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, 2000
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, 2000: 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, 2000 and December 31, 1999
(Unaudited)
Assets
<CAPTION>
March 31, December 31,
2000 1999
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) 321,159 230,685
Rents and other receivables 415,027 420,962
Due from affiliates 15,192 17,193
Prepaid expense 3,382 8,454
Total current assets 754,760 677,294
Investment property, at cost (note 1):
Land 2,233,114 2,233,114
Building 15,407,591 15,407,591
17,640,705 17,640,705
Less accumulated depreciation (6,876,004) (6,760,373)
Total properties held for investment 10,764,701 10,880,332
Investment in unconsolidated venture - (9,828)
Deferred rents receivable 877,703 933,974
Deferred loan costs 202,876 206,531
Total assets 12,600,040 12,688,303
<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, 2000 and December 31, 1999
(Unaudited)
Liabilities and Partners' Capital Accounts
<CAPTION>
March 31, December 31,
2000 1999
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses 154,932 125,108
Due to affiliates (note 3) 377,236 375,986
Accrued interest 39,000 39,539
Current portion of long-term debt 397,218 387,476
Total current liabilities 968,386 928,109
Long-term debt 7,442,804 7,517,873
Venture partners' equity in consolidated venture 1,106,220 1,117,020
Deposits 12,724 18,769
Total long-term liabilities 8,561,748 8,653,662
Total liabilities 9,530,134 9,581,771
Partners' capital accounts (deficits) (note 1):
General partners:
Cumulative net loss (23,791) (23,425)
(23,791) (23,425)
Limited partners:
Capital contributions 8,800,461 8,800,461
Cumulative net loss (2,347,860) (2,311,600)
Cumulative cash distributions (3,358,904) (3,358,904)
3,093,697 3,129,957
Total partners' capital accounts 3,069,906 3,106,532
Commitments and contingencies (note 2)
Total Liabilities and Partners' Capital 12,600,040 12,688,303
<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, 2000 and 1999
(Unaudited)
<CAPTION>
2000 1999
<S> <C> <C>
Revenues:
Rental income 292,322 291,473
Tenant charges 29,685 20,592
Interest income 9,253 12,224
Total revenues 331,260 324,289
Expenses:
Property operating expenses 84,134 61,425
Interest 173,497 180,547
Depreciation 115,631 126,841
Amortization 3,655 3,655
General and administrative expenses 7,264 13,029
Total expenses 384,181 385,497
Operating loss (52,921) (61,208)
Partnership's share of operations
of unconsolidated ventures 9,828 (18,070)
Venture partner's share of consolidated
venture's operations (note 1) 6,467 2,520
Net income (loss) (36,626) (76,758)
Net income (loss) per
limited partnership unit (note 1) (1.77) (3.71)
Cash distribution per limited partnership unit 0.00 0.00
<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, 2000 and 1999
(Unaudited)
<CAPTION>
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) (36,626) (76,758)
Items not requiring (providing) cash
or cash equivalents:
Depreciation 115,631 126,841
Amortization 3,655 3,655
Partnership's share of operations of
unconsolidated venture (9,828) 16,098
Venture partners' share of
consolidated venture's operations (6,467) (2,520)
Changes in:
Rents and other receivables 5,935 (58,721)
Prepaid expenses 5,072 5,260
Deferred rents receivable 56,271 64,508
Accounts payable and accrued expenses 29,285 15,483
Due to affiliates 3,251 (1,386)
Tenant deposits (6,045) -
Net cash provided by operating activities 160,134 92,460
Cash flows from financing activities:
Venture partners' distributions
from consolidated venture (4,333) (11,560)
Distributions to limited partners - -
Principal payments on long-term debt (65,327) (24,280)
Net cash used in financing activities (69,660) (35,840)
Net increase in cash and cash equivalents 90,474 56,620
<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, 2000 and 1999
(Unaudited)
Readers of this quarterly report should refer to the Partnership's audited
financial statements for the fiscal year ended December 31, 1999, which are
included in the Partnership's 1999 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, 2000 and March 31, 1999 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. At December 31, 1997, an impairment loss of $400,000 was recognized
as it relates to the Vero Beach property. In response to the uncertainty
relative to Sycamore Mall Associates ability to recover the net carrying value
of Sycamore Mall through future operations and sale, Sycamore Mall Associates,
as a matter of prudent accounting practices and for financial reporting
purposes, recorded a provision for value impairment in 1998 in the amount of
$1,100,000, of which the Partnership's share was $278,000. During 1999, an
additional $1,890,000 provision for value impairment was recorded at the
Sycamore Mall property, of which the Partnerships share was $477,655. As a
result of the inability to find new tenants, the Sycamore Mall property was
unable to meet its financial obligations and beginning in October of 1999,
payments to the lender were halted. This resulted in a default of the loan
terms and on March 13, 2000, title to the land buildings and improvements as
well as the other assets and liabilities of the property was transferred to the
lender in consideration of a discharge of the mortgage loan.
<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, 2000 and 1999
is summarized as follows:
<TABLE>
<CAPTION>
2000 2000 1999 1999
GAAP Tax GAAP Tax
Basis Basis Basis Basis
<S> <C> <C> <C> <C>
Net loss (36,626) (744,551) (76,758) (51,750)
Net loss per limited partnership unit (1.77) (36.01) (3.71) (2.50)
</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, (none
held as of March 31, 2000 or December 31, 1999) 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, 2000. The Partnership has acquired, through
these ventures, interests in two shopping centers and an office building
partnership.
