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, 1997
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 16<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
BALANCE SHEETS
<CAPTION>
March 31, December 31,
1997 1996
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 5,089,948 $ 4,743,191
Investments in revenue bonds available for sale 111,348,000 110,696,721
Deferred bond selection fee, net 994,788 1,048,032
Escrowed funds 669,182 774,756
Accrued interest receivable 458,356 1,015,685
$118,560,274 $118,278,385
LIABILITIES AND PARTNERS' CAPITAL
Excess of equity in losses of property-owning
investees over investments therein $ 6,170,741 $ 6,098,642
Accounts payable and other liabilities 893,659 908,516
7,064,400 7,007,158
Partners' capital:
Net unrealized gain on revenue bonds available
for sale 3,425,911 2,774,632
General Partner (655,733) (647,230)
Limited Partner Assigned Benefit Certificates
(7,454,110 ABCs outstanding) 108,725,696 109,143,825
Total Partner's capital 111,495,874 111,271,227
$118,560,274 $118,278,385
See accompanying notes to financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
STATEMENTS OF OPERATIONS
Three months ended March 31, 1997 and 1996
<CAPTION>
1997 1996
<S> <C> <C>
Interest income:
Revenue bonds $2,208,608 $2,292,782
Short-term investments 28,497 34,048
2,237,105 2,326,830
Equity in losses of property-owning investees 72,099 232,003
Expenses:
General and administrative 118,120 94,216
Net income $2,046,886 $2,000,611
Net income allocated to:
Limited partners $2,005,948 $1,960,599
General partner 40,938 40,012
$2,046,886 $2,000,611
Net income per Assigned Benefit Certificate $ .27 $ .26
See accompanying notes to financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
STATEMENT OF PARTNERS' CAPITAL
Three months ended March 31, 1997
<CAPTION>
Net
Unrealized
Gain on
Limited General Revenue
Partner Partner Bonds Total
<S> <C> <C> <C> <C>
Partners' capital (deficit) at $109,143,825 $(647,230) $2,774,632 $111,271,227
December 31, 1996
Net income 2,005,948 40,938 2,046,886
Cash distributions (2,424,077) (49,441) (2,473,518)
Net change in fair value of revenue
bonds available for sale - - 651,279 651,279
Partners' capital (deficit) at
March 31, 1997 $108,725,696 $(655,733) $3,425,911 $111,495,874
See accompanying notes to financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER/COLDWELL BANKER TAX EXEMPT MORTGAGE FUND, L.P.
STATEMENTS OF CASH FLOWS
Three months ended March 31, 1997 and 1996
<CAPTION>
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,046,886 $ 2,000,611
Adjustments to reconcile net income to net cash provided
by operating activities:
Equity in losses of property-owning investees 72,099 232,003
Amortization of deferred bond selection fee 53,244 53,244
Decrease in accrued interest receivable 557,329 85,676
Decrease in escrowed funds 105,574 87,211
Decrease in accounts payable and other liabilities (14,857) (62,629)
Net cash provided by operating activities 2,820,275 2,396,116
Cash flows used in investing activities:
Investment in property-owning investee - (15,000)
Cash flows used in financing activities:
Cash distributions (2,473,518) (2,281,870)
Increase in cash and cash equivalents 346,757 99,246
Cash and cash equivalents at beginning of period 4,743,191 5,255,586
Cash and cash equivalents at end of period $ 5,089,948 $ 5,354,832
See accompanying notes to financial statements.
/TABLE
<PAGE>
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 filed with the Securities
and Exchange Commission for the year ended December 31, 1996
Operating results of interim periods may not be indicative of the
operating results for the entire year.
The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" in
February, 1997. This pronouncement establishes standards for
computing and presenting earnings per share, and is effective for
the Partnership's 1997 year-end financial statements. The
Partnership's management has determined that this standard will have
no impact on the Partnership's computation or presentation of net
income per unit of limited partnership interest.
2. Investment in Revenue Bonds
The Partnership recognized provisions for uncollectible interest of
$250,075 and $254,970 for the three months ended March 31, 1997 and
1996, respectively, which amounts represent accrued but unpaid
interest on the Park at Landmark revenue bond in 1997 and 1996.
These amounts were 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 taking into account the estimated value of the
underlying collateral. 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 flow 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.
The amortized cost basis of the revenue bonds was $107,922,089 at
March 31, 1997 and December 31, 1996. Net unrealized gain on
revenue bonds consists of gross unrealized gains and losses of
$7,640,000 and $4,214,089, respectively, at March 31, 1997 and
$7,498,238 and $4,723,606, respectively, at December 31, 1996.
