SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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 0-15796
Corporate Realty Income Fund I, L.P.
------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3311993
- ----------------------- ----------------
(State of organization) (I.R.S. Employer
identification No.)
406 East 85th Street, New York, New York 10028
- ---------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 794-3292
--------------
- -------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
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
-- ----
1 of 12
<PAGE>
<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
Index
-----
Page No.
--------
Part I Financial information 3
Balance Sheets --
September 30, 1996 and December 31, 1995 4
Statements of Operations --
For the three months ended September 30, 1996 and 1995 5
Statements of Operations --
For the nine months ended September 30, 1996 and 1995 6
Statements of Cash Flows --
For the nine months ended September 30, 1996 and 1995 7
Notes to the Financial Statements 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Other information 11
Signatures 12
2 of 12
<PAGE>
PART I. FINANCIAL INFORMATION
Item I. Financial Statements
The summarized financial information contained herein is unaudited; however,
in the opinion of management, all adjustments necessary for a fair presentation
of such financial information have been included.
3 of 12
<PAGE>
<TABLE>
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
-------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Real estate, at cost:
Land $13,598,425 $13,598,425
Buildings and improvements 71,977,094 71,444,155
85,575,519 85,042,580
Less accumulated depreciation 17,810,635 15,974,431
67,764,884 69,068,149
Cash and short-term investments at cost,
which approximates market value 999,080 397,432
Accounts receivable 29,146 437,191
Note receivable 12,185 17,694
Step rent receivables 2,803,594 2,784,802
Deferred charges, net of accumulated
amortization of $21,937 in 1995 711,147 7,313
Lease commissions, net of accumulated amortization
of 1,249,602 in 1996 and $1,007,199 in 1995 1,567,689 1,628,004
Deposits 33,142 33,142
Other assets 62,381 41,624
----------- -----------
Total assets $73,983,248 $74,415,351
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Mortgage loan payable $11,200,000 $ 7,800,000
Accounts payable and accrued expenses 581,101 1,457,029
Due to affiliates (47,812) (44,788)
Other liabilities 639,554 325,161
----------- -----------
Total Liabilities 12,372,843 9,537,402
----------- -----------
Partners' Capital:
General partners:
Capital contributions 1,000 1,000
Net income 375,442 373,356
Cash distributions (484,896) (456,581)
---------- ----------
(108,454) (82,225)
---------- ----------
Limited partners: ($25 per unit; 4,000,000 units
authorized, 3,067,290 and 3,127,484 issued and
outstanding in 1996 and 1995 respectively)
Capital contributions, net of offering costs 72,635,937 73,276,650
Net income 37,168,590 36,962,115
Cash distributions (48,085,668) (45,278,591)
------------ -----------
61,718,859 64,960,174
------------ -----------
Total partners' capital 61,610,405 64,877,949
------------ -----------
Total liabilities and partners' capital $ 73,983,248 $74,415,351
------------ -----------
------------ -----------
See accompanying notes to financial statements.
</TABLE>
4 of 12
<PAGE>
<TABLE>
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Income:
Rental $2,069,740 $2,252,474
Interest and other income 148 188,220
--------- ---------
2,069,888 2,440,694
--------- ---------
Expenses:
Interest 194,590 184,762
Depreciation 612,068 584,064
Amortization 80,801 77,136
Property operating 771,762 729,701
Management fees 169,867 191,316
General and administrative 165,661 257,540
--------- ---------
1,994,749 2,024,519
--------- ---------
Net income $ 75,139 $ 416,175
--------- ----------
--------- ----------
Net income allocated:
To the general partners $ 752 $ 4,162
To the limited partners 74,387 412,013
------- ---------
$75,139 $416,175
------- ---------
------- ---------
Net income per unit of limited partnership interest $0.02 $0.13
----- -----
----- -----
See accompanying notes to financial statements.
