UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____________to_____________
Commission file number 33-00086
Decade Companies Income Properties - A Limited Partnership
(Exact name of registrant as specified in its charter)
State of Wisconsin 39-1518732
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 Patrick Blvd., Suite 140 Brookfield, Wisconsin 53045-5864
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: 414-792-9200
Former name, former address and former fiscal year, if changed
since last report: Not Applicable.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. YES X NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
YES NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each issuer's classes
of common stock, as of the latest practicable date.
Decade Companies Income Properties - A Limited Partnership
INDEX
March 31, 1996
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (unaudited as to
March 31, 1996 and the three months
then ended).
Balance Sheets at March 31, 1996, and
December 31, 1995. 3
Statements of Operations for the three months
ended March 31, 1996 and 1995. 4
Statements of Changes in Partners' Capital
for the three months ended March 31, 1996
and the year ended December 31, 1995. 5
Statements of Cash Flows for the three months
ended March 31, 1996 and 1995. 6
Notes to Financial Statements. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 10
SIGNATURES 11
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
March 31 December 31
1996 1995
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 235,681 $ 56,316
Restricted cash 227,904 497,390
Escrow deposits 241,442 186,703
Prepaid expenses and other assets 68,439 94,405
Total Current Assets 773,466 834,814
INVESTMENT PROPERTIES, AT COST: 30,959,725 30,927,287
Less: accumulated depreciation (5,663,339) (5,393,539)
Net Investment Property 25,296,386 25,533,698
OTHER ASSETS:
Utility deposits 43,415 43,415
Debt issue costs, net of accumulated
amortization 45,492 46,440
Total Other Assets 88,907 89,855
Total Assets $26,158,759 $26,458,367
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and
accrued taxes $ 416,830 $ 350,722
Tenant security deposits 171,547 169,369
Distributions payable 222,154 221,154
Accrued interest payable 39,785 37,971
Payables to affiliates 3,401,446 3,409,338
Mortgage notes payable 19,173,968 19,228,533
Total Liabilities 23,425,730 23,417,087
PARTNERS' CAPITAL:
General Partner Capital (71,074) (69,185)
Limited Partners
(authorized--18,000 Interests;
outstanding--17,466.31 Interests 2,804,103 3,110,465
Total Partners' Capital 2,733,029 3,041,280
Total Liabilities and
Partners' Capital $26,158,759 $26,458,367
Note: The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date.
See Notes to Financial Statements.
STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended March 31
1996 1995
Operating revenue:
Rental income $1,477,879 $1,414,521
Operating expenses:
Operating 664,390 669,221
Real Estate Taxes 183,540 187,552
Total 847,930 856,773
Net income before
debt service and other
expenses 629,949 557,748
Interest expense (403,160) (368,970)
Depreciation (269,800) (275,000)
Amortization of debt issue costs (949) (4,091)
Net (loss) from investment property (43,960) (90,313)
Other income (expenses):
Interest income 6,027 21,034
Partnership management (50,358) (72,233)
(44,331) (51,199)
NET (LOSS) $ (88,291) $ (141,512)
Net (loss) attributable to
General Partner (1%) $ (829) $ (1,415)
Net (loss) attributable to
Limited Partners (99%) (88,032) (140,097)
$ (88,921) $ (141,512)
Net (loss) per Limited
Partner Interest $ (5.04) $ (8.02)
See Notes to Financial Statements
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(Unaudited as to the Three Months Ended March 31, 1996)
General Limited
Partner Partners'
Capital Capital Total
BALANCES AT 12/31/94 $(60,621) $ 4,448,786 $ 4,388,165
Distributions to Partners (3,867) (873,320) (877,187)
Net (loss) for the year (4,697) (465,001) (469,698)
BALANCES AT 3/31/95 $(63,036) $ 4,090,359 $ 4,027,323
Distributions to Partners (1,000) (218,330) (219,330)
Net (loss) for the year (889) (88,032) (88,921)
BALANCES AT 3/31/96 $(71,074) $ 2,804,103 $ 2,733,029
() denotes deficit or deduction.
