<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, 1996
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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
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(Exact name of registrant as specified in its charter)
Illinois 36-3441345
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(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
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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,
1996 December 31,
(Unaudited) 1995
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<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 5,050,400 $ 5,050,400
Buildings and improvements 38,310,600 38,273,000
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43,361,000 43,323,400
Accumulated depreciation and amortization (9,418,000) (9,091,000)
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Total investment properties, net of accumulated
depreciation and amortization 33,943,000 34,232,400
Cash and cash equivalents 4,573,700 4,655,200
Restricted cash 87,500 62,500
Rents receivable 131,100 225,100
Other assets 46,700 53,600
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$38,782,000 $39,228,800
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Loan payable to General Partner $ 4,246,800 $ 4,085,700
Accounts payable and accrued expenses 557,300 732,100
Due to Affiliates 173,500 138,900
Distributions payable 660,200 783,900
Security deposits 93,000 92,600
Other liabilities 53,900 61,400
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5,784,700 5,894,600
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Partners' capital:
General Partner (deficit) (270,300) (270,300)
Limited Partners (593,025 Units issued and
outstanding) 33,267,600 33,604,500
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32,997,300 33,334,200
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$38,782,000 $39,228,800
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</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the quarter ended March 31, 1996 (Unaudited)
and the year ended December 31, 1995
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital,
January 1, 1995 $(246,300) $36,839,000 $36,592,700
Net income (loss) for the year ended
December 31, 1995 137,200 (921,700) (784,500)
Distributions for the year ended
December 31, 1995 (161,200) (2,312,800) (2,474,000)
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Partners' (deficit) capital,
December 31, 1995 (270,300) 33,604,500 33,334,200
Net income for the quarter ended
March 31, 1996 37,500 285,800 323,300
Distributions for the quarter ended
March 31, 1996 (37,500) (622,700) (660,200)
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Partners' (deficit) capital,
March 31, 1996 $(270,300) $33,267,600 $32,997,300
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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, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Income:
Rental $1,308,300 $1,463,000
Interest 57,700 57,600
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1,366,000 1,520,600
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Expenses:
Interest on loan payable to General Partner 89,000 84,500
Depreciation and amortization 327,000 351,700
Property operating:
Affiliates 99,100 89,600
Nonaffiliates 158,400 143,300
Real estate taxes 156,100 161,800
Insurance--Affiliate 16,300 16,600
Repairs and maintenance 129,000 116,700
General and administrative:
Affiliates 11,700 7,900
Nonaffiliates 56,100 38,700
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1,042,700 1,010,800
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Net income $ 323,300 $ 509,800
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Net income allocated to General Partner $ 37,500 $ 33,600
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Net income allocated to Limited Partners $ 285,800 $ 476,200
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Net income allocated to Limited Partners per Unit
(593,025 Units outstanding) $ 0.48 $ 0.80
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</TABLE>
STATEMENTS OF CASH FLOWS
For the quarters ended March 31, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 323,300 $ 509,800
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 327,000 351,700
Changes in assets and liabilities:
Decrease in rents receivable 94,000 40,100
Decrease (increase) in other assets 6,900 (9,500)
(Decrease) in accounts payable and accrued expenses (174,800) (101,000)
Increase in due to Affiliates 34,600 35,700
(Decrease) increase in other liabilities (7,500) 6,600
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Net cash provided by operating activities 603,500 833,400
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Cash flows from investing activities:
Payments for capital and tenant improvements (37,600) (33,500)
(Increase) in restricted cash (25,000)
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Net cash (used for) investing activities (62,600) (33,500)
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Cash flows from financing activities:
Proceeds received from loan payable to General Partner 161,100 174,000
Increase in security deposits 400 1,300
Distributions paid to Partners (783,900) (678,100)
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Net cash (used for) financing activities (622,400) (502,800)
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Net (decrease) increase in cash and cash equivalents (81,500) 297,100
Cash and cash equivalents at the beginning of the
period 4,655,200 4,142,100
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Cash and cash equivalents at the end of the period $4,573,700 $4,439,200
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Supplemental information:
Interest paid during the period $ 87,800 $ 83,200
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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, 1996
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 filed with the Securities and
Exchange Commission on Form S-11. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is included in the Registration Statement and
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.
Preparation of the Partnership's financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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, 1996 are not necessarily indicative of the
operating results for the year ending December 31, 1996.
