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 March 31, 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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Part I - Financial Information
Item 1. Financial Statements
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
BALANCE SHEETS
<CAPTION>
March 31,
1994 December 31,
(Unaudited) 1993
ASSETS
<S> <C> <C>
Cash and short-term investments, at cost
which approximates market $ 3,686,003 $ 3,214,536
Accrued interest receivable 500,661 533,357
Investment in revenue bonds 103,590,989 103,778,450
Deferred bond selection fee, net 1,633,710 1,686,954
Other assets 693,042 681,530
$110,104,405 $109,894,827
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and other liabilities $ 687,224 $ 790,525
Partners' capital:
Assigned Benefit Certificates
(7,454,110 ABC's outstanding) 109,417,181 109,104,302
$110,104,405 $109,894,827
<FN>
See accompanying notes to financial statements.
</TABLE>
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DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
STATEMENTS OF OPERATIONS
Three months ended March 31, 1994 and 1993
(Unaudited)
<CAPTION>
1994 1993
<S> <C> <C>
Interest income:
Revenue bonds $2,037,385 $1,714,621
Short-term investments 7,912 20,388
2,045,297 1,735,009
Expenses:
General and administrative 116,095 97,542
Net income $ 1,929,202 $1,637,467
Net income per Assigned Benefit Certificate $ 0.25 $ 0.22
<FN>
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
STATEMENT OF PARTNERS' CAPITAL
Three months ended March 31, 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 1,890,618 38,584 1,929,202
Cash distributions (1,583,997) (32,326) (1,616,323)
Partners' capital (deficit)
at March 31, 1994 $110,046,001 $(628,820) $109,417,181
<FN>
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
STATEMENTS OF CASH FLOWS
Three months ended March 31, 1994 and 1993
(Unaudited)
<CAPTION>
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,929,202 $ 1,637,467
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization 187,461 261,540
Amortization of deferred bond selection fee 53,244 53,244
Decrease (increase) in operating assets:
Accrued interest receivable 32,696 (56,845)
(Decrease) increase in operating liabilities:
Accounts payable and other liabilities (103,301) 317,781
Net cash provided by operating activities 2,099,302 2,213,187
Cash flows from financing activities:
Cash distributions (1,616,323) (1,901,559)
Other assets (11,512) (179,869)
Net cash used in financing activities (1,627,835) (2,081,428)
Increase in cash and short-term investments 471,467 131,759
Cash and short-term investments at beginning
of period 3,214,536 3,116,206
Cash and short-term investments at end
of period $ 3,686,003 $ 3,247,965
<FN>
See accompanying notes to financial statements.
</TABLE>
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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
$72,217 and $477,102 for the three months ended March 31, 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
pre-payment before 1998. 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.
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DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (Cont'd)
(Unaudited)
On May 6, 1993, the Partnership and the partnership which owns the
Burlington Arboretum Apartments property (the "Owner") agreed to
restructure the debt. The general partner of the Owner was replaced
by a new general partner who agreed to commit a substantial amount
of new capital, and the Partnership agreed to attempt to modify the
revenue bond and related mortgage loan by extending the earliest call
date, eliminating the operating deficit guaranty and reducing the
minimum interest rate. (The base interest rate is unchanged, so the
Partnership expects to continue to receive all of the cash flow from
the property as interest.) The Partnership and the new general
partner shared certain costs of restructuring and each agreed to fund
approximately one-half of any cash shortfalls of the Owner between
the original minimum debt service requirements and the actual cash
flow of the property until the debt restructuring is completed.
In 1993, the Owner paid minimum debt service and required reserve
payments, but did not pay certain taxes and other liabilities. In
February 1994, the City of Burlington placed a lien on the property
for nonpayment of the taxes; this lien represents an event of default
on the revenue bond.
In March 1994, the Owner did not pay all of its minimum debt service
and required reserve payments; in response, the Partnership sent the
Owner a notice of default. The Partnership and the Owner have
negotiated a settlement pursuant to which the defaults will be
eliminated and the restructuring will be completed; such settlement
is pending final approval by both parties.
