UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ........ to ........
Commission file number 0-16820
FIRST DEARBORN INCOME PROPERTIES L.P.
(Exact name of registrant as specified in its charter)
Delaware 36-3473943
(State of organization) (IRS Employer Identification No.)
154 West Hubbard Street, Suite 250, Chicago, IL 60610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 464-0100
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 ____
Units outstanding as of September 30, 1996: 20,468.5
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Balance Sheets
September 30, 1996 and December 31, 1995
(Unaudited)
Assets
<CAPTION>
September 30, December 31,
1996 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) 544,976 394,223
Rents and other receivables 335,494 939,304
Due from affiliates 2,215 2,014
Prepaid expense 0 9,073
Total current assets 882,685 1,344,614
Investment property, at cost (note 1):
Land 2,273,114 2,273,114
Building 15,629,211 15,594,670
17,902,325 17,867,784
Less accumulated depreciation (5,179,409) (4,809,502)
12,722,916 13,058,282
Investment in unconsolidated venture,
at equity (note 2) 959,602 915,594
Deferred rents receivable 1,739,481 1,537,569
Deferred loan costs 78,815 103,672
Total assets 16,383,499 16,959,731
<FN>
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Balance Sheets
September 30, 1996 and December 31, 1995
(Unaudited)
Liabilities and Partners' Capital Accounts
<CAPTION>
September 30, December 31,
1996 1995
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses 187,730 209,208
Due to affiliates (note 3) 252,975 238,190
Accrued interest 68,867 69,274
Current portion of long-term debt 4,800,392 283,213
Total current liabilities 5,309,964 799,885
Long-term debt 4,297,903 8,889,627
Venture partners' equity
in consolidated venture (note 2) 1,144,206 1,301,012
Deposits 13,507 29,924
Total long-term liabilities 5,455,616 10,220,563
Total liabilities 10,765,580 11,020,448
Partners' capital accounts (deficits) (note 1):
General partners:
Cumulative net income (1,572) 489
(1,572) 489
Limited partners:
Capital contributions 8,800,461 8,800,461
Cumulative net income (148,263) 55,805
Cumulative cash distributions (3,032,707) (2,917,472)
5,619,491 5,938,794
Total partners' capital accounts 5,617,919 5,939,283
Commitments and contingencies (note 2)
Total Liabilities and Partners' Capital 16,383,499 16,959,731
<FN>
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Consolidated Statement of Operations
Three months ended September 30, 1996 and 1995
(Unaudited)
<CAPTION>
1996 1995
<S> <C> <C>
Revenues:
Rental income 287,853 357,013
Tenant charges 25,820 27,305
Interest income 24,833 30,046
Total revenues 338,506 414,364
Expenses:
Property operating expenses 67,849 93,789
Interest 204,389 203,743
Depreciation 108,237 101,125
Amortization 8,286 5,312
General and administrative expenses 10,626 30,513
Total expenses 399,387 434,482
Operating loss (60,881) (20,118)
Partnership's share of operations
of unconsolidated venture 25,899 40,599
Venture partner's share of consolidated
ventures' operations (note 1) 878 53,122
Net income (loss) (34,104) 73,603
Net income (loss) per
limited partnership unit (note 1) (1.65) 3.56
Cash distribution per
limited partnership unit 1.87 1.89
<FN>
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Consolidated Statement of Operations
Nine months ended September 30, 1996 and 1995
(Unaudited)
<CAPTION>
1996 1995
<S> <C> <C>
Revenues:
Rental income 872,744 1,012,338
Tenant charges 81,690 76,599
Interest income 69,866 94,879
Total revenues 1,024,300 1,183,816
Expenses:
Property operating expenses 217,065 276,585
Interest 618,170 612,680
Depreciation 369,907 365,187
Amortization 24,857 15,935
General and administrative expenses 101,697 125,911
Total expenses 1,331,696 1,396,298
Operating loss (307,396) (212,482)
Partnership's share of operations
of unconsolidated venture 76,813 104,550
Venture partner's share of consolidated
ventures' operations (note 1) 24,454 42,318
Net income (loss) (206,129) (65,614)
Net income (loss) per
limited partnership unit (note 1) (9.97) (3.17)
Cash distribution per
limited partnership unit 5.57 9.37
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Consolidated Statements of Cash Flows
Nine months ended September 30, 1996 and 1995
(Unaudited)
<CAPTION>
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) (206,129) (65,614)
Items not requiring (providing)
cash or cash equivalents:
Depreciation 361,907 365,187
Amortization 24,857 15,935
Partnership's share of operations of
unconsolidated venture (44,008) (2,408)
Venture partners' share of
consolidated ventures' operations (156,806) (354,346)
Changes in:
Rents and other receivables 603,810 12,436
Prepaid expenses 9,007 (5,509)
Deferred rents receivable (201,912) 607,789
Accounts payable and accrued expenses (21,885) (2,857)
Due to affiliates 14,657 10,115
Tenant deposits (16,417) 16,598
Net cash provided by (used in)
operating activities 375,074 597,326
Additions to building: (34,541) (18,900)
Cash flows from financing activities:
Distributions to limited partners (115,235) (191,782)
Payment of deferred loan costs 0 (24,531)
Principal payments on long-term debt (74,545) (463,483)
Net cash used in financing activities (189,780) (679,796)
Net increase (decrease) in
cash and cash equivalents 150,753 (101,370)
<FN>
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Notes to Consolidated Financial Statements
September 30, 1996 and 1995
(Unaudited)
Readers of this quarterly report should refer to the
Partnership's audited financial statements for the fiscal year ended
December 31, 1995, which are included in the Partnership's 1995 Annual
Report, as certain footnote disclosures which would substantially
duplicate those contained in such audited financial statements have
been omitted from this report.
