partners until the limited partners have
received an amount of cumulative distributions from sales or refinancings that
equal original invested capital plus an amount which, when added to the prior
distributions to limited partners will equal 12% per annum cumulative
noncompounded on Adjusted Invested Capital, as defined in the agreement of
limited partnership. Thereafter, upon payment to an affiliate of the general
partners certain real estate commissions and incentive fees as described in the
limited partnership agreement, remaining cash from sales or refinancings are
allocated 97% to limited partners and 3% to general partners. In connection
with the liquidation of the Partnership, cash from sales or refinancings and any
remaining working capital reserves shall be allocated among, and distributed to,
the partners in proportion to, and to the extent of, their positive capital
account balances.
Restricted Escrows
Capital Improvement Reserves - At the time of the refinancing of
Northsprings and the financing of Covington Pointe in 1993, $162,915 and
$161,250 of the proceeds were designated for "capital improvement escrows" for
certain capital improvements. At December 31, 1995, Northsprings and Covington
Pointe had unexpended balances of $55,359 and $11,675 for capital improvements.
Upon completion of scheduled property improvements, any excess funds will be
returned for property operations.
At the time of the refinancing of Bexley House Apartments mortgage note payable
in 1992, $122,000 of the proceeds were designated for a capital improvement
escrow for certain capital improvements. At December 31, 1995, $3,355 remained
in escrow for 1996 capital improvements and any excess funds will be returned
for property operations.
Reserve Account - In addition to the Capital Improvement Reserves
established in 1993, general reserve accounts of $48,000 and $72,000 on
Northsprings and Covington Pointe, respectively, were established with the
refinancing and financing proceeds for the properties involved. These funds
were established to cover necessary repairs and replacements of existing
improvements, debt services, out-of-pocket expenses incurred for ordinary and
necessary administrative tasks, and payments of real property taxes and
insurance premiums. The Partnership was required to deposit net operating
income (as defined in the mortgage notes) from the properties to the respective
reserve accounts until the reserve accounts equaled $400 per apartment unit or
$48,000 for Northsprings and $72,000 for Covington Pointe. At December 31,
1995, the account balances were $50,354 and $72,206, respectively, which
includes interest earned on these funds.
During 1992, a general reserve account of $64,000 was established with the
refinancing proceeds for Bexley House. These funds were established to cover
necessary repairs and replacements of existing improvements, debt service, out-
of-pocket expenses incurred for ordinary and necessary administrative tasks, and
payment of real property taxes and insurance premiums. The Partnership is
required to deposit net operating income (as defined in the mortgage note) from
the refinanced property to the reserve account until the reserve account equals
$1,000 per apartment unit or $64,000 in total. At December 31, 1995, the
account balance was $65,658, which includes interest earned on these funds.
Escrows for Taxes: These escrows are held by the Partnership for Bexley House,
Covington Pointe, and Northsprings. The mortgagor holds the escrow for
Lakeside. All escrow funds are designated for the payment of real estate taxes.
Present Value Discounts: Periodically, the Partnership incurs debt at below
market rates for similar debt. Present value discounts are recorded on the
basis of prevailing market rates and are amortized on an interest method over
the life of the related debt. The amortization expense is included in interest
expense.
Investment Properties: During the fourth quarter of 1995, the Partnership
adopted FASB Statement No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of, which requires impairment
losses to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amount. The impairment loss
is measured by comparing the fair value of the asset to its carrying amount.
The effect of adoption was not material.
Depreciation: Depreciation is calculated by the straight-line method over the
estimated lives of the investment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 18 years for additions after March 15, 1984, and before
May 9, 1985, and 19 years for additions after May 8, 1985, and before January 1,
1987, and (2) for personal property over 5 years for additions prior to January
1, 1987. As a result of the Tax Reform Act of 1986, for additions after
December 31, 1986, the modified accelerated cost recovery method is used for
depreciation of (1) real property additions over 27 1/2 years, and (2) personal
property additions over 7 years.
Cash and Cash Equivalents: The Partnership considers unrestricted cash and
certificates of deposit to be cash. At certain times, the amount of cash
deposited at a bank may exceed the limit on insured deposits.
Loan Costs: Loan costs are included in other assets and are being amortized on
a straight-line basis over the life of the loans. The amortization expense is
included in interest expense.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on leases. The Managing
General Partner finds it necessary to offer rental concessions during
particularly slow months or in response to heavy competition from other similar
complexes in the area. During 1995, the properties offered various concessions
including one month free rent and variable move-in allowances. Concessions are
charged to expense as incurred.
