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, 1996
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 1 of 15
PAGE
<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, December 31,
1996 1995
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 5,146,032 $ 5,255,586
Investments in revenue bonds
available for sale 107,555,642 108,635,226
Deferred bond selection fee, net 1,154,519 1,261,006
Escrowed funds 791,494 741,613
Accrued interest receivable 675,970 543,723
$115,323,657 $116,437,154
LIABILITIES AND PARTNERS' CAPITAL
Excess of equity in losses of
property-owning investees over
investments therein $ 5,670,379 $ 5,135,109
Accounts payable and other liabilities 917,146 865,304
6,587,525 6,000,413
Partners' capital:
Net unrealized gain (loss) on
revenue bonds available for sale (366,447) 713,137
Assigned Benefit Certificates
(7,454,110 ABCs outstanding) 109,102,579 109,723,604
Total Partners' capital 108,736,132 110,436,741
$115,323,657 $116,437,154
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, 1996 and 1995
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest income:
Revenue bonds $2,310,451 $2,202,606 $4,603,233 $4,419,150
Short-term investments 43,468 38,221 77,516 67,293
2,353,919 2,240,827 4,680,749 4,486,443
Equity in losses of property-
owning investees 318,267 231,489 550,270 461,814
Expenses:
General and administrative 93,548 82,624 187,764 252,401
Net income $1,942,104 $1,926,714 $3,942,715 $3,772,228
Net income allocated to:
Limited Partner $1,903,262 $1,888,180 $3,863,861 $3,696,783
General Partner 38,842 38,534 78,854 75,445
$1,942,104 $1,926,714 $3,942,715 $3,772,228
Net income per Assigned Benefit Certificate $ .26 $ .26 $ .52 $ .50
See accompanying notes to financial statements.
</TABLE>
<TABLE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
STATEMENT OF PARTNERS' CAPITAL
Six months ended June 30, 1996
<CAPTION>
Net
Unrealized
Gain (Loss)
Limited General on Revenue
Partner Partner Bonds Total
<S> <C> <C> <C> <C>
Partners' capital (deficit) at
December 31, 1995 $110,346,295 $ (622,691) $ 713,137 $110,436,741
Net income 3,863,861 78,854 3,942,715
Cash distributions (4,472,465) (91,275) (4,563,740)
Net change in fair value of
revenue bonds available
for sale - - (1,079,584) (1,079,584)
Partners' capital (deficit) at
June 30, 1996 $109,737,691 $ (635,112) $ (366,447) $108,736,132
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, 1996 and 1995
<CAPTION>
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,942,715 $ 3,772,228
Adjustments to reconcile net income to
net cash provided by operating activities:
Equity in losses of property-owning investees 550,270 461,814
Amortization of deferred bond selection fee 106,487 106,487
(Increase) decrease in accrued interest receivable (132,247) 274,948
(Increase) decrease in escrowed funds (49,881) 15,325
Decrease (increase) in accounts payable and other
liabilities 51,842 (15,513)
Net cash provided by operating activities 4,469,186 4,615,289
Cash flows (used in) provided by investing activities:
Investment in property-owning investees (15,000) 57,740
Cash flows used in financing activities:
Cash distributions (4,563,740) (3,517,882)
(Decrease) increase in cash and cash equivalents (109,554) 1,155,147
Cash and cash equivalents at beginning
of period 5,255,586 3,736,746
Cash and cash equivalents at end
of period $ 5,146,032 $ 4,891,893
See accompanying notes to financial statements.
</TABLE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
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.
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 number of ABCs outstanding.
In the opinion of management, the accompanying financial statements,
which have not been audited, include all adjustments, consisting only of
normal recurring accruals, necessary to present fairly the results for
the interim periods.
These financial statements should be read in conjunction with the annual
financial statements and notes thereto included in the Partnership's
annual report on Form 10-K/A filed with the Securities and Exchange
Commission for the year ended December 31, 1995. Operating results of
interim periods may not be indicative of the operating results for the
entire year.
Certain 1995 amounts have been reclassified to conform to 1996
presentation.
2. Investment in Revenue Bonds
The Partnership recognized provisions for uncollectible interest of
$431,654 and $480,679 for the six months ended June 30, 1996 and 1995,
respectively, which amounts approximate accrued but unpaid interest on
the Park at Landmark revenue bond in 1996 and 1995. These amounts are
recorded as a reduction of interest income from revenue bonds.
Because the revenue bonds are not readily marketable, the Partnership
estimates the fair value of each bond as the present value of its
expected cash flows using a rate of interest for similar investments.
The process of determining the fair value of the revenue bonds is based
upon projections of future economic events affecting the real estate
collateralizing the bonds such as property occupancy rates, rental rates,
operating cost inflation, market capitalization rates, and upon market
interest rates; therefore, amounts ultimately collected from the revenue
bonds may differ materially from their carrying values. The cash flows
used in this process are based on good faith estimates and assumptions
developed by the Managing General Partner. Unanticipated events and
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
circumstances may occur and some assumptions may not materialize;
therefore, actual results may vary from the estimates and the variance
may be material.
