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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, 1998
___ 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
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 13
<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
Index
Page No.
--------
Part I Financial information 3
Balance Sheets --
September 30, 1998 and December 31, 1997 4
Statements of Operations --
For the three months ended September 30, 1998 and 1997 5
Statements of Operations --
For the nine months ended September 30, 1998 and 1997 6
Statements of Cash Flows --
For the nine months ended September 30, 1998 and 1997 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
2 of 13
<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 13
<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
BALANCE SHEETS
September 30, 1998 and December 31, 1997
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Real estate, at cost:
Land $ 19,875,846 $ 19,875,846
Buildings and improvements 95,298,734 92,162,859
Equipment and furniture 78,029 78,029
------------- -------------
115,252,609 112,116,734
Less accumulated depreciation (20,798,814) (18,592,878)
------------- -------------
94,453,795 93,523,856
Cash and cash equivalents at cost,
which approximate market value 2,528,919 855,840
Accounts receivable 289,903 478,380
Due from partners 48,453 158,248
Notes receivable 93,601 2,628
Step rent receivables 2,796,351 2,955,384
Deferred charges, net of accumulated amortization
of $793,034 in 1998 and $507,542 in 1997 901,809 1,015,084
Lease commissions and legal fees, net of accumulated amortization
of $1,678,202 in 1998 and $1,329,755 in 1997 2,264,206 1,844,392
Deposits 71,742 71,742
Prepaid expenses 399,479 41,414
------------- -------------
Total assets $ 103,848,258 $ 100,946,968
============= =============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Mortgage loan payable $ 47,212,000 $ 41,578,800
Accounts payable and accrued expenses 1,746,160 1,986,273
Other liabilities 985,376 1,141,712
------------- -------------
Total Liabilities 49,943,536 44,706,785
------------- -------------
Partners' Capital (Deficit):
General partners:
Capital contributions 1,000 1,000
Net income 380,931 375,926
Cash distributions (558,401) (530,944)
------------- -------------
(176,470) (154,018)
------------- -------------
Limited partners: ($25 per unit; 4,000,000 units
authorized, 2,957,146 and 3,043,106 issued and
outstanding in 1998 and 1997 respectively)
Capital contributions, net of offering costs 71,727,866 71,818,166
Net income 37,712,110 37,216,567
Cash distributions (55,358,784) (52,640,532)
------------- -------------
54,081,192 56,394,201
------------- -------------
Total partners' capital (deficit) 53,904,722 56,240,183
------------- -------------
Total liabilities and partners' capital (deficit) $ 103,848,258 $ 100,946,968
============= =============
</TABLE>
See accompanying notes to financial statements.
4 of 13
<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
STATEMENTS OF OPERATIONS
For the three months ended September 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Income:
Rental $ 4,189,509 $ 3,572,702
Interest and other income 3,350 103
----------- -----------
4,192,859 3,572,805
----------- -----------
Expenses:
Interest 795,863 819,841
Depreciation 737,070 748,865
Amortization 211,313 200,383
Property operating 1,572,697 2,203,438
Management fees 282,500 259,007
General and administrative 114,792 144,315
----------- -----------
3,714,235 4,375,849
----------- -----------
Net income/(loss) $ 478,624 $ (803,044)
=========== ===========
Net income/(loss) allocated:
To the general partners $ 4,786 $ (8,030)
To the limited partners 473,838 (795,014)
----------- -----------
$ 478,624 $ (803,044)
=========== ===========
Net income/(loss) per unit of limited partnership interest $0.16 $(0.26)
===== ======
</TABLE>
See accompanying notes to financial statements.
5 of 13
<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
STATEMENTS OF OPERATIONS
For the nine months ended September 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Income:
Rental $ 12,168,132 $ 10,904,754
Interest and other income 41,909 45,215
------------ ------------
12,210,041 10,949,969
------------ ------------
Expenses:
Interest 2,429,619 2,339,950
Depreciation 2,205,936 2,103,198
Amortization 633,939 601,149
Property operating 5,286,662 5,284,808
Management fees 869,902 743,549
General and administrative 283,435 449,099
------------ ------------
11,709,493 11,521,753
------------ ------------
Net income/(loss) from real estate operations 500,548 (571,784)
Gain on sale of real estate -- 912,501
------------ ------------
Net income $ 500,548 $ 340,717
============ ============
Net income allocated:
To the general partners $ 5,005 $ 3,407
To the limited partners 495,543 337,310
------------ ------------
$ 500,548 $ 340,717
============ ============
Net income per unit of limited partnership interest $0.17 $0.11
===== =====
</TABLE>
See accompanying notes to financial statements.