Restricted Cash--Tenant Security Deposits: The Partnership requires security
deposits from all apartment lessees for the duration of the lease which are
considered to be restricted cash. Deposits are refunded when the tenant vacates
the apartment if there has been no damage to the unit.
Joint Venture: The Partnership accounts for its investment in Sterling Crest
Joint Venture using the equity method of accounting.
Reclassifications: Certain reclassifications have been made to the 1994
balances to conform to the 1995 presentation.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising expense, included in operating expenses, was $92,840 and $87,516 for
the years ended December 31, 1995 and 1994, respectively.
Fair Value: In 1995, the Partnership implemented Statement of Financial
Accounting Standards No. 107, "Disclosure about Fair Value of Financial
Instruments," which requires disclosure of fair value information about
financial instruments for which it is practicable to estimate that value. The
carrying amount of the Partnership's cash and cash equivalents approximates fair
value due to short-term maturities. The Partnership estimates the fair value of
its fixed rate mortgages by discounted cash flow analysis, based on estimated
borrowing rates currently available to the Partnership. The carrying amounts of
variable-rate mortgages approximate fair value due to frequent re-pricing.
NOTE B - INVESTMENT IN JOINT VENTURE
The Partnership owns a 17.5% interest in Sterling Crest Joint Venture with
Davidson Growth Plus, L.P., an affiliate of the Managing General Partner which
owns the remaining 82.5% of the joint venture. In connection with the joint
venture s purchase of Phase I of Brighton Crest Apartments on June 30, 1987, the
Partnership invested $2,726,696 in the joint venture. The joint venture
purchased Phase II of Brighton Crest Apartments on December 15, 1987.
Summary financial information for Sterling Crest Joint Venture is as follows:
December 31,
1995 1994
Total assets $9,170,623 $10,093,765
Total liabilities (6,728,392) (6,976,465)
Total venturers' equity $2,442,231 $ 3,117,300
December 31,
1995 1994
Total revenues $ 2,391,532 $ 2,241,824
Total expenses (2,066,601) (1,999,150)
$ 324,931 $ 242,674
In 1995 and 1994, the Partnership received distributions of $175,000 and
$93,531, respectively, from the Joint Venture.
NOTE C - MORTGAGE NOTES PAYABLE
The principal terms of the mortgage notes payable are as follows:
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1995 Interest Rate Date Maturity
Northsprings
1st mortgage $ 1,935,054 $ 14,461 7.83% 10/15/03 $1,701,388
2nd mortgage 61,200 399 7.83% 10/15/03 61,200
Lakeside 3,827,984 37,367 10.75% 07/01/96 3,812,335
Bexley House
1st mortgage 1,365,032 11,520 7.60% 11/15/02 1,052,381
2nd mortgage 45,142 286 7.60% 11/15/02 45,142
Covington Pointe
1st mortgage 4,740,950 35,428 7.83% 10/15/03 4,168,660
2nd mortgage 149,940 978 7.83% 10/15/03 149,940
Total 12,125,302 $100,439
Less unamortized
discounts (193,199)
$11,932,103
The estimated fair values of the Partnership's aggregate debt is $12,176,626.
This value represents a general approximation of possible value and is not
necessarily indicative of the amounts the Partnership may pay in actual market
transactions.
The mortgage notes payable are non-recourse and are secured by pledge of the
respective apartment properties and by pledge of revenues from the respective
apartment properties. Certain of the notes require prepayment penalties if
repaid prior to maturity and prohibit resale of the properties subject to
existing indebtedness.
The Partnership exercised interest rate buy-down options reducing the stated
rate from 8.76% to 7.60% for Bexley House and 8.13% to 7.83% for Northsprings
and Covington Pointe. The fees for the interest rate reductions were $242,732
and are being amortized as loan discounts using the interest method over the
life of the loans. The discount fees are reflected as a reduction of the
mortgage notes payable and increases the effective rate of the debt to 8.76% for
Bexley House and 8.13% for Northsprings and Covington Pointe.
Refinancing for the debt encumbering Lakeside Apartments which matures in July
1996 is currently being discussed with the existing lender, however, there is no
assurance that the refinancing discussions will ultimately be successful.
Scheduled principal payments of mortgage notes payable subsequent to December
31, 1995, are as follows:
1996 $ 3,942,433
1997 123,651
1998 133,593
1999 144,335
2000 155,940
Thereafter 7,625,350
$12,125,302
NOTE D - INCOME TAXES
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the financial statements
of the Partnership. Taxable income or loss of the Partnership is reported in
the income tax returns of its partners.