Pursuant to the proposed settlement, in April 1994, the Owner cured
the defaults by paying the March 1994 debt service shortfall and an
additional $105,000 to the Partnership to pay certain of the
outstanding tax liabilities. Consequently, the Partnership paid all
past due taxes on behalf of the Owner, and the tax lien has been
removed.
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 three-month
period ended March 31, 1994 and 1993, the Partnership incurred
approximately $129,000 for these services. As of March 31, 1994, the
affiliate was owed approximately $29,000 for these services.
Another affiliate of the General Partner earned fees of $22,766 and
$37,698 for the management of the Park at Landmark property during
the three months ended March 31, 1994 and 1993, respectively. As of
March 31, 1994, the affiliate was owed approximately $7,600.
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DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (Cont'd)
(Unaudited)
4.Cash Distributions
On May 13, 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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<PAGE> TEMPO-LP, INC.
BALANCE SHEETS
March 31,
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.
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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.
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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 is also indirectly affected by
low interest rates which have made home ownership more affordable to
existing and prospective tenants of the Properties. In addition, real
estate in general, has been negatively affected by a major cyclical
downturn. Therefore, cash flow from the Properties available to pay
debt service on the revenue bonds in some cases has been reduced as a
result of lower rents and increased concessions required to attract or
retain tenants.
Real estate markets are generally divided into sub-markets by
geographic location. Not all sub-markets have been affected equally by
the above factors.
During the three months ended March 31, 1994, the Partnership's
cash flow from operations exceeded its distributions and advances 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 three months
ended March 31, 1994 is as follows:
Cash flow from the High Ridge Apartments and Township in Hampton
Woods properties enabled their owners to pay debt service at effective
interest rates of 8.23% and 8.94%, respectively. These payment rates
exceeded the minimum interest rates required on the High Ridge loan
(7.25%) and the Hampton Woods loan (8.5%). Such excess payments were
applied to base interest due under the respective loans. During the
remainder of 1994, both of these properties are expected to operate at
a modest cash flow surplus after payment of minimum debt service and,
therefore, each should be able to continue to pay a portion of base
interest.
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
pre-payment before 1998. 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.
Cash flow from the Pine Club Apartments enabled its owners to pay
minimum debt service. Pine Club is expected to generate sufficient cash
flow to fully pay minimum debt service and a portion of additional base
interest during the remainder of 1994.
The Wildcreek Apartments property operated at a modest cash flow
deficit; however, the owner was able to pay 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 $245,000, in a segregated cash
account. It is uncertain whether the Partnership will need to use
additional proceeds from the letter of credit to fund cash flow deficits
during the remainder of 1994.
On May 6, 1993, the Partnership and the partnership which owns
the Burlington Arboretum Apartments property (the "Owner") agreed to
restructure the debt. The general partner of the Owner was replaced by
a new general partner who agreed to commit a substantial amount of new
capital, and the Partnership agreed to attempt to modify the revenue
bond and related mortgage loan by extending the earliest call date,
eliminating the operating deficit guaranty and reducing the minimum
interest rate. (The base interest rate is unchanged, so the Partnership
expects to continue to receive all of the cash flow from the property
as interest.) The Partnership and the new general partner shared
certain costs of restructuring and each agreed to fund approximately
one-half of any cash shortfalls of the Owner between the original
minimum debt service requirements and the actual cash flow of the
property until the debt restructuring is completed.
The Partnership expects that when the revenue bond and related
mortgage are restructured, the Owner will be able to pay at least its
minimum debt service.
In 1993, the Owner paid minimum debt service and required reserve
payments, but did not pay certain taxes and other liabilities. In
February 1994, the City of Burlington placed a lien on the property for
nonpayment of the taxes; this lien represents an event of default on the
revenue bond.
In March 1994, the Owner did not pay all of its minimum debt
service and required reserve payments; in response, the Partnership sent
the Owner a notice of default. The Partnership and the Owner have
negotiated a settlement pursuant to which the defaults will be
eliminated and the restructuring will be completed; such settlement is
pending final approval by both parties.
Pursuant to the proposed settlement, in April 1994, the Owner
cured the defaults by paying the March 1994 debt service shortfall and
an additional $105,000 to the Partnership to pay certain of the
outstanding tax liabilities. Consequently, the Partnership paid all
past due taxes on behalf of the Owner, and the tax lien has been
removed.
In 1994, the Fountain Head property, which is owned 50% each by
the Partnership and Fountain Head Partners, an unaffiliated party,
operated at a modest cash flow deficit; however, the owner was able to
pay its minimum debt service in full. 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 March 31,
1994, Fountain Head Partners has a remaining commitment to fund property
operating deficits of approximately $25,000.
Certain building improvements are required at the property, which
the Partnership estimates will cost as much as $275,000. While,
Fountain Head Partners acknowledges the need for certain building
improvements, it has not yet committed itself to pay its share of what
the Partnership considers to be necessary. The parties are attempting
to bridge this impasse. In the meantime, in order to fix certain
conditions which are in immediate need of repair, the Partnership has
contracted for the improvements, and funded initial costs of
approximately $35,000 in March 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 three months ended March 31, 1994, the Partnership received $345,546
from the property; this amount was greater than required minimum debt
service by $49,655. The excess payment was applied to minimum debt
service reserves previously taken on this loan.
The Partnership has approved a capital improvements program to
the SunBrook property and funded $570,795 of expected costs of $740,000
through March 31, 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 three months ended March 31, 1994, the Partnership received
$527,816 from the property; this amount was less than minimum debt
service by $121,871. Cash flow from the property is not expected to be
sufficient to fully pay minimum debt service in the foreseeable future.
On May 13, 1994, the Partnership paid the first 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 three
months ended March 31, 1994 compared to the three months ended March 31,
1993 are primarily attributable to the following:
The increase in interest income from revenue bonds in 1994
compared to 1993 was primarily due to an increase in interest received
from the Park at Landmark and SunBrook properties.
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; however, this market has been only slightly
affected by the negative economic conditions of the Boston area.
Currently, this market has a vacancy rate of 5%. During the first
quarter of 1994, occupancy at the property remained at 99%, and the
owner plans to raise rental rates in 1994, as was done in 1993.
The Park at Landmark property competes against several
neighboring apartment buildings in a market experiencing a vacancy rate
of over 8%. During the first quarter of 1994, occupancy at the property
increased from 85% to 87%. To increase occupancy further, the owner
plans to lower rental rates in 1994.
Pine Club Apartments is located in Orlando, Fl. During the first
quarter of 1994, occupancy at the property decreased from 99% to 95%
as occupancy is historically lower in the first quarter. During the
remainder of 1994, the owner expects occupancy to increase again, and
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, which had been
negatively affected by overbuilding and poor economic conditions, has
begun to increase. Property occupancy is subject to seasonal
fluctuations, with the highest occupancy occurring in the summer months.
In the first quarter of 1994, occupancy at the property increased
slightly from 86% to 88%. The owner plans to raise rental rates at the
property during 1994.
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 first quarter of 1994, occupancy at
the property decreased from 99% to 95%; however, occupancy is
historically lower in this market in the first quarter. During the
remainder of 1994, the owner expects occupancy to increase again, and
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, with a vacancy rate of
only 7%, has not been adversely affected by this trend. During the
first quarter of 1994, occupancy at the property increased from 93% to
94%.
High Ridge Apartments, located in Albuquerque, NM, operates in
a strong market which has a vacancy rate of 3%. Occupancy at the
property decreased slightly from 99% to 98% during the first 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 6%. During the first quarter of
1994, rental rates at the property were above average market rates, and
occupancy remained at 96%. Once the capital improvements mentioned
above are completed, the owner plans to raise rental rates.
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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.
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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: May 13, 1994 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: May 13, 1994 By: /s/Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
TEMPO-LP, INC.
Date: May 13, 1994 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: May 13, 1994 By: /s/Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
