<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended September 30, 1994
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 0-15632
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FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 4
- - --------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3441345
- - ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Riverside Plaza, Suite 950, Chicago, Illinois 60606-2607
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(Address of principal executive offices) (Zip Code)
(312) 207-0020
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(Registrant's telephone number, including area code)
Not applicable
- - -----------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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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DOCUMENTS INCORPORATED BY REFERENCE:
The First Amended and Restated Certificate and Agreement of Limited Partnership
filed as Exhibit A to the Partnership's Prospectus dated November 5, 1986,
included in the Partnership's Registration Statement on Form S-11, is
incorporated herein by reference in Part I of this report.
<PAGE>
BALANCE SHEETS
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
September 30,
1994 December 31,
(Unaudited) 1993
- - -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 5,550,400 $ 6,180,400
Buildings and improvements 40,142,300 41,798,200
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45,692,700 47,978,600
Accumulated depreciation and amortization (7,349,200) (6,573,300)
- - -------------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 38,343,500 41,405,300
Cash and cash equivalents 4,085,500 3,054,000
Restricted certificates of deposit 62,500 62,500
Rents receivable 216,400 296,500
Other assets 37,800 69,300
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$42,745,700 $44,887,600
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 727,900 $ 838,600
Due to Affiliates 130,000 125,300
Loan payable to General Partner 3,911,700 3,937,900
Security deposits 99,800 118,300
Distributions payable 644,500 639,900
Other liabilities 97,600 68,900
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5,611,500 5,728,900
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Partners' (deficit) capital:
General Partner (241,300) (240,800)
Limited Partners (750,000 Units authorized, 593,025
issued and outstanding) 37,375,500 39,399,500
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37,134,200 39,158,700
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$42,745,700 $44,887,600
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</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the nine months ended September 30, 1994 and the year ended December 31,
1993
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital,
January 1, 1993 $(241,100) $39,632,100 $39,391,000
Net income for the
year ended
December 31, 1993 515,700 1,107,600 1,623,300
Distributions for the
year ended
December 31, 1993 (515,400) (1,340,200) (1,855,600)
- - -------------------------------------------------------------------------------
Partners' (deficit) capital, December 31,
1993 (240,800) 39,399,500 39,158,700
Net income for the
nine months ended September 30, 1994 139,900 1,113,100 1,253,000
Distributions for the
nine months ended September 30, 1994 (140,400) (3,137,100) (3,277,500)
- - -------------------------------------------------------------------------------
Partners' (deficit) capital, September
30, 1994 $(241,300) $37,375,500 $37,134,200
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</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended September 30, 1994 and 1993
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1994 1993
- - ---------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $1,445,600 $1,556,800
Interest 60,000 18,600
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1,505,600 1,575,400
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Expenses:
Interest 93,600 83,700
Depreciation and amortization 353,300 360,000
Real estate taxes and insurance 153,600 183,800
Repairs and maintenance 120,100 156,900
Property operating 258,900 315,500
General and administrative 44,800 48,100
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1,024,300 1,148,000
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Income before (loss) on sale or disposition of
properties 481,300 427,400
(Loss) on sale or disposition of properties (19,300)
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Net income $ 481,300 $ 408,100
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Net income allocated to General Partner $ 46,800 $ 42,400
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Net income allocated to Limited Partners $ 434,500 $ 365,700
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Net income allocated to Limited Partners per Unit
(593,025 Units authorized, issued and outstanding) $ 0.73 $ 0.62
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</TABLE>
STATEMENTS OF INCOME AND EXPENSES
For the nine months ended September 30, 1994 and 1993
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1994 1993
- - ------------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $4,501,800 $4,659,900
Interest 119,300 65,900
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4,621,100 4,725,800
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Expenses:
Interest 276,700 253,900
Depreciation and amortization 1,134,200 1,012,600
Real estate taxes and insurance 533,900 545,400
Repairs and maintenance 416,600 488,600
Property operating 825,000 898,800
General and administrative 133,000 185,900
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3,319,400 3,385,200
