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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________
Commission file number 0-16859
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NYLIFE REALTY INCOME PARTNERS I, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3410538
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
51 MADISON AVENUE, NEW YORK, NEW YORK 10010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 576-7300
--------------
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
--- ---
Yes X No
--- ---
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NYLIFE REALTY INCOME PARTNERS I, L.P.
(A LIMITED PARTNERSHIP)
MARCH 31, 1996
INDEX
PAGE NO.
--------
Part I - Financial Information (Unaudited)
Balance Sheets as of March 31, 1996
and December 31, 1995 3
Statements of Operations for the Three
Months Ended March 31, 1996 and 1995 4
Statements of Partners' Capital (Deficit) for the
Three Months Ended March 31, 1996 and
for the Year Ended December 31, 1995 5
Statements of Cash Flows for the Three Months
Ended March 31, 1996 and 1995 6
Notes to Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II - Other Information 12
Signatures 13
2
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NYLIFE REALTY INCOME PARTNERS I, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
AS OF MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
1996
ASSETS (UNAUDITED) 1995
- ------ ----------- -----------
<S> <C> <C>
Cash and cash equivalents $ 828,769 $ 688,977
Restricted cash 283,392 283,392
Investments in real estate joint ventures 13,497,084 13,590,960
Other assets - net 2,149 2,472
----------- -----------
Total assets $14,611,394 $14,565,801
----------- -----------
----------- -----------
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Due to affiliates $ 25,000 $ -
Accrued liabilities 85,211 94,058
----------- -----------
Total liabilities 110,211 94,058
----------- -----------
Partners' capital
General Partners:
Capital contributions 2,000 2,000
Accumulated deficit (8,809) (9,103)
Cumulative distributions (66,470) (66,470)
----------- -----------
(73,279) (73,573)
----------- -----------
Limited Partners:
Capital contributions
net of public offering expenses 25,032,724 25,032,724
Accumulated deficit (872,225) (901,371)
Cumulative distributions (9,586,037) (9,586,037)
----------- -----------
14,574,462 14,545,316
----------- -----------
Total partners' capital 14,501,183 14,471,743
----------- -----------
Total liabilities and partners' capital $14,611,394 $14,565,801
----------- -----------
----------- -----------
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of these statements.
3
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NYLIFE REALTY INCOME PARTNERS I, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
INCOME 1996 1995
- ------ ---------- ----------
Equity in income from Joint Venture operations $ 67,116 $ 63,314
Interest 12,924 33,355
---------- ----------
Total income 80,040 96,669
---------- ----------
EXPENSES
- --------
General and administrative 25,600 17,565
General and administrative - related party 25,000 25,000
---------- ----------
Total expenses 50,600 42,565
---------- ----------
Net income $ 29,440 $ 54,104
---------- ----------
---------- ----------
NET INCOME ALLOCATED
- --------------------
General Partners $ 294 $ 541
Limited Partners 29,146 53,563
---------- ----------
$ 29,440 $ 54,104
---------- ----------
---------- ----------
Net income per Unit $ .01 $ .02
---------- ----------
---------- ----------
The accompanying Notes to Financial Statements are
an integral part of these statements.
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NYLIFE REALTY INCOME PARTNERS I, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 1995 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
TOTAL
LIMITED GENERAL PARTNERS'
PARTNERS PARTNERS CAPITAL
------------- ---------- -------------
<S> <C> <C> <C>
Capital (deficit) at January 1, 1995 $ 18,970,789 $ (61,376) $ 18,909,413
Net income 155,625 1,572 157,197
Distributions to partners (4,581,098) (13,769) (4,594,867)
------------- ---------- -------------
Capital (deficit) at December 31, 1995 14,545,316 (73,573) 14,471,743
Net income 29,146 294 29,440
------------- ---------- -------------
Capital (deficit) at March 31, 1996 $ 14,574,462 $ (73,279) $ 14,501,183
------------- ---------- -------------
------------- ---------- -------------
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of these statments.
