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, 1999
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, 1999: 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, 1999 and December 31, 1998
(Unaudited)
Assets
<CAPTION>
March 31, December 31,
1999 1998
<S> <C> <C>
Current assets:
Cash and cash equivalents 355,120 298,500
Rents and other receivables 430,351 371,630
Due from affiliates 6,656 6,934
Prepaid expense 3,507 8,767
Total current assets 795,634 685,831
Investment property, at cost (note 1):
Land 2,233,114 2,233,114
Building 15,375,453 15,375,453
17,608,567 17,608,567
Less accumulated depreciation (6,423,168) (6,296,327)
Total properties held for investment 11,185,399 11,312,240
Investment in unconsolidated venture 511,330 529,400
Deferred rents receivable 1,147,328 1,211,836
Deferred loan costs 219,747 221,152
Total assets 13,859,438 13,960,459
<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, 1999 and December 31, 1998
(Unaudited)
Liabilities and Partners' Capital Accounts
<CAPTION>
March 31, December 31,
1999 1998
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses 243,977 228,452
Due to affiliates (note 3) 305,257 306,643
Accrued interest 49,174 49,216
Current portion of long-term debt 354,050 353,857
Total current liabilities 952,458 938,168
Long-term debt 7,904,079 7,928,552
Venture partners' equity
in consolidated venture (note 2) 1,162,596 1,176,676
Deposits 17,767 17,767
Total long-term liabilities 9,084,442 9,122,995
Total liabilities 10,036,900 10,061,163
Partners' capital accounts (deficits) (note 1):
General partners:
Cumulative net loss (16,265) (15,497)
Limited partners:
Capital contributions 8,800,461 8,800,461
Cumulative net loss (1,602,754) (1,526,764)
Cumulative cash distributions (3,358,904) (3,358,904)
3,838,803 3,914,793
Total partners' capital accounts 3,822,538 3,899,296
Commitments and contingencies (note 2)
Total Liabilities and Partners' Capital 13,859,438 13,960,459
<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, 1999 and 1998
(Unaudited)
<CAPTION>
1999 1998
<S> <C> <C>
Revenues:
Rental income 291,473 293,518
Tenant charges 20,592 31,075
Interest income 12,224 15,411
Total revenues 324,289 340,004
Expenses:
Property operating expenses 61,425 56,388
Interest 180,547 186,657
Depreciation 126,841 70,187
Amortization 3,655 3,655
General and administrative expenses 13,029 55,488
Total expenses 385,497 372,376
Operating loss (61,208) (32,372)
Partnership's share of operations
of unconsolidated ventures (18,070) 6,743
Venture partner's share of consolidated
venture's operations (note 1) 2,520 (10,974)
Net income (loss) (76,758) (36,603)
Net income (loss) per
limited partnership unit (note 1) (3.71) (1.77)
Cash distribution per
limited partnership unit 0.00 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, 1999 and 1998
(Unaudited)
<CAPTION>
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) (76,758) (36,603)
Items not requiring (providing)
cash or cash equivalents:
Depreciation 126,841 70,187
Amortization 3,655 3,655
Partnership's share of operations of
unconsolidated venture 16,098 2,088
Venture partners' share of
consolidated venture's operations (2,520) 10,974
Changes in:
Rents and other receivables (58,721) 32,026
Prepaid expenses 5,260 9,955
Deferred rents receivable 64,508 69,376
Accounts payable and accrued expenses 15,483 (47,854)
Due to affiliates (1,386) 9,026
Tenant deposits - 1,736
Net cash provided by operating activities 92,460 124,565
Cash flows from financing activities:
Venture partners' distributions
from consolidated venture (11,560) -
Distributions to limited partners - (38,278)
Principal payments on long-term debt (24,280) (89,749)
Net cash used in financing activities (35,840) (128,027)
Net increase (decrease) in
cash and cash equivalents 56,620 (3,462)
<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, 1999 and 1998
(Unaudited)
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1998,
which are included in the Partnership's 1998 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, 1999 and March 31, 1998
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.
However, the property had not been sold as of September 30, 1998 and no
active marketing is currently taking place. Therefore, the Partnership
resumed depreciation as of October 1, 1998 and recorded an adjustment for
the one year of depreciation which had been deferred.
<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, 1999 and 1998 is summarized as follows:
<TABLE>
<CAPTION>
1998 1998
GAAP Tax GAAP Tax
Basis Basis Basis Basis
<S> <C> <C> <C> <C>
Net loss (76,758) (51,750) (36,603) (45,215)
Net loss per
limited partnership unit (3.71) (2.50) (1.77) (2.19)
</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, ($18,805 and $18,810 at March 31, 1999 and December 31,
1998, 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, 1999. 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, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
Unpaid at
March 31,
1999 1998 1999
<S> <C> <C> <C>
Non-accountable expense reimbursement - 6,397 305,257
Reimbursement for administrative services - 4,250 -
- 10,647 305,257
</TABLE>
(4) Unconsolidated Ventures - Summary Information
Summary income statement information for Sycamore Mall Associates for
the three months ended March 31, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Total revenue 296,252 430,972
Operating income (loss) (62,893) 26,756
Partnership's share of income (loss) (18,070) 6,743
</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, 1999 and 1998.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
At March 31, 1999, the Partnership had cash and cash equivalents of
$355,120 which will be utilized for working capital requirements. This is
$56,620 more than the $298,500 balance at December 31, 1998. Net cash
provided by operations was $92,460 during the three months ended March 31,
1999 as compared to a utilization of $124,565 of cash from operating
activities during the three months ended March 31, 1998. The Partnership
has stopped making its regular distributions to the Limited Partners. During
the quarter ended March 31, 1998, the Partnership distributed $38,278
($1.87 per unit). In addition, there was a $65.460 reduction in the amount
of mortgage liability which was paid off during the quarter ended March 31,
1999 as compared to the quarter ended March 31, 1998.