The following is a reconciliation of reported net loss and Federal taxable loss:
1995 1994
Net loss as reported $(216,376) $(308,178)
Add (deduct):
Depreciation differences (56,417) (99,132)
Equity in Joint Venture (38,069) (2,853)
Miscellaneous 84,175 69,236
Prepaid rents (18,874) 64,005
Federal taxable loss $(245,561) $(276,922)
Federal taxable loss
per limited partnership unit $ (8.90) $ (10.03)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities:
Net assets as reported $ 4,549,197
Land and buildings 3,176,096
Accumulated depreciation 680,694
Syndication 3,809,021
Other 950,646
Net assets - Federal tax basis $13,165,654
NOTE E - 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. Transactions with affiliates of
Insignia Financial Group, Inc. in 1995 and 1994 are:
1995 1994
Property management fees $221,930 $210,096
Reimbursement for services of affiliates 171,056 154,758
Construction service fees 13,991 4,476
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.
NOTE F - REAL ESTATE AND ACCUMULATED DEPRECIATION
Initial Cost
To Partnership
Cost
Buildings Capitalized
and Related (Written Down)
Personal Subsequent to
Description Encumbrances Land Property Acquisition
Northsprings $ 1,996,254 $ 736,021 $ 4,195,924 $ (436,603)
Lakeside 3,827,984 1,259,254 5,791,309 (803,336)
Bexley House 1,410,174 646,518 3,066,691 (262,629)
Covington Pointe 4,890,890 1,935,043 7,041,470 295,289
Totals $12,125,302 $4,576,836 $20,095,394 $(1,207,279)
<TABLE>
<caption)
Gross Amount At Which Carried
At December 31, 1995
Buildings
And
Personal Accumulated Date of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C> <C>
Northsprings $ 596,800 $ 3,898,542 $ 4,495,342 $ 1,807,059 1969 11/85 5-25
Lakeside 1,046,092 5,201,135 6,247,227 2,423,360 1980 05/86 5-25
Bexley House 541,609 2,908,971 3,450,580 1,225,817 1972 09/86 5-25
Covington 1,935,043 7,336,759 9,271,802 2,955,408 1982 03/87 5-25
Totals $4,119,544 $19,345,407 $23,464,951 $ 8,411,644
</TABLE>
Reconciliation of Real Estate and Accumulated Depreciation :
Years Ended December 31,
1995 1994
Real Estate
Balance at beginning of year $23,229,978 $23,081,494
Property improvements 481,818 305,448
Disposal of property (246,845) (156,964)
Balance at End of Year $23,464,951 $23,229,978
Accumulated Depreciation
Balance at beginning of year $ 7,787,553 $ 7,134,472
Additions charged to expense 782,111 738,544
Disposal of property (158,020) (85,463)
Balance at End of Year $ 8,411,644 $ 7,787,553
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1995 and 1994 is $26,641,047 and $26,159,229. The accumulated
depreciation taken for Federal income tax purposes at December 31, 1995 and 1994
is $7,730,950 and $6,892,422.
NOTE G - COMMITMENTS
The Partnership Agreement provides for the Managing General Partner to receive a
fee of 2% of adjusted cash from operations, as defined in the partnership
agreement, payable only after the Partnership has distributed to all limited
partners, adjusted cash from operations in any year equal to 10% of their
adjusted invested capital as defined in the partnership agreement. No fees were
payable for the years ended December 31, 1995, or December 31, 1994.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
The Registrant does not have any directors or officers. The Managing
General Partner, Davidson Diversified Properties, Inc., is responsible for the
management and control of substantially all of the Registrant's operations and
has general responsibility and ultimate authority in all matters affecting the
Registrant's business. The Individual General Partners, in their capacity as
such, did not devote any material amount of business time or attention to the
Registrant's affairs.
The present officers of the Managing General Partner are listed below:
Name Age Position
Carroll D. Vinson 55 President
Robert D. Long, Jr. 28 Controller and Principal
Accounting Officer
William H. Jarrard, Jr. 49 Vice President
John K. Lines 36 Vice President and Secretary
Kelley M. Buechler 38 Assistant Secretary
Carroll D. Vinson has been President of Davidson Diversified Properties,
Inc. since August of 1994. Prior to that, from April 1993 to August 1994, Mr.
Vinson was affiliated with Crisp, Hughes & Co. (regional CPA firm) and engaged
in various other investment and consulting activities. Briefly, in early 1993,
Mr. Vinson served as President and Chief Executive Officer of Angeles
Corporation, a real estate investment firm. From 1991 to 1993, Mr. Vinson was
employed by Insignia in various capacities including Managing Director-President
during 1991. From 1986 to 1990, Mr. Vinson was President and Director of U.S.