</TABLE>
5 of 12
<PAGE>
<TABLE>
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Income:
Rental $5,937,434 $6,620,701
Interest and other income 58,419 214,621
--------- ---------
5,995,853 6,835,322
--------- ---------
Expenses:
Interest 553,470 551,904
Depreciation 1,836,204 1,752,192
Amortization 249,716 236,283
Property operating 2,089,378 2,088,234
Management fees 521,517 455,972
General and administrative 537,007 421,394
--------- ---------
5,787,292 5,505,979
--------- ---------
Net income from real estate operations 208,561 1,329,343
Gain on sales of marketable securities -- 27,682
------- ------
Net income $208,561 $1,357,025
-------- ----------
-------- ----------
Net income allocated:
To the general partners $ 2,086 $ 13,570
To the limited partners 206,475 1,343,455
$208,561 $1,357,025
-------- ----------
-------- ----------
Net income per unit of limited partnership interest $0.06 $0.43
----- -----
----- -----
See accompanying notes to financial statements.
</TABLE>
6 of 12
<PAGE>
<TABLE>
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 and 1995
(Unaudited)
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 208,561 $1,357,025
--------- ----------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,085,920 1,988,475
Gain on marketable securities -- (27,682)
Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable 408,045 (252,088)
Notes receivable 5,509 5,293
Step rent receivables (18,792) (272,133)
Lease commissions (182,088) (321,345)
Deferred charges (711,147) (67,461)
Other assets (20,757) (12,835)
Increase (decrease)in:
Accounts payable and accrued expenses (875,928) (106,786)
Due to affiliates (3,024) (71,885)
Other liabilities 314,393 183,419
--------- ---------
Total adjustments 1,002,131 1,044,972
--------- ---------
Net cash provided by operating activities 1,210,692 2,401,997
--------- ---------
Cash flows from investing activities:
Acquisition of real estate (532,939) (183,864)
Sales of marketable securities -- 128,579
------- -------
Net cash provided by (used in)
investing activities (532,939) (55,285)
------- ------
Cash flows from financing activities:
Mortgage refinancing proceeds 3,400,000 --
Capital repurchase (640,713) ( 324,242)
Cash distributions to partners (2,835,392) (2,909,090)
--------- ---------
Net cash used in financing activities (76,105) (3,233,332)
--------- ---------
Net increase in cash and short-term investments 601,648 (886,620)
Cash and short-term investments
at beginning of period 397,432 1,291,972
-------- ---------
Cash and short-term investments at end of period $ 999,080 $ 405,352
-------- ---------
-------- ---------
See accompanying notes to financial statements.
</TABLE>
7 of 12
<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
1. GENERAL
The accompanying financial statements and related notes should
be read in conjunction with the Partnership's annual report for the year
ended December 31, 1995 as certain footnote disclosures which would
substantially duplicate those contained in such audited financial
statements have been omitted from this report.
2. RENTAL INCOME
In accordance with the Financial Accounting Standards Board Statement
No. 13, "Accounting for Leases," the Partnership recognizes rental income
on a straight-line basis over the fixed term of the lease period. Step rent
receivables represent unbilled future rentals. The following reconciles
rental income received in cash to rental income recognized.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------- ----------------------
1996 1995 1996 1995
----------- --------- --------- ----------
<S> <C> <C> <C> <C>
Rental income received in cash $2,063,476 $2,161,763 $5,918,642 $6,348,568
Step rent receivables 6,264 90,711 18,792 272,133
--------- --------- --------- ---------
Rental income recognized $2,069,740 $2,252,474 $5,937,434 $6,620,701
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
3. LEASES
Minimum future rentals under noncancellable operating leases as of
September 30, 1996 are as follows:
Year ending December 31
-----------------------
1996 $ 1,483,000
1997 6,741,000
1998 6,247,000
1999 5,981,000
2000 5,332,000
Thereafter 5,568,000
-----------
Total $31,352,000
-----------
-----------
In addition to the minimum lease amounts, the leases provide for
escalation charges to the tenants for operating expenses and real estate
taxes. Escalation charges have been included in rental income. For the three
and nine months ended September 30, 1996 and 1995, escalation charges
amounted to $380,445 and $963,951 in 1996 and $410,455 and $1,279,031 in 1995.
8 of 12
<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
4. TRANSACTIONS WITH GENERAL PARTNERS AND AFFILIATES
Fees earned and reimbursable expenses for the three and nine ended
September 30, 1996 are:
<TABLE>
<CAPTION>
Three Nine
Months Months
------ ------
<S> <C> <C>
Partnership management fees $65,751 $197,253
Property management fees 104,116 324,264
Administration expenses 25,914 126,187
Leasing Commission --- 75,645
</TABLE>
5. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest during the nine months ended September 30,
1996 and 1995 amounted to $ 553,470 and $491,779, respectively.