The Partnership has been notified by the owner of the Township at
Hampton Woods property that the owner intends to prepay its revenue
bond in June 1997.
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
three-months ended March 31, 1997 and 1996, the Partnership incurred
approximately $129,000 for these services. As of March 31, 1997,
the affiliate was owed approximately $97,000 for these services.
Another affiliate of the General Partner earned fees of $25,787 and
$25,115 for the management of the Park at Landmark property during
the three months ended March 31, 1997 and 1996, respectively. As of
March 31, 1997, the affiliate was owed $8,530 by the owner of Park
at Landmark for these services.
4. Litigation
Various public partnerships sponsored by Realty (including the
Partnership and its Managing General Partner) are defendants in
purported class action lawsuits pending in state and federal court.
The complaints allege a number of claims, including breach of
fiduciary duty, fraud and misrepresentation, and seek an accounting
of profits, compensatory and other damages in an unspecified amount,
possible liquidation of the Partnership under a receiver's
supervision and other equitable relief. The defendants are
vigorously defending these actions. It is impossible to predict the
effect, if any, the outcome of these actions might have on the
Partnership's financial statements.
On or about August 27, 1996, an ABC Holder in the Partnership filed
a petition against the Partnership and the General Partner. The
action seeks access to the list of ABC holders and Limited Partners
in the Partnership and unspecified damages for alleged breaches of
fiduciary duty by the General Partner in connection with the refusal
to provide such list. The Partnership and the General Partner
believe that they have good defenses in the action.
5. Cash Distributions
On May 12, 1997, the Partnership paid a cash distribution of
$2,424,077 to the Investors ($0.325 per ABC) and $49,441 to the
General Partner.
<PAGE>
<TABLE>
TEMPO-LP, INC.
BALANCE SHEETS
<CAPTION>
March 31, December 31,
1997 1996
ASSETS
<S> <C> <C>
Cash $ 900 $ 900
Investment in Partnership, at cost 100 100
STOCKHOLDERS' 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.
Continued moderate economic growth resulted in steady demand for
apartment units during the first quarter 1997, although rate
increases were not prevalent in every region of the country. In
general, rental rates did not increase significantly during the
first quarter 1997 due to competition from new apartment projects
and the relative affordability of single-family housing.
Development of new apartments continues to increase in the Southeast
and Southwest and new construction has also occurred in some
midwest, northeast, and west coast markets.
Because the revenue bonds owned by the Partnership 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 taking into account the estimated
value of the underlying collateral. 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.
The payment status of each revenue bond during the three months
ended March 31, 1997 was 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 during the three
months ended March 31, 1997 at effective interest rates of 7.75%,
8.50%, 8.66% and 7.65%, respectively. These payment rates equaled
or exceeded the minimum interest required on the respective loans;
the excess payments were applied to base interest. During the
remainder of 1997, 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 during 1997.
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 pay minimum debt service during the
remainder of 1997.
During the three months ended March 31, 1997, the Fountain Head
property, owned 50% each by the Partnership and Fountain Head
Partners, an unaffiliated party, operated at approximately breakeven
on a cash flow basis (after required minimum debt service and
additions to replacement reserves) and the General Partner expects
that it will continue to do so during the remainder of 1997. As of
March 31, 1997, Fountain Head Partners has a remaining commitment to
fund property operating deficits of $26,500 secured by a letter of
credit in favor of the Partnership.
All of the cash flow generated by the SunBrook property (which is
partly owned by the Partnership) is paid to the Partnership. The
property operated at a modest cash flow surplus for the three months
ended March 31, 1997 and the owner was able to pay its minimum debt
service. Cash flow from the property is expected to be sufficient
to fully pay minimum debt service during the remainder of 1997.
All of the cash flow generated by the Part at Landmark property
(which is partly owned by the Partnership) is paid to the
Partnership. During the three months ended March 31, 1997, the
Partnership received $399,612 from the property; this amount was
less than required minimum debt service by $250,075. The
Partnership believes that cash flow from the property will not be
sufficient to fully pay minimum debt service for the next several
years.
On May 12, 1997, the Partnership paid the first quarter cash
distribution of $2,424,077 to the Investors ($0.325 per ABC) and
$49,441 to the General Partner.
The Partnership has been notified by the owner of the Township at
Hampton Woods property that the owner intends to prepay its
$10,800,000 revenue bond in June 1997. If the bond is prepaid,
proceeds will be distributed to the Investors and the Partnership's
cash flow available for distribution will decrease. The Partnership
received approximately $920,000 of minimum interest on the bond for
the year-ended December 31, 1996.