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Income before (loss) on sale or disposition of
properties and extraordinary gain on early
extinguishment of debt 1,301,700 1,340,600
(Loss) on sale or disposition of properties (48,700) (1,428,400)
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Net income (loss) before extraordinary gain on early
extinguishment of debt 1,253,000 (87,800)
Extraordinary gain on early extinguishment of debt 1,464,000
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Net income $1,253,000 $1,376,200
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Net income allocated to General Partner $ 139,900 $ 128,000
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Net income allocated to Limited Partners $1,113,100 $1,248,200
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Net income (loss) before extraordinary gain on early
extinguishment of debt allocated to Limited Partners
per Unit (593,025 Units authorized, issued and
outstanding) $ 1.88 $ (0.34)
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Net income allocated to Limited Partners per Unit
(593,025 Units authorized, issued and outstanding) $ 1.88 $ 2.10
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</TABLE>
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1994 and 1993
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1994 1993
- - -------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $1,253,000 $1,376,200
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,134,200 1,012,600
Loss on sale or disposition of properties 48,700 1,428,400
Extraordinary (gain) on early extinguishment of debt (1,464,000)
Changes in assets and liabilities:
Decrease in rents receivable 80,100 80,400
Decrease in other assets 30,900 5,900
(Decrease) increase in accounts payable and accrued
expenses (110,700) 121,400
Increase (decrease) in due to Affiliates 4,700 (19,500)
Increase in other liabilities 28,700 9,800
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Net cash provided by operating activities 2,469,600 2,551,200
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Cash flows from investing activities:
Proceeds from the sale or disposition of properties 2,168,500 844,400
Payments for capital and tenant improvements (289,000) (2,276,400)
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Net cash provided by (used for) investing activities 1,879,500 (1,432,000)
- - -------------------------------------------------------------------------------
Cash flows from financing activities:
Distributions paid to Partners (3,272,900) (1,091,200)
Net repayment of loan payable to General Partner (26,200)
(Decrease) in security deposits (18,500) (1,700)
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Net cash (used for) financing activities (3,317,600) (1,092,900)
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Net increase in cash and cash equivalents 1,031,500 26,300
Cash and cash equivalents at the beginning of the
period 3,054,000 2,694,300
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Cash and cash equivalents at the end of the period $4,085,500 $2,720,600
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Supplemental information:
Interest paid during the period $ 277,100 $ 254,800
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</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
September 30, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement on Form S-11, filed with the
Securities and Exchange Commission. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is incorporated herein by reference.
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles. Under this method of accounting, revenues are
recorded when earned and expenses are recorded when incurred.
The financial information included in these financial statements is unaudited;
however, in management's opinion, all adjustments (consisting of only normal,
recurring accruals) necessary for a fair presentation of the results of
operations for the periods included have been made. Results of operations for
the quarter and nine months ended September 30, 1994, are not necessarily
indicative of the operating results for the year ending December 31, 1994.
Certain reclassifications have been made to the previously reported 1993
statements in order to provide comparability with the 1994 statements. These
reclassifications have no effect on income or Partners' capital.
The financial statements include the Partnership's 50% interest in three joint
ventures and its 75% interest in one joint venture. These joint ventures are
operated under the control of the General Partner. Accordingly, the
Partnership's pro rata share of the ventures' revenues, expenses, assets,
liabilities and capital is included in the financial statements.
Cash equivalents are considered all highly liquid investments purchased with a
maturity of three months or less.
Property sales or dispositions are recorded when title transfers and sufficient
consideration has been received by the Partnership. Upon disposition, the
related costs and accumulated depreciation and amortization are removed from
the respective accounts. Any gain or loss on sale or disposition is recognized
in accordance with generally accepted accounting principles.
Reference is made to the Partnership's annual report for the year ended
December 31, 1993, for a description of other accounting policies and
additional details of the Partnership's financial condition, results of
operations, changes in Partners' capital and changes in cash balances for the
year then ended. The details provided in the notes thereto have not changed
except as a result of normal transactions in the interim or as otherwise
disclosed herein.
