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 March 31, 1999
|_| 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 __
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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 --
March 31, 1999 and December 31, 1998 4
Statements of Operations --
For the three months ended March 31, 1999 and 1998 5
Statements of Cash Flows --
For the three months ended March 31, 1999 and 1998 6
Notes to the Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II Other information 10
Signatures 11
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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
March 31, 1999 and December 31, 1998
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Real estate, at cost:
Land $19,875,846 $19,875,846
Buildings and improvements 95,964,250 95,541,299
Equipment and furniture 78,029 78,029
------------- -------------
115,918,125 115,495,174
Less accumulated depreciation 22,460,618 21,669,758
------------- -------------
93,457,507 93,825,416
Cash and cash equivalents at cost,
which approximates market value 778,997 4,115,435
Accounts receivable 268,315 737,617
Due from partners 106,145 95,016
Notes receivable, net of unamortized discount of
$45,061 in 1999 and $50,024 in 1998 488,046 524,379
Step rent receivables 2,725,625 2,638,615
Deferred charges, net of accumulated amortization
of $1,051,657 in 1999 and $927,224 in 1998 705,119 829,552
Lease commissions and legal fees, net of accumulated amortization
of $1,769,624 in 1999 and $1,637,425 in 1998 2,639,207 2,726,566
Deposits and other assets 421,287 255,769
------------- -------------
Total assets $101,590,248 $105,748,365
============= =============
LIABILITIES AND PARTNERS' CAPITAL
Mortgage loan payable $44,644,800 $46,930,800
Accounts payable and accrued expenses 2,610,011 2,983,261
Other liabilities 1,094,461 1,382,043
------------- -------------
Total liabilities 48,349,272 51,296,104
------------- -------------
Partners' Capital:
General partners:
Capital contributions 1,000 1,000
Net income 392,165 395,236
Cash distributions (576,242) (567,200)
------------- -------------
(183,077) (170,964)
------------- -------------
Limited partners: ($25 per unit; 4,000,000 units
authorized, 2,983,531 issued and
outstanding in 1999 and 1998)
Capital contributions, net of offering costs 71,724,856 71,724,856
Net income 38,824,250 39,128,241
Cash distributions (57,125,053) (56,229,872)
------------- -------------
53,424,053 54,623,225
------------- -------------
Total partners' capital 53,240,976 54,452,261
------------- -------------
Total liabilities and partners' capital 101,590,248 $105,748,365
============= =============
</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 March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Income:
Rental $3,491,090 $3,565,300
Interest and other income 263,489 6,198
----------- -----------
3,754,579 3,571,498
----------- -----------
Expenses:
Interest 832,019 823,246
Depreciation 790,860 735,312
Amortization 256,632 211,313
Property operating 1,773,782 1,719,753
Management fees 264,364 275,068
General and administrative 143,984 85,144
----------- -----------
4,061,641 3,849,836
----------- -----------
Net income/(loss) $(307,062) $(278,338)
=========== ===========
Net income/(loss) allocated:
To the general partners $(3,071) $(2,783)
To the limited partners (303,991) (275,555)
----------- -----------
$(307,062) $(278,338)
=========== ===========
Net income/(loss) per unit of limited partnership interest $(0.11) $(0.09)
=========== ===========
</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 CASH FLOWS
For the three months ended March 31, 1999 and 1998
Increase/(Decrease) in Cash
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income/(loss) $(307,062) $(278,338)
----------- -----------
Adjustments to reconcile net income/(loss)
to net cash provided by operating activities:
Depreciation and amortization 1,047,492 946,625
Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable 469,302 55,923
Due from partners (11,129) 322,232
Note receivable 36,333 (15,505)
Step rent receivables (87,010) 53,011
Lease commissions and legal fees (44,840) (245,024)
Other assets (165,518) (298,683)
Increase (decrease) in:
Accounts payable and accrued expenses (373,250) (540,167)
Other liabilities (287,582) 225,572
----------- -----------
Total adjustments 583,798 503,984
----------- -----------
Net cash provided by operating activities 276,736 225,646
----------- -----------
Cash flows from investing activities:
Acquisition of real estate (422,951) (1,257,237)
----------- -----------
Cash provided by/(used in) investing activities (422,951) (1,257,237)
----------- -----------
Cash flows from financing activities:
Due to partners -- 2,000,000
Mortgage paid (2,286,000) (255,600)
Capital repurchase -- (64,500)
Cash distributions to partners (904,223) (911,787)
----------- -----------
Cash provided by/(used in) financing activities (3,190,223) 768,113
----------- -----------
Net decrease in cash and cash equivalents (3,336,438) (263,478)
Cash and cash equivalents at beginning of period 4,115,435 855,840
----------- -----------
Cash and cash equivalents at end of period $778,997 $592,362
=========== ===========
</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
March 31, 1999
(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,
1998 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.