9 of 12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
Liquidity and Capital Resources
- -------------------------------
At September 30, 1996, the Partnership had cash and working capital of
approximately $1,000,000 which was invested in unaffiliated money market
funds and interest-bearing bank accounts.
Except for approximately 20,000 square feet (half in Monterey Park,
California and half in Oklahoma City) all of the Partnership's buildings
are now fully leased. The Partnership does not anticipate expending any
significant additional funds for tenant improvements during 1996.
The Partnership expects sufficient cash flow to be generated from
operations to meet its current operating and debt service requirements on a
short-term and long-term basis. In September 1996 the Partnership refinanced
its $8,800,000 mortgage from Pittsburg National Bank with a loan obtained
from Fleet Bank which committed itself to lending the Partnership up to
$24,000,000 for loan refinancing and acquisition of new properties. The Fleet
Bank loan has a period of four years and bears interest, at the Partnership's
choice, of either LIBOR plus 2.25% or prime plus 0.50%.
On November 13, 1996, the Partnership signed a contract to purchase the
fee interest in the land and building commonly known as 475 Fifth Avenue,
New York, New York. This is a 240,000 square foot multi-tenant office
building located at the southeast corner of Fifth Avenue and 41st Street
in the borough of Manhattan. The purchase price is $26,492,000. The contract
provides for a closing within 30 days and requires the Partnership to put up
a $3,000,000 non-refundable good faith deposit. Prior to signing this contract
the Partnership received from Fleet Bank an oral commitment (subject to
satisfaction of customary closing conditions) to increase their current line-
of-credit from $24,000,000 to $44,000,000. In addition the commitment provided
for the increase in the front-end fee associated with the line-of-credit from
1.0% to 1.5% and a decrease in the interest rate from LIBOR plus 2.25% to LIBOR
plus 2.00%. It is anticipated that proceeds from this line-of-credit will be
used to fund the purchase of the above-mentioned property.
Results of Operations
- ---------------------
Rental revenues in 1996 decreased from 1995 as the result of lower
rents on the leases that expired in late 1995 and were renewed at current
market rates. All expenses (except interest) in 1996 increased from 1995,
reflecting a shift of several leases from net leases (under which the
tenant pay the expenses) to gross leases (under which the landlord pays
the expenses).
10 of 12
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No reports on Form 8-K were filed during the quarter in which
this report is filed.
11 of 12
<PAGE>
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.
CORPORATE REALTY INCOME FUND I, L.P
(Registrant)
Date: November 15, 1996 By: /s/Robert F. Gossett, Jr.
------------------------------------------
Robert F. Gossett, Jr.
Presidnet, Director
Date: November 15, 1996 By: /s/Paula G. Gossett
-------------------------------------------
Paula G. Gossett
Treasurer, Vice President
12 of 12
</PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from registrant's
audited financial statements as at and for the year ended December 31, 1995 and
unaudited financial statements as at and for the six months ended June 30, 1996
and 1995 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-END> SEP-30-1996 DEC-31-1995
<CASH> 999,080 397,432
<SECURITIES> 0 0
<RECEIVABLES> 29,146 437,191
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,135,934 927,083
<PP&E> 85,575,519 85,042,580
<DEPRECIATION> 17,810,635 15,974,431
<TOTAL-ASSETS> 73,983,248 74,415,351
<CURRENT-LIABILITIES> 1,172,843 1,737,402
<BONDS> 11,200,000 7,800,000
<COMMON> 61,610,405 64,877,949
0 0
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 73,983,248 74,415,351
<SALES> 2,069,740 2,252,474
<TOTAL-REVENUES> 2,069,888 2,440,694
<CGS> 0 0
<TOTAL-COSTS> 1,634,498 1,582,217
<OTHER-EXPENSES> 165,661 257,540
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 194,590 184,762
<INCOME-PRETAX> 75,139 416,175
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 75,139 416,175
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 75,139 416,175
<EPS-PRIMARY> 0.02 0.13
<EPS-DILUTED> 0.02 0.13
</TABLE>