Shelter Corporation, a real estate services company, which sold substantially
all of its assets to Insignia in December 1990.
Robert D. Long, Jr. is Controller and Principal Accounting Officer of
Davidson Diversified Properties, Inc. Prior to joining Metropolitan Asset
Enhancement, L.P., and subsidiaries, he was an auditor for the State of
Tennessee and was associated with the accounting firm of Harshman Lewis and
Associates. He is a graduate of The University of Memphis.
William H. Jarrard, Jr. is Managing Director - Partnership Administration of
Insignia Financial Group, Inc. ("Insignia"). He is also Vice President of
Davidson Diversified Properties, Inc. During the five years prior to joining
Insignia in 1991, he served in a similar capacity for U.S. Shelter. Mr. Jarrard
is a graduate of the University of South Carolina and a certified public
accountant.
John K. Lines has been General Counsel and Secretary of Insignia since June
1994. From May 1993 until June 1994, Mr. Lines was the Assistant General
Counsel and Vice President of Ocwen Financial Corporation in West Palm Beach,
Florida. From October 1991 until April 1993, Mr. Lines was a Senior Attorney
with Banc One Corporation in Columbus, Ohio. From May 1984 until October 1991,
Mr. Lines was employed as an Associate Attorney with Squire Sanders & Dempsey in
Columbus, Ohio.
Kelley M. Buechler is Assistant Secretary of Insignia. During the five
years prior to joining Insignia in 1991, she served in a similar capacity for
U.S. Shelter. Ms. Buechler is a graduate of the University of North Carolina.
ITEM 10. EXECUTIVE COMPENSATION
The Registrant was not required to and did not pay remuneration to
officers and/or directors of the Managing General Partner during 1995 or 1994.
See "Item 12." below and Note E of the Notes to the financial statements in Item
7 for a discussion of compensation and reimbursements paid to the General
Partners and certain affiliates.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 1995, the only person or entity known by the
Registrant to be the beneficial owner of more than 5% of the Units of the
Registrant is set forth below:
Amount and Nature of Percent
Entity Title of Class Beneficial Ownership of Class
Third National Bank for Units of Limited 3,000 Units @ 11.2%
Hospital Corporation of Partnership Interest $1,000/Unit
America
One Park Plaza
Nashville, TN 37202
As of December 31, 1995, no director or officer of the Managing General
Partner owns, nor do the directors or officers as a whole own more than 1% of
the Registrant's Units. No such director or officer had any right to acquire
beneficial ownership of additional Units of the Registrant.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Davidson Diversified Properties, Inc., the Managing General Partner of the
Registrant, is owned by MAE GP Corporation, which is wholly owned by
Metropolitan Asset Enhancement. L.P., an affiliate of Insignia.
Effective January 1, 1992, management and administrative services were
assumed by affiliates of Insignia. Management fees paid to affiliates of
Insignia in 1995 and 1994 were $221,930 and $210,096, respectively.
Reimbursements of administrative fees paid to affiliates of Insignia in 1995 and
1994 were $160,347 and $144,610, respectively.
The Partnership Agreement provides for the Managing General Partner to
receive a fee of 2% of adjusted cash from operations, as defined in the
partnership agreement, payable only after the Partnership has distributed to all
limited partners, adjusted cash from operations in any year equal to 10% of
their adjusted invested capital as defined in the partnership agreement. No
fees were payable for the years ended December 31, 1995, or December 31, 1994.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Exhibit Index contained herein.
Exhibit 27, Financial Data Schedule, is filed as an exhibit
to this report.
(b) Reports on Form 8-K filed in the fourth quarter of fiscal
year 1995:
None.
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.
DAVIDSON INCOME REAL ESTATE, L.P.
By: Davidson Diversified Properties, Inc.,
as Managing General Partner
By: /s/ Carroll D. Vinson
Carroll D. Vinson
President
Date: January 10, 1997
In accordance with the Exchange Act, this report has been signed below
by the following person on behalf of the Registrant and in the capacities and on
the date indicated.
/s/ Carroll D. Vinson President January 10, 1997
Carroll D. Vinson
/s/ Robert D. Long, Jr. Vice President/CAO January 10, 1997
Robert D. Long, Jr.
EXHIBIT INDEX
Exhibit
3 Agreement of Limited Partnership is incorporated by reference to
Exhibit A to the Prospectus of the Registrant dated July 26, 1985 as
filed with the Commission pursuant to Rule 424(b) under the Act.
