FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] 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 0-14530
DAVIDSON INCOME REAL ESTATE, L.P.
(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.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
DAVIDSON INCOME REAL ESTATE, L.P.
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 1,259
Receivables and deposits 188
Restricted escrows 175
Other assets 265
Investment in joint venture 93
Investment properties:
Land $ 4,120
Buildings and related personal property 21,713
25,833
Less accumulated depreciation (12,278) 13,555
$ 15,535
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 99
Tenant security deposit liabilities 80
Accrued property taxes 204
Other liabilities 123
Mortgage notes payable 11,747
Partners' (Deficit) Capital
General partners $ (673)
Limited partners (26,776 units issued and
outstanding) 3,955 3,282
$ 15,535
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
b)
DAVIDSON INCOME REAL ESTATE, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
Revenues:
<S> <C> <C>
Rental income $1,207 $1,155
Other income 53 64
Total revenues 1,260 1,219
Expenses:
Operating 462 481
General and administrative 37 57
Depreciation 255 235
Interest 246 249
Property taxes 95 108
Total expenses 1,095 1,130
Income before equity in income of joint venture 165 89
Equity in income of joint venture 16 39
Net income $ 181 $ 128
Net income allocated to general partners (3%) $ 5 $ 4
Net income allocated to limited partners (97%) 176 124
$ 181 $ 128
Net income per limited partnership unit $ 6.57 $ 4.63
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
c)
DAVIDSON INCOME REAL ESTATE, L.P.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 26,776 $ 1 $26,776 $26,777
Partners' (deficit) capital at
December 31, 1999 26,776 $ (678) $ 3,779 $ 3,101
Net income for the three months
ended March 31, 2000 -- 5 176 181
Partners' (deficit) capital
at March 31, 2000 26,776 $ (673) $ 3,955 $ 3,282
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
d)
DAVIDSON INCOME REAL ESTATE, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 181 $ 128
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 255 235
Amortization of discounts and loan costs 21 20
Equity in income of joint venture (16) (39)
Change in accounts:
Receivables and deposits 172 226
Other assets (35) (49)
Accounts payable (44) (18)
Tenant security deposit liabilities (4) 3
Accrued property taxes (197) (206)
Other liabilities (37) 5
Net cash provided by operating activities 296 305
Cash flows from investing activities:
Property improvements and replacements (308) (64)
Net (deposits to) withdrawals from restricted escrows (18) 15
Distributions from joint venture 33 --
Net cash used in investing activities (293) (49)
Cash flows from financing activities:
Payments on mortgage notes payable (39) (35)
Distributions to partners (380) --
Net cash used in financing activities (419) (35)
Net (decrease) increase in cash and cash equivalents (416) 221
Cash and cash equivalents at beginning of period 1,675 920
Cash and cash equivalents at end of period $1,259 $1,141
Supplemental disclosure of cash flow information:
Cash paid for interest $ 225 $ 229
</TABLE>
At December 31, 1999 and March 31, 2000, accounts payable and property
improvements and replacements were adjusted by approximately $243,000 for
non-cash activity.
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
e)
DAVIDSON INCOME REAL ESTATE, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Davidson Income
Real Estate, L.P. (the "Partnership" or "Registrant") 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 Davidson Diversified Properties, Inc.
(the "Managing General Partner"), all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 2000, are
not necessarily indicative of the results that may be expected for the fiscal
year ending December 31, 2000. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Partnership's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1999.
Principles of Consolidation
The consolidated financial statements of the Partnership include its 100%
ownership interests in the following partnerships: Bexley House, L.P. and
Davidson IRE Associates, L.P. All significant interpartnership balances have
been eliminated.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the Managing General Partner. The Managing General Partner does not believe that
this transaction has had or will have a material effect on the affairs and
operations of the Partnership.
Note C - 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 (i) payments to
affiliates for services and (ii) reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following transactions with the
Managing General Partner and/or its affiliates were incurred during the three
months ended March 31, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $ 64 $ 62
Reimbursement for services of affiliates (included in
general and administrative expense) 21 32
<PAGE>
During the three months ended March 31, 2000 and 1999, affiliates of the
Managing General Partner were entitled to receive 5% of gross receipts from all
of the Partnership's properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$64,000 and $62,000 for the three months ended March 31, 2000 and 1999,
respectively.
An affiliate of the Managing General Partner received reimbursements of
accountable administrative expenses amounting to approximately $21,000 and
$32,000 for the three months ended March 31, 2000 and 1999, respectively.