See Notes to Financial Statements.
STATEMENTS OF CASH FLOWS - (UNAUDITED)
For The Three Months Ended March 31,
1996 1995
CASH PROVIDED FROM OPERATIONS $ 215,262 $ 156,957
INVESTING ACTIVITIES:
Proceeds from exchange escrow account 269,486 ----
Additions to investment property (32,488) (21,353)
Net cash provided by (used in) investing
activities 236,998 (21,353)
FINANCING ACTIVITIES:
Principal payments on mortgage notes (54,565) (22,049)
Proceeds from line of credit note 0 120,000
Distributions paid to limited partners (218,330) (218,330)
NET CASH (USED IN) FINANCING ACTIVITIES (272,895) (120,379)
INCREASE (DECREASE) IN CASH & CASH
EQUIVALENTS 179,365 15,225
CASH & CASH EQUIVALENTS AT THE BEGINNING
OF PERIOD 56,316 16,415
CASH & CASH EQUIVALENTS
AT THE END OF PERIOD $ 235,681 $ 31,640
Supplementary disclosure of cash flow information:
Interest paid $ 360,400 $ 181,556
Income taxes paid 0 0
See Notes to Financial Statements
Note A--Basis of Presentation
The accompanying unaudited financial statements have been prepared
in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. 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 management, 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, 1996 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1996. For
further information, refer to the financial statements and
footnotes thereto included in the Partnership's annual report on
Form 10-K for the year ended December 31, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Results of Operations
Operating revenue from rental income was $1,477,900 in the quarter
ended March 31, 1996, compared to $1,414,500 for the same period of
1995, an increase of 4.5%. Rental income was provided by the three
sites per the following for the three month period:
Increase
3/31/96 3/31/95 (Decrease)
Meadows II $ 481,400 $ 412,600 $ 68,800
Town Place 397,700 386,600 11,100
Pelican Sound 598,800 615,300 (16,500)
Total $1,477,900 $1,414,500 $ 63,400
The average monthly gross potential rent per unit at the Apartments
for the first quarter of 1996, and the comparative period in 1995
is set forth below:
Number
of Units 1996 1995
Pelican Sound 379 $564 $551
The Meadows II 316 $560 $568
Town Place 240 $570 $554
All Rental Units 935 $564 $558
"Gross potential rent" represents the asking rent established by
the Partnership for a vacant apartment plus the rent in effect for
occupied apartments.
The average occupancy level at the Apartments for the quarter ended
March 31, 1996, and the comparable period in 1995, is set forth
below:
Three Months Ended
3/31/96 3/31/95
Pelican Sound 94.5% 96.3%
The Meadows II 91.2% 76.5%
Town Place 93.3% 96.4%
All Rental Units 93.1% 89.5%
The range of occupancy levels at the Apartments for the three month
period ended March 31, 1996, and the comparable period in 1995, is
set forth below:
Three Months Ended
3/31/96 3/31/95
Pelican Sound 91.5-99.0% 95.7-96.9%
The Meadows II 90.4-91.7% 74.5-80.0%
Town Place 93.3-93.7% 95.5-97.0%
All Rental Units 91.9-94.7% 88.3-91.1%
Total rental expenses before depreciation and debt service in the
three month period ended March 31, 1996 decreased by $9,000, from
$857,000 to $848,000, compared to the same period of 1995. The
decrease was comprised of decreases from The Meadows II ($11,000)
and Town Place ($3,000), offset by an increase from Pelican Sound
($5,000).
Net income from rental property operations before debt service and
depreciation was approximately $630,000 for the first three months
of 1996, compared to $558,000 for the comparative period, an
increase of approximately $72,000. The increase was comprised of
increases from The Meadows II ($80,000), and Town Place ($14,000),
offset by a decrease at Pelican Sound of $22,000.
As a result of the foregoing, net operating income before
depreciation and debt service was $630,000 for the quarter compared
to $558,000 for the comparative quarter. For the quarter, Pelican
Sound contributed $219,000 (35%) of net operating income before
depreciation and debt service; The Meadows contributed $234,000
(37%); and Town Place contributed $177,000 (28%).