5
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NYLIFE REALTY INCOME PARTNERS I, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 29,440 $ 54,104
---------- ------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in income from joint venture operations (67,116) (63,314)
Cash distributions from joint ventures 67,116 63,314
Changes in assets and liabilities:
Decrease in other assets 323 24,929
Increase (decrease) in due to affiliates 25,000 (75,000)
Decrease in accrued liabilities (8,847) (27,254)
---------- ------------
Total adjustments 16,476 (77,325)
---------- ------------
Net cash provided by operating activities 45,916 (23,221)
---------- ------------
Cash flows from investing activities:
Cash distributions from joint ventures in excess of earnings
(return of capital) 93,876 3,358,700
---------- ------------
Cash flows from financing activities:
Distributions to partners - (4,129,702)
---------- ------------
Net increase (decrease) in cash and cash equivalents 139,792 (794,223)
Cash and cash equivalents at beginning of period 688,977 1,362,676
---------- ------------
Cash and cash equivalents at end of period $ 828,769 $ 568,453
---------- ------------
---------- ------------
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of these statements.
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NYLIFE REALTY INCOME PARTNERS I, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 1 - ORGANIZATION
The accompanying financial statements and related notes should be read in
conjunction with the Partnership's 1995 Annual Report on Form 10-K. The
accompanying financial statements include the accounts of the Partnership
including its investments in NYLIFE Realty Partners I - General Partnership A
(Cornell), General Partnership C (Eden Woods), and General Partnership D
(NewMarket) (collectively, the "Joint Ventures") to which the equity method
of accounting has been applied. The Partnership will continue until
December 31, 2036, unless terminated sooner in accordance with the terms of
the Partnership Agreement. A preliminary solicitation statement for dissolution
of the partnership was issued on March 29, 1996 (Note 4).
The summarized financial information contained herein is unaudited, however,
in the opinion of management, all adjustments (which include normal recurring
adjustments) necessary for a fair presentation of financial information have
been included.
Capitalized terms used in these Notes to Financial Statements, unless otherwise
defined herein, shall have the meanings set forth in the Partnership Agreement.
NOTE 2 - INVESTMENT IN REAL ESTATE JOINT VENTURES
A summary of the financial information for the Joint Ventures as of March 31,
1996 is presented below:
<TABLE>
<CAPTION>
EDEN
BALANCE SHEETS CORNELL WOODS NEWMARKET TOTAL
- -------------- ------- ----- --------- -----
<S> <C> <C> <C> <C>
Land $1,128,832 $1,765,928 $1,773,046 $ 4,667,806
Building and improvements 9,840,813 10,457,194 9,667,612 29,665,619
Accumulated depreciation (3,331,943) (2,898,452) (3,013,217) (9,243,612)
Other assets 429,671 1,023,404 665,892 2,118,967
Accrued liabilities (142,519) (350,494) (181,021) (674,034)
Co-Venturer's equity (3,118,869) (5,326,608) (5,486,989) (13,932,466)
---------- ---------- ---------- -----------
Partnership's equity in Joint Ventures $4,805,986 $4,670,971 $ 3,425,321 $12,902,278
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Represented by:
Partnership's equity
investment in Joint Ventures
at January 1, 1996 $4,905,324 $4,804,232 $3,906,801 $13,616,357
Joint Venture income 17,395 12,772 36,948 67,116
Cash distributions (116,734) - (44,258) (160,992)
---------- ---------- ---------- -----------
Net equity investment 4,805,986 4,817,004 3,899,491 13,522,481
Interest - (72,377) (300,910) (373,287)
Acquisition fees - (73,656) (173,260) (246,916)
Amortization of interest and
acquisition fees - 6,043 19,354 25,397
---------- ---------- ---------- -----------
Partnership's equity in Joint
Ventures at March 31, 1996 $4,805,986 $4,677,014 $3,444,675 $12,927,675
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
</TABLE>
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The following is a summary of the operations of Cornell Plaza, Eden Woods and
NewMarket for the three months ended March 31, 1996:
<TABLE>
<CAPTION>
EDEN
OPERATIONS CORNELL WOODS NEWMARKET TOTAL
- ---------- ------- ------- --------- --------
<S> <C> <C> <C> <C>
Net operating income $27,484 $23,230 $82,649 $133,363
Interest income 1,508 3,910 1,669 7,088
------- ------- ------- --------
Net income $28,992 $27,141 $84,318 $140,451
------- ------- ------- --------
------- ------- ------- --------
Net income allocated
To Co-Venturer $11,597 $14,368 $47,370 $ 73,335
To Partnership 17,395 12,772 36,948 67,116
------- ------- ------- --------
$28,992 $27,141 $84,318 $140,451
------- ------- ------- --------
------- ------- ------- --------
</TABLE>
NOTE 3 - TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES
The following is a summary of the amounts earned by the General Partners and
their Affiliates for the three months ended March 31, 1996 and 1995 as
defined in the Partnership Agreement:
<TABLE>
<CAPTION>
EARNED FOR THE EARNED FOR THE
UNPAID AT THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31,1996 MARCH 31, 1996 MARCH 31, 1995
------------- ------------------ ------------------
<S> <C> <C> <C>
Property management fees (1) $14,830 $34,665 $34,665
Reimbursement of general and
administrative expenses paid
by the General Partners 25,000 25,000 25,000
------- ------- -------
$39,830 $59,665 $59,665
------- ------- -------
------- ------- -------
</TABLE>
(1) Costs associated with property management fees are borne by the
Joint Ventures.