(1) Basis of Accounting
For the three and nine month periods ended September 30, 1996 and
September 30, 1995, the accompanying consolidated financial statements
include the accounts of the Partnership and its consolidated ventures
- - Vero Beach Associates and Downers Grove Building Partnership (the
"Ventures"). The effect of all transactions between the Partnership
and the Ventures has been eliminated.
The equity method of accounting has been applied in the
accompanying consolidated financial statements with respect to the
Partnership's interest in Sycamore Mall Associates.
The Partnership records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes.
The accompanying consolidated financial statements have been prepared
from such records after making appropriate adjustments, where
applicable, to present the Partnership's accounts in accordance with
generally accepted accounting principles (GAAP). Such adjustments are
not recorded on the records of the Partnership. The net effect of
these adjustments for the nine months ended September 30, 1996 and
1995 is summarized as follows:
<TABLE>
<CAPTION>
1996 1995
GAAP Tax GAAP Tax
Basis Basis Basis Basis
<S> <C> <C> <C> <C>
Net income (loss) (206,129) (60,500) (65,614) (115,000)
Net income (loss) per
limited partnership unit (9.97) (2.93) (3.17) (5.56)
</TABLE>
The net loss per limited partnership unit presented is based on
the weighted limited partnership units outstanding at the end of each
period (20,468.5).
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Notes to Consolidated Financial Statements - Continued
Partnership distributions from Sycamore Mall Associates are
considered cash flow from operating activities to the extent of the
Partnership's cumulative share of net operating earnings before
depreciation and non-cash items. In addition, the Partnership records
amounts held in U.S. Government obligations, commercial paper and
certificates of deposit at cost which approximates market. For the
purposes of these statements, the Partnership's policy is to consider
all such investments with an original maturity of three months or less
($291,548 and $237,206 at September 30, 1996 and December 31, 1995,
respectively) as cash equivalents.
Deferred offering costs were charged to the partners' capital
accounts upon consummation of the initial offering of the Limited
Partnership units. Deferred loan costs are amortized over the terms
of the related agreements using the straight-line method.
Depreciation on the investment properties acquired has been
provided over the estimated useful lives of 5 to 30 years using the
straight-line method.
No provision for Federal income taxes has been made as any
liability for such taxes would be that of the partners rather than the
Partnership.
(2) Venture Agreements
The Partnership has entered into three joint venture agreements
with partnerships sponsored by affiliates of the General Partners.
Pursuant to such agreements, the Partnership has made capital
contributions aggregating $7,685,642 through September 30, 1996. In
consideration of its capital contributions, the Partnership has
acquired interests in two shopping centers and an office building.
(3) Transactions with Affiliates
Fees, commissions and other expenses required to be paid by the
Partnership to affiliates of the General Partners for the six months
ended September 30, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
Unpaid at
September 30,
1996 1995 1996
<S> <C> <C> <C>
Non-accountable expense reimbursement 19,191 19,191 247,715
Reimbursement (at cost)
for administrative services 12,500 10,500 5,250
21,295 29,691 252,965
</TABLE>
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Notes to Consolidated Financial Statements - Continued
(4) Unconsolidated Venture - Summary Information
Summary income statement information for Sycamore Mall Associates
for the nine months ended September 30, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Total revenue 1,444,613 1,413,556
Operating income (loss) 304,330 256,469
Partnership's share of income 76,813 104,550
</TABLE>
(5) Adjustments
In the opinion of the Managing General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a
fair presentation have been made to the accompanying consolidated
financial statements as of September 30, 1996 and 1995.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
At September 30, 1996, the Partnership had cash and cash
equivalents of $544,976 which the Partnership intends to utilize to
meet working capital requirements and for future distributions to
Partners. This is $150,753 more than the $394,223 balance at December
31, 1995. The Partnership has reduced its regular distribution to
Limited Partners. During the nine months ended September 30, 1996,
the Partnership distributed $115,235 ($5.63 per unit) to Limited
Partners as compared to $191,782 ($9.37 per unit) during the nine
months ended September 30, 1995. The partnership is attempting to
reserve additional cash balances while searching for a replacement
tenant for Walgreens at the Vero Beach property. In addition, the
mortgage loan at Vero Beach will mature July 1, 1997, and the
Partnership anticipates incurring costs associated with the
refinancing of that mortgage debt. The $4,517,179 increase in the
current portion of long-term debt results in the reclassification of
the Vero Beach mortgage indebtedness to current, since its maturity is
now less than twelve months.
Net cash provided by operating activities during the nine months
ended September 30, 1996 was $375,074, a decrease of $222,252 from the
$597,326 of cash provided by operating activities during nine months
ended September 30, 1995. The decrease is largely due to an increase
in deferred rents receivable of $202,000 during the nine months ended
September 30, 1996. This increase results from the straight-line
recognition of deferred rents at the Downers Grove property. Current
cash payments received at the Downers Grove property are coming from
the annuities. This explains the $604,000 reduction in rents
receivable..
As the Partnership intends to distribute all "net cash receipts"
and "sales proceeds" in accordance with the terms of the Partnership
Agreement, and does not intend to reinvest any such proceeds, the
Partnership is intended to be self-liquidating in nature. The
Partnership's future source of liquidity and distributions is expected
to be through cash generated by the Partnership's investment
properties and from the sale and refinancing of such properties. To
the extent that additional payments are required under a purchase
agreement or a property does not generate an adequate cash flow to
meet its requirements, the Partnership may withdraw funds from the
working capital reserve which it maintains.
Results of Operations
For the three and nine month periods ended September 30, 1996 and
September 30, 1995, the accompanying consolidated financial statements
include the accounts of the Partnership and its consolidated ventures
- - Vero Beach Associates and Downers Grove Building Partnership. The
effect of all transactions between the Partnership and the Ventures
has been eliminated. The equity method of accounting has been applied
in the accompanying consolidated financial statements with respect to
the Partnership's interest in Sycamore Mall Associates.
<PAGE>
The $139,594 (14%) decrease in rental income for the nine month
period ended September 30, 1996 as compared to the nine month period
ended September 30, 1995, and the $69,160 (19%) decrease in rental
income for the three month period ended September 30, 1996 as compared
to the three month period ended September 30, 1995, are primarily
attributed to a reduction in percentage rent at the Vero Beach
property, resulting from Walgreen's vacated space. These decreased
levels of percentage rent are expected to continue until a replacement
tenant is found for the Walgreen's space.
The $25,013 (26%) decrease in interest income for the nine
months ended September 30, 1996 as compared to the nine month period
ended September 30, 1995, and the $5,213 (17%) decrease in interest
income for the three months ended September 30, 1996 as compared to
the three month period ended September 30, 1995, are primarily
attributable to a decrease in the interest earned on the annuities
purchased in connection with the lease buy out in 1994 at the Downers
Grove property. As payments have been made from the annuities, there
is a reducing amount remaining upon which interest is earned. The
total principal payments to be received from the annuities in 1996
aggregate $664,256 which was reflected in rents and other receivables
as of December 31, 1995. An additional $1,043,374 was included in
deferred rents receivable on the December 31, 1995 consolidated
balance sheet, and is expected to be received in the years 1997
through 2001.
The $25,940 (28%) decrease in property operating expense for the
three months ended September 30, 1996 as compared to the three months
ended September 30, 1995 and the $59,520 (22%) decrease in property
operating expense for the nine months ended September 30, 1996 as
compared to the nine month period ended September 30, 1995, are
primarily attributable to a decrease in building maintenance and
repairs at the Downers Grove property, resulting from expenses
incurred in 1995 for roof and parking lot repairs, which should be non-
recurring.
