UNITED STATES
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 period ended September 30, 1994
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: 0-15764
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
TEMPO-LP, INC.
(Exact name of registrant as specified in governing instrument)
Dean Witter/Coldwell Banker Tax
Exempt Mortgage Fund, L.P.
Delaware 58-1710934
(State of organization) (IRS Employer Identification No.)
TEMPO-LP, Inc.
58-1710930
(IRS Employer Identification No.)
2 World Trade Center, New York, NY 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 392-1054
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
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<TABLE>
Part I - Financial Information
Item 1. Financial Statements
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
BALANCE SHEETS
<CAPTION>
September 30,
1994 December 31,
(Unaudited) 1993
ASSETS
<S> <C> <C>
Cash and short-term investments, at cost,
which approximates market $ 4,280,326 $ 3,214,536
Accrued interest receivable 457,275 533,357
Investments in revenue bonds 103,216,067 103,778,450
Deferred bond selection fee, net 1,527,223 1,686,954
Other assets 742,562 681,530
$110,223,453 $109,894,827
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and other liabilities $ 887,014 $ 790,525
Partners' capital:
Assigned Benefit Certificates
(7,454,110 ABC's outstanding) 109,336,439 109,104,302
$110,223,453 $109,894,827
See accompanying notes to financial statements.
</TABLE>
[FN]
<PAGE>
<PAGE>
<TABLE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
Statements of Operations
Three and nine months ended September 30, 1994 and 1993
(Unaudited)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Interest income:
Revenue bonds $1,907,660 $1,733,900 $5,601,282 $4,870,058
Short-term investments 14,628 17,258 35,433 55,071
1,922,288 1,751,158 5,636,715 4,925,129
Expenses:
General and administrative 74,347 82,980 555,609 305,305
Net income $1,847,941 $1,668,178 $5,081,106 $4,619,824
Net income per Assigned
Benefit Certificate $ .25 $ .22 $ .67 $ .61
See accompanying notes to financial statements.
</TABLE>
[FN]
<PAGE>
<PAGE>
<TABLE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
STATEMENT OF PARTNERS' CAPITAL
Nine months ended September 30, 1994
(Unaudited)
<CAPTION>
Limited General
Partners Partner Total
<S> <C> <C> <C>
Partners' capital (deficit)
at January 1, 1994 $109,739,380 $(635,078) $109,104,302
Net income 4,979,484 101,622 5,081,106
Cash distributions (4,751,991) (96,978) (4,848,969)
Partners' capital (deficit)
at September 30, 1994 $110,966,873 $(630,434) $109,336,439
See accompanying notes to financial statements.
</TABLE>
[FN] <PAGE>
<PAGE>
<TABLE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
STATEMENTS OF CASH FLOWS
Nine months ended September 30, 1994 and 1993
(Unaudited)
<CAPTION>
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,081,106 $ 4,619,824
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization 562,383 784,620
Amortization of deferred bond selection fee 159,731 159,731
Decrease in operating assets:
Accrued interest receivable 76,082 31,477
Increase in operating liabilities:
Accounts payable and other liabilities 96,489 627,121
Net cash provided by operating activities 5,975,791 6,222,773
Cash flows from financing activities:
Cash distributions (4,848,969) (5,419,441)
Other assets (61,032) (522,460)
Net cash used in financing activities (4,910,001) (5,941,901)
Increase in cash and short-term investments 1,065,790 280,872
Cash and short-term investments at beginning
of period 3,214,536 3,116,206
Cash and short-term investments at end
of period $ 4,280,326 $ 3,397,078
See accompanying notes to financial statements.
</TABLE>
[FN]
<PAGE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. The Partnership and Accounting Policies
Dean Witter/Coldwell Banker Tax Exempt Mortgage Fund, L.P. (the
"Partnership") is a limited partnership organized under the laws of the
State of Delaware on August 20, 1986.
The Partnership's records are maintained on the accrual basis of
accounting for financial reporting and tax purposes.