2. RELATED PARTY TRANSACTIONS:
Subsequent to May 4, 1988, the Termination of the Offering, as compensation for
services rendered in managing the affairs of the Partnership, the General
Partner shall be entitled to receive a Partnership Management Fee payable
within 60 days following the end of each fiscal year. Such amount shall be
equal to the lesser of (i) 0.5% of the net value of the Partnership's assets as
of the end of such year as reflected on the Certificate of Value furnished to
the Holders, plus, the amount, if any, the Partnership Management Fee paid in
any prior year was less than 0.5% of the net value of the Partnership's assets
in such prior years, or (ii) an amount equal to the difference between (a) 10%
of the Partnership's aggregate Cash Flow from the Commencement of Operations to
the end of the year for which such Partnership Management Fee is payable, and
(b) the aggregate amount previously paid to the General Partner as a
Partnership Management Fee. In accordance with the Partnership Agreement, Net
Profits (exclusive of Net Profits from the sale or disposition of Partnership
properties) shall be allocated to the General Partner in an amount equal to the
greater of the General Partner's Partnership Management Fee for such year, or
1% of such Net Profits. The balance of Net Profits, if any, is allocated to the
Holders. Net Losses from the sale of Partnership properties shall be allocated
first, after giving effect to any distributions of Sale Proceeds, to the
General Partner and Holders with positive balances in their Capital Accounts,
pro rata in proportion to such respective positive balances, to the extent of
the total amount of such positive balances and the balance, if any, 1% to the
General Partner and 99% to the Holders. Notwithstanding, in all events, there
shall be allocated to the General Partner not less than 1% of all items of
Partnership income, gain, loss, deduction and credit allocated during the
existence of the Partnership. For the quarter and nine months ended September
30, 1994, the General Partner was allocated a Partnership Management Fee and,
accordingly, Net Profits from operations of approximately $46,800 and $140,400,
respectively. In addition, for the nine months ended September 30, 1994, the
General Partner was allocated a Net Loss from the sale of a Partnership
property of approximately $500.
As set forth in the Partnership Agreement, the General Partner has agreed to
make available to the Partnership a line of credit in an amount equal to the
sum of the Partnership Management Fees and Acquisition Fees paid to the General
Partner or its Affiliates. This line of credit may be drawn upon for
distribution to the Holders on a pro rata basis to the extent that Cash Flow is
otherwise less than sufficient to distribute cash in amounts equal to the
Holders' Preferred Return (7.5% per annum noncompounding cumulative return on
the Holders' Capital Investment); provided, however, that the maximum amount
which shall be advanced to the Partnership by the General Partner for
distribution to the Holders shall be the amount of Acquisition Fees and
Partnership Management Fees actually paid to the General Partner or its
Affiliates. Amounts advanced shall bear interest at the rate of 8.5% per annum
simple interest, payable monthly. On February 28, 1994, the Partnership drew an
additional $515,400. Repayment of amounts advanced shall be made only from Cash
Flow if and to the extent that Cash Flow is more than sufficient to distribute
cash to the Holders in amounts equal to the Holders' Preferred Return and from
Sale or Financing Proceeds. Per the Partnership Agreement, whenever there is a
sale, disposition or financing of a Partnership property, the Sale or Financing
Proceeds shall be distributed: 1) first, 75% to all Holders and 25% to the
General Partner until the earlier of (i) receipt by Holders of cumulative
distributions of Sale or Financing Proceeds in an amount equal to 100% of their
Original Capital Contribution, or (ii) receipt by the General Partner of
cumulative distributions of Sale or Financing Proceeds sufficient to repay all
outstanding advances under the line of credit and 2) second, to the General
Partner, until all outstanding advances under the line of credit, if any, have
been repaid. In August 1994, the Partnership distributed to the General Partner
approximately $541,600, which represented approximately 25% of the net proceeds
from the sale of the Wellington North Office Complex Building C ("Wellington
C")
<PAGE>
(see Note 4) as a partial repayment of the outstanding loan payable to the
General Partner. As of September 30, 1994 the outstanding loan payable to the
General Partner was approximately $3,911,700.
