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, 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 September 30, 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
September 30, 1998 and December 31, 1997
(Unaudited)
Assets
<CAPTION>
September 30, December 31,
1998 1997
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) 290,977 318,627
Rents and other receivables 539,663 422,867
Due from affiliates 6,755 6,329
Prepaid expense 6,878 14,202
Total current assets 844,273 762,025
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 (3,692,680) (3,482,119)
Total properties held for investment 5,810,689 6,021,250
Property held for sale or disposition 5,780,676 5,780,676
Total investment properties 11,591,365 11,801,926
Investment in unconsolidated venture,
at equity (note 2) 797,547 890,432
Deferred rents receivable 1,307,288 1,476,641
Deferred loan costs 231,557 238,116
Total assets 14,772,030 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
September 30, 1998 and December 31, 1997
(Unaudited)
Liabilities and Partners' Capital Accounts
<CAPTION>
September 30, December 31,
1998 1997
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses 197,148 215,149
Due to affiliates (note 3) 364,346 281,182
Accrued interest 50,405 54,375
Current portion of long-term debt 425,250 399,478
Total current liabilities 1,037,149 950,184
Long-term debt 7,940,950 8,249,873
Venture partners' equity
in consolidated venture (note 2) 1,275,811 1,245,723
Deposits 16,767 13,431
Total long-term liabilities 9,233,528 9,509,027
Total liabilities 10,270,677 10,459,211
Partners' capital accounts (deficits):
General partners:
Cumulative net income (9,678) (8,740)
(9,678) (8,740)
Limited partners:
Capital contributions 8,800,461 8,800,461
Cumulative net income (950,731) (857,839)
Cumulative cash distributions (3,338,699) (3,223,957)
4,511,031 4,718,669
Total partners' capital accounts 4,501,353 4,709,929
Commitments and contingencies (note 2)
Total Liabilities and Partners' Capital 14,772,030 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 September 30, 1998 and 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
Revenues:
Rental income 292,852 264,722
Tenant charges 31,000 31,620
Interest income 13,455 20,166
Total revenues 337,307 316,508
Expenses:
Property operating expenses 55,265 71,726
Interest 184,587 197,938
Depreciation 70,187 123,840
Amortization 3,655 3,032
General and administrative expenses 11,369 16,742
Total expenses 325,063 413,278
Operating income (loss) 12,244 (96,770)
Partnership's share of operations
of unconsolidated ventures (2,195) 27,804
Venture partner's share of consolidated
venture's operations (note 1) (24,248) 7,207
Net income (loss) (14,199) (61,759)
Net income (loss) per
limited partnership unit (note 1) (0.69) (2.99)
Cash distribution per
limited partnership unit 1.86 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 Statement of Operations
Nine months ended September 30, 1998 and 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
Revenues:
Rental income 877,733 799,113
Tenant charges 93,000 94,770
Interest income 41,073 68,290
Total revenues 1,011,806 962,173
Expenses:
Property operating expenses 189,671 221,960
Interest 559,700 597,161
Depreciation 210,561 371,524
Amortization 10,965 12,230
General and administrative expenses 90,641 97,978
Total expenses 1,061,358 1,300,853
Operating loss (49,552) (338,680)
Partnership's share of operations
of unconsolidated ventures 8,560 52,530
Venture partner's share of consolidated
venture's operations (note 1) (52,838) 21,596
Net income (loss) (93,830) (264,554)
Net income (loss) per
limited partnership unit (note 1) (4.54) (12.80)
Cash distribution per
limited partnership unit 5.61 5.61
<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, 1998 and 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) (93,830) (264,554)
Items not requiring (providing)
cash or cash equivalents:
Depreciation 210,561 371,524
Amortization 10,965 12,230
Partnership's share of operations of
unconsolidated venture 92,885 9,297
Venture partners' share of
consolidated venture's operations 30,088 (50,834)
Changes in:
Rents and other receivables (116,796) (90,070)
Prepaid expenses 7,324 982
Deferred rents receivable 169,353 140,973
Accounts payable and accrued expenses (21,971) 12,530
Unearned revenue 0 (60,538)
Due to affiliates 82,738 20,011
Tenant deposits 3,336 (164)
Net cash provided by operating activities 374,653 101,387
Additions to building: 0 (9,235)
Cash flows from financing activities:
Distributions to limited partners (114,742) (114,742)
Payment of deferred loan costs 0 10,202
Principal payments on long-term debt (283,151) (261,324)
Net cash used in financing activities (397,893) (386,268)
Net(decrease) in cash and cash equivalents (23,240) (295,426)
<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, 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 and nine month periods ended September 30, 1998 and September
30, 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 September 30, 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 nine months ended
September 30, 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) (93,830) (126,500) (264,554) (196,500)
Net income (loss) per
limited partnership unit (4.54) (6.12) (12.80) (9.50)
</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 ($140,651 and $69,163 at September 30, 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 September 30, 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 nine months
ended September 30, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Unpaid at
9/30,
1998 1997 1998
<S> <C> <C> <C>
Non-accountable expense reimbursement 19,191 19,191 298,862
Reimbursement (at cost) for administrative services 13,500 13,500 1,484
$32,691 32,691 293,976
</TABLE>
(4) Unconsolidated Ventures - Summary Information
Summary income statement information for Sycamore Mall Associates for
the nine months ended September 30, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Total revenue 1,225,025 1,364,007
Operating income (loss) 33,968 208,121
Partnership's share of income 8,560 52,530
</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, 1998 and 1997.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
At September 30, 1998, the Partnership had cash and cash equivalents
of $290,977 which will be utilized for working capital requirements and
for future distributions to Partners. This is $27,650 less than the
$318,627 balance at December 31, 1997. Net cash provided by operations
was $374,653 during the nine months ended September 30, 1998, as compared
to $101,387 during the nine months ended September 30, 1997. Improved
operations at the Vero Beach property is the reason for this improvement.
The Partnership distributed $114,742 to its partners during the nine
months ended September 30, 1998 and principal reductions on long term
debt totaled $283,151.
The Partnership has maintained its current level of distribution to
Limited Partners. During the three and nine months ended September 30, 1998,
the Partnership distributed $38,232 ($1.86 per unit) and $114,742
($5.61 per unit), respectively, to Limited Partners as compared to $38,232
($1.86 per unit) and $114,742 ($5.61 per unit), respectively, during the
three and nine month periods ended September 30, 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 and nine month periods ended September 30, 1998 and
September 30, 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.
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 $78,620 (10%) increase in rental income for the nine months ended
September 30, 1998 as compared to the nine months ended September 30, 1997
is primarily attributed to increased occupancy at the Vero Beach property.
Occupancy during the first nine months of 1998 has held at around 97% as
compared to 93% in the prior year.
The $1,770 (2%) decrease in tenant charges income for the nine month period
ended September 30, 1998 as compared to the nine months ended September 30,
1997 is attributable to a decrease in operating expenses partially offset by
an increase in occupancy at the Vero Beach property.
<PAGE>
The $27,217 (40%) decrease in interest income for nine month period
ended September 30, 1998 as compared to the nine month period ended
September 30, 1997 is 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 $32,289 (15%) decrease in property operating for the nine month period
ended September 30, 1998 as compared to the nine month period ended
September 30, 1997 and the $16,461 (23%) decrease for three month period
ended September 30, 1998 as compared to the three month period ended
September 30, 1997 is primarily attributable to a decrease in building
maintenance and repairs at Indian River Plaza. In the prior year,
management had undertaken several maintenance projects in conjunction
with the then vacated tenant spaces.
The $37,461 (6%) decrease in interest expense for the nine month period
ended September 30, 1998 as compared to the nine month period ended
September 30, 1997 and the $13,351 (7%) decrease for three month period
ended September 30, 1998 as compared to the three month period ended
September 30, 1997 is primarily attributable to reductions in the outstanding
balance of the mortgage indebtedness.
The $7,337 (7%) decrease in general and administrative for the nine month
period ended September 30, 1998 as compared to the nine month period ended
September 30, 1997 and the $5,373 (32%) decrease for three month period ended
September 30, 1998 as compared to the three month period ended September 30,
1997 is primarily attributable to a decrease in administrative overhead
charged from the General Partner.
The Partnership's allocation of income from unconsolidated ventures
decreased $43,970 from $52,530 during the nine months ended September 30,
1997 to $8,560 during the nine months ended September 30, 1998, as a result
of increased vacancy at Sycamore Mall. Occupancy at September 30,
1998 was 89% as compared to 84% as of September 30, 1997.
<PAGE>
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
03/31/97 06/30/97 09/30/97 12/31/97 03/31/98 06/30/98 09/30/98
<S> <C> <C> <C> <C> <C> <C> <C>
Indian River Plaza
Vero Beach, FL 93% 93% 97% 97% 97% 97% 97%
Downers Grove Building
Downers Grove, IL 100% 100% 100% 100% 100% 100% 100%
Sycamore Mall
Iowa City, Iowa 88% 89% 89% 90% 85% 79% 84%
</TABLE>
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, 1998 By: /s/ Robert S. Ross
President
(Principal Executive Officer)
November 14, 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> Sep-30-1998
<PERIOD-TYPE> 9-mos
<CASH> 290,977
<SECURITIES> 0
<RECEIVABLES> 539,663
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 844,273
<PP&E> 9,503,369
<DEPRECIATION> 3,692,680
<TOTAL-ASSETS> 14,772,030
<CURRENT-LIABILITIES> 1,037,149
<BONDS> 7,940,950
0
0
<COMMON> 0
<OTHER-SE> 4,501,353
<TOTAL-LIABILITY-AND-EQUITY> 14,772,030
<SALES> 970,733
<TOTAL-REVENUES> 1,011,806
<CGS> 0
<TOTAL-COSTS> 189,671
<OTHER-EXPENSES> 312,167
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 559,700
<INCOME-PRETAX> (93,830)
<INCOME-TAX> 0
<INCOME-CONTINUING> (93,830)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (93,830)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