The financial statements include the Partnership's 50% interest in two joint
ventures and a 75% interest in another joint venture with Affiliated
partnerships. These joint ventures were formed for the purpose of each
acquiring a 100% interest in certain real property and are operated under the
common control of the General Partner. Accordingly, the Partnership's pro rata
share of the ventures' revenues, expenses, assets, liabilities and Partners'
capital was included in the financial statements.
Commercial rental properties held for investment are recorded at cost, net of
any provisions for value impairment, and depreciated (exclusive of amounts, if
any, allocated to land and value impairments) on the straight-line method over
their estimated useful lives. Upon classifying a commercial rental property as
held for disposition, no further depreciation or amortization of such property
is provided for in the Financial Statements. Lease acquisition fees are
recorded at cost and amortized over the life of the lease. Repair and
maintenance costs are expensed as incurred; expenditures for improvements are
capitalized and depreciated over the estimated life of the improvements.
During the first quarter of 1996, the Partnership adopted Financial Accounting
Standards Board Statement No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" (the "Standard"). The
Standard established guidance for determining if the value of defined assets
are impaired, and if so, how impairment losses should be measured and reported
in the financial statements. The Standard also addressed the accounting for
long-lived assets that are expected to be disposed of. The adoption of the
Standard did not have a material effect on the Partnership's financial
statements.
Cash equivalents are considered all highly liquid investments with an original
maturity of three months or less when purchased.
Certain reclassifications have been made to the previously reported 1995
statements in order to provide comparability with the 1996 statements. These
reclassifications had no effect on net income or Partners' capital.
Reference is made to the Partnership's annual report for the year ended
December 31, 1995 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:
In accordance with the Partnership Agreement, as compensation for services
rendered in managing the affairs of the Partnership, the General Partner shall
be entitled to receive subsequent to May 4, 1988, the Termination of the
Offering, a Partnership Management Fee payable annually within 60 days
following the last day of each fiscal year, which shall be an amount equal to
the lesser of (i) 0.5% of the net value of the Partnership's assets as of the
end of such fiscal year reflected on the Certificate of Value furnished to the
Limited Partners, plus, to the extent 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, the amount of such deficit, or (ii) an amount equal to the
difference between 10% of the Partnership's aggregate Cash Flow (as defined in
the Partnership Agreement) for the period from the Commencement of Operations
to the end of the fiscal year for which such Partnership Management Fee is
payable, and the aggregate amount previously paid to the General Partner as a
Partnership Management Fee. In addition, Sale Proceeds are distributed: first,
75% to all Limited Partners and 25% to the General Partner until the earlier of
(i) receipt by Limited Partners of cumulative distributions of Sale Proceeds in
an amount equal to 100% of their Original Capital Contribution, or (ii) receipt
by the General Partner of cumulative distributions of Sale Proceeds sufficient
to repay all outstanding advances to the Partnership from the General Partner;
thereafter, to the General Partner, until all outstanding advances, if any, to
the Partnership from the General Partner have been repaid; thereafter, to the
Limited Partners, until they have received cumulative distributions of Sale
Proceeds in an amount equal to 100% of their Original Capital Contribution,
plus an amount (including Cash Flow (as defined in the Partnership Agreement))
equal to a cumulative return of 6% per annum simple interest on their Capital
Investment from their investment date in the Partnership; thereafter, 85% to
all Limited Partners; and 15% to the General Partner, provided, however, that
no distribution of the General Partner's share of Sale Proceeds shall be made
until Limited Partners have received the greater of (i) Sale Proceeds plus Cash
Flow (as defined in the Partnership Agreement) previously received in excess of
the Preferred Return equal to 125% of the Limited Partners' Original Capital
Contribution, or (ii) Sale Proceeds plus all Cash Flow (as defined in the
Partnership Agreement)
4
<PAGE>
previously received equal to their Original Capital Contribution plus a 10% per
annum simple interest return on their Capital Investment from the date of
investment.