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.
Year 2000
The General Partner has determined that it does not expect that the
consequences of the Partnership's year 2000 issues will have a material effect
on the Partnership's business, results of operations or financial condition.
Results of Operations
For the three month periods ended March 31, 1999 and March 31, 1998 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. However, the property had not been sold as of September 30,
1998 and no active marketing is currently taking place. Therefore, the
Partnership resumed depreciation as of October 1, 1998 and recorded an
adjustment for the one year of depreciation which had been deferred.
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 $2,045 (1%) decrease in rental income for the three month period
ended March 31, 1999 as compared to the three month period ended March 31,
1998 is primarily attributed to a decrease in the amount of percentage
rent at the Vero Beach property.
The $10,483 (34%) decrease in tenant charges income for the three months
ended March 31, 1999 as compared to the three month period ended March 31,
1998 is attributable to a reserve which is being established for tenant
charges which are recoverable from K-Mart, at the Vero Beach property.
K-Mart is disputing the calculation of the amount of expenses which are
recoverable.
The $3,187 (21%) decrease in interest income for the three months ended
March 31, 1999 as compared to the three month period ended March 31, 1998 is
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 $5,037 (9%) increase in property operating expense for the three
months ended March 31, 1999 as compared to the three months ended March 31,
1998 is primarily attributable to an increase in building maintenance and
repairs at Indian River Plaza.
The $6,110 (3%) decrease in interest expense for the three months ended
March 31, 1999 as compared to the three months ended March 31, 1998 is
attributable to reductions in the outstanding balance of the mortgage
indebtedness at the Vero Beach property
Depreciation expense increased $56,654 (81%) from $70,187 during the
three months ended March 31, 1998 to $126,841 during the three months ended
March 31, 1999. 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. However, the property had not been
sold as of September 30, 1998 and no active marketing is currently taking
place. Therfore depreciation has been resumed.
The $42,459 (77%) decrease in general and administrative expense for
the three months ended March 31, 1999 as compared to the three months ended
March 31, 1998 is attributable to a delay in the payment of professional
fees for the annual audit and tax return preparation. Further, the
Partnership has stopped accruing for a management fee which is contingently
payable to the General Partner. It does not appear that the conditions
which would result in the payment of these fees will not be obtained.
<PAGE>
The Partnership's allocation of income from unconsolidated ventures
decreased $24,813 from $6,743 during the three months ended March 31, 1998
to a loss of $18,070 during the three months ended March 31, 1999, as a
result of increased vacancy at Sycamore Mall. Occupancy at March 31, 1999
was 47% as compared to 84% as of March 31, 1998. Management is currently
searching for replacement tenants, however there can be no assurance that
new leases 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.
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 $2,520 during the three
months ended March 31, 1999. This change results from the increased
operating expenses at the Vero Beach property and a reserve for the K-Mart
tenant charge income.
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
03/31/98 06/30/98 09/30/98 12/31/98 03/31/99
<S> <C> <C> <C> <C> <C>
Indian River Plaza
Vero Beach, FL 97% 97% 97% 98% 98%
Downers Grove Building
Downers Grove, IL 100% 100% 100% 100% 100%
Sycamore Mall
Iowa City, Iowa 85% 79% 84% 47% 47%
</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 17, 1999 By: /s/ Robert S. Ross
President
(Principal Executive Officer)
May 17, 1999 By: /s/ Bruce H. Block
Vice President
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Mar-31-1999
<PERIOD-TYPE> 3-mos
<CASH> 355,120
<SECURITIES> 0
<RECEIVABLES> 430,351
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 795,634
<PP&E> 17,608,567
<DEPRECIATION> 6,423,168
<TOTAL-ASSETS> 13,859,438
<CURRENT-LIABILITIES> 952,458
<BONDS> 7,904,079
0
0
<COMMON> 0
<OTHER-SE> 3,822,538
<TOTAL-LIABILITY-AND-EQUITY> 13,859,438
<SALES> 312,065
<TOTAL-REVENUES> 324,289
<CGS> 0
<TOTAL-COSTS> 61,428
<OTHER-EXPENSES> 143,525
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 180,547
<INCOME-PRETAX> (76,758)
<INCOME-TAX> 0
<INCOME-CONTINUING> (76,758)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (76,758)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