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter and nine months ended September 30, 1994 are as follows:
<TABLE>
<CAPTION>
Paid
--------------------
Quarter Nine Months Payable
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
Property management and leasing fees $ 84,100 $246,800 $ 58,000
Reimbursement of property insurance premiums, at
cost 16,500 50,800 None
Interest on loan payable to General Partner 96,700 277,100 28,500
Real estate commissions (a) None None 40,200
Reimbursement of expenses, at cost:
(1) Accounting 4,400 14,300 1,900
(2) Investor communication 3,400 10,800 1,400
(3) Legal 6,900 38,800 None
- - -------------------------------------------------------------------------------
$212,000 $638,600 $130,000
- - -------------------------------------------------------------------------------
</TABLE>
(a) As of September 30, 1994, $40,200 was due to the General Partner for real
estate commissions earned in connection with the disposition and sale of
Partnership property. These commissions have been accrued but not paid.
Under the terms of the Partnership Agreement, these commissions will not be
paid until such time as the Limited Partners have received cumulative
distributions of Sale or Financing Proceeds equal to 100% of their Original
Capital Contribution, plus a cumulative return (including all Cash Flow
which has been distributed to Limited Partners) of 6% simple interest per
annum on their Capital Investment from the initial date of investment.
3. RESTRICTED CERTIFICATES OF DEPOSIT:
Restricted certificates of deposit include negotiable certificates of deposit
in the amounts of $25,000 and $12,500, which have been pledged as collateral
for security deposits to the Houston Lighting & Power Company and $25,000,
which has been pledged as collateral for security deposits to the Florida
Lighting & Power Company.
4. PROPERTY SALE:
On June 8, 1994, Farmington Hills Associates, a joint venture in which the
Partnership and an Affiliated partnership each have a 50% interest, sold
Wellington C for the sale price of $4,500,000. The Partnership's share of
selling expenses was approximately $81,500. The Partnership's share of the net
proceeds from this sale was approximately $2,168,500. The Partnership recorded
a total loss on the sale of this property of approximately $2,048,700 for
financial statement purposes, of which $2,000,000 was recorded as of December
31, 1992 as a provision for value impairment. For tax reporting purposes the
Partnership will record a total loss in 1994 of approximately $1,980,000 on
this sale.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the Partnership's annual report for the year ended
December 31, 1993, for a discussion of the Partnership's business.
OPERATIONS
One of the primary objectives of the Partnership is to provide cash
distributions to Limited Partners from Cash Flow generated by Partnership
operations. To the extent cash distributions exceed net income, such excess
distributions will be treated as a return of capital. The statements of cash
flows presented in the financial statements represent a reconciliation of the
changes in cash balances. Cash Flow, as defined in the Partnership Agreement,
is generally not equal to Partnership net income or cash flows as determined
under generally accepted accounting principles, since certain items are treated
differently under the Partnership Agreement than under generally accepted
accounting principles. Management believes that in order to facilitate a clear
understanding of the Partnership's operations, an analysis of Cash Flow (as
defined in the Partnership Agreement) should be examined in conjunction with an
analysis of net income or cash flows, as defined by generally accepted
accounting principles. The amount of Cash Flow and the return on Capital
Investment are not indicative of actual distributions and actual returns on
Capital Investment.
<TABLE>
<CAPTION>
Comparative Cash Flow Results
For the For the
Quarters Ended Nine Months Ended
9/30/94 9/30/93 9/30/94 9/30/93
- - -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Amount of Cash Flow (as
defined in the Partnership
Agreement) $ 787,800 $ 744,800 $ 2,295,500 $ 2,225,500
Average Capital Investment $57,916,900 $58,458,500 $58,278,000 $58,927,400
Annualized return on average
Capital Investment
(Annualized Cash Flow
/average Capital
Investment) 5.44% 5.10% 5.25% 5.04%
- - -----------------------------------------------------------------------------
</TABLE>
As the Partnership enters the disposition phase of its life cycle, comparisons
of Cash Flow results between periods are complicated. Partnership Cash Flow is
generally expected to decline as real property interests are sold or disposed
since the Partnership no longer receives Cash Flow generated from such real
property interests. Accordingly, rental income, property operating expenses,
repairs and maintenance and real estate taxes and insurance are expected to
decline as well, but will continue to comprise the significant components of
Cash Flow and operating results until the final property is sold. Also, during
the disposition phase, cash and cash equivalents increase as Sale Proceeds are
received and decrease as the Partnership utilizes such proceeds for the
purposes of distributions to Limited Partners, repayment of the loan payable to
the General Partner or making improvements to the Partnership's remaining
properties. Prior to being utilized for such purposes, these funds are invested
in short-term money market instruments. Sale Proceeds are excluded from the
determination of Cash Flow. The disposition of Wellington A in March 1993 and
sales of Wellington B in March 1993 and Wellington C in June 1994 at the
Wellington North Office Complex ("Wellington") caused Cash Flow results at
Wellington to decrease during the quarter and nine months ended September 30,
1994 when compared to the quarter and nine months ended September 30, 1993 by
approximately $13,300 and $83,600, respectively.
Excluding the effects of the Wellington dispositions, Cash Flow results for the
quarter and nine months ended September 30, 1994 increased when compared to the
quarter and nine months ended September 30, 1993 by approximately $56,300 and
$153,600, respectively. Factors which contributed to the increases were: 1)
increased rental revenues for the nine-month periods under comparison of
approximately $67,000; 2) increased interest income earned on short-term
investments of approximately $41,400 and $53,400, respectively, due to an
increase in the average interest rate earned on these investments as well as an
increase in the funds available for short-term investments; 3) decreased
general and administrative expenses for the nine-month periods under comparison
of approximately $52,300 due to Indiana state and county income and sales taxes
being assessed to the Partnership in 1993 for the tax years 1989, 1990 and
1992; 4) decreased property operating expenses at various Partnership
properties totaling approximately $20,700 and $15,300, respectively, primarily
due to lower professional servicing fees and utility costs. Partially
offsetting the increases in Cash Flow results were: 1) increased interest
expense of approximately $9,900 and $22,800, respectively, due to an additional
draw in the first quarter of 1994 on the line of credit available from the
General Partner (subsequent to this additional draw, a partial repayment was
made in the third quarter of 1994 in connection with the proceeds distributed
from the sale of Wellington C); 2) an increase in the General Partner's
Portfolio Management Fee of approximately $4,200 and $12,700, respectively, and
3) decreased rental revenues during the quarterly periods under comparison of
approximately $9,900.
Rental revenues at Indian Ridge Plaza Shopping Center for the nine months ended
September 30, 1994 and 1993 were approximately $1,591,900 and $1,617,800,
respectively, and for the quarters ended September 30, 1994 and 1993 were
approximately $540,500 and $535,200, respectively. Although both the quarterly
and nine-month average occupancy rates increased from 95% and 96%,
respectively, in 1993 to 98% for the comparable periods in 1994, rental
revenues remained stable.
Rental revenues at Park Plaza Professional Building ("Park Plaza") for the nine
months ended September 30, 1994 and 1993 were approximately $1,346,300 and
$1,404,600, respectively, and for the quarters ended September 30, 1994 and
1993 were approximately $451,600 and $486,900, respectively. The decrease in
1994 rental revenues was due to decreased tenant expense reimbursements and
lower quarterly and nine-month average occupancy rates from 92% and 93%,
respectively, in 1993 to 88% for the comparable periods in 1994.
Rental revenues at Carrollton Crossroads Shopping Center for the nine months
ended September 30, 1994 and 1993 were approximately $815,800 and $748,700,
respectively and for the quarters ended September 30, 1994 and 1993 were
approximately $265,900 and $280,200, respectively. The increase in the nine-
month rental revenues was primarily due to the expansion of a major tenant's
leasable square footage in May 1993. The decrease for the quarterly periods
under comparison was primarily the result of real estate tax reimbursements
being billed to tenants in 1993 for 1992 real estate taxes which were greater
than previously estimated due to a significant increase in real estate tax
expense.
Rental revenues at 3120 Southwest Freeway Office Building ("Southwest Freeway")
for the nine months ended September 30, 1994 and 1993 were approximately
$532,400 and $448,400, respectively, and for the quarters ended September 30,
1994 and 1993 were approximately $188,700 and $154,400, respectively. The
increase in 1994 nine-month rental revenues was due to: 1) the recovery of
certain tenant receivables which were previously written off as uncollectible;
2) an increase in the real estate tax reimbursements billed to tenants in 1994
for 1993 real estate taxes; 3) an increase in the average occupancy rate from
85% in 1993 to 88% in 1994 and 4) an increase in the average effective base
rental rate. Although the average quarterly occupancy rate decreased from 91%
in 1993 to 85% in 1994, quarterly rental revenues increased in 1994 due to the
recovery of certain tenant receivables previously written off and an increase
in the average effective base rental rate.
Rental revenues at Wellington C for the nine months ended September 30, 1994
and 1993 were approximately $215,400 and $440,500, respectively. The decrease
in 1994 rental revenues was due to the disposition and sale of two of the three
buildings at the office complex (Wellington A and Wellington B) on March 17 and
March 23, 1993, respectively, and the sale of Wellington C on
June 8, 1994.
To increase and maintain occupancy levels at the Partnership's properties, the
General Partner, through its Affiliated asset and property management groups,
continues to take the necessary actions deemed appropriate for the properties
discussed above. Some of these actions include: 1) implementation of marketing
programs, including hiring of third-party leasing agents or providing on-site
leasing personnel, advertising, direct mail campaigns and development of
building brochures; 2) early renewal of existing tenants and addressing any
expansion needs these tenants may have; 3) promotion of local broker events and
networking with local brokers; 4) networking with national level retailers; 5)
cold-calling other businesses and tenants in the market area; and 6) providing
rental concessions or competitively pricing rental rates depending on market
conditions.
LIQUIDITY AND CAPITAL RESOURCES
The increase in the Partnership's cash position as of September 30, 1994 when
compared to December 31, 1993 was primarily the result of net cash provided by
operating activities and the net Sale Proceeds received from the sale of
Wellington C exceeding distributions paid to Partners and expenditures for
capital and tenant improvements. Liquid assets of the Partnership as of
September 30, 1994 were comprised of Cash Flow retained for working capital
purposes and undistributed Sale Proceeds.
Net cash provided by operating activities decreased from $2,551,200 to
$2,469,600 for the nine months ended September 30, 1993 and 1994, respectively.
This decrease was primarily due to the disposition and sale of Wellington A and
B, respectively, in 1993, as well as the sale of Wellington C in June 1994.
Aside from the Wellington transactions, net cash provided by operating
activities increased approximately $111,100. Factors impacting this increase
included the increase in Cash Flow results previously discussed as well as the
timing of the payment of certain Partnership expenses and the collection of
rental revenues.
Net cash (used for) provided by investing activities changed from ($1,432,000)
for the nine months ended September 30, 1993 to $1,879,500 for the nine months
ended September 30, 1994. This increase was primarily due to proceeds received
from the sale of Wellington C in 1994 being greater than the proceeds received
on the disposition of Wellington A and sale of Wellington B in 1993 and the
decrease in payments made in 1994 for capital and tenant improvements.
On June 8, 1994, Farmington Hills Associates, a joint venture in which the
Partnership and an Affiliated partnership each have a 50% interest, sold
Wellington C for the sale price of $4,500,000. The Partnership's share of the
net proceeds from this sale approximated $2,168,500. In accordance with the
Partnership Agreement, the Partnership distributed approximately 75%, or
$1,624,900 of these proceeds to Limited Partners in August 1994 and
approximately 25%, or $541,600 to the General Partner as a partial repayment of
the outstanding loan payable to the General Partner (see Note 2 in Notes to
Financial Statements).
During the nine months ended September 30, 1994, the Partnership spent
approximately $289,000 for capital and tenant improvements and has budgeted to
spend approximately $100,000 during the remainder of 1994. Included in the
remaining budgeted amount is approximately $60,000 relating to anticipated
capital and tenant improvements and leasing costs expected to be incurred at
Southwest Freeway. The General Partner believes these improvements are
necessary in order to maintain the occupancy level in a very competitive
market, as well as to maximize rental rates charged to new and renewing
tenants.
Net cash used for financing activities increased from $1,092,900 for the nine
months ended September 30, 1993 to $3,317,600 for the nine months ended
September 30, 1994. This increase was due to: 1) increased cash distributions
paid to Partners in 1994, including the proceeds from the sale of Wellington C;
2) the partial repayment in August 1994 of the loan payable to the General
Partner from the sale proceeds of Wellington C exceeding the loan proceeds
received in February 1994 and 3) a decrease in security deposits.
On June 2, 1994, the Partnership cancelled the revolving line of credit it had
with a major New York bank originally scheduled to expire on November 5, 1996.
This line of credit provided that the bank would lend to the Partnership from
time to time up to $2,965,100 which was equal to approximately 5% of the gross
proceeds of the Offering. As of the date of cancellation, the Partnership did
not have an outstanding balance under this line of credit.
The General Partner continues to take a conservative approach to projections of
future rental income and to maintain higher levels of cash reserves for the
Partnership. The higher levels of cash reserves are needed due to the
anticipated capital and tenant improvements necessary to be made to the
Partnership's remaining properties during the next several years. As a result
of this, the Partnership continues to reserve amounts from Cash Flow to
supplement working capital reserves. For the quarter and nine months ended
September 30, 1994, Cash Flow retained to supplement working capital reserves
approximated $283,700 and $783,300, respectively. The General Partner believes
that the Partnership's current cash position along with any additional amounts
retained from future Cash Flow will be sufficient to cover budgeted
expenditures as well as any other requirements which may reasonably be
foreseen.
Distributions to Limited Partners for the quarter ended September 30, 1994 were
declared at $0.85 per Unit. Cash distributions are made 60 days after the
quarter-end. The amount of Cash Flow available for distributions to Partners is
ultimately dependent upon the performance of the Partnership's investments as
well as the amount of Cash Flow retained for future cash requirements.
Therefore, there can be no assurance of the amount of future Cash Flow
available for distribution to Partners.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
- - ------- --------------------------------
(a) Exhibits: None
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the quarter ended
September 30, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 4
BY: FIRST CAPITAL FINANCIAL CORPORATION
GENERAL PARTNER
Date: November 11, 1994 By: /s/ DOUGLAS CROCKER II
----------------- ---------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: November 11, 1994 By: /s/ NORMAN M. FIELD
----------------- ---------------------------------------
NORMAN M. FIELD
Vice President - Finance and Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000794665
<NAME> FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD.-4
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 4,148,000
<SECURITIES> 0
<RECEIVABLES> 216,400
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,301,900
<PP&E> 45,692,700
<DEPRECIATION> 7,349,200
<TOTAL-ASSETS> 42,745,700
<CURRENT-LIABILITIES> 1,372,400
<BONDS> 3,911,700
<COMMON> 0
0
0
<OTHER-SE> 37,134,200
<TOTAL-LIABILITY-AND-EQUITY> 42,745,700
<SALES> 0
<TOTAL-REVENUES> 4,621,100
<CGS> 0
<TOTAL-COSTS> 1,775,500
<OTHER-EXPENSES> 133,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 276,700
<INCOME-PRETAX> 1,301,700
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,253,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,253,000
<EPS-PRIMARY> 1.88
<EPS-DILUTED> 1.88
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