<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 March 31, 1995
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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 _____________________
Commission File Number: 0-15632
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First Capital Institutional Real Estate, Ltd. - 4
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(Exact name of registrant as specified in its charter)
Florida 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
- ------------------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
(312) 207-0020
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(Registrant's telephone number, including area code)
Not applicable
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(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
--- ---
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>
March 31,
1995 December 31,
(Unaudited) 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 5,550,400 $ 5,550,400
Buildings and improvements 39,793,900 39,760,400
- ------------------------------------------------------------------------------
45,344,300 45,310,800
Accumulated depreciation and amortization (8,054,700) (7,703,200)
- ------------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 37,289,600 37,607,600
Cash and cash equivalents 4,439,200 4,142,100
Restricted certificates of deposits 62,500 62,500
Rents receivable 258,000 298,100
Other assets 74,300 65,000
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$42,123,600 $42,175,300
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Loan payable to General Partner $ 4,085,700 $ 3,911,700
Accounts payable and accrued expenses 560,700 661,700
Due to Affiliates 186,500 150,800
Security deposits 102,400 101,100
Distributions payable 567,300 678,100
Other liabilities 85,800 79,200
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5,588,400 5,582,600
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Partners' (deficit) capital:
General Partner (246,300) (246,300)
Limited Partners (750,000 Units authorized, 593,025
issued and outstanding) 36,781,500 36,839,000
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36,535,200 36,592,700
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$42,123,600 $42,175,300
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</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the quarter ended March 31, 1995
and the year ended December 31, 1994
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital,
January 1, 1994 $(240,800) $39,399,500 $39,158,700
Net income for the year ended December
31, 1994 168,500 1,080,700 1,249,200
Distributions for the year ended December
31, 1994 (174,000) (3,641,200) (3,815,200)
- -------------------------------------------------------------------------------
Partners' (deficit) capital,
December 31, 1994 (246,300) 36,839,000 36,592,700
Net income for the quarter ended March
31, 1995 33,600 476,200 509,800
Distributions for the quarter ended March
31, 1995 (33,600) (533,700) (567,300)
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Partners' (deficit) capital,
March 31, 1995 $(246,300) $36,781,500 $36,535,200
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</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended March 31, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1995 1994
- ------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $1,463,000 $1,590,500
Interest 57,600 23,100
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1,520,600 1,613,600
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Expenses:
Interest--Affiliate 84,500 87,500
Depreciation and amortization 351,700 395,200
Real estate taxes 161,700 156,000
Insurance--Affiliate 16,700 23,500
Repairs and maintenance 116,700 149,100
Property operating:
Affiliates 89,100 97,900
Nonaffiliates 143,800 192,500
General and administrative:
Affiliates 8,300 10,400
Nonaffiliates 38,300 30,600
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1,010,800 1,142,700
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Net income $ 509,800 $ 470,900
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Net income allocated to General Partner $ 33,600 $ 46,800
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Net income allocated to Limited Partners $ 476,200 $ 424,100
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Net income allocated to Limited Partners per Unit
(593,025 Units issued and outstanding) $ 0.80 $ 0.72
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</TABLE>
STATEMENTS OF CASH FLOWS
For the quarters ended March 31, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 509,800 $ 470,900
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 351,700 395,200
Changes in assets and liabilities:
Decrease in rents receivable 40,100 2,500
(Increase) in other assets (9,500) (15,200)
(Decrease) in accounts payable and accrued expenses (101,000) (302,100)
Increase in due to Affiliates 35,700 40,100
Increase in other liabilities 6,600 9,400
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Net cash provided by operating activities 833,400 600,800
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Cash flows from investing activities:
Payments for capital and tenant improvements (33,500) (72,000)
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Net cash (used for) investing activities (33,500) (72,000)
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Cash flows from financing activities:
Proceeds received from loan payable to General Partner 174,000 515,400
Increase in security deposits 1,300 3,600
Distributions paid to Partners (678,100) (639,900)
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Net cash (used for) financing activities (502,800) (120,900)
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Net increase in cash and cash equivalents 297,100 407,900
Cash and cash equivalents at the beginning of the
period 4,142,100 3,054,000
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Cash and cash equivalents at the end of the period $4,439,200 $3,461,900
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Supplemental information:
Interest paid during the period $ 83,200 $ 57,700
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</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
March 31, 1995
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 ended March 31, 1995, are not necessarily indicative of the
operating results for the year ending December 31, 1995.
The financial statements include the Partnership's 50% interest in two joint
ventures and its 75% interest in one joint venture. These joint ventures are
with Affiliated partnerships, and like these partnerships 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.
Certain reclassifications have been made to the previously reported 1994
statements in order to provide comparability with the 1995 statements. These
reclassifications have not changed the 1994 results.
Cash equivalents are considered all highly liquid investments purchased with a
maturity of three months or less.
Reference is made to the Partnership's annual report for the year ended
December 31, 1994, 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.
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 Limited Partners, 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 year, 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
Limited Partners. For the quarter ended March 31, 1995, the General Partner was
allocated a Partnership Management Fee and, accordingly, Net Profits from
operations of approximately $33,600.
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 Limited Partners on a pro rata basis to the extent that
Cash Flow is otherwise less than sufficient to distribute cash in amounts equal
to the Limited Partners' Preferred Return (7.5% per annum noncompounding
cumulative return on the Limited Partner's Capital Investment); provided,
however, that the maximum amount which shall be advanced to the Partnership by
the General Partner for distribution to the Limited Partners 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. 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 Limited Partners in amounts
equal to the Limited Partners Preferred Return and from Sale or Financing
Proceeds to the extent permitted by the Partnership Agreement. As of March 31,
1995, the Partnership has drawn approximately $4,085,700 which represents the
total amount of the General Partner's current commitment.
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter ended March 31, 1995 are as follows:
<TABLE>
<CAPTION>
Paid Payable
- ------------------------------------------------------------------------
<S> <C> <C>
Property management and leasing fees $ 70,100 $ 95,900
Interest on loan payable to General Partner 83,200 29,900
Reimbursement of property insurance premiums, at cost None 16,700
Real estate commission (a) None 40,200
Reimbursement of expenses, at cost:
(1) Accounting 5,100 1,800
(2) Investor communication 4,100 2,000
(3) Legal 400 None
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$162,900 $186,500
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</TABLE>
(a) As of March 31, 1995, $40,200 was due to the General Partner for real
estate commissions earned in connection with the disposition of Wellington
A and the sale of Wellington B in the Wellington North Office Complex.
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 DEPOSITS:
Restricted certificates of deposits includes $37,500 which has 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
<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, 1994, 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
Quarters Ended March
31,
1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C>
Amount of Cash Flow (as defined in the Partnership
Agreement) $ 827,900 $ 819,300
Capital Investment $56,835,500 $58,458,500
Annualized return on Capital Investment (Annualized
Cash Flow/Capital Investment) 5.83% 5.61%
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</TABLE>
As the Partnership progresses through 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 of 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 are expected
to decline as well, but will continue to comprise the significant components of
Cash Flow and operating results until the final property sale. 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. On June 8, 1994 ("Wellington "C' ") of the
Wellington North Office Complex was sold.
Cash Flow increased approximately $8,600 from the quarter ended March 31, 1994
to the quarter ended March 31, 1995. Although Cash Flow remained relatively
consistent from 1994 to 1995, several significant factors had either a positive
or negative impact on Cash Flow. The positive factors were: 1) increased Cash
Flow results at 3120 Southwest Freeway and Park Plaza Professional Building
("Park Plaza") of approximately $14,000 and $9,200, respectively; 2) increased
interest income earned on short-term investments of $34,500 and 3) the receipt
of refunds of approximately $19,500 for Wellington C. The negative factors
were: 1) decreased Cash Flow results at Indian Ridge Plaza and Carrollton
Crossroads Shopping Center ("Carrollton") of approximately $32,400 and $14,200,
respectively and 2) decreased Cash Flow of $40,100 due to the absence of
Wellington C.
Rental revenues at Indian Ridge Plaza for the quarters ended March 31, 1995 and
1994 were approximately $533,000 and $566,300, respectively. Rental revenues
decreased primarily due to a decrease in tenant reimbursements for real taxes.
The average quarterly occupancy rate decreased from 98% in 1994 to 96% in 1995.
Rental revenues at Park Plaza for the quarters ended March 31, 1995 and 1994
were approximately $444,500 and $446,100, respectively. The average occupancy
rate remained at 88% for the quarters ended March 31, 1995 and 1994.
Contributing to the increase in Cash Flow for this property were decreases in
repairs and maintenance and property operating expenses of approximately $4,500
and $13,400, respectively, partially offset by an increase in real estate tax
expense of approximately $7,400.
Rental revenues at Carrollton for the quarters ended March 31, 1995 and 1994
were approximately $278,200 and $287,800, respectively. The decrease in rental
revenues was primarily due to the fact that expense reimbursements billed to
tenants for the quarter ended March 31, 1994 included prior year reimbursements
which were greater than had been previously estimated. Also contributing to the
decrease in Cash Flow results at Carrollton and the Partnership for the quarter
ended March 31, 1995 was an increase in real estate tax expense of
approximately $6,700.
Rental revenues at 3120 Southwest Freeway for the quarters ended March 31, 1995
and 1994 were approximately $187,900 and $171,900, respectively. The increase
in rental revenues was primarily due to an increase in the average quarterly
occupancy rate from 91% in 1994 to 96% in 1995.
Rental revenues at Wellington C for the quarter ended March 31, 1994 were
approximately $118,400.
To further increase 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 March 31, 1995 when
compared to December 31, 1994 was primarily the result of net cash provided by
operating activities exceeding expenditures for capital and tenant improvements
and net distributions paid to Partners. Liquid assets of the Partnership as of
March 31, 1995 were comprised of working capital reserves and undistributed
Cash Flow.
Net cash provided by operating activities continues to be the Partnership's
primary source of funds. Net cash provided by operating activities increased
from $600,800 for the quarter ended March 31, 1994 to $833,400 for the quarter
ended March 31, 1995. This increase was primarily due to the timing of the
payment of certain Partnership expenses and the collection of rental revenues.
Net cash used for investing activities decreased from $72,000 for the quarter
ended March 31, 1994 to $33,500 for the quarter ended March 31, 1995. This
decrease was due to a decrease in payments made in 1995 for capital and tenant
improvements. In addition to the $33,500, the Partnership has budgeted to spend
approximately $647,000 for capital and tenant improvements during the remainder
of 1995, consisting of approximately $239,000, $215,000, $102,000 and $91,000,
respectively at Indian Ridge Plaza, Park Plaza, Southwest Freeway and
Carrollton. The General Partner believes these improvements are necessary in
order to maintain the occupancy levels in very competitive markets, as well as
to maximize rental rates charged to new and renewing tenants.
Net cash used for financing activities increased from $120,900 for the quarter
ended March 31, 1994 to $502,800 for the quarter ended March 31, 1995. This
increase was due to an increase in the payment of cash distributions to
Partners.
The General Partner continues to take a conservative approach to projections of
future rental income and to maintain higher levels of cash reserves due to the
anticipated capital and tenant improvements necessary to be made to the
Partnership's 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 ended March 31, 1995, Cash Flow
retained to supplement working capital reserves approximated $294,200. 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 March 31, 1995 were
declared at an annualized rate of 3.76% of total Capital Investment. 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.
5
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K:
- ------- ---------------------------------
(a) Exhibits: Financial Data Schedules
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the quarter ended
March 31, 1995.
<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: May 12, 1995 By: /s/ DOUGLAS CROCKER II
------------ ---------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: May 12, 1995 By: /s/ NORMAN M. FIELD
------------ ---------------------------------------
NORMAN M. FIELD
Vice President - Finance and Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 4,501,700
<SECURITIES> 0
<RECEIVABLES> 258,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,759,700
<PP&E> 45,344,300
<DEPRECIATION> 8,054,700
<TOTAL-ASSETS> 42,123,600
<CURRENT-LIABILITIES> 1,274,300
<BONDS> 4,085,700
<COMMON> 0
0
0
<OTHER-SE> 36,535,200
<TOTAL-LIABILITY-AND-EQUITY> 42,123,600
<SALES> 0
<TOTAL-REVENUES> 1,520,600
<CGS> 0
<TOTAL-COSTS> 528,000
<OTHER-EXPENSES> 46,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84,500
<INCOME-PRETAX> 509,800
<INCOME-TAX> 0
<INCOME-CONTINUING> 509,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 509,800
<EPS-PRIMARY> .80
<EPS-DILUTED> .80
</TABLE>