3A Amendment to Partnership Agreement dated October 1, 1985 is
incorporated by reference to Exhibit 3A to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1987.
4 Certificate of Limited Partnership dated April 29, 1985 is incorporated
by reference to Exhibit 4 to the Registrant's Registration Statement on
Form S-11 dated May 7, 1985.
4A Certificate of Amendment to Certificate of Limited Partnership dated
July 16, 1985 is incorporated by reference to Exhibit 4B in Amendment
No. 1 to Registration Statement No. 2-97539, dated July 24, 1985.
10A Agent's Agreement dated July 1, 1985 between the Registrant and Harvey
Freeman & Sons, Inc., is incorporated by reference to Exhibit 10B in
Amendment No. 1 to Registration Statement No. 2-97539, dated July 24,
1985.
10B Agreement Among Agents dated July 1, 1985 by and among Harvey Freeman &
Sons, Inc., Harvey Freeman & Sons, Inc. of Arkansas, Harvey Freeman &
Sons, Inc. of Florida, Harvey Freeman & Sons, Inc. of Georgia, Harvey
Freeman & Sons, Inc. of Indiana, Harvey Freeman & Sons, Inc. of
Kentucky, Harvey Freeman & Sons, Inc. of Mississippi, Harvey Freeman &
Sons of Missouri, Inc., Harvey Freeman & Sons, Inc. of North Carolina,
Harvey Freeman & Sons, Inc. of Ohio and Harvey Freeman & Sons, Inc. of
South Carolina is incorporated by reference to Exhibit 10C in Amendment
No. 1 to Registration Statement No. 2-97539, dated July 24, 1985.
10C Acquisition and Disposition Services Agreement dated July 1, 1985
between the Registrant and Criswell Freeman Company is incorporated by
reference to Exhibit 10D in Amendment No. 1 to Registration Statement
No. 2-97539, dated July 24, 1985.
10D Contract for Sale of Real Estate for North Springs apartments dated
October 16, 1985 between James B. Miller, Karina Miller, Dahlis Winn,
Christine Abrams and William Lichirie, as Tenants in Common and
Tennessee Trust Company is incorporated by reference to Exhibit 10(a)
to the Registrant's Current Report on Form 8-K dated November 13, 1985.
10E Assignment of Contract for Sale of Real Estate for North Springs
Apartments dated November 12, 1985 between Tennessee Trust Company and
the Registrant is incorporated by reference to Exhibit 10(b) to the
Registrant's Current Report on Form 8-K dated November 13, 1985.
10F Promissory Note dated February 14, 1969 executed by Mt. Pleasant Plaza,
Inc., a Georgia corporation payable to The Fulton National Bank of
Atlanta, a corporation having its principal place of business in Fulton
County, Georgia, is incorporated by reference to Exhibit 10G to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1985.
10G Agreement dated December 24, 1969 between Massachusetts Mutual Life
Insurance Company, a Massachusetts corporation and Mt. Pleasant Plaza,
Inc., a corporation of the State of Georgia, is incorporated by
reference to Exhibit 10H to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1985.
10H Purchase Agreement for Lakeside Apartments dated April 4, 1986 between
Lakeside Apartments Venture, a North Carolina general partnership and
Tennessee Trust Company, a Tennessee corporation, is incorporated by
reference to Exhibit 10(a) to the Registrant's Current report on Form
8-K dated May 20, 1986.
10I Assignment of Agreement dated May 16, 1986 between Tennessee Trust
Company, a Tennessee corporation, and the Registrant is incorporated by
reference to Exhibit 10(b) to the Registrant's Current Report on Form
8-K dated May 20, 1986.
10J Deed of Trust Note dated June 13, 1989 executed by the Registrant
payable to John Hancock Variable Life Insurance Company relating to
Lakeside Apartments.
10K Deed of Trust and Security Agreement dated April 28, 1980 between
Lakeside Properties, Ltd., a North Carolina limited partnership, Gibson
L. Smith, Jr., Trustee and Continental Illinois National Bank and Trust
Company of Chicago is incorporated by reference to Exhibit 10(d) to the
Registrant's Current Report on Form 80-K dated May 20, 1986.
10L Contract for Sale of Real Estate for The Bexley House dated July 16,
1986 between Bexley House, Limited, an Ohio limited partnership and
Tennessee Trust company is incorporated by reference to Exhibit 10(a)
to the Registrant's Current Report on Form 8-K dated September 30,
1986.
10M Reinstatement and Amendment of Contract for Sale of Real Estate for The
Bexley House dated September 4, 1986 between Bexley House, Limited, an
Ohio limited partnership and Tennessee Trust Company, a Tennessee
corporation, is incorporated by reference to Exhibit 10(b) to the
Registrant's Current Report on Form 8-K dated September 30, 1986.