The above amounts are allocable to the General Partners and their Affiliates
as follows:
<TABLE>
<CAPTION>
EARNED FOR THE EARNED FOR THE
UNPAID AT THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31,1996 MARCH 31, 1996 MARCH 31, 1995
------------- ------------------ ------------------
<S> <C> <C> <C>
NYLIFE Realty Inc. and Affiliates $25,000 $25,000 $25,000
Greystone Realty Corporation (2) 14,830 34,665 34,665
------- ------- -------
$39,830 $59,665 $59,665
------- ------- -------
------- ------- -------
</TABLE>
(2) Under no circumstances will the amount charged to the Partnership in
respect of Greystone Realty Corporation ("Greystone"), an affiliate of
New York Life Insurance Company, exceed the limitations on payments to
affiliates set forth in the Partnership Agreement.
NOTE 4 - LEGAL PROCEEDINGS
Two class action lawsuits were filed against the Co-Venturer and certain
other affiliates of the General Partners in the District Court of Harris
County, Texas on January 11, 1996, styled Grimshawe v. New York Life
Insurance Co., et al. (No. 96-001188) and Shea v. New York Life Insurance
Co., et al. (No. 96-001189) alleging misconduct in connection without the
original sale of investment units in various partnerships, including
violation of various federal and state laws and regulations and claims of
continuing fraudulent conduct. The plaintiffs have asked for
8
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compensatory damages for their lost original investment, plus interest, costs
(including attorneys fees), punitive damages, disgorgement of any earnings,
compensation and benefits received by the defendants as a result of the
alleged actions and other unspecified relief to which plaintiffs may be
entitled. These suits were amended and refiled in a consolidated action in
the United States District Court for the Southern District of Florida (the
"Court") on March 18, 1996. In the federal action, the plaintiffs added NYLIFE
Realty as a defendant and included allegations concerning the Partnership.
The plaintiffs purport to represent a class of all persons (the "Class") who
purchased or otherwise assumed rights and title to interests in certain
limited partnerships, including the Partnership, and other programs created,
sponsored, marketed, sold, operated or managed by the defendants (the
"Proprietary Partnerships"). The Partnership is not a defendant in the
litigation.
The defendants expressly deny any wrongdoing alleged in the complaint and
concede no liability or wrongdoing in connection with the sale of the Units
or the structure of the Proprietary Partnerships. Nevertheless, to reduce
the burden of protracted litigation, the defendants have entered into a
Stipulation of Settlement ("Settlement Agreement") with the plaintiffs
because in their opinion such Settlement would (i) provide substantial
benefits to the Class in a manner consistent with New York Life's position
that it had previously determined to wind up most of the Proprietary
Partnerships, including the Partnership, through orderly liquidation as the
continuation of the business no longer serves the intended objectives of
either the owners of interests in such Proprietary Partnerships or the
defendants and to offer the investors an enhancement to the liquidating
distribution they would otherwise receive and (ii) provide an opportunity to
wind up such partnerships on a schedule favorable to the Class and resolve
the issues raised by the lawsuit.
In connection with the proposed settlement (the "Settlement"), the General
Partners will solicit consents of the Limited Partners for the dissolution of
the Partnership.
Under the terms of the Settlement Agreement, any settling Limited Partners
will receive at least a complete return of their original investment, less
distributions received prior to the final settlement date, in exchange for a
release of any and all claims a Limited Partner may have against the
defendants in connection with the Proprietary Partnerships, including the
Partnership, and all activities related to the dissolution and liquidation of
such partnerships.
Preliminary approval of the Settlement Agreement was given by the Court on
March 19, 1996. The Settlement Agreