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 March 31, 1998
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 March 31, 1998: 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
March 31, 1998 and December 31, 1997
(Unaudited)
Assets
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) 315,165 318,627
Rents and other receivables 390,841 422,867
Due from affiliates 2,216 6,329
Prepaid expense 4,247 14,202
Total current assets 712,469 762,025
Investment property, at cost (note 1):
Land 920,953 920,953
Building 8,582,416 8,582,416
9,503,369 9,503,369
Less accumulated depreciation (3,552,306) (3,482,119)
Total properties held for investment 5,951,063 6,021,250
Property held for sale or disposition 5,780,676 5,780,676
Total investment properties 11,731,739 11,801,926
Investment in unconsolidated venture, at equity 888,343 890,432
Deferred rents receivable 1,407,265 1,476,641
Deferred loan costs 234,461 238,116
Total assets 14,974,277 15,169,140
<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
March 31, 1998 and December 31, 1997
(Unaudited)
Liabilities and Partners' Capital Accounts
<CAPTION>
March 31, December31,
1998 1997
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses 170,245 215,149
Due to affiliates (note 3) 286,095 281,182
Accrued interest 51,427 54,375
Unearned revenue - -
Current portion of long-term debt 401,050 399,478
Total current liabilities 908,817 950,184
Long-term debt 8,158,552 8,249,873
Venture partners' equity in consolidated venture 1,256,697 1,245,723
Deposits 15,167 13,431
Total long-term liabilities 9,430,416 9,509,027
Total liabilities 10,339,233 10,459,211
Partners' capital accounts (deficits) (note 1):
General partners:
Cumulative net income (loss) (9,106) (8,740)
(9,106) (8,740)
Limited partners:
Capital contributions 8,800,461 8,800,461
Cumulative net income (loss) (894,076) (857,839)
Cumulative cash distributions (3,262,235) (3,223,957)
4,644,150 4,718,669
Total partners' capital accounts 4,635,044 4,709,929
Commitments and contingencies (note 2)
Total Liabilities and Partners' Capital 14,974,277 15,169,140
<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 March 31, 1998 and 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
Revenues:
Rental income 293,518 255,204
Tenant charges 31,075 27,648
Interest income 15,411 20,301
Total revenues 340,004 303,153
Expenses:
Property operating expenses 56,388 82,553
Interest 186,657 200,594
Depreciation 70,187 123,842
Amortization 3,655 4,599
General and administrative expenses 55,488 49,358
Total expenses 372,376 460,946
Operating loss (32,372) (157,793)
Partnership's share of operations
of unconsolidated ventures 6,743 17,776
Venture partner's share of consolidated
venture's operations (note 1) (10,974) 9,006
Net income (loss) (36,603) (131,011)
Net income (loss) per limited partnership unit (1.77) (6.34)
Cash distribution per limited partnership unit 1.87 1.87
<FN>
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Consolidated Statements of Cash Flows
Three months ended March 31, 1998 and 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) (36,603) (131,011)
Items not requiring (providing)
cash or cash equivalents:
Depreciation 70,187 123,842
Amortization 3,655 4,599
Partnership's share of operations of
unconsolidated venture - net of distributions 2,088 7,459
Venture partners' share of
consolidated venture's operations 10,974 (9,006)
Changes in:
Rents and other receivables 32,026 7,191
Prepaid expenses 9,955 5,060
Deferred rents receivable 69,376 48,845
Accounts payable and accrued expenses (47,854) (36,473)
Due to affiliates 9,026 3,983
Unearned revenue - (60,538)
Tenant deposits 1,736 (164)
Net cash provided by (used in) operating activities 124,565 (36,213)
Additions to building: - (9,235)
Cash flows from financing activities:
Venture partners' distributions
from consolidated venture - (7,584)
Distributions to limited partners (38,278) (38,232)
Principal payments on long-term debt (89,749) (85,520)
Net cash used in financing activities (128,027) (131,336)
Net increase (decrease) in cash and cash equivalents (3,462) (176,784)
<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
March 31, 1998 and 1997
(Unaudited)
Readers of this quarterly report should refer to the
Partnership's audited financial statements for the fiscal year ended
December 31, 1997, which are included in the Partnership's 1997 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 month periods ended March 31, 1998 and March 31,
1997 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 adopted Statement of Financial Accounting
Standards No. 121 ("SFAS 121") "Accounting for the Impairment of Long-
Lived Assets and for Long Lived Assets to be Disposed Of", on January
1, 1996. SFAS 121 requires that the Partnership record an impairment
loss on its property held for investment whenever the property's
carrying value cannot be fully recovered through estimated
undiscounted cash flows from its operations and sale. The amount of
the impairment loss to be recognized would be the difference between
the property's carrying value and the property's estimated fair value.
In addition, SFAS 121 provides that a property not be depreciated
while being held for sale. As of October 1, 1997, the Downers Grove
property was considered to be held for sale. In accordance with SFAS
121, no depreciation expense relative to the property was recorded by
the Partnership from October 1, 1997 through March 31, 1998.
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Notes to Consolidated Financial Statements - Continued
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 three months ended March 31, 1998 and 1997
is summarized as follows:
<TABLE>
<CAPTION>
1998 1997
GAAP Tax GAAP Tax
Basis Basis Basis Basis
<S> <C> <C> <C> <C>
Net income (loss) (36,603) (45,215) (131,011) (98,152)
Net income (loss) per
limited partnership unit (1.77) (2.19) (6.34) (4.75)
</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).
Partnership distributions from unconsolidated ventures 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, ($68,278 and $69,163 at March 31, 1998 and December 31, 1997,
respectively) as cash equivalents.
Deferred offering costs were charged to the partners' capital
accounts upon consummation of the offering. Deferred organization
costs are amortized over a 60-month period using the straight-line
method. 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.
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Notes to Consolidated Financial Statements - Continued
(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 March 31, 1998. The
Partnership has acquired, through these ventures, interests in two
shopping centers and an office building partnership.
(3) Transactions with Affiliates
Fees, commissions and other expenses required to be paid by the
Partnership to affiliates of the General Partners for the three months
ended March 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Unpaid at
March 31,
1998 1997 1997
<S> <C> <C> <C>
Non-accountable expense reimbursement 6,397 6,397 286,095
Reimbursement (at cost)
for administrative services 4,250 4,250 1,484
10,647 10,647 287,579
</TABLE>
(4) Unconsolidated Ventures - Summary Information
Summary income statement information for Sycamore Mall Associates
for the three months ended March 31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Total revenue 430,972 468,194
Operating income (loss) 26,756 70,538
Partnership's share of income 6,743 17,776
</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 March 31, 1998 and 1997.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
At March 31, 1998, the Partnership had cash and cash equivalents
of $315,165 which will be utilized for working capital requirements
and for future distributions to Partners. This is $3,462 less than
the $318,627 balance at December 31, 1997. Net cash provided by
operations was $124,565 during the three months ended March 31, 1998
as compared to a utilization of $36, 213 of cash from operating
activities during the three months ended March 31, 1997. Improved
occupancy at the Vero Beach property resulted in an increase in
operating profits.
The Partnership has maintained its current level of distribution to
Limited Partners. During the quarter ended March 31, 1998, the
Partnership distributed $38,278 ($1.87 per unit) to Limited Partners
as compared to $38,232 ( $1.87 per unit) during the quarter ended
March 31, 1997.
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 month periods ended March 31, 1998 and March 31,
1997 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.
As of October 1, 1997, the Downers Grove property was considered
to be held for sale. In accordance with SFAS 121, no depreciation
expense relative to the property was recorded by the Partnership from
October 1, 1997 through March 31, 1998.
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 $38,314 (15%) increase in rental income for the three month
period ended March 31, 1998 as compared to the three month period
ended March 31, 1997 is primarily attributed to increased occupancy at
the Vero Beach property. Beall's Outlet occupied 12,000 square feet
in March 1997, raising occupancy to 93%. Additional leasing brought
occupsncy up to 97% during 1997. Occupancy held at 97% during the
three month period ended March 31, 1998 as compared to average
occupancy of 90% during the three month period ended March 31, 1997.
The $3,427 (12%) increase in tenant charges income for the three
months ended March 31, 1998 as compared to the three month period
ended March 31, 1997 is attributable to the increased occupancy at the
Vero Beach property..
The $4,890 (24%) decrease in interest income for the three
months ended March 31, 1998 as compared to the three month period
ended March 31, 1997 is attributable to a decrease in short term
investments. It is also attributable to 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 $26,165 (32%) decrease in property operating expense for the
three months ended March 31, 1998 as compared to the three months
ended March 31, 1997 is primarily attributable to a decrease in
building maintenance and repairs, lawn maintenance, janitorial and
administrative expenses at Indian River Plaza. During the three
months ended March 31, 1997, management had undertaken several
maintenance projects in conjunction with the then recently vacated
tenant spaces. These spaces have now been released and the expenses
were not of an ongoing nature.
The $13,937 (7%) decrease in interest expense for the three
months ended March 31, 1998 as compared to the three months ended
March 31, 1997 is attributable to reductions in the outstanding
balance of the mortgage indebtedness and to a reduced interest rate on
the mortgage at the Vero Beach property. The refinancing occured in
November 1997 and the interest rate was reduced to 8.3% from 9.0%..
Depreciation expense decreased $53,655 (43%) from $123,842 during
the three months ended March 31, 1997 to$70,187 during the three
months ended March 31, 1998. As of October 1, 1997 the Partnership
determined to begin marketed for sale its Downers Grove property. In
accordance with SFAS 121 no depreciation expense relative to the
property was recorded by the Partnership since October 1, 1997. There
are no active negotiations currently taking place for the sale of this
property.
The $6,130 (12%) increase in general and administrative expense
for the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997 is attributable to an increase in
professional fees for the annual audit and tax return preparation.
<PAGE>
The Partnership's allocation of income from unconsolidated
ventures decreased $11,033 from $17,776 during the three months ended
March 31, 1997 to $6,743 during the three months ended March 31, 1998,
as a result of increased vacancy at Sycamore Mall. Occupancy at March
31, 1997 was 88% as compared to 85% as of March 31, 1998. Management
is currently negotiating with a potential tenant, however there can be
no assurance that a new lease will be entered into. If this space is
not released, the ability of Sycamore Mall to meet its financial
obligations could be effected, as a result of decreased revenues.
Sears, Roebuck and Co. is a tenant under a lease which had an original
termination date of March 31, 1992. Prior to that termination, a ten-
year extension was agreed to which provided Sears an option to
terminate the lease at any time after March 31, 1997 by giving
landlord a one year written notice. Sears gave such notice on
September 17, 1997 and will terminate its lease on September 1, 1998.
The Sears lease comprises 82,605 square feet which is 34% of the
leaseable area of the shopping center. However, the annual rental
income received from Sears is approximately $109,000 or approximately
6% of total revenues. Management believes that any new leases entered
into will be at rents higher then what is being paid by Sears..
The Partnership's allocation of income to venture partners in
consolidated operations was $10,974 during the three months ended
March 31, 1998 as compared to an allocation of loss totaling $9,006
during the three months ended March 31, 1997. This change results
from the improved operations at the Vero Beach property.
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
03/31/97 06/30/97 09/30/97 12/31/97 03/31/98
<S> <C> <C> <C> <C> <C>
Indian River Plaza
Vero Beach, FL 93% 93% 97% 97% 97%
Downers Grove Building
Downers Grove, IL 100% 100% 100% 100% 100%
Sycamore Mall
Iowa City, Iowa 88% 89% 89% 90% 85%
</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)
May 21, 1998 By: /s/ Robert S. Ross
President
(Principal Executive Officer)
May 21, 1998 By: /s/ Bruce H. Block
Vice President
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Mar-31-1998
<PERIOD-TYPE> 3-mos
<CASH> 315,165
<SECURITIES> 0
<RECEIVABLES> 390,841
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 712,469
<PP&E> 9,503,369
<DEPRECIATION> 3,552,306
<TOTAL-ASSETS> 14,974,277
<CURRENT-LIABILITIES> 908,817
<BONDS> 8,158,552
0
0
<COMMON> 0
<OTHER-SE> 4,635,044
<TOTAL-LIABILITY-AND-EQUITY> 14,974,277
<SALES> 324,593
<TOTAL-REVENUES> 340,004
<CGS> 0
<TOTAL-COSTS> 56,388
<OTHER-EXPENSES> 125,675
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 186,657
<INCOME-PRETAX> (36,603)
<INCOME-TAX> 0
<INCOME-CONTINUING> (36,603)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (36,603)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