10N Amendment to Reinstated and Amended Contract for Sale of Real Estate
for The Bexley House dated September 19, 1986 between Bexley House,
Limited, an Ohio limited partnership and Tennessee Trust Company, a
Tennessee corporation, is incorporated by reference to Exhibit 10(c) to
the Registrant's Current Report on Form 80K dated September 30, 1986.
10O Assignment of Contract for Sale of Real Estate dated September 30, 1986
between Tennessee Trust company and the Registrant is incorporated by
reference to Exhibit 10(d) to the Registrant's urrent Report on Form 8-
K dated September 30, 1986.
10P Limited Warranty Deed dated September 28, 1986 between Bexley House,
Ltd., an Ohio limited partnership and the Registrant is incorporated by
reference to Exhibit 10(e) to the Registrant's Current Report on Form
8-K dated September 30, 1986.
10Q Contract for Sale of Real Estate for Covington Pointe Apartments dated
January 20, 1987 between F.G.M.C. Investment Corp., a Texas corporation
Tennessee Trust Company, a Tennessee corporation, is incorporated by
reference to Exhibit 10(a) to the Registrant's Current Report on Form
8-K dated March 10, 1987.
10R Amendment to Contract for Purchase of Real Estate for Covington Pointe
Apartments dated January 23, 1987 between F.G.M.C. Investment Corp., a
Texas corporation Tennessee Trust Company, a Tennessee corporation, is
incorporated by reference to Exhibit 10(b) to the Registrant's Current
Report on Form 8-K dated March 10, 1987.
10S Assignment of Contract for Purchase of Real Estate for Covington Pointe
Apartments dated March 2, 1987 between Tennessee Trust Company and the
Registrant is incorporated by reference to Exhibit 10(c) to the
Registrant's Current Report on Form 8-K dated March 10,1987.
10T Contract for Purchase of Real Estate for Phase I of Sterling Crest
Apartments dated March 10, 1987 between Sterling Crest Development
Partners, Ltd., a Georgia limited partnership, and Tennessee Trust
Company, a Tennessee corporation, is incorporated by reference to
Exhibit 10(d) to the Registrant's Current Report on Form 8-K dated
March 10, 1987.
10U Mortgage Note dated March 23, 1987 executed by the Registrant payable
to BancOhio National Bank, relating to The Bexley House, is
incorporated by reference to Exhibit a(1) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1987.
10V Open-End Mortgage, Assignment of Rents and Security Agreement dated
March 23, 1987 executed by the Registrant in favor of BancOhio National
Bank relating to The Bexley House, is incorporated by reference to
Exhibit a(2) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1987.
10W Mortgage Note dated March 23, 1987 executed by the Registrant payable
to BancOhio National Bank, relating to The Bexley House, is
incorporated by reference to Exhibit a(3) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1987.
10X Open-End Mortgage, Assignment of Rents and Security Agreement dated
March 23, 1987 executed by the Registrant in favor of BancOhio National
Bank relating to The Bexley House, is incorporated by reference to
Exhibit a(4) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1987.
10Y Sterling Crest Joint Venture Agreement dated June 29, 1987 between the
Registrant and Freeman Georgia Ventures, Inc. is incorporated by
reference to Exhibit 10(b) to the Registrant's Current Report on Form
8-K dated June 30, 1987.
10Z Assignment of Contract for Purchase of Real Estate for Phase I of
Sterling Crest Apartments dated June 29, 1987 is incorporated by
reference to Exhibit 10(c) to the Registrant's Current Report on
Form 8-K dated June 30, 1987.
10AA Warranty Deed dated June 30, 1987 between Sterling Crest Development
Partners, Ltd. and Sterling Crest Joint Venture, is incorporated by
reference to Exhibit 10(d) to the Registrant's Current Report on Form
8-K dated June 30, 1987.
10BB Sub-Management Agreement dated June 30, 1987 between Harvey Freeman &
Sons, Inc. and Sterling Property Management Company, is incorporated by
reference to Exhibit 10(k) to the Registrant's Current Report on Form
8-K dated June 30, 1987.
10CC Property Management Agreement dated June 30, 1987 between Sterling
Crest Joint Venture and Harvey Freemen & Sons, Inc., is incorporated by
reference to Exhibit 10(l) to the Registrant's Current Report on Form
8-K dated June 30, 1987.