On September 25, 1997, an affiliate of the Managing General Partner purchased
Lehman Brothers' Class "D" subordinated bonds of SASCO, 1992-M1. These bonds are
secured by 55 multi-family apartment mortgage loan pairs held in Trust,
including Bexley House Apartments owned by the Partnership.
AIMCO and its affiliates currently own 9,843.50 limited partnership units in the
Partnership representing approximately 36.76% of the outstanding units. A number
of these units were acquired pursuant to tender offers made by AIMCO or its
affiliates. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner.
Note D - Investment in Joint Venture
The Partnership owns a 17.5% interest in the 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 approximately $2,727,000 in the joint venture. The joint
venture purchased Phase II of Brighton Crest Apartments on December 15, 1987.
Summary balance sheet information for the three months ended March 31, 2000, of
the Sterling Crest Joint Venture is as follows (in thousands):
Total assets $ 7,611
Total liabilities (6,074)
Total venture's equity $ 1,537
Summary statements of operations information for the three months ended March
31, 2000 and 1999 of the Sterling Crest Joint Venture is as follows (in
thousands):
2000 1999
Total revenues $ 608 $ 667
Total expenses (505) (445)
$ 103 $ 222
<PAGE>
The Partnership received distributions of approximately $33,000 from the joint
venture during the three months ended March 31, 2000. The Partnership received
no distributions from the joint venture during the three months ended March 31,
1999. For the three months ended March 31, 2000 and 1999, the Partnership
recognized equity in the income of the joint venture of approximately $16,000
and $39,000, respectively.
Note E - Distributions
During the three months ended March 31, 2000, the Partnership paid a cash
distribution from operations, which was declared and accrued at December 31,
1999, of approximately $380,000 of which approximately $368,000 ($13.74 per
limited partnership unit) was paid to the limited partners. There were no
distributions paid or declared during the three months ended March 31, 1999.
Note F - Segment Information
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of four apartment complexes,
one each in Georgia, North Carolina, Ohio and Texas. The Partnership rents
apartment units to tenants for terms that are typically twelve months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those of the Partnership as described in Partnership's Annual Report on Form
10-KSB for the year ended December 31, 1999.
Factors management used to identify the Partnership's reportable segment:
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
are managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
Segment information for the three months ended March 31, 2000 and 1999, is shown
in the following tables below (in thousands). The "Other" column includes
Partnership administration related items and income and expense not allocated to
the reportable segment.
<PAGE>
2000 Residential Other Totals
Rental income $ 1,207 $ -- $ 1,207
Other income 45 8 53
Interest expense 246 -- 246
Depreciation 255 -- 255
General and administrative expense -- 37 37
Equity in income of joint venture -- 16 16
Segment profit (loss) 194 (13) 181
Total assets 15,037 498 15,535
Capital expenditures for investment
properties 65 -- 65
1999 Residential Other Totals
Rental income $ 1,155 $ -- $ 1,155
Other income 57 7 64
Interest expense 249 -- 249
Depreciation 235 -- 235
General and administrative expense -- 57 57
Equity in income of joint venture -- 39 39
Segment profit (loss) 139 (11) 128
Total assets 14,665 1,041 15,706
Capital expenditures for investment
properties 64 -- 64
Note G - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note B - Transfer of Control"). The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Managing General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999. Pending the ruling on such demurrers,
settlement negotiations commenced. On November 2, 1999, the parties executed and
filed a Stipulation of Settlement, settling claims, subject to final court
approval, on behalf of the Partnership and all limited partners who own units as
of November 3, 1999. Preliminary approval of the settlement was obtained on
November 3, 1999 from the Superior Court of the State of California, County of
San Mateo, at which time the Court set a final approval hearing for December 10,
1999. Prior to the December 10, 1999 hearing the Court received various
objections to the settlement, including a challenge to the Court's preliminary
approval based upon the alleged lack of authority of class plaintiffs' counsel
to enter the settlement. On December 14, 1999, the Managing General Partner and
its affiliates terminated the proposed settlement. Certain plaintiffs have filed
a motion to disqualify some of the plaintiffs' counsel in the action. The
Managing General Partner does not anticipate that costs associated with this
case will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussion of the Partnership's business and results of operations,
including forward-looking statements pertaining to such matters, does not take
into account the effects of any changes to the Partnership's business and
results of operations. Accordingly, actual results could differ materially from
those projected in the forward-looking statements as a result of a number of
factors, including those identified herein.
