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 June 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 June 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
June 30, 1998 and December 31, 1997
(Unaudited)
Assets
<CAPTION>
June 30, December 31,
1998 1997
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) 268,347 318,627
Rents and other receivables 439,663 422,867
Due from affiliates 6,804 6,329
Prepaid expense 5,796 14,202
Total current assets 720,610 762,025
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 (3,622,790) (3,482,119)
Total properties held for investment 5,880,579 6,021,250
Property held for sale or disposition 5,780,676 5,780,676
Total investment properties 11,661,255 11,801,926
Investment in unconsolidated venture 820,435 890,432
Deferred rents receivable 1,376,641 1,476,641
Deferred loan costs 232,962 238,116
Total assets 14,811,903 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
June 30, 1998 and December 31, 1997
(Unaudited)
Liabilities and Partners' Capital Accounts
<CAPTION>
June 30, December 31,
1998 1997
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses 169,780 215,149
Due to affiliates (note 3) 293,976 281,182
Accrued interest 50,435 54,375
Unearned revenue - -
Current portion of long-term debt 421,250 399,478
Total current liabilities 935,441 950,184
Long-term debt 8,113,742 8,249,873
Venture partners' equity
in consolidated venture (note 2) 1,192,349 1,245,723
Deposits 16,767 13,431
Total long-term liabilities 9,322,858 9,509,027
Total liabilities 10,258,299 10,459,211
Partners' capital accounts (deficits) (note 1):
General partners:
Cumulative net income (9,538) (8,740)
(9,538) (8,740)
Limited partners:
Capital contributions 8,800,461 8,800,461
Cumulative net income (936,852) (857,839)
Cumulative cash distributions (3,300,467) (3,223,957)
4,563,142 4,718,669
Total partners' capital accounts 4,553,604 4,709,929
Commitments and contingencies (note 2)
Total Liabilities and Partners' Capital 14,811,903 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 June 30, 1998 and 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
Revenues:
Rental income 291,363 279,187
Tenant charges 30,925 35,502
Interest income 12,207 27,823
Total revenues 334,495 342,512
Expenses:
Property operating expenses 78,018 67,681
Interest 188,456 198,629
Depreciation 70,187 123,842
Amortization 3,655 4,599
General and administrative expenses 23,784 31,878
Total expenses 364,100 426,629
Operating loss (29,605) (84,117)
Partnership's share of operations
of unconsolidated ventures 4,012 6,950
Venture partner's share of consolidated
venture's operations (note 1) (17,616) 1,438
Net income (loss) (43,209) (75,729)
Net income (loss) per limited partnership unit (2.09) (3.66)
Cash distribution per limited partnership unit 1.86 1.86
<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
Six months ended June 30, 1998 and 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
Revenues:
Rental income 584,881 534,391
Tenant charges 62,000 63,150
Interest income 27,618 48,124
Total revenues 674,499 645,665
Expenses:
Property operating expenses 134,406 150,234
Interest 375,113 399,223
Depreciation 140,374 247,684
Amortization 7,310 9,198
General and administrative expenses 79,272 81,236
Total expenses 736,475 887,575
Operating loss (61,976) (241,910)
Partnership's share of operations
of unconsolidated ventures 10,755 24,726
Venture partner's share of consolidated
venture's operations (note 1) (28,590) 14,389
Net income (loss) (79,811) (202,795)
Net income (loss) per limited partnership unit (3.86) (9.81)
Cash distribution per limited partnership unit 3.74 3.74
<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
Six months ended June 30, 1998 and 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) (79,811) (202,795)
Items not requiring (providing)
cash or cash equivalents:
Depreciation 140,374 247,684
Amortization 7,310 9,198
Partnership's share of operations
of unconsolidated venture 69,997 37,101
Venture partners' share of
consolidated venture's operations (53,374) (33,889)
Changes in:
Rents and other receivables (16,796) (84,644)
Prepaid expenses 8,406 8,482
Deferred rents receivable 100,000 93,982
Accounts payable and accrued expens es (49,309) (9,877)
Unearned revenue (60,538)
Due to affiliates 12,794 9,115
Tenant deposits 3,336 (164)
Net cash provided by operating activities 142,927 13,655
Additions to building: - (9,235)
Cash flows from financing activities:
Distributions to limited partners (76,510) (76,464)
Principal payments on long-term debt (114,359) (195,913)
Net cash used in financing activities (190,869) (272,377)
Net decrease in cash and cash equivalents (47,942) (269,267)
<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
June 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 six month periods ended June 30, 1998 and June
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 June 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 six months ended June 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) (79,811) (96,500) (202,795) (137,500)
Net income (loss)
per limited partnership unit (3.86) (4.67) (9.81) (6.65)
</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
($107,965 and $69,163 at June 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 June 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 six months
ended June 30, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Unpaid at
June 30,
1998 1997 1998
<S> <C> <C> <C>
Non-accountable expense reimbursement 12,795 12,795 292,492
Reimbursement for administrative services 8,500 8,500 1,484
21,295 21,295 293,976
</TABLE>
(4) Unconsolidated Ventures - Summary Information
Summary income statement information for Sycamore Mall Associates
for the six months ended June 30, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Total revenue 828,575 922,410
Operating income (loss) 42,680 97,962
Partnership's share of income 10,755 24,726
</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 June 30, 1998 and 1997.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
At June 30, 1998, the Partnership had cash and cash equivalents
of $268,347 which will be utilized for working capital requirements
and for future distributions to Partners. This is $50,280 less than
the $318,627 balance at December 31, 1997. Net cash provided by
operations was $142,927 during the six months ended June 30, 1998, as
compared to $13,655 during the six months ended June 30, 1997.
Improved operations at the Vero Beach property is the reason for this
improvement. The Partnership distributed $76,510 to its partners
during the six months ended June 30, 1998 and principal reductions on
long term debt totaled $114,359.
The Partnership has maintained its current level of distribution
to Limited Partners. During the three and six months ended June 30,
1998, the Partnership distributed $38,232 ($1.86 per unit) and $76,510
($1.86 per unit), respectively, to Limited Partners as compared to
$38,232 ($3.74 per unit) and $76,464 ($3.74 per unit), respectively,
during the three and six month periods ended June 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 six month periods ended June 30, 1998 and June
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 $50,490 (9%) increase in rental income for the six month
period ended June 30, 1998 as compared to the six month period ended
June 30, 1997 is primarily attributed to increased occupancy at the
Vero Beach property. Occupancy during the first six months of 1998
has held at around 97% as compared to 93% in the prior year.
The $1,150 (2%) dencrease in tenant charges income for six month
period ended June 30, 1998 as compared to the six month period ended
June 30, 1997 is attributable to a decreae in operating expenses
partialy offset by an increase in occupancy at the Vero Beach
property.
<PAGE>
The $20,506 (43%) decrease in interest income for six month
period ended June 30, 1998 as compared to the six month period ended
June 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 $15,828 (11%) decrease in property operating for six month
period ended June 30, 1998 as compared to the six month period ended
June 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 $24,110 (6%) decrease in interest expense for six month
period ended June 30, 1998 as compared to the six month period ended
June 30, 1997 is primarily attributable to reductions in the
outstanding balance of the mortgage indebtedness.
The $1,964 (2%) decrease in general and administrative expense
for six month period ended June 30, 1998 as compared to the six month
period ended June 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 $13,971 from $24,726 during the six months ended
June 30, 1997 to $10,755 during the six months ended June 30, 1998, as
a result of increased vacancy at Sycamore Mall. Occupancy at June 30,
1998 was 79% as compared to 89% as of June 30, 1997.
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
<S> <C> <C> <C> <C> <C> <C>
Indian River Plaza
Vero Beach, FL 93% 93% 97% 97% 97% 97%
Downers Grove Building
Downers Grove, IL 100% 100% 100% 100% 100% 100%
Sycamore Mall
Iowa City, Iowa 88% 89% 89% 90% 85% 79%
</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)
August 14, 1998 By: /s/ Robert S. Ross
President
(Principal Executive Officer)
August 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> Jun-30-1998
<PERIOD-TYPE> 6-mos
<CASH> 268,347
<SECURITIES> 0
<RECEIVABLES> 439,663
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 720,610
<PP&E> 9,503,369
<DEPRECIATION> 3,622,790
<TOTAL-ASSETS> 14,811,903
<CURRENT-LIABILITIES> 935,441
<BONDS> 8,113,742
0
0
<COMMON> 0
<OTHER-SE> 4,553,604
<TOTAL-LIABILITY-AND-EQUITY> 14,811,903
<SALES> 646,881
<TOTAL-REVENUES> 674,499
<CGS> 0
<TOTAL-COSTS> 134,406
<OTHER-EXPENSES> 226,956
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 375,113
<INCOME-PRETAX> (79,811)
<INCOME-TAX> 0
<INCOME-CONTINUING> (79,811)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (79,811)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