Generally, investments in revenue bonds are carried at cost. The
Partnership has acquired ownership interests in certain properties
collateralizing the bonds because the owners of such properties
defaulted on the bonds. At the date of acquisition of these ownership
interests, the Partnership adjusted the carrying value of the related
bonds to the net realizable value of the property if such amount was
lower than the book value of the bonds. Subsequently, for those bonds
which were written down to net realizable value, the Partnership records
periodic amortization (netted against bond interest) approximately equal
to depreciation on the property.
Net income per Assigned Benefit Certificate ("ABC") is calculated by
dividing net income allocated to the Investors in accordance with the
Partnership Agreement by the weighted average number of ABC's
outstanding.
In the opinion of management, the accompanying financial statements,
which have not been audited, reflect all adjustments necessary to
present fairly the results for the interim periods.
Certain 1993 amounts have been reclassified to conform with the 1994
presentation.
2. Investment in Revenue Bonds
The Partnership recognized provisions for uncollectible interest of
$887,377 and $1,592,739 for the nine months ended September 30, 1994 and
1993, respectively, which amounts approximate accrued but unpaid
interest on the Park at Landmark and SunBrook Apartments revenue bonds.
These amounts are recorded as a reduction of interest income from
revenue bonds.
In 1993, American First REIT Inc. ("AFREIT"), owner of the Township in
Hampton Woods property, informed the Partnership that it intended to
refinance the property and prepay the related mortgage loan. The
Partnership informed AFREIT that the loan documents do not permit
prepayment before 1996. (If prepayment is made between 1996 and 1998,
the owner must also pay a prepayment penalty.) In March 1994, AFREIT
filed suit to compel the Partnership to accept the prepayment. The
ultimate outcome of this suit is uncertain at this time.
Building improvements costing approximately $275,000 were completed
during the second quarter of 1994 at the Fountain Head property, which
is owned 50% each by the Partnership and Fountain Head Partners, an
unaffiliated party. While Fountain Head Partners acknowledged the need
for certain building improvements, it has not agreed to pay its share of
what the Partnership considers to be necessary. In May 1994, the
Partnership filed a demand for arbitration seeking a 50% reimbursement
of project costs from Fountain Head Partners; the arbitration hearing is
scheduled for December 12, 1994. In the meantime, in order to fix
certain conditions which were in immediate need of repair, the
Partnership made the improvements.
The partnership which owns the Burlington Arboretum Apartments (the
"Owner") did not pay debt service in full in 1991 and 1992. In 1993,
the Owner paid minimum debt service, but did not pay certain taxes and
other liabilities incurred prior to May 6, 1993.
On May 6, 1993, the general partner of the Owner was replaced by a new
general partner who committed a substantial amount of new capital, and
the Partnership agreed to attempt to modify the revenue bond and related
mortgage loan.
The new general partner did not pay the taxes described above and, in
February 1994, the City of Burlington placed a lien on the property;
this lien represented an event of default on the revenue bond.
In March 1994, the Owner did not make all of its minimum debt service
and required reserve payments; in response, the Partnership sent the
Owner a notice of default. Pursuant to a settlement between the
Partnership and the Owner, in April 1994, the Owner cured the defaults
by paying the March debt service shortfall and an additional $105,000 to
the Partnership. The Partnership then paid all past due taxes on behalf
of the Owner, and the tax lien has been removed.
In July 1994, the debt was modified, effective with the September 1
payment. The minimum interest rate was reduced from 7.25% to 5.35%, the
earliest call date was extended to 2006, and the requirement for an
operating deficit guaranty was eliminated. The base interest rate was
not changed, so the Partnership expects to continue to receive all of
the cash flow from the property as interest.
The Partnership incurred costs of approximately $255,000 to remove the
tax lien and modify the debt; these costs were included in general and
administrative expenses in the second quarter of 1994.
3. Related Party Transactions
An affiliate of the General Partner performs bond servicing and
administrative functions, processes investor transactions and prepares
tax information for the Partnership. For each nine-month period ended
September 30, 1994 and 1993, the Partnership incurred approximately
$387,000 for these services. As of September 30, 1994, the affiliate
was owed approximately $30,000 for these services.
Another affiliate of the General Partner earned fees of $73,522 and
$102,104 for the management of the Park at Landmark property during the
nine months ended September 30, 1994 and 1993, respectively. As of
September 30, 1994, the affiliate was owed approximately $17,000.
4. Cash Distributions
On November 10, 1994, the Partnership paid a cash distribution of
$1,583,997 to the Investors ($0.2125 per ABC) and $32,326 to the General
Partner.
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<TABLE>
TEMPO-LP, INC.
BALANCE SHEETS
<CAPTION>
September 30,
1994 December 31,
(Unaudited) 1993
ASSETS
<S> <C> <C>
Cash $ 900 $ 900
Investment in partnership, at cost 100 100
$1,000 $1,000
STOCKHOLDER'S EQUITY
Common stock, $1 par value, 1,000 shares
authorized, and outstanding $1,000 $1,000
See accompanying note.
</TABLE>
[FN]
<PAGE>
<PAGE>
TEMPO-LP, INC.
NOTE TO BALANCE SHEETS
1.Organization
TEMPO-LP, Inc. (the "Corporation"), was formed in April 1986 to be the
limited partner of the Dean Witter/Coldwell Banker Tax Exempt Mortgage
Fund, L.P. (the "Partnership"). The Partnership issued limited
partnership interests to the Corporation, which in turn assigned those
limited partnership interests to investors. Investors received assigned
benefit certificates to represent the limited partnership interests
assigned to them. The Corporation has had no activity since assignment
of the limited partnership interests in 1986.
The Corporation's capital stock is owned by Dean Witter, Discover & Co.
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
The Partnership raised $149,082,200 in a public offering of
7,454,110 ABCs which was terminated in 1987. The Registrants have no plans
to raise additional capital.
The Partnership has purchased ten series of revenue bonds, the
proceeds of which funded the development of eight properties (the
"Properties"). The Partnership's acquisition program has been completed.
No additional investments are planned.
Cash flow generated by the Properties is the primary source of all
payments due the Partnership under the terms of the revenue bonds, which are
collateralized by the Properties.
The Partnership's business is indirectly affected by competition to
the extent that the Properties may be subject to competition from
neighboring properties. Many residential real estate markets are
stabilizing because new construction has been significantly less than new
renter household formation over the past several years. Another indication
of improvement in the residential market is that rental rates in many
metropolitan areas are slowly increasing. Employment is projected to grow
in certain regions such as the Southwest, Southeast and areas of Florida
resulting in a steady increase in demand for multifamily housing. At
several of the properties securing the mortgage loans in the Partnership's
portfolio, rental rates have increased or are scheduled to increase during
1994, and therefore, the Partnership's cash flow from operations should
gradually increase.
During the nine months ended September 30, 1994, the Partnership's
cash flow from operations exceeded its distributions and expenditures. The
Partnership expects that its cash flow from operations will continue to
exceed its distributions and other cash needs during the remainder of 1994.
The payment status of each revenue bond during the nine months ended
September 30, 1994 is as follows:
Cash flow from the High Ridge Apartments, Township in Hampton Woods
and Pine Club Apartments properties enabled their owners to pay debt service
at effective interest rates of 8.20%, 8.84% and 7.84%, respectively. These
payment rates exceeded the minimum interest rates required on the High Ridge
loan (7.25%), Hampton Woods loan (8.5%) and Pine Club loan (7.5%). Such
excess payments were applied to base interest due under the respective
loans. During the remainder of 1994, each of these properties is expected
to operate at a modest cash flow surplus after payment of minimum debt
service and, therefore, should be able to continue to pay a portion of base
interest.
The owner of Wildcreek Apartments property paid its minimum debt
service and required reserves in full. The Partnership is holding the
remaining proceeds from the letter of credit opened by this owner as
additional security on the loan, approximately $249,000, in a segregated
cash account. The Partnership does not expect that it will need to use
these proceeds to fund minimum debt service or reserve shortfalls of the
owner in the near future.
In April 1994, the Partnership and the owner of Burlington Arboretum
Apartments reached a settlement with respect to various defaults in debt
service and other matters, and in July 1994, the Burlington Arboretum debt
was modified effective with the September 1 payment. See note 2 to the
financial statements.
The owner of Burlington Arboretum is currently completing certain
capital improvements projects; as a result, the Partnership does not expect
to receive significant base interest from this property during the remainder
of 1994.
The Fountain Head property operated at breakeven after paying
minimum debt service but before funding the capital improvements described
in note 2 to the financial statements. During the remainder of 1994, the
property is expected to continue to generate sufficient cash flow to make
minimum debt service and required reserve payments. At September 30, 1994,
Fountain Head Partners has a remaining commitment to fund property operating
deficits of approximately $25,000. The Partnership has funded $216,811 of
the total costs of the capital improvements program ($275,000) as of
September 30, 1994.
All of the cash flow generated by the SunBrook property (which is
partly owned by the Partnership) is paid to the Partnership. During the
nine months ended September 30, 1994, the Partnership received $1,004,285
from the property; this amount was higher than required minimum debt service
by $116,614. The excess payment was applied to minimum debt service
reserves previously taken on this loan.
The Partnership has completed a $740,000 capital improvements
program for the SunBrook property. The Partnership has funded $622,946 of
project costs as of September 30, 1994.
All of the cash flow generated by the Park at Landmark property
(which is partly owned by the Partnership) is paid to the Partnership.
During the nine months ended September 30, 1994, the Partnership received
$945,071 from the property; this amount was less than minimum debt service
by $1,003,991. Cash flow from the property is not expected to be sufficient
to fully pay minimum debt service in the foreseeable future.
On November 10, 1994, the Partnership paid the third quarter cash
distribution of $1,583,997 to the Investors ($0.2125 per ABC) and $32,326
to the General Partner.
In December 1992, the Internal Revenue Service published proposed
regulations with respect to the modification of debt instruments. If the
regulations are adopted as currently written, they would limit the type and
degree of direct, indirect and implied modifications that could be made by
a bond owner or lender without adversely affecting the tax-exempt status of
the bonds. It is not clear at this time how the proposed regulations would
affect the Partnership with respect to bonds secured by mortgages on
properties transferred to new borrowers. The regulations have not yet been
finalized and they are not expected to be issued for another several months.
Operations
Fluctuations in the Partnership's operating results for the nine and
three months ended September 30, 1994 compared to the nine and three months
ended September 30, 1993 are primarily attributable to the following:
The increase in interest income from revenue bonds for the nine
months ended September 30, 1994 compared to 1993 was primarily due to an
increase in interest received from the Park at Landmark and SunBrook
properties. The increase in interest income from revenue bonds for the
three months ended September 30, 1994 compared to 1993 was primarily due to
an increase in interest received from the SunBrook property.
The increase in general and administrative expenses for the nine
months ended September 30, 1994 compared to 1993 was primarily due to the
costs of restructuring the Burlington Arboretum debt of approximately
$255,000, which were recognized by the Partnership in the second quarter of
1994.
A summary of the markets in which the Properties are located is as
follows:
Burlington Arboretum Apartments is located in Burlington, MA, a
suburb of Boston which has been only slightly affected by the negative
economic conditions of the Boston area. This market currently has a vacancy
rate of 3% and is experiencing a modest increase in rental rates. In 1994,
the owner raised rental rates by an average of 2%. During the third quarter
of 1994, occupancy at the property increased from 95% to 98%.
The Park at Landmark property, located in Alexandria, VA, competes
against several neighboring apartment buildings. The Alexandria market
currently has a vacancy rate of 5%, but has not experienced an increase in
rental rates. During the third quarter of 1994, occupancy at the property
increased from 91% to 95%. Occupancy in the market is expected to stabilize
in 1995, which should lead to higher rental rates.