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 1% of
such Net Profits or the Partnership Management Fee paid by the Partnership to
the General Partner during such year, and the balance, if any, to the Limited
Partners. Net Losses (exclusive of Net Losses from the sale, disposition or
provision for value impairment of Partnership properties) are allocated 1% to
the General Partner and 99% to the Limited Partners. Net Profits from the sale
or disposition of a Partnership property are allocated: first, prior to giving
effect to any distributions of Sale Proceeds from the transaction, to the
General Partner and Limited Partners with negative balances in their Capital
Accounts, pro rata in proportion to such respective negative balances, to the
extent of the total of such negative balances; second, to each Limited Partner
in an amount, if any, necessary to make the positive balance in its Capital
Account equal to the Sale Proceeds to be distributed to such Limited Partner
with respect to the sale or disposition of such property; third, to the General
Partner in an amount, if any, necessary to make the positive balance in its
Capital Account equal to the Sale Proceeds to be distributed to the General
Partner with respect to the sale or disposition of such property; and fourth,
the balance, if any, 15% to the General Partner and 85% to the Limited
Partners. Net Losses from the sale, disposition or provision for value
impairment of Partnership properties are allocated: first, after giving effect
to any distributions of Sale Proceeds from the transaction to the General
Partner and Limited Partners 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 second, the balance, if any, 1%
to the General Partner and 99% to the Limited Partners. Notwithstanding
anything to the contrary, there shall be allocated to the General Partner not
less than 1% of all items of Partnership income, gain, loss, deduction and
credit during the existence of the Partnership. For the quarter ended March 31,
1996, the General Partner was entitled to a Partnership Management Fee, and
accordingly, allocated Net Profits, of $37,500.
In accordance with the Partnership Agreement, the General Partner made advances
to the Partnership in cumulative amounts equal to the Acquisition Fees and the
Partnership Management Fees which were paid to the General Partner or its
Affiliates for distribution to the Limited Partners on a pro rata basis to the
extent that Cash Flow (as defined in the Partnership Agreement) was 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 Partners' 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 (as defined in the Partnership Agreement) if and to the
extent it is more than sufficient to distribute cash to the Limited Partners in
amounts equal to the Limited Partners' Preferred Return and from Sale Proceeds
to the extent permitted in the Partnership Agreement. During the quarter ended
March 31, 1996, the General Partner advanced its distribution for the year
ended December 31, 1995 of $161,100 to the Partnership. As of March 31, 1996,
the Partnership has drawn $4,246,800, 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, 1996 were as follows:
<TABLE>
<CAPTION>
Paid Payable
- ------------------------------------------------------------------------
<S> <C> <C>
Property management and leasing fees $ 66,000 $ 80,000
Real estate commissions (a) None 40,200
Interest expense on loan payable to General Partner 87,800 31,100
Reimbursement of property insurance premiums, at cost None 16,200
Reimbursement of expenses, at cost:
--Accounting 10,500 4,000
--Investor communication 3,700 2,000
--Legal 13,500 None
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$181,500 $173,500
- ------------------------------------------------------------------------
</TABLE>
(a) As of March 31, 1996, the Partnership owed $40,200 to the General Partner
for real estate commissions earned in connection with the sales of
Partnership properties. These commissions have been accrued but not paid.
In accordance with the Partnership Agreement, the Partnership will not pay
the General Partner or any Affiliates a real estate commission from the
sale of a Partnership property until 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 (as defined in the Partnership Agreement) which has been
distributed to the Limited Partners from the initial investment date) of 6%
simple interest per annum on their Capital Investment from the initial
investment date.
On-site property management for the Partnership's properties is provided by
Affiliates of the General Partner for fees ranging from 3% to 6% of gross rents
received from the properties.
5
<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, 1995, for a discussion of the Partnership's business.
OPERATIONS
The table below is a recap of the Partnership's share of certain operating
results of each of its remaining properties for the quarters ended March 31,
1996 and 1995. The discussion following the table should be read in conjunction
with the Financial Statements and Notes thereto appearing in this report.
<TABLE>
<CAPTION>
Comparative Operating
Results (a)
For the Quarters Ended
3/31/96 3/31/95
- ----------------------------------------------
<S> <C> <C>
INDIAN RIDGE PLAZA SHOPPING CENTER
Rental revenues $ 426,200 $ 533,000
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Property net income $ 144,600 $ 267,900
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Average occupancy 69% 96%
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PARK PLAZA PROFESSIONAL BUILDING (50%)
Rental revenues $ 405,800 $ 444,500
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Property net income $ 90,100 $ 136,400
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Average occupancy 84% 88%
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CARROLLTON CROSSROADS SHOPPING CENTER (50%)
Rental revenues $ 309,600 $ 278,200
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Property net income $ 174,500 $ 147,000
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Average occupancy 98% 99%
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3120 SOUTHWEST FREEWAY OFFICE BUILDING (75%)
Rental revenues $ 162,700 $ 187,900
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Property net income $ 15,700 $ 17,300
- ----------------------------------------------
Average occupancy 83% 96%
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</TABLE>
(a) Excludes certain income and expense items which are either not directly
related to individual property operating results such as interest income,
interest expense and general and administrative expenses or are related to
properties previously owned by the Partnership.
