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 June 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
<PAGE>
<TABLE>
Part I - Financial Information
Item 1. Financial Statements
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
BALANCE SHEETS
<CAPTION>
June 30,
1994 December 31,
(Unaudited) 1993
ASSETS
<S> <C> <C>
Cash and short-term investments, at cost
which approximates market $ 3,814,492 $ 3,214,536
Accrued interest receivable 502,351 533,357
Investment in revenue bonds 103,403,528 103,778,450
Deferred bond selection fee, net 1,580,467 1,686,954
Other assets 730,396 681,530
$110,031,234 $109,894,827
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and other liabilities $ 926,413 $ 790,525
Partners' capital:
Assigned Benefit Certificates
(7,454,110 ABC's outstanding) 109,104,821 109,104,302
$110,031,234 $109,894,827
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
Statements of Operations
Three and six months ended June 30, 1994 and 1993
(Unaudited)
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Interest income:
Revenue bonds $1,656,237 $1,421,537 $3,693,622 $3,136,158
Short-term investments 12,893 17,425 20,805 37,813
1,669,130 1,438,962 3,714,427 3,173,971
Expenses:
General and administrative 365,167 124,783 481,262 222,325
Net income $1,303,963 $1,314,179 $3,233,165 $2,951,646
Net income per Assigned
Benefit Certificate $ .17 $ .17 $ .42 $ .39
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
STATEMENT OF PARTNERS' CAPITAL
Six months ended June 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 3,168,502 64,663 3,233,165
Cash distributions (3,167,994) (64,652) (3,232,646)
Partners' capital (deficit)
at June 30, 1994 $109,739,888 $(635,067) $109,104,821
<FN>
See accompanying notes to financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
STATEMENTS OF CASH FLOWS
Six months ended June 30, 1994 and 1993
(Unaudited)
<CAPTION>
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,233,165 $ 2,951,646
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization 374,922 523,080
Amortization of deferred bond selection fee 106,487 106,487
Decrease in operating assets:
Accrued interest receivable 31,006 32,248
Increase in operating liabilities:
Accounts payable and other liabilities 135,888 438,263
Net cash provided by operating activities 3,881,468 4,051,724
Cash flows from financing activities:
Cash distributions (3,232,646) (3,803,118)
Other assets (48,866) (484,684)
Net cash used in financing activities (3,281,512) (4,287,802)
Increase (decrease) in cash and short-term investments 599,956 (236,078)
Cash and short-term investments at beginning
of period 3,214,536 3,116,206
Cash and short-term investments at end
of period $ 3,814,492 $ 2,880,128
<FN>
See accompanying notes to financial statements.
/TABLE
<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, the 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
$697,337 and $1,191,002 for the six months ended June 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 any
type of prepayment before 1996. (If prepayment is made between 1996
<PAGE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (Cont'd)
(Unaudited)
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 fo 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. In the meantime, in order to fix certain
conditions which were in immediate need of repair, the Partnership
had contracted for all of 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.
The Partnership incurred costs of approximately $255,000 to remove
the tax lien and modify the debt; these costs are included in general
and administrative expenses in the second quarter of 1994.
In July 1994, the debt was modified. 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
<PAGE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (Cont'd)
(Unaudited)
Partnership expects to continue to receive all of the cash flow from
the property as interest.
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 six-month
period ended June 30, 1994 and 1993, the Partnership incurred
approximately $258,000 for these services. As of June 30, 1994, the
affiliate was owed approximately $29,000 for these services.
Another affiliate of the General Partner earned fees of $47,787 and
$78,171 for the management of the Park at Landmark property during
the six months ended June 30, 1994 and 1993, respectively. As of
June 30, 1994, the affiliate was owed approximately $32,600.
4.Cash Distributions
On August 12, 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.
<PAGE>
TEMPO-LP, INC.
BALANCE SHEETS
June 30,
1994 December 31,
(Unaudited) 1993
ASSETS
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.
<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>
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 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 Properties may be subject to competition from
neighboring properties. The Partnership has also been negatively
affected by low interest rates which have made home ownership more
affordable to existing and prospective tenants. However, improvement
in the national economy is having a positive effect on the rental
market. Occupancy has stabilized in many areas 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 six months ended June 30, 1994, the Partnership's cash
flow from operations exceeded its distributions and expenditures with
respect to certain properties. 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 six months
ended June 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 8.22%, 8.98% and 7.97%,
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 $248,000, in a segregated
cash account. During the remainder of 1994, the Partnership expects to
receive all minimum debt service and required reserves.
In April 1994, the Partnership and the partnership which owns
Burlington Arboretum Apartments reached a settlement with respect to
various defaults in debt service and other matters. See note 2 to the
financial statements.
In July 1994, the Burlington Arboretum debt was modified. 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 also expects that, as a result
of the modification, the Owner will be able to pay at least its minimum
debt service.
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 June 30, 1994, Fountain Head Partners has a remaining commitment to
fund property operating deficits of approximately $25,000.
All of the cash flow generated by the SunBrook property (which
is partly owned by the Partnership) is paid to the Partnership. During
the six months ended June 30, 1994, the Partnership received $553,936
from the property; this amount was less than required minimum debt
service by $37,846.
The Partnership has completed a $740,000 capital improvements
program for the SunBrook property. The Partnership has funded $602,663
of project costs to date.
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 six months ended June 30, 1994, the Partnership received
$639,883 from the property; this amount was less than minimum debt
service by $659,492. Cash flow from the property is not expected to be
sufficient to fully pay minimum debt service in the foreseeable future.
On August 12, 1994, the Partnership paid the second 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 six
and three months ended June 30, 1994 compared to the six and three
months ended June 30, 1993 are primarily attributable to the following:
The increases in interest income from revenue bonds for the
periods ended June 30, 1994 compared to the comparable periods in 1993
were primarily due to increases in interest received from the Park at
Landmark and SunBrook properties.
The increases in general and administrative expenses for the
periods ended June 30, 1994 compared to the comparable periods in 1993
were primarily due to the costs of restructuring the Burlington
Arboretum debt, 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, MA, the location of Burlington Arboretum Apartments,
is a suburb of Boston. This market, however, has been only slightly
affected by the negative economic conditions of the Boston area.
Although this market has a vacancy rate of 3%, occupancy at the
property decreased to 95% during the second quarter of 1994. However,
the property is 99% leased at June 30, 1994, and the owner plans to
raise rental rates later in 1994 upon completion of certain capital
improvements.
The Park at Landmark property, located in Alexandria, VA,
competes against several neighboring apartment buildings in a market
experiencing a vacancy rate of 5%. During the second quarter of 1994,
occupancy at the property increased from 87% to 91%.
Pine Club Apartments is located in Orlando, Fl. During the
second quarter of 1994, occupancy at the property increased from 95% to
97%. During the remainder of 1994, the owner plans to raise rental
rates, as was done in 1993.
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. In the second
quarter of 1994, occupancy at the property increased from 88% to 95%.
Also, during the second quarter of 1994, the owner implemented a
schedule of rental increases which will average 4% when completed.
Wildcreek Apartments is located in Clarkson, GA, a suburb of
Atlanta. This market has strengthened recently due to a lack of new
building in the area. During the second quarter of 1994, occupancy at
the property increased from 95% to 97%. During the remainder of 1994,
the owner plans to raise rental rates, as was done in 1993.
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 by this trend. During the second quarter of 1994, occupancy
at the property decreased from 94% to 93%. The owner, however, was able
to raise rental rates approximately 4%.
High Ridge Apartments, located in Albuquerque, NM, operates in
a strong market which has a vacancy rate of 3%. Occupancy at the
property remained at 98% during the second quarter of 1994. New
apartment units are under construction in this market, but they are not
expected to adversely affect the property's performance.
Fountain Head Apartments, located in Kansas City, MO, is in a
market which has a vacancy rate of 5%. Although occupancy at the
property decreased from 96% to 92% during the second quarter of 1994,
rents were increased and concessions were eliminated.<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>
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: August 15, 1994 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: August 15, 1994 By: /s/Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
TEMPO-LP, INC.
Date: August 15, 1994 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: August 15, 1994 By: /s/Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