6 of 13
<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 500,548 $ 340,717
------------ ------------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,839,875 2,704,237
Gain on sale of real estate -- (912,501)
Changes in operating assets and liabilities:
Decrease/(increase) in:
Accounts receivable 188,477 239,495
Due from partners 109,795 204,507
Notes receivable (90,973) 6,382
Step rent receivables 159,033 127,212
Lease commissions (768,261) (760,956)
Deferred charges (172,217) --
Other assets (358,065) 7,476
Increase/(decrease)in:
Accounts payable and accrued expenses (240,113) (957,274)
Other liabilities (156,336) 109,205
------------ ------------
Total adjustments 1,511,215 767,783
------------ ------------
Net cash provided by operating activities 2,011,763 1,108,500
------------ ------------
Cash flows from investing activities:
Acquisition of real estate (3,135,875) (13,407,513)
Sale of real estate -- 12,475,923
------------ ------------
Net cash used in investing activities (3,135,875) (931,590)
------------ ------------
Cash flows from financing activities:
Mortgage proceeds 6,400,000 2,600,000
Mortgage paid (766,800) (724,000)
Capital repurchase (90,300) (353,191)
Cash distributions to partners (2,745,709) (2,764,578)
------------ ------------
Net cash provided by (used in) financing activities 2,797,191 (1,241,769)
------------ ------------
Net increase/(decrease) in cash and cash equivalents 1,673,079 (1,064,859)
Cash and cash equivalents at beginning of period 855,840 2,025,925
------------ ------------
Cash and cash equivalents at end of period $ 2,528,919 $ 961,066
============ ============
</TABLE>
See accompanying notes to financial statements.
7 of 13
<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(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,
1997 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
--------------------------------- ---------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Rental income received in cash $ 4,242,520 $ 3,639,440 $ 12,327,165 $ 11,031,966
Step rent receivables (53,011) (66,738) (159,033) (127,212)
------------ ------------ ------------ ------------
Rental income recognized $ 4,189,509 $ 3,572,702 $ 12,168,132 $ 10,904,754
============ ============ ============ ============
</TABLE>
3. Leases
Minimum future rentals under noncancellable operating leases as of
September 30, 1998 are as follows:
Year ending December 31
1998 $ 2,136,000
1999 11,229,000
2000 10,213,000
2001 7,264,000
2002 5,137,000
Thereafter 15,494,000
-----------
Total $51,473,000
===========
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, 1998 and 1997, escalation charges amounted to $1,053,828 and
$2,157,606 in 1998 and $676,758 and $2,045,801 in 1997.
8 of 13
<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
4. Transactions with General Partners and Affiliates
Fees earned for the three and nine ended September 30, 1998 are:
Three Nine
Months Months
------ ------
Partnership management fees $ 63,636 $190,908
Property management fees 218,864 678,994
5. Supplemental Disclosure of Cash Flow Information
Cash paid for interest during the nine months ended September 30, 1998 and
1997 amounted to $2,429,617 and $2,339,950, respectively.
9 of 13
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations for the nine months ended September 30, 1998
Liquidity and Capital Resources
At September 30,1998, the Partnership had cash and working capital of
approximately $2,528,000 which was invested in unaffiliated money market funds
and interest-bearing bank accounts. In addition, the Partnership has the right
to borrow an additional $1,788,000 under its existing line of credit.
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 $47,212,000.
Results of Operations
The Partnership's results of operations during the third quarter
significantly improved when compared to prior years. Rental revenues increased
as a result of filled-in-vacancies, rate adjustments and end to some rent
abatements. Operating expenses decreased after the completion of certain
non-recurring maintenance work performed last year.
During the third quarter, the Partnership spent approximately $800,000 in
tenant and building improvements and related lease expenses. Such improvements,
which are called for under the negotiated leases, enhance the appraised values
of the properties.
10 of 13
<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 13
<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 13, 1998 By:
/s/ Robert F. Gossett, Jr.
--------------------------------
Robert F. Gossett, Jr.
President, Director
Date: November 13, 1998 By: /s/ Paula G. Gossett
--------------------------------
Paula G. Gossett
Treasurer, Vice President
12 of 13
<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, 1997 and unaudited financial statements as at and for the nine months ended
September 30, 1998 and 1997 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,528,919
<SECURITIES> 0
<RECEIVABLES> 289,903
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,816,207
<PP&E> 115,252,609
<DEPRECIATION> 20,798,814
<TOTAL-ASSETS> 103,848,258
<CURRENT-LIABILITIES> 2,731,536
<BONDS> 47,212,000
0
0
<COMMON> 54,081,192
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 103,848,258
<SALES> 12,168,132
<TOTAL-REVENUES> 12,210,041
<CGS> 0
<TOTAL-COSTS> 8,996,439
<OTHER-EXPENSES> 283,435
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,429,619
<INCOME-PRETAX> 500,548
<INCOME-TAX> 0
<INCOME-CONTINUING> 500,548
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 500,548
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
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