Pine Club Apartments, located in Orlando, Fl, operates in a market
with a current vacancy rate of 8%. In 1994, the owner raised rental rates
by an average of 5%. During the third quarter of 1994, occupancy at the
property decreased from 97% to 94% due to seasonal fluctuations.
SunBrook Apartments is located in St. Charles County, MO, a suburb
of St. Louis. Occupancy in this market has begun to increase as a result
of improving economic conditions in the area. The rate of layoffs has
decreased and new commercial construction has begun to increase. Property
occupancy is subject to seasonal fluctuations, with the highest occupancy
occurring in the summer months; occupancy at the property decreased from 95%
to 90% by September 30, 1994. In 1994, the owner increased rental rates by
approximately 4%.
Wildcreek Apartments is located in Clarkson, GA, a suburb of
Atlanta. This market, which has a vacancy rate of 93%, has strengthened
recently due to a lack of new construction in the area. In 1994, the owner
raised rental rates by an average of 15%. During the third quarter of 1994,
occupancy at the property decreased from 97% to 94% due to seasonal
fluctuations.
The Township in Hampton Woods property, located in Hampton, VA,
operates in a market which is primarily dependent on the defense industry.
Although military bases and factories in general have been subject to
cutbacks and closings, this market has not been adversely affected. During
the third quarter of 1994, occupancy at the property remained stable at 93%.
In 1994, the owner increased rental rates by approximately 4%.
High Ridge Apartments, located in Albuquerque, NM, operates in a
strong market which has a vacancy rate of 3% and is experiencing an increase
in rental rates. In 1994, the owner raised rental rates by an average of
5%. Occupancy at the property remained stable at 98% during the third
quarter of 1994. New apartment units are under construction in this market,
but they are not expected to adversely affect this property's performance.
Fountain Head Apartments, located in Kansas City, MO, operates in
a market which has a vacancy rate of 5% and is experiencing an increase in
rental rates. Rents at the property were increased and concessions were
eliminated during the second the quarter. Occupancy at the property
increased from 92% to 97% during the third quarter of 1994.
Inflation
Inflation has been consistently low during the periods presented in
the financial statements and, as a result, has not had a significant effect
on the operations of the Partnership or the Properties.<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal proceedings - not applicable.
Item 2. Changes in Securities - not applicable.
Item 3. Defaults upon Senior Securities - not applicable.
Item 4. Submission of Matters to a vote of Security Holders -
not applicable.
Item 5. Other Information - not applicable.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - not applicable.
b) Reports on Form 8-K - not applicable.
<PAGE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
DEAN WITTER/COLDWELL BANKER
TAX EXEMPT MORTGAGE FUND, L.P.
By: TEMPO-GP, INC.
Managing General Partner
Date: November 14, 1994 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: November 14, 1994 By: /s/Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
TEMPO-LP, INC.
Date: November 14, 1994 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: November 14, 1994 By: /s/Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Registrant is a limited partnership which invests in federally tax-exempt
revenue bonds, which financed construction and/or ownership of multi-family
residential properties. In accordance with industry practice, its balance
sheet is unclassified. For full information, refer to the accompanying
unaudited financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 4,280,326
<SECURITIES> 0
<RECEIVABLES> 457,275
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 110,223,453<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 109,336,439<F2>
<TOTAL-LIABILITY-AND-EQUITY> 110,223,453<F3>
<SALES> 0
<TOTAL-REVENUES> 5,636,715<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 555,609
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,081,106
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,081,106
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,081,106
<EPS-PRIMARY> .67<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include investment
in revenue bonds of $103,216,067, net deferred bond selection fees of
$1,527,223 and other assets of $742,562.
<F2>Represents partners' capital.
<F3>Liabilities include accounts payable and other liabilities of $887,014.
<F4>Total revenue includes interest income of $5,636,715.
<F5>Represents net income per Assigned Benefit Certificate.
</FN>
</TABLE>