Except as discussed herein and in the financial statements, the
General Partner is not aware of any trends or events, commitments or
uncertainties that may 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, effective 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 three-
months ended March 31, 1997 compared to the three-months ended March
31, 1996 were primarily attributable to the following:
Interest income from revenue bonds decreased during the first
quarter of 1997 primarily due to $108,000 of interest received in
the first quarter of 1996 from the Township in Hampton Woods
property pertaining to the settlement of its loan default.
Equity in losses of property-owning investees decreased in 1997
primarily due to increased rental income at the Sunbrook and Park at
Landmark properties. This increase was due to occupancy increases
at both properties, and an increase in rental rates at the Sunbrook
property.
General and administrative expenses increased during the first
quarter of 1997 primarily due to increased costs related to investor
reporting.
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
approximately 5%. Average occupancy during the first quarter was
96% and the owner anticipates increasing rental rates by
approximately 2.5% in the second quarter.
The Park at Landmark property, located in Alexandria, VA, continues
to operate in a very competitive market experiencing a vacancy rate
of approximately 10%. The property has discontinued offering rental
concessions and free rent to compete with surrounding properties;
however, market conditions may cause these concessions to be
reinstated sometime in 1997. Average occupancy at the property
during the first quarter was 92%.
Pine Club Apartments, located in Orlando, FL, operates in a market
with a current vacancy rate of approximately 6%. The market
continues to remain strong due to steady employment growth in the
Orlando area. The completion of several new high-end luxury
complexes in 1996 has not negatively affected the property. Average
occupancy at the property during the first quarter was 93%. Pine
Club anticipates increasing rents slightly during the second quarter
1997.
SunBrook Apartments, located in St. Charles County, MO, a suburb of
St. Louis, is in a market currently experiencing a vacancy rate of
approximately 7%. The complex consists primarily of furnished
apartments and offers short-term leases to corporate renters.
Market demand for the units increases during the spring and summer
months. Rent increases of approximately 3% are projected in 1997.
Average occupancy during the first quarter was 83%.
Wildcreek Apartments, located in Clarkston, GA, a suburb of Atlanta,
is in a mature market with a current vacancy rate of approximately
10%. At the property, average occupancy during the first quarter
was 95%. Rental rates were increased slightly during the first
quarter. There is minimal new apartment construction in this sub-
market.
The Township in Hampton Woods property, located in Hampton, VA,
operates in a market (with a vacancy rate of approximately 7%) which
is primarily dependent on the defense industry. This market remains
competitive as newly constructed units will be completed in the
second quarter of 1997 and will impact the property in the future.
Average occupancy at the property was 92%.
High Ridge Apartments, located in Albuquerque, NM, operates in a
weakening market experiencing a current vacancy rate of
approximately 9%. Competing apartment buildings continue to offer
rental concessions to attract new tenants, and High Ridge has
decreased rents on some units to remain competitive. New
construction in the market may adversely impact the property in
1997. Occupancy at the property remained at 98%.
Fountain Head Apartments, located in Kansas City, MO, operates in a
market with a vacancy rate of 5%. Average occupancy during the
first quarter was 96% and rent increases are planned for 1997. 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.
<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: May 15, 1997 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: May 15, 1997 By: /s/Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
TEMPO-LP, INC.
Date: May 15, 1997 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: May 15, 1997 By: /s/Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)<PAGE>
Exhibit Index
Quarter Ended March 31, 1997
Exhibit
No. Description
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 indsutry practice, its
balance sheet is unclassified. For full informaiton, refer to the
accompanying unaudited financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,089,948
<SECURITIES> 0
<RECEIVABLES> 458,356
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 118,560,274<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 111,495,874<F2>
<TOTAL-LIABILITY-AND-EQUITY> 118,560,274<F3>
<SALES> 0
<TOTAL-REVENUES> 2,237,105<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 190,219<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,046,886
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,046,886
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,046,886
<EPS-PRIMARY> .27<F6>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include investment in
revenue bonds of $111,348,000, net deferred expenses of $994,788 and
escrowed funds of $669,182.
<F2>Represents partners' capital.
<F3>Liabilities include accounts payable and other liabilities of $893,659
and excess of equity in losses of property-owning investees over investments
therein of $6,170,741.
<F4>Total revenue includes interest income of $2,237,105.
<F5>Other expenses include equity in losses of property-owning investees of
$72,099 and general and administrative expenses of $118,120.
<F6>Represents net income per Assigned Benefit Certificate.
</FN>
</TABLE>