Net income for the quarter ended March 31, 1996 decreased $186,500 when
compared to the quarter ended March 31, 1995. The decrease was primarily due to
decreases in operating results of $123,300 and $46,300 at Indian Ridge Plaza
Shopping Center ("Indian Ridge") and Park Plaza Professional Building ("Park
Plaza"), respectively. In addition, general and administrative expenses
increased $21,200 primarily due to an increase in state income taxes. Partially
offsetting the decrease was an increase in operating results of $27,500 at
Carrollton Crossroads Shopping Center ("Carrollton").
Rental revenues for the quarter ended March 31, 1996 decreased $154,700, or
10.6%, when compared to the quarter ended March 31, 1995. The primary factor
which contributed to the decrease in rental revenues was lower average
quarterly occupancy rates at all of the Partnership's properties, particularly
at Indian Ridge as a result of a major tenant vacating 45,000 square feet of
space in July 1995 subsequent to filing for bankruptcy. This leasable square
footage accounts for 24% of the total leasable square footage of the building.
In addition, in accordance with its lease, starting in December 1995, the other
major tenant at Indian Ridge began to pay percentage rent, in lieu of the
required base rent, because of the major tenant vacancy. In total, rental
revenues at Indian Ridge decreased $106,800 during the first quarter of 1996
when compared to the first quarter of 1995. As of May 1, 1996, a major new
tenant has begun construction on 44,400 square feet of space and is expected to
begin operations in August 1996. Once the new major tenant takes occupancy, the
tenant currently paying percentage rent at Indian Ridge will resume paying the
rental rates charged prior to the vacancy. Partially offsetting the decrease in
rental revenues was the receipt of percentage rental income from various
tenants at Carrollton relating to 1995.
Property operating expenses increased $24,600 for the quarter ended March 31,
1996 when compared to the quarter ended March 31, 1995 primarily due to higher
professional service fees at all of the Partnership's properties except 3120
Southwest Freeway Office Building ("Southwest Freeway").
Repairs and maintenance expense increased $12,300 for the quarter ended March
31, 1996 when compared to the quarter ended March 31, 1995, primarily due to
increased costs associated with snow removal at Indian Ridge and expenditures
relating to the parking facilities at Park Plaza. Partially offsetting the
increase was a decrease at Southwest Freeway as a result of expenditures made
during the first quarter of 1995 in order to enhance the appearance and safety
features of the property.
Depreciation and amortization expense decreased $24,700 for the quarters under
comparison primarily due to the effects of the provisions for value impairment
recorded for several Partnership properties during the year ended December 31,
1995.
Interest expense on the loan payable to the General Partner, as well as real
estate tax and insurance expenses remained stable for the quarters under
comparison.
To increase and/or maintain occupancy levels at the Partnership's properties,
the General Partner, through its Affiliated asset and property management
groups, continues to take the following actions: 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 tenant leases 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
One of the Partnership's objectives is to dispose of its properties when market
conditions allow for the achievement of the maximum possible sales price. In
the interim, the Partnership continues to manage and maintain its remaining
properties. Notwithstanding the Partnership's intention relative to property
sales, another primary objective of the Partnership is to provide cash
distributions to Partners from Partnership operations. To the extent cumulative
cash distributions exceed net income, such excess distributions will be treated
as a return of capital. Cash Flow (as defined in
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
the Partnership Agreement) is generally not equal to Partnership net income or
cash flows as defined by generally accepted accounting principles ("GAAP"),
since certain items are treated differently under the Partnership Agreement
than under GAAP. Management believes that 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 GAAP. The following table includes a
reconciliation of Cash Flow (as defined in the Partnership Agreement) to cash
flows provided by operating activities as defined by GAAP. Such amounts are not
indicative of actual distributions to Partners and should not necessarily be
considered as an alternative to the results disclosed in the Statements of
Income and Expenses and Statements of Cash Flows.
<TABLE>
<CAPTION>
Comparative
Cash Flow Results
For the Quarters Ended
3/31/96 3/31/95
- ------------------------------------------------------------------------------
<S> <C> <C>
Cash Flow (as defined in the Partnership Agreement) $ 612,800 $ 827,900
Items of reconciliation:
General Partner's Partnership Management Fee 37,500 33,600
Decrease in current assets 100,900 30,600
(Decrease) in current liabilities (147,700) (58,700)
- ------------------------------------------------------------------------------
Net cash provided by operating activities $ 603,500 $ 833,400
- ------------------------------------------------------------------------------
Net cash (used for) investing activities $ (62,600) $ (33,500)
- ------------------------------------------------------------------------------
Net cash (used for) financing activities $ (622,400) $ (502,800)
- ------------------------------------------------------------------------------
</TABLE>
The decrease in Cash Flow (as defined in the Partnership Agreement) of $215,100
for the quarter ended March 31, 1996 when compared to quarter ended March 31,
1995 was primarily due to the decrease in net income, as previously discussed,
exclusive of depreciation and amortization expense.
The decrease in the Partnership's cash position as of March 31, 1996 when
compared to December 31, 1995, resulted primarily from the distributions paid
to Limited Partners and expenditures for capital, tenant improvement and
leasing costs exceeding the net cash provided by operating activities. Liquid
assets of the Partnership as of March 31, 1996 were substantially comprised of
undistributed cash from operations retained for working capital purposes.
Net cash provided by operating activities continues to be a primary source of
funds to the Partnership. Net cash provided by operating activities decreased
$229,900 for the quarter ended March 31, 1996 when compared to the quarter
ended March 31, 1995. The decrease was primarily due to the decrease in net
income, exclusive of depreciation and amortization expense, as previously
discussed, and a decrease in net cash provided by operating activities at all
of the Partnership's properties except Carrollton.
The increase in net cash (used for) investing activities of $29,100 was
primarily due to an increase in the amount of investment in restricted cash
pledged as collateral for deposits to the Houston Lighting & Power Company. In
addition, the Partnership maintains working capital reserves to pay for capital
expenditures, such as capital, tenant improvement and leasing costs. During the
quarter ended March 31, 1996, the Partnership spent $37,600 for capital, tenant
improvement and leasing costs and has budgeted to spend approximately $620,000
during the remainder of 1996. This budgeted amount relates to anticipated
capital, tenant improvement and leasing costs of approximately: 1) $370,000 at
Park Plaza; 2) $110,000 at 3120 Southwest Freeway; 3) $70,000 at Indian Ridge
and 4) $70,000 at Carrollton. Actual amounts expended in 1996 may vary
depending on a number of factors including actual leasing activity and other
market conditions throughout the year. The General Partner believes these
improvements and leasing costs are necessary in order to increase and/or
maintain the occupancy levels in very competitive markets, maximize rental
rates charged to new and renewing tenants and prepare the remaining properties
for eventual disposition.
The increase in net cash (used for) financing activities of $119,600 was
primarily due to an increase in the payment of cash distributions to Limited
Partners.
The General Partner continues to take a conservative approach to projections of
future rental income in its determination of adequate levels of cash reserves
due to the anticipated capital, tenant improvement and leasing costs necessary
to be made at the Partnership's properties during the next several years. For
the quarter ended March 31, 1996, the Partnership included $9,900 of previously
undistributed Cash Flow (as defined in the Partnership Agreement) in its first
quarter distribution to Limited Partners.
Distributions to Limited Partners for the quarter ended March 31, 1996 were
declared in the amount of $622,700, or $1.05 per Unit. Cash distributions are
made 60 days after the last day of each fiscal quarter. The amount of future
distributions to Partners will ultimately be dependent upon the performance of
the Partnership's investments as well as the General Partner's determination of
the amount of cash necessary to supplement working capital reserves to meet
future liquidity requirements of the Partnership. Accordingly, there can be no
assurance as to the amounts and/or availability of cash for future
distributions to Partners.
7
<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 March 31, 1996.
<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 13, 1996 By: /s/ DOUGLAS CROCKER II
------------ --------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: May 13, 1996 By: /s/ NORMAN M. FIELD
------------ --------------------------------------
NORMAN M. FIELD
Vice President - Finance and Treasurer
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