10DD Contract for Purchase of Real Estate for Phase II of Sterling Crest
Apartments dated March 10, 1987 between Sterling Crest Development
Partners, Ltd. and Tennessee Trust Company is incorporated by reference
to Exhibit 10(a) to the Registrant's Report on Form 8 dated December
29, 1987.
10EE Tri-Party Agreement dated May 22, 1987 among North Carolina Federal
Savings & Loan Association, Sterling Crest Development Partners, Ltd.
and Tennessee Trust Company relating to Sterling Crest Apartments, is
incorporated by reference to Exhibit 10(b) to the Registrant's Report
on Form 8 dated December 29, 1987.
10FF Assignment of Contract for Purchase of Real Estate and Tri-Party
Agreement dated November 4, 1987 between Tennessee Trust Company and
Sterling Crest Joint Venture relating to Sterling Crest Apartments, is
incorporated by reference to Exhibit 10(c) to the Registrant's Report
on Form 8 dated December 29, 1987.
10GG Amended and Restated Sterling Crest Joint Venture Joint Venture
Agreement dated June 29, 1987 among the Registrant, Freeman Georgia
Ventures, Inc., and Freeman Growth Plus, L.P., is incorporated by
reference to Exhibit 10(d) to the Registrant's Report on Form 8 dated
December 29, 1987.
10HH Memorandum of Understanding among SEC Realty Corp., Tennessee
Properties, L.P., Freeman Mortgage Corporation, J. Richard Freeman, W.
Criswell Freeman and Jacques-Miller Properties, Inc. is incorporated by
reference to Exhibit 10MM to the Registrant's Annual Report on Form 10-
K for the fiscal year ended December 31, 1988.
10II Partnership Administration and Consultation Agreement among Freeman
Properties, Inc., Freeman Diversified Properties, Inc., residual
Equities Limited and Jacques-Miller Properties, Inc. is incorporated by
reference to Exhibit 10NN to the Registrant's Annual Report on Form 10-
K for the fiscal year ended December 31, 1988.
10JJ Termination Agreement, dated December 31, 1991 among Jacques-Miller,
Inc., Jacques-Miller Property Management, Davidson Diversified
Properties, Inc., and Supar, Inc.
10KK Assignment of Limited Partnership Interest of Freeman Equities,
Limited, dated December 31, 1991 between Davidson Diversified
Properties, Inc. and Insignia Jacques-Miller, L.P.
10LL Assignment of General Partner Interests of Freeman Equities, Limited,
dated December 31, 1991 between Davidson Diversified Properties, Inc.
and MAE GP Corporation.
10MM Stock certificate, dated December 31, 1991 showing ownership of 1,000
shares of Davidson Diversified Properties, Inc. by MAE GP Corporation.
10NN Contracts related to refinancing of debt:
(a) First Deeds of Trust and Security Agreements dated October 28, 1992
between Bexley House, L.P. and First Commonwealth Realty Credit
Corporation, a Virginia Corporation, securing Bexley House Apartments
is incorporated by reference to Exhibit 10NN (a) to the Registrant's
Annual Report on Form 10-KSB for the fiscal year ended December 31,
1992.
(b) Seconds Deeds of Trust and Security Agreements dated October 28, 1992
between Bexley House, L.P. and First Commonwealth Realty Credit
Corporation, a Virginia Corporation, securing Bexley House Apartments
is incorporated by reference to Exhibit 10NN (b) to the Registrant's
Annual Report on Form 10-KSB for the fiscal year ended December 31,
1992.
(c) First Assignments of Leases and Rents dated October 28, 1992 between
Bexley House, L.P. and First Commonwealth Realty Credit Corporation,
a Virginia Corporation, securing Bexley House Apartments is
incorporated by reference to Exhibit 10NN (c) to the Registrant's
Annual Report on Form 10-KSB for the fiscal year ended December 31,
1992.
(d) Second Assignments of Leases and Rents dated October 28, 1992 between
Bexley House, L.P. and First Commonwealth Realty Credit Corporation,
a Virginia Corporation, securing Bexley House Apartments is
incorporated by reference to Exhibit 10NN (d) to the Registrant's
Annual Report on Form 10-KSB for the fiscal year ended December 31,
1992.
(e) First Deeds of Trust Notes dated October 28, 1992 between Bexley
House, L.P. and First Commonwealth Realty Credit Corporation,
relating to Bexley House Apartments is incorporated by reference to
Exhibit 10NN (e) to the Registrant's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1992.
(f) Second Deeds of Trust Notes dated October 28, 1992 between Bexley
House, L.P. and First Commonwealth Realty Credit Corporation,
relating to Bexley House Apartments is incorporated by reference to
Exhibit 10NN (f) to the Registrant's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1992.