Interest expense increased 34,200 from the comparative period.
The net income before debt service from real estate activities is
partially sheltered by deductions for depreciation which do not
affect cash flow. Depreciation decreased $5,000 from 1996 to 1995
for the respective three month periods.
The Partnership's net other expenses decreased in 1996 by
approximately $7,000. Interest income decreased $15,000, offset by
a decrease in partnership management expenses of $22,000. The
decrease in interest earned is primarily attributable to a smaller
investment portfolio since the like-kind exchange escrow funds have
been used to supplement the cash distributions to partners.
As a result of the foregoing, the Partnership's net loss for the
quarter ended March 31, 1996 was $88,000, compared to a loss of
$142,000 in the same period of 1995. Exclusive of depreciation and
amortization, the Partnership's net income for the quarters ended
March 31, 1996 and 1995 was $182,000 and $138,000.
Liquidity and Financial Condition
At March 31, 1996 there was $477,000 of cash and cash equivalents
and escrow deposits available to pay liabilities compared to
$243,000 available at December 31, 1995.
During the first three months of 1996, cash and cash equivalents
increased by $179,000. During the period $215,000 was generated by
operating activities, $237,000 was from investing activities and
approximately $273,000 was used in financing activities that
included payments on the mortgage notes and distributions to
partners as shown herein on the Statements of Cash Flows.
Operations provided cash flow which was used to partially fund the
cash distributions paid to the Limited Partners of $218,000.
Day-to-day operating expenses are presently being funded from
operations and do not require the use of cash reserves.
The Agreement of Limited Partnership provides that the Partnership
will make distributions for each calendar quarter of Cash Flow less
amounts set aside for Reserves. In January the Partnership paid to
the Limited Partners the December declaration of $218,330 ($12.50
per Interest) and declared a similar amount payable for the first
quarter of 1996 to be paid in April 1996. The distribution payable
to the General Partner of $1,000 was accrued and payment will be
made subsequently. The Partnership intends, but is not required,
to continue to make cash distributions to the Limited Partners each
quarter in the same amount.
During the first three months of 1996 total liabilities increased
by $9,000. The increase in liabilities is attributable to an
increase in accounts payable and accrued taxes of $66,000, an
increase in accrued interest of $2,000, and an increase in
distributions payable of $1,000, an increase in tenant security
deposits of $2,000, offset by decreases in mortgage notes payable
of $54,000, and a decrease in payables to affiliates of $8,000.
The outstanding principal balance on mortgage notes was reduced by
$54,505 during the quarter. Scheduled mortgage debt principal
reductions are approximately $2,648,000 over the balance of the
year, including the balloon payment of $2.5 million on the Town
Place mortgage note due May 15, 1996 (maturity date was extended
during the quarter). A financial institution has committed to lend
$6.7 million to refinance the $2.5 million mortgage note on Town
Place; the excess may be used to repurchase Interests and for other
workping capital purposes. The $10 million note on Pelican Sound
required payments of interest only until January 1, 1996, at which
time payments of principal are also required with payments of
$67,185 per month for principal and interest plus tax escrow
deposits of $24,000 per month.
Partners' Capital decreased by $308,000 during the first three
months of 1996 due to the net loss for financial reporting purposes
of approximately $89,000 and cash distributions declared payable
to the partners of $219,000.
Restricted funds of $227,904 are held in the exchange escrow. The
funds were to be used to acquire a replacement property and
complete the like-kind exchange. However, they may also and have
been used to provide additional liquidity, if necessary.
PART II.
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
The Company did not filed a report on Form 8-K during the three
months ended March 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
DECADE COMPANIES INCOME PROPERTIES -
A LIMITED PARTNERSHIP
(Registrant)
By: DECADE COMPANIES
(General Partner)
Date: May 10, 1996 By:/s/ Jeffrey Keierleber
Jeffrey Keierleber
General Partner and Principal
Financial and Accounting Officer
of Registrant
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