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, 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 June 30, 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
June 30, 2000 and December 31, 1999
(Unaudited)
Assets
<CAPTION>
June 30, December 31,
2000 1999
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) 433,064 230,685
Rents and other receivables 442,433 420,962
Due from affiliates 18,793 17,193
Prepaid expense - 8,454
Total current assets 894,290 677,294
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 (6,991,636) (6,760,373)
Total properties held for investment 10,649,069 10,880,332
Investment in unconsolidated venture - (9,828)
Deferred rents receivable 641,721 933,974
Deferred loan costs 199,158 206,531
Total assets 12,384,238 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
June 30, 2000 and December 31, 1999
(Unaudited)
Liabilities and Partners' Capital Accounts
<CAPTION>
June 30, December 31,
2000 1999
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses 103,443 125,108
Due to affiliates (note 3) 388,986 375,986
Accrued interest 38,500 39,539
Current portion of long-term debt 406,960 387,476
Total current liabilities 937,889 928,109
Long-term debt 7,304,651 7,517,873
Venture partners' equity
in consolidated venture (note 2) 1,099,769 1,117,020
Deposits 21,761 18,769
Total long-term liabilities 8,426,181 8,653,662
Total liabilities 9,364,070 9,581,771
Partners' capital accounts (deficits):
General partners:
Cumulative net loss (24,289) (23,425)
(24,289) (23,425)
Limited partners:
Capital contributions 8,800,461 8,800,461
Cumulative net loss (2,397,100) (2,311,600)
Cumulative cash distributions (3,358,904) (3,358,904)
3,044,457 3,129,957
Total partners' capital accounts 3,020,168 3,106,532
Commitments and contingencies (note 2)
Total Liabilities and Partners' Capital 12,384,238 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 June 30, 2000 and 1999
(Unaudited)
<CAPTION>
2000 1999
<S> <C> <C>
Revenues:
Rental income 294,164 290,254
Tenant charges 29,680 20,742
Interest income 9,289 11,977
Total revenues 333,133 322,973
Expenses:
Property operating expenses 72,729 78,675
Interest 170,108 180,885
Depreciation 115,632 126,842
Amortization 3,718 3,656
General and administrative expenses 27,135 44,838
Total expenses 389,322 434,896
Operating loss (56,189) (111,923)
Partnership's share of operations
of unconsolidated ventures - (14,911)
Venture partner's share of consolidated
venture's operations (note 1) 6,451 1,619
Net income (loss) (49,738) (125,215)
Net income (loss) per limited partnership unit (2.41) (6.06)
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 Statement of Operations
Six months ended June 30, 2000 and 1999
(Unaudited)
<CAPTION>
2000 1999
<S> <C> <C>
Revenues:
Rental income 586,486 581,727
Tenant charges 59,365 41,334
Interest income 18,542 24,201
Total revenues 664,393 647,262
Expenses:
Property operating expenses 156,863 140,100
Interest 343,605 361,432
Depreciation 231,263 253,683
Amortization 7,373 7,311
General and administrative expenses 34,399 57,867
Total expenses 773,503 820,393
Operating loss (109,110) (173,131)
Partnership's share of operations
of unconsolidated ventures 9,828 (32,981)
Venture partner's share of consolidated
venture's operations (note 1) 12,918 4,139
Net income (loss) (86,364) (201,973)
Net income (loss) per limited partnership unit (4.18) (9.77)
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
Six months ended June 30, 2000 and 1999
(Unaudited)
<CAPTION>
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) (86,364) (201,973)
Items not requiring (providing)
cash or cash equivalents:
Depreciation 231,263 253,683
Amortization 7,373 7,311
Partnership's share of operations of
unconsolidated venture (9,828) 32,981
Venture partners' share of
consolidated venture's operations (17,251) (138,674)
Changes in:
Rents and other receivables (23,071) (21,152)
Prepaid expenses 8,454 8,767
Deferred rents receivable 292,253 129,016
Accounts payable and accrued expenses (22,704) (42,230)
Due to affiliates 13,000 (3,816)
Tenant deposits 2,992 -
Net cash provided by operating activities 396,117 23,915
Cash flows from financing activities:
Distributions to limited partners - -
Payment of deferred loan costs - (4,501)
Principal payments on long-term debt (193,738) (47,262)
Net cash used in financing activities (193,738) (51,763)
Net increase (decrease) in
cash and cash equivalents 202,379 (27,848)
<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, 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 and six month periods ended June 30, 2000 and June 30, 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 six months ended June 30, 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 (86,364) (781,177) (201,973) (150,000)
Net loss per
limited partnership unit (4.18) (37.78) (9.77) (7.26)
</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 June 30, 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 June 30, 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 six months ended
June 30, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
Unpaid at
June 30,
2000 1999 2000
<S> <C> <C> <C>
Non-accountable expense reimbursement - - 305,257
Reimbursement for administrative services 2,500 - 9,229
2,500 - 314,486
</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, 2000 and 1999.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
At June 30, 2000, the Partnership had cash and cash equivalents of
$433,064 which will be utilized for working capital requirements. This is
$202,379 more than the $230,685 balance at December 31, 1999. Net cash
provided by operations was $396,117 during the three months ended three and
six month periods ended June 30, 2000 as compared to $23,915 during the six
months ended June 30, 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 and six month periods ended June 30, 2000 and June 30, 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 six month period ended June 30, 2000 as compared to
the six month period ended June 30, 1999 is primarily unchanged. Occupancy at
the Vero Beach property and the Downers Grove property have remained
relatively stable.
The $18,031 (44%) increase in tenant charges income for the six months
ended June 30, 2000 as compared to the six month period ended June 30, 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 $5,659 (23%) decrease in interest income for the six months ended
June 30, 2000 as compared to the six month period ended June 30, 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 $16,763 (12%) increase in property operating expense for the six
months ended June 30, 2000 as compared to the six months ended June 30, 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 $17,827 (5%) decrease in interest expense for the six months ended
June 30, 2000 as compared to the six months ended June 30, 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 six months ended
June 30, 2000. This decrease results from certain assets becoming fully
depreciated during 1999.
The $23,468 (41%) decrease in general and administrative expense for the
six months ended June 30, 2000 as compared to the six months ended June 30,
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 at
3/31/99 6/30/99 9/30/99 12/31/99 3/31/00 6/30/00
<S> <C> <C> <C> <C> <C> <C>
Indian River Plaza
Vero Beach, FL 98% 99% 100% 98% 98% 98%
Downers Grove Building
Downers Grove, IL 100% 100% 100% 100% 100% 100%
Sycamore Mall
Iowa City, Iowa 47% 44% 44% 44% n/a 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)
August 14, 2000 By: /s/ Robert S. Ross
President
(Principal Executive Officer)
August 14, 2000 By: /s/ Bruce H. Block
Vice President
(Principal Financial Officer)