The Partnership's investment properties consist of four apartment complexes. The
following table sets forth the average occupancy of the properties for the three
months ended March 31, 2000 and 1999:
Average Occupancy
Property 2000 1999
Northsprings Apartments 98% 97%
Atlanta, Georgia
Lakeside Apartments 92% 94%
Charlotte, North Carolina
Bexley House Apartments 92% 87%
Columbus, Ohio
Covington Pointe Apartments 90% 93%
Dallas, Texas
The Managing General Partner attributes the increase in occupancy at Bexley
House to increased marketing efforts. The decrease in occupancy at Covington
Pointe was due to a change in demographics in the area.
Results of Operations
The Partnership's net income for the three months ended March 31, 2000, was
approximately $181,000 compared to approximately $128,000 for the corresponding
period in 1999. The increase in net income for the three month period is
primarily attributable to an increase in total revenues and a decrease in total
expenses partially offset by a decrease in income from the joint venture. Total
revenues increased as a result of an increase in rental income partially offset
by a decrease in other income. Rental income increased primarily as a result of
an increase in average rental rates at all the Partnership's investment
properties except Covington Pointe Apartments and increased occupancy at
Northsprings Apartments and Bexley House Apartments, which more than offset the
decrease in occupancy at Lakeside Apartments and Covington Pointe Apartments.
Other income decreased primarily due to a decrease in lease cancellation fees
primarily at Covington Pointe Apartments.
The decrease in total expenses is primarily attributable to a decrease in
operating, general and administrative and property tax expenses partially offset
by an increase in depreciation expense. The decrease in operating expense is
primarily due to a decrease in referral fees at Covington Pointe Apartments,
maintenance salaries at Northsprings Apartments, and interior building
improvements at all of the Partnership's investment properties. General and
administrative expenses decreased due to a decrease in reimbursements to the
Managing General Partner and a decrease in legal fees due to the settlement in
1999 of a lawsuit. Included in general and administrative expenses for the three
months ended March 31, 2000 and 1999, are management reimbursements to the
Managing General Partner allowed under the Partnership Agreement. In addition,
costs associated with the quarterly and annual communications with the investors
and regulatory agencies and the annual audit required by the Partnership
Agreement are also included. Property tax expense decreased primarily due to a
decrease at Covington Pointe Apartments due to a reduction in the assessed value
of the property. Depreciation expense increased primarily at Covington Pointe
Apartments due to a large increase in depreciable assets over the past year.
Partially offsetting the increase in overall net income for the three months
ended March 31, 2000, was a decrease in equity in income of the joint venture
property from approximately $39,000 at March 31, 1999, to approximately $16,000
at March 31, 2000. The Partnership owns a 17.5% interest in Sterling Crest Joint
Venture (the "Joint Venture"). Equity in income from the joint venture decreased
due primarily to reduced rental revenue and increased operating expenses of the
joint venture. Rental revenues decreased due to reduced occupancy and increased
concession costs at Brighton Crest. Operating expenses increased due to
increased advertising, utility costs, and interior painting expenses.
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
expenses. 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 March 31, 2000, the Partnership had cash and cash equivalents of
approximately $1,259,000 compared to approximately $1,141,000 at March 31, 1999.
The decrease in cash and cash equivalents for the three months ended March 31,
2000 from the Partnership's year ended December 31, 1999, was approximately
$416,000. This decrease is due to approximately $419,000 of cash used in
financing activities and approximately $293,000 of cash used by investing
activities partially offset by approximately $296,000 of cash provided by
operating activities. Cash used in financing activities consisted primarily of
distributions paid to the partners and, to a lesser extent, payments of
principal made on the mortgages encumbering the Partnership's investment
properties. Cash used in investing activities consisted of property improvements
and replacements and, to a lesser extent, net deposits to restricted escrows
maintained by the mortgage lenders partially offset by distributions received
from the Partnership's joint venture. The Partnership invests its working
capital reserves in money market 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 investment properties to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
Federal, state, and local legal and regulatory requirements. Capital
improvements planned for the Partnership's properties are detailed below.
Northsprings Apartments
Approximately $53,000 is budgeted for capital improvements for the year 2000 at
Northsprings Apartments consisting primarily of carpet and vinyl replacement,
wall covering replacement, and appliance replacements. During the three months
ended March 31, 2000, the Partnership completed approximately $22,000 of
budgeted capital improvements at Northsprings Apartments, consisting primarily
of sewer replacements, plumbing upgrades, interior decorating, and floor
covering replacements. These improvements were funded from operating cash flow.
Lakeside Apartments
Approximatley $60,000 is budgeted for capital improvements for the year 2000 at
Lakeside Apartments consisting primarily of floor covering replacement, major
landscaping, wall covering replacement, air conditioning unit replacements,
appliance replacements, and other structural improvements. During the three
months ended March 31, 2000, the Partnership completed approximately $22,000 of
budgeted capital improvements at Lakeside Apartments, consisting primarily of
floor covering replacements, drapes and mini blind replacements, structural
upgrades and roof replacement. These improvements were funded primarily from
replacement reserves.
Bexley House Apartments
Approximately $30,000 is budgeted for capital improvements for the year 2000 at
Bexley House Apartments consisting primarily of carpet and vinyl replacement,
heating upgrades, and appliance replacements. During the three months ended
March 31, 2000, the Partnership completed approximately $14,000 of budgeted
capital improvements at Bexley House, consisting primarily of carpet and vinyl
replacement, appliance replacements, electrical upgrades, plumbing upgrades,
equipment and heating system replacements. These improvements were funded from
operating cash flow.
Covington Pointe Apartments
Approximately $97,000 is budgeted for capital improvements for the year 2000 at
Covington Pointe Apartments consisting primarily of carpet and vinyl
replacement, interior decoration, air conditioning unit replacements, and
appliance replacements. During the three months ended March 31, 2000, the
Partnership completed approximately $7,000 of budgeted capital improvements at
Covington Pointe Apartments, consisting primarily of pool upgrades, carpet and
vinyl replacement, appliance replacement and plumbing fixture replacements.
These improvements were funded primarily from operating cash flow.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $11,747,000, net of discounts, is amortized over
varying periods with balloon payments of approximately $1,097,000 due November
2002 and approximately $10,181,000 due October and November 2003. The Managing
General Partner will attempt to refinance such indebtedness and/or sell the
properties prior to such maturity dates. If the properties cannot be refinanced
or sold for a sufficient amount, the Partnership may risk losing such properties
through foreclosure.
During the three months ended March 31, 2000, the Partnership paid a cash
distribution from operations, which was declared and accrued at December 31,
1999, of approximately $380,000 of which approximately $368,000 ($13.74 per
limited partnership unit) was paid to the limited partners. There were no
distributions paid or declared during the three months ended March 31, 1999. The
Partnership's distribution policy is reviewed on a quarterly basis. Future cash
distributions will depend on the levels of net cash generated from operations,
the availability of cash reserves, and the timing of debt maturities,
refinancings and/or property sales. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations after required
capital improvements to permit further distributions to its partners during the
remainder of 2000 or subsequent periods.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Part 1 - Financial Information, Item 1. Financial Statements, Note B - Transfer
of Control"). The plaintiffs seek monetary damages and equitable relief,
including judicial dissolution of the Partnership. On June 25, 1998, the
Managing General Partner filed a motion seeking dismissal of the action. In lieu
of responding to the motion, the plaintiffs have filed an amended complaint. The
Managing General Partner filed demurrers to the amended complaint which were
heard February 1999. Pending the ruling on such demurrers, settlement
negotiations commenced. On November 2, 1999, the parties executed and filed a
Stipulation of Settlement, settling claims, subject to final court approval, on
behalf of the Partnership and all limited partners who own units as of November
3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999
from the Superior Court of the State of California, County of San Mateo, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of class plaintiffs' counsel to enter the
settlement. On December 14, 1999, the Managing General Partner and its
affiliates terminated the proposed settlement. Certain plaintiffs have filed a
motion to disqualify some of the plaintiffs' counsel in the action. The Managing
General Partner does not anticipate that costs associated with this case will be
material to the Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
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 March 31, 2000.
<PAGE>
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.
Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from DAVIDSON
INCOME REAL ESTATE, L.P. 2000 First Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000768598
<NAME> DAVIDSON INCOME REAL ESTATE, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,259
<SECURITIES> 0
<RECEIVABLES> 188
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 25,833
<DEPRECIATION> 12,278
<TOTAL-ASSETS> 15,535
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 11,747
0
0
<COMMON> 0
<OTHER-SE> 3,282
<TOTAL-LIABILITY-AND-EQUITY> 15,535
<SALES> 0
<TOTAL-REVENUES> 1,260
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,095
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 246
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 181
<EPS-BASIC> 6.57 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