(3) Disposition of Sycamore Mall
In March 2000, title to the land buildings and improvements as well as the
other assets and liabilities of the Sycamore Mall property was transferred to
the lender in consideration of a discharge of the mortgage loan. Total
consideration from the lender was $4,741,517. The outstanding mortgage balance
was $4,258,224 and there was $453,293 of accrued interest, prepayment penalties
and other costs associated with the transfer. All operating liabilities and
assets were also assumed as a part of this transaction. This disposition
resulted in a net gain of $9,828 to the Partnership. No net cash flow was
realized from this disposition.
(4) 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, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
Unpaid at
March 31,
2000 1999 2000
<S> <C> <C> <C>
Non-accountable expense reimbursement - - 305,257
Reimbursement (at cost) for administrative services 2,636 - 7,979
2,636 - 313,236
</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,
2000 and 1999.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
At March 31, 2000, the Partnership had cash and cash equivalents of
$321,159 which will be utilized for working capital requirements. This is
$90,474 more than the $230,685 balance at December 31, 1999. Net cash provided
by operations was $160,134 during the three months ended March 31, 2000 as
compared to a utilization of $92,460 of cash from operating activities during
the three months ended March 31, 1999. The Partnership has not made a
distribution to the Limited Partners since 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.
Results of Operations
For the three month periods ended March 31, 2000 and March 31, 1999 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.
In March 2000, title to the land buildings and improvements as well as the
other assets and liabilities of the Sycamore Mall property was transferred to
the lender in consideration of a discharge of the mortgage loan. Total
consideration from the lender was $4,741,517. The outstanding mortgage balance
was $4,258,224 and there was $453,293 of accrued interest, prepayment penalties
and other costs associated with the transfer. All operating liabilities and
assets were also assumed as a part of this transaction. This disposition
resulted in a net gain of $9,828 to the Partnership. No net cash flow was
realized from this disposition.
<PAGE>
Rental income for the three month period ended March 31, 2000 as compared
to the three month period ended March 31, 1999 is primarily unchanged.
Occupancy at the Vero Beach property and the Downers Grove property have
remained relatively stable.
The $9,093 (44%) increase in tenant charges income for the three months
ended March 31, 2000 as compared to the three month period ended March 31, 1999
is attributable to a reserve which was established for tenant charges in the
prior year. K-Mart is disputing the calculation of the amount of expenses
which are recoverable at the Vero Beach property.
The $2,971 (24%) decrease in interest income for the three months ended
March 31, 2000 as compared to the three month period ended March 31, 1999 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 $22,709 (37%) increase in property operating expense for the three
months ended March 31, 2000 as compared to the three months ended March 31,
1999 is primarily attributable to legal fees incurred at Indian River Plaza.
These legal fees relate to the litigation against K-Mart for the disputed
tenant charges.
The $7,050 (4%) decrease in interest expense for the three months ended
March 31, 2000 as compared to the three months ended March 31, 1999 is
attributable to reductions in the outstanding balance of the mortgage
indebtedness at the Vero Beach and Downers Grove properties.
Depreciation expense decreased $11,210 (9%) from $126,841 during the three
months ended March 31, 1999 to $115,631 during the three months ended March 31,
2000. This decrease results from certain assets becoming fully depreciated
during 1999.
The $5,765 (44%) decrease in general and administrative expense for the
three months ended March 31, 2000 as compared to the three months ended March
31, 1999 is attributable to a delay in the payment of professional fees for
the annual audit and tax return preparation. Further, the Partnership has
continued to reduce overhead and administrative expenses.
<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
03/31/99 06/30/99 09/30/99 12/31/99 03/31/00
<S> <C> <C> <C> <C> <C>
Indian River Plaza
Vero Beach, FL 98% 99% 100% 98% 98%
Downers Grove Building
Downers Grove, IL 100% 100% 100% 100% 100%
Sycamore Mall
Iowa City, Iowa 47% 44% 44% 44% n/a%
</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
Form 8-K reporting the disposition of the Sycamore Mall property was
filed on March 23, 2000.
<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, 2000 By: /s/ Robert S. Ross
President
(Principal Executive Officer)
May 21, 2000 By: /s/ Bruce H. Block
Vice President
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-START> Jan-01-2000
<PERIOD-END> Mar-31-2000
<PERIOD-TYPE> 3-mos
<CASH> 321,159
<SECURITIES> 0
<RECEIVABLES> 415,027
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 754,760
<PP&E> 17,640,705
<DEPRECIATION> 6,876,004
<TOTAL-ASSETS> 13,859,438
<CURRENT-LIABILITIES> 968,386
<BONDS> 7,442,804
0
0
<COMMON> 0
<OTHER-SE> 3,093,697
<TOTAL-LIABILITY-AND-EQUITY> 12,600,040
<SALES> 322,007
<TOTAL-REVENUES> 331,260
<CGS> 0
<TOTAL-COSTS> 84,134
<OTHER-EXPENSES> 126,550
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 173,497
<INCOME-PRETAX> (36,626)
<INCOME-TAX> 0
<INCOME-CONTINUING> (36,626)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (36,626)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