Three Months Ended
----------------------------
1999 1998
----------- -----------
Rental income received in cash $3,404,080 $3,618,311
Step rent receivables 87,010 (53,011)
----------- -----------
Rental income recognized $3,491,090 $3,565,300
=========== ===========
3. Leases
Minimum future rentals under noncancellable operating leases as of March
31, 1999 are as follows:
Year ending December 31
1999 $8,810,000
2000 10,634,000
2001 7,961,000
2002 7,101,000
2003 6,757,000
Thereafter 25,069,000
-----------
Total $66,332,000
===========
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 months ended March
31, 1999 and 1998, escalation charges amounted to $474,886 and $536,338,
respectively.
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<PAGE>
CORPORATE REALTY INCOME FUND I, L.P.
(a Delaware limited partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
4. Transactions with General Partners and Affiliates
Fees incurred and reimbursable expenses for the three months ended March
31, 1999 are:
Three
Months
------
Partnership management fees $ 62,727
Property management fees 201,637
5. Supplemental Disclosure of Cash Flow Information
Cash paid for interest during the three months ended March 31, 1999 and
1998 amounted to $832,019 and $823,246, respectively.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations for the three months ended March 31, 1999.
Year 2000 Considerations
Registrant has determined that it will need to modify or replace portions
of its software so that its computer systems will function properly with respect
to dates in the Year 2000 and beyond. Registrant also has initiated discussions
with its significant suppliers, large customers and financial institutions to
ensure that those parties have appropriate plans to re-mediate Year 2000 issues
where their systems interface with Registrant's systems or otherwise impact its
operations. Registrant is assessing the extent to which its operations are
vulnerable should those organizations fail to re-mediate properly their computer
systems.
Registrant is currently replacing and testing its computer software
systems, which is scheduled to be completed in mid 1999. While Registrant
believes its planning efforts are adequate to address its Year 2000 concerns,
there can be no guarantee that the systems of other companies on which
Registrant's systems and operations rely will be converted on a timely basis and
will not have a material effect on Registrant. The cost of the Year 2000
initiatives is not expected to be material to Registrant's results of operations
or financial position.
Liquidity and Capital Resources
At March 31, 1999, the Partnership had cash and working capital of
approximately $778,000 which was invested in unaffiliated money market funds and
interest-bearing bank accounts. In addition, the Partnership has the right to
borrow an additional $4,300,000 under its existing line-of-credit. In January,
1999, the Partnership reduced the balance of its mortgage or line of credit by
$2,000,000 thereby reducing the monthly debt service requirements and financing
cost.
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 $44,644,800.
Results of Operations
Rental revenue during the first quarter of 1999 decreased in relation to
1998 as a result of certain lease cancellations prior to the end of the term.
Property operating expenses for 1999 were comparable to those of 1998. General
and administrative expenses were higher in 1999 when compared to 1998 due to the
writeoff of balances from delinquent tenants who vacated their spaces during the
period.
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<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) None.
(b) 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: May 15, 1998 By: Robert F. Gossett, Jr.
------------------------------------
President, Director
Date: May 15, 1998 By: Pauline G. Gossett
-------------------------------------
Secretary
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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, 1998and
unaudited financial statements as at and for the three months ended March 31,
1999 and 1998 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 778,997
<SECURITIES> 0
<RECEIVABLES> 268,315
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,153,457
<PP&E> 115,918,125
<DEPRECIATION> 22,460,618
<TOTAL-ASSETS> 101,590,248
<CURRENT-LIABILITIES> 3,704,472
<BONDS> 44,644,800
0
0
<COMMON> 53,424,053
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 101,590,248
<SALES> 3,491,090
<TOTAL-REVENUES> 3,754,579
<CGS> 0
<TOTAL-COSTS> 3,085,638
<OTHER-EXPENSES> 143,984
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 832,019
<INCOME-PRETAX> (307,062)
<INCOME-TAX> 0
<INCOME-CONTINUING> (307,062)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (307,062)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