The amortized cost basis of the revenue bonds is $107,922,089 at June 30,
1996 and December 31, 1995. Net unrealized gain (loss) on revenue bonds
consists of gross unrealized gains and losses of $4,246,247 and
$4,612,694, respectively, at June 30, 1996 and $3,152,980 and $2,439,843,
respectively, at December 31, 1995.
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 of the six-month periods
ended June 30, 1996 and 1995, the Partnership incurred approximately
$258,000 for these services. As of June 30, 1996, the affiliate was owed
approximately $15,800 for these services.
Another affiliate of the General Partner earned fees of $50,058 and
$53,071 for the management of the Park at Landmark property during the
six months ended June 30, 1996 and 1995, respectively. As of June 30,
1996, the affiliate was owed approximately $8,700 by the owner of Park
at Landmark for these services.
4. Cash Distributions
On August 12, 1996, the Partnership paid a cash distribution of
$2,236,233 to the Investors ($0.30 per ABC) and $45,637 to the General
Partner.
<PAGE>
<TABLE>
TEMPO-LP, INC.
BALANCE SHEETS
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
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.
/TABLE
<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 eight multi-family residential
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.
Performance at apartment properties was strong during the second quarter
but has slowed from the fourth quarter of 1995. Favorable returns at
quality residential properties have supported continued development of
apartment properties. The expansion was evident in areas of the
southeast, southwest and midwest. As new apartments are completed,
concessions are being offered, especially during the initial leasing of
the newly developed projects. Therefore, rental revenue growth and
income returns at many apartment properties, including those securing the
Partnership's mortgage loans, may be negatively affected, at least in the
short-term.
Because the revenue bonds are not readily marketable, the Partnership
estimates the fair value of each bond as the present value of its
expected cash flows using a rate of interest for similar investments.
The process of determining the fair value of the revenue bonds is based
upon projections of future economic events affecting the real estate
collateralizing the bonds such as property occupancy rates, rental rates,
operating cost inflation, market capitalization rates, and upon market
interest rates; therefore, amounts ultimately collected from the revenue
bonds may differ materially from their carrying values. The cash flows
used in this process are based on good faith estimates and assumptions
developed by the Managing General Partner. Unanticipated events and
circumstances may occur and some assumptions may not materialize;
therefore, actual results may vary from the estimates and the variance
may be material.
Based on an assessment of the projected cash flow from operations of the
Partnership's properties and anticipated future cash needs, the
Partnership has determined that it can distribute a portion of its
existing cash reserves. Accordingly, the Partnership increased the
annual cash distribution rate from 5% to 6%, beginning with the cash
distribution for the fourth quarter of 1995, which was paid in February
1996.
The payment status of each revenue bond during the six months ended June
30, 1996 is as follows:
Cash flow from the High Ridge Apartments, Township in Hampton Woods
Apartments, Wildcreek Apartments and Burlington Arboretum Apartments
properties enabled their owners to pay debt service at effective interest
rates of 8.64%, 11.05%, 7.69% and 7.58%, respectively. These payment
rates exceeded the minimum interest required on the respective loans; the
excess payments were applied to base interest. During the remainder of
1996, 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.
Cash flow from the Pine Club Apartments enabled their owner to pay
minimum debt service. The property is expected to generate sufficient
cash flow to fully pay minimum debt service during the remainder of 1996.
During the six months ended June 30, 1996, 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, but the
owner paid its required minimum debt service and real estate tax escrow
in full. As of June 30, 1996, Fountain Head Partners has a remaining
commitment to fund property operating deficits of approximately $26,500
secured by a letter of credit in favor of the Partnership. During the
remainder of 1996, the Partnership and Fountain Head Partners will be
required to fund operating deficits; the Partnership's share of such
fundings is not expected to be material.
Cash flow from the SunBrook property (which is partly owned by the
Partnership) enabled its owner to pay minimum debt service during the six
months ended June 30, 1996. Cash flow from the property is expected to
be sufficient to fully pay minimum debt service for the remainder of
1996.
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, 1996, the Partnership received $867,721
from the property; this amount was less than required minimum debt
service by $431,654. Cash flow from the property is not expected to be
sufficient to fully pay minimum debt service in the foreseeable future.
On August 12, 1996, the Partnership paid the second quarter cash
distribution of $2,236,233 to the Investors ($0.30 per ABC) and $45,637
to the General Partner.
Except as discussed herein and in the financial statements, the General
Partner is not aware of any trends or events, commitments or
uncertainties that will have a material impact on liquidity.
In June 1996, the Internal Revenue Service published final regulations
with respect to the modification of debt instruments. These regulations,
which have an effective date of September 24, 1996, limit the type and
extent of direct, indirect and implied modifications that can be made by
a bond holder with respect to the terms of the revenue bonds without
adversely affecting the tax-exempt status of the revenue bonds. The
Partnership is in the process of determining what actions, if any, should
be taken with respect to certain of the revenue bonds held by the
Partnership which may be subject to the provisions of these regulations.