The $5,490 increase in interest expense for the nine months ended
September 30, 1996 as compared to the nine months ended September 30,
1995, is primarily attributable to the restructured mortgage
indebtedness at the Downers Grove property. The current mortgage
terms, which were finalized in August 1995, provide for an interest
rate of 9.125%, as compared to the 8.5% interest rate of the previous
loan.
The $19,887 (65%) decrease in general and administrative expense
for the three months ended September 30, 1996 as compared to the three
months ended September 30, 1995, and the $24,214 (19%) decrease in
general and administrative expense for the nine months ended September
30, 1996 as compared to the nine month period ended September 30,
1995, are primarily attributable to professional fees incurred at the
Downers Grove property in 1995, which were related to the loan and new
tenant issues, and are not of an ongoing nature. Therefore, absent
unforeseen circumstances, general and administrative expenses in 1996
are expected to be less than in 1995.
The Partnership's allocation of consolidated ventures' operations
to the venture partners has resulted in an income allocation of
$24,454 for the nine months ended September 30, 1996 as compared to an
income allocation of $42,318 for the nine months ended September 30,
1995. The reduced income allocation in 1996 results from a reduction
in operating losses generated at the Downers Grove property during the
nine months ended September 30, 1996 as compared to 1995. During nine
months ended September 30, 1995, the Downers Grove property
experienced larger losses as a result of the increased property
operating expenses.
<PAGE>
The Partnership's allocation of income from unconsolidated
venture decreased $27,737 to $76,813 for the nine months ended
September 30, 1996, as compared to $104,550 for the nine months ended
September 30, 1995. The Partnership's allocation of income from its
unconsolidated venture decreased $14,700 to $25,899 for the three
months ended September 30, 1996 as compared to $40,599 for the three
months ended September 30, 1995. Occupancy at Sycamore Mall
decreased from 95% to 86% during the three month period ended June 30,
1996, as a reset of Randall's, a drug store operation, vacating its
leased space, which totaled approximately 19,800 square feet. Its
lease term expires January 10, 1997 and rent is being paid currently.
The total monthly rent, including tax and operating expense
reimbursements, which is being paid under the terms of the Randall's
lease is approximately $3,300. The partnership anticipates no adverse
financial impact during the remainder of 1996 and management is
currently searching for a replacement tenant for the vacant space.
OCCUPANCY
The following is a list of approximate occupancy levels by
quarter for the Partnership's investment properties:
<TABLE>
<CAPTION>
at at at at at at at
03/31/95 06/30/95 09/30/95 12/31/95 03/31/96 06/30/96 09/30/96
<S> <C> <C> <C> <C> <C> <C> <C>
Indian River Plaza
Vero Beach, FL 99% 99% 99% 97% 98% 89% 89%
Reichhold Building
Downers Grove, IL 100% 100% 100% 100% 100% 100% 100%
Sycamore Mall
Iowa City, Iowa 99% 98% 97% 97% 95% 86% 87%
</TABLE>
<PAGE>
Part II - OTHER INFORMATION
Items 1, 2, 3, 4, and 5 of Part II are omitted because of the absence
of conditions under which they are required.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
None
b) Reports on Form 8-K
No reports on Form 8-K were filed for the period covered by this
report.
<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 DEARBORN INCOME PROPERTIES L.P.
(Registrant)
By: FDIP, Inc.
(Managing General Partner)
November 14, 1996 By: /s/ Robert S. Ross
President
(Principal Executive Officer)
November 14, 1996 By: /s/ Bruce H. Block
Vice President
(Principal Financial Officer)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jul-01-1996
<PERIOD-END> Sep 30-1996
<PERIOD-TYPE> 3 mos
<CASH> 544,976
<SECURITIES> 0
<RECEIVABLES> 335,494
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 882,685
<PP&E> 17,902,325
<DEPRECIATION> 5,179,409
<TOTAL-ASSETS> 16,383,499
<CURRENT-LIABILITIES> 793,322
<BONDS> 8,814,545
0
0
<COMMON> 0
<OTHER-SE> 5,617,919
<TOTAL-LIABILITY-AND-EQUITY> 16,383,499
<SALES> 313,673
<TOTAL-REVENUES> 365,283
<CGS> 0
<TOTAL-COSTS> 176,086
<OTHER-EXPENSES> 18,912
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 204,389
<INCOME-PRETAX> (34,104)
<INCOME-TAX> 0
<INCOME-CONTINUING> (34,104)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (34,104)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