10OO Contracts related to refinancing of debt:
(a) First Deeds of Trust and Security Agreements dated September 30, 1993
between Davidson IRE Associates, L.P. and Lexington Mortgage Company,
a Virginia Corporation, securing Northsprings Apartments is
incorporated by reference to Exhibit 10OO (a) to the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended September 30,
1993.
(b) Second Deeds of Trust and Security Agreements dated September 30,
1993 between Davidson IRE Associates, L.P. and Lexington Mortgage
Company, a Virginia Corporation, securing Northsprings Apartments is
incorporated by reference to Exhibit 10OO (b) to the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended September 30,
1993.
(c) First Assignments of Leases and Rents dated September 30, 1993
between Davidson IRE Associates, L.P. and Lexington Mortgage Company,
a Virginia Corporation, securing Northsprings Apartments is
incorporated by reference to Exhibit 10OO (c) to the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended September 30,
1993.
(d) Second Assignments of Leases and Rents dated September 30, 1993
between Davidson IRE Associates, L.P. and Lexington Mortgage Company,
a Virginia Corporation, securing Northsprings Apartments is
incorporated by reference to Exhibit 10OO (d) to the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended September 30,
1993.
(e) First Deeds of Trust Notes dated September 30, 1993 between Davidson
IRE Associates, L.P. and Lexington Mortgage Company, relating to
Northsprings Apartments is incorporated by reference to Exhibit 10OO
(e) to the Registrant's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1993.
(f) Second Deeds of Trust Notes dated September 30, 1993 between Davidson
IRE Associates, L.P. and Lexington Mortgage Company, relating to
Northsprings Apartments is incorporated by reference to Exhibit 10OO
(f) to the Registrant's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1993.
10PP Contracts related to refinancing of debt:
(a) First Deeds of Trust and Security Agreements dated September 30, 1993
between Davidson IRE Associates, L.P. and Lexington Mortgage Company,
a Virginia Corporation, securing Covington Pointe Apartments is
incorporated by reference to Exhibit 10PP (a) to the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended September 30,
1993.
(b) Second Deeds of Trust and Security Agreements dated September 30,
1993 between Davidson IRE Associates, L.P. and Lexington Mortgage
Company, a Virginia Corporation, securing Covington Pointe Apartments
is incorporated by reference to Exhibit 10PP (b) to the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended September 30,
1993.
(c) First Assignments of Leases and Rents dated September 30, 1993
between Davidson IRE Associates, L.P. and Lexington Mortgage Company,
a Virginia Corporation, securing Covington Pointe Apartments is
incorporated by reference to Exhibit 10PP (c) to the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended September 30,
1993.
(d) Second Assignments of Leases and Rents dated September 30, 1993
between Davidson IRE Associates, L.P. and Lexington Mortgage Company,
a Virginia Corporation, securing Covington Pointe Apartments is
incorporated by reference to Exhibit 10PP (d) to the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended September 30,
1993.
(e) First Deeds of Trust Notes dated September 30, 1993 between Davidson
IRE Associates, L.P. and Lexington Mortgage Company, relating to
Covington Pointe Apartments is incorporated by reference to Exhibit
10PP (e) to the Registrant's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1993.
(f) Second Deeds of Trust Notes dated September 30, 1993 between Davidson
IRE Associates, L.P. and Lexington Mortgage Company, relating to
Covington Pointe Apartments is incorporated by reference to Exhibit
10PP (f) to the Registrant's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1993.
16 Letter from the Registrant's former independent accountant regarding its
concurrence with the statements made by the Registrant is incorporated by
reference to the exhibit filed with Form 8-K dated September 30, 1992.
27 Financial Data Schedule.
99A Agreement of Limited Partnership for Davidson IRE GP Limited Partnership
between Davidson Diversified Properties, Inc. and Davidson Income Real
Estate, L.P. entered into on September 15, 1993 is incorporated by
reference to Exhibit 99A to the Registrant's Quarterly Report on Form 10-
QSB for the quarter ended September 30, 1993.
99B Agreement of Limited Partnership for Davidson IRE Associates, L.P.
between Davidson IRE GP Limited Partnership and Davidson Income Real
Estate, L.P is incorporated by reference to Exhibit 99B to the
Registrant's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1993.
99C Agreement of Limited Partnership for Bexley House L.P. between Davidson
Income GP Limited Partnership and Davidson Income Real Estate, L.P.
entered into on October 13, 1992 is incorporated by reference to Exhibit
99C to the Registrant's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1992.