Operations
Fluctuations in the Partnership's operating results for the six- and
three-month periods ended June 30, 1996 compared to 1995 are primarily
attributable to the following:
Interest income from revenue bonds increased primarily because $108,000
of interest was received in the first quarter of 1996 from the Township
in Hampton Woods property pertaining to the settlement of its loan
default and approximately $78,000 more interest from the Park at Landmark
property in the second quarter.
General and administrative expenses decreased in the six months ended
June 30, 1996 compared to 1995 primarily due to the absence of legal
expenses incurred in the first quarter of 1995 with respect to the
Fountain Head Apartments and Township in Hampton Woods investments.
A summary of the markets in which the Properties are located is as
follows:
Burlington Arboretum Apartments, located in Burlington, MA, a suburb of
Boston, is in a strong market with a current vacancy rate of 5%. Job
growth from a rebound in the biomedical and high technology industries
in this market provided steady demand for apartments. Average occupancy
during the second quarter remained at 99% and the owner was able to raise
rental rates.
The Park at Landmark property, located in Alexandria, VA, is in a market
experiencing a vacancy rate of 10%. The property has recently matched the
levels of rental concessions made by competing apartment buildings to
attract new tenants to offset the effect of low demand for multifamily
units. This action has increased average occupancy from 90% to 92% in
the second quarter.
Pine Club Apartments, located in Orlando, Fl, is in a market with a
current vacancy rate of approximately 7%. The market has remained strong
due to continued employment growth in Orlando's service industries.
Average occupancy during the second quarter remained at 93% despite the
opening of a competing apartment complex in this market.
SunBrook Apartments, located in St. Charles County, MO, a suburb of St.
Louis, consists primarily of furnished apartments and offers short-term
leases. These apartments have little direct competition; they compete
primarily with other furnished apartment units and extended-stay hotels.
During the first and second quarters of 1996, the owner was able to raise
rental rates. Demand for this type of apartment increases in the spring
and summer months and decreases in the fall and winter months. Average
occupancy during the second quarter increased from 79% to 84%.
Wildcreek Apartments is located in Clarkston, GA, a suburb of Atlanta.
The vacancy rate in this market, currently approximately 5%, has leveled
off due to increased purchases of single-family homes by apartment
tenants. Average occupancy during the second quarter remained at 97%.
There is no new apartment construction in this sub-market; new apartments
in the surrounding Atlanta area do not directly compete with the
property.
The Township in Hampton Woods property, located in Hampton, VA, is in a
market which is primarily dependent on the defense industry. The market
vacancy rate, currently approximately 8%, remains reasonably stable due
to the maintenance of the military population in the area. Average
occupancy during the second quarter decreased slightly from 93% to 92%
and the owner was able to raise rental rates. New apartments under
construction in the area may have an impact on the property when
complete.
High Ridge Apartments, located in Albuquerque, NM, is in a market
experiencing a current vacancy rate of 7%. Competing apartment buildings
are offering rental concessions to attract new tenants to offset the
effect of the affordability of single-family homes. Newly completed
apartments in this market may also have an adverse effect on the property
in the future. Average occupancy during the second quarter remained at
97%.
Fountain Head Apartments, located in Kansas City, MO, is in a market
which has a vacancy rate of 5%. Average occupancy during the second
quarter remained at 97% and the owner was able to raise rental rates
slightly. New apartment units are under construction, but they are not
expected to adversely affect the property.
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 its properties.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
An exhibit index has been filed as part of this Report on
Page E1.
(b) Reports on Form 8-K - none.
<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 14, 1996 By: /s/ E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: August 14, 1996 By: /s/ Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
TEMPO-LP, INC.
Date: August 14, 1996 By: /s/ E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: August 14, 1996 By: /s/ Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
Exhibit Index
Quarter Ended June 30, 1996
Exhibit Sequentially
No. Description Numbered Page
27 Financial Data Schedule
E1
<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 audited financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 5,146,032
<SECURITIES> 0
<RECEIVABLES> 675,970
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 115,323,657<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 108,736,132<F2>
<TOTAL-LIABILITY-AND-EQUITY> 115,323,657<F3>
<SALES> 0
<TOTAL-REVENUES> 4,680,749<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 738,034<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,942,715
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,942,715
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,942,715
<EPS-PRIMARY> .52<F6>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include investment in
revenue bonds of $107,555,642, net deferred expenses of $1,154,519 and
escrowed funds of $791,494.
<F2>Represents partners' capital.
<F3>Liabilities include accounts payable and other liabilities of $917,146 and
excess of equity in losses of property-owning investees over investments
therein of $5,670,379.
<F4>Total revenue includes interest income of $4,680,749.
<F5>Other expenses include equity in losses of property-owning investees of
$550,270 and general and administrative expenses of $187,764.
<F6>Represents net income per Assigned Benefit Certificate.
</FN>
</TABLE>
