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, 1997
___ 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.)
475 Fifth Avenue, New York, New York 10017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 696-0772
406 East 85th Street, New York, New York
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
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<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
Index
-----
Page No.
--------
Part I Financial information 3
Balance Sheets --
September 30, 1997 and December 31, 1996 4
Statements of Operations --
For the three months ended September 30, 1997 and 1996 5
Statements of Operations --
For the nine months ended September 30, 1997 and 1996 6
Statements of Cash Flows --
For the nine months ended September 30, 1997 and 1996 7
Notes to the Financial Statements 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Other information 11
Signatures 13
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<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.
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<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
BALANCE SHEETS
September 30, 1997 and December 31, 1996
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Real estate, at cost:
Land $ 19,875,846 $ 19,086,425
Buildings and improvements 91,895,247 93,885,121
------------- -------------
111,771,093 112,971,546
Less accumulated depreciation 17,611,613 18,553,069
------------- -------------
94,159,480 94,418,477
Cash and short-term investments at cost,
which approximates market value 961,066 2,025,925
Accounts receivable 192,394 431,889
Due from general partners -- 99,797
Notes receivable 3,930 10,312
Step rent receivables 2,817,951 2,945,163
Deferred charges, net of accumulated amortization
of $412,378 in 1997 and $180,636 in 1996 1,110,248 1,395,740
Lease commissions, net of accumulated amortization
of 1,715,917 in 1997 and $1,400,260 in 1996 1,990,544 1,545,245
Deposits 71,742 71,742
Prepaid expenses 31,513 38,989
------------- -------------
Total assets $ 101,338,869 $ 102,983,279
============= =============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Mortgage loan payable $ 41,831,200 $ 39,955,200
Accounts payable and accrued expenses 241,263 1,198,537
Due to general partners 104,710 --
Other liabilities 1,053,171 943,966
------------- -------------
Total Liabilities 43,230,344 42,097,703
------------- -------------
Partners' Capital (Deficit):
General partners:
Capital contributions 1,000 1,000
Net income 383,542 380,135
Cash distributions (521,802) (494,170)
------------- -------------
(137,260) (113,035)
------------- -------------
Limited partners: ($25 per unit; 4,000,000 units
authorized, 3,013,451 and 3,043,106 issued and
outstanding in 1997 and 1996 respectively)
Capital contributions, net of offering costs 72,012,095 72,365,286
Net income 37,970,560 37,633,250
Cash distributions (51,736,871) (48,999,925)
------------- -------------
58,245,784 60,998,611
------------- -------------
Total partners' capital (deficit) 58,108,524 60,885,576
------------- -------------
Total liabilities and partners'
capital (deficit) $ 101,338,868 $ 102,983,279
============= =============
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
STATEMENTS OF OPERATIONS
For the three months ended September 30, 1997 and 1996
(Unaudited)
1997 1996
----------- -----------
Income:
Rental $ 3,572,702 $ 2,069,740
Interest and other income 103 148
----------- -----------
3,572,805 2,069,888
----------- -----------
Expenses:
Interest 819,841 194,590
Depreciation 748,865 612,068
Amortization 200,383 80,801
Property operating 2,203,438 771,762
Management fees 259,007 169,867
General and administrative 144,315 165,661
----------- -----------
4,375,849 1,994,749
----------- -----------
Net income/(loss) $ (803,044) $ 75,139
=========== ===========
Net income/(loss) allocated:
To the general partners $ (8,030) $ 752
To the limited partners (795,014) 74,387
----------- -----------
$ (803,044) $ 75,139
----------- ===========
Net income/(loss) per unit of limited
partnership interest $ (0.26) $ 0.02
=========== ===========
See accompanying notes to financial statements.
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<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
STATEMENTS OF OPERATIONS
For the nine months ended September 30, 1997 and 1996
(Unaudited)
1997 1996
----------- -----------
Income:
Rental $ 10,904,754 $ 5,937,434
Interest and other income 45,215 58,419
------------ ------------
10,949,969 5,995,853
------------ ------------
Expenses:
Interest 2,339,950 553,470
Depreciation 2,103,198 1,836,204
Amortization 601,149 249,716
Property operating 5,284,808 2,089,378
Management fees 743,549 521,517
General and administrative 449,099 537,007
------------ ------------
11,521,753 5,787,292
------------ ------------
Net income/(loss) from real estate operations (571,784) 208,561
Gain on sale of real estate 912,501 --
------------ ------------
Net income $ 340,717 $ 208,561
============ ============
Net income allocated:
To the general partners $ 3,407 $ 2,086
To the limited partners 337,310 206,475
------------ ------------
$ 340,717 $ 208,561
============ ============
Net income per unit of limited
partnership interest $ 0.11 $ 0.06
============ ============
See accompanying notes to financial statements.
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<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income/(loss) $ (571,784) $ 208,561
------------ ------------
Adjustments to reconcile net income/(loss)
to net cash provided by operating
activities:
Depreciation and amortization 2,704,237 2,085,920
Gain on sale of real estate 912,501 --
Changes in operating assets and liabilities:
Decrease/(increase) in:
Accounts receivable 239,495 408,045
Notes receivable 6,382 5,509
Step rent receivables 127,212 (18,792)
Lease commissions (760,956) (182,088)
Deferred charges -- (711,147)
Other assets 7,476 (20,757)
Increase/(decrease)in:
Accounts payable and accrued expenses (957,274) (875,928)
Due to general partners 204,507 (3,024)
Other liabilities 109,205 314,393
------------ ------------
Total adjustments 2,592,785 1,002,131
------------ ------------
Net cash provided by operating activities 2,021,001 1,210,692
------------ ------------
Cash flows from investing activities:
Acquisition of real estate (13,407,513) (532,939)
Sale of real estate 11,563,422 --
------------ ------------
Net cash used in investing activities (1,844,091) (532,939)
------------ ------------
Cash flows from financing activities:
Mortgage proceeds 2,600,000 3,400,000
Mortgage paid (724,000) --
Capital repurchase (353,191) (640,713)
Cash distributions to partners (2,764,578) (2,835,392)
------------ ------------
Net cash used in financing activities (1,241,769) (76,105)
------------ ------------
Net increase/(decrease) in cash and short-term investments (1,064,859) 601,648
Cash and short-term investments at beginning of period 2,025,925 397,432
------------ ------------
Cash and short-term investments at end of period $ 961,066 $ 999,080
============ ============
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(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,
1996 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
---------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Rental income received in cash $ 3,639,440 $ 2,063,476 $ 11,031,966 $ 5,918,642
Step rent receivables (66,738) 6,264 (127,212) 18,792
------------ ------------ ------------ ------------
Rental income recognized $ 3,572,702 $ 2,069,740 $ 10,904,754 $ 5,937,434
============ ============ ============ ============
</TABLE>
3. Leases
Minimum future rentals under noncancellable operating leases as of
September 30, 1997 are as follows:
Year ending December 31
-----------------------
1997 $ 2,575,000
1998 10,473,000
1999 9,554,000
2000 8,811,000
2001 6,620,000
Thereafter 10,767,000
-----------
Total $48,800,000
===========
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, 1997 and 1996, escalation charges amounted to $676,758 and
$2,045,801 in 1997 and $380,445 and $963,951 in 1996.
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<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
4. Transactions with General Partners and Affiliates
Fees earned and reimbursable expenses for the three and nine ended
September 30, 1997 are:
Three Nine
Months Months
------ ------
Partnership management fees $ 64,242 $ 193,179
Property management fees 194,765 550,370
Administration expenses --0-- 25,000
During the three and nine months ended September 30,1997, the Partnership
paid to the General Partners leasing commission aggregating $356,886 and
$486,826, respectively.
5. Supplemental Disclosure of Cash Flow Information
Cash paid for interest during the nine months ended September 30, 1997 and
1996 amounted to $2,339,950 and $553,470, respectively.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations for the nine months ended September 30, 1997
Liquidity and Capital Resources
At September 30, 1997, the Partnership had cash and working capital of
approximately $960,000 which was invested in unaffiliated money market funds and
interest-bearing bank accounts.
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. The Partnership's only significant liability is
a mortgage loan of approximately $41,831,200.
Results of Operations
Rental revenues and all expenses (except General and Administrative) during
the third quarter for the first nine months of 1997 increased from comparable
periods in 1996 as a result of the acquisition of the New York and San Antonio
properties. Net operating loss for the three months and nine months ended
September 30, 1997 was due primarily to depreciation of recently acquired
properties and amortization of deferred mortgage cost. Total net cash provided
by operating activities for the first nine months of 1997 increased when
compared to operating results of similar period of 1996.
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<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.
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<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 14, 1997 By: /s/Robert F. Gossett, Jr.
-----------------------------------
Robert F. Gossett, Jr.
President, Director
Date: November 14, 1996 By: /s/Paula G. Gossett
-----------------------------------
Paula G. Gossett
Treasurer, Vice President
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<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 14, 1997 By:
President, Director
Date: November 14, 1997 By:
Treasurer, Vice President
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<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, 1996 and unaudited financial statements as at and for the nine months ended
September 30, 1997 and 1996 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 961,066
<SECURITIES> 0
<RECEIVABLES> 192,394
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,157,390
<PP&E> 111,771,093
<DEPRECIATION> 17,611,613
<TOTAL-ASSETS> 101,338,868
<CURRENT-LIABILITIES> 1,399,144
<BONDS> 41,831,200
0
0
<COMMON> 58,245,784
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 101,338,868
<SALES> 10,904,754
<TOTAL-REVENUES> 10,949,969
<CGS> 0
<TOTAL-COSTS> 8,732,704
<OTHER-EXPENSES> 449,099
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,339,950
<INCOME-PRETAX> 340,717
<INCOME-TAX> 0
<INCOME-CONTINUING> 340,717
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 340,717
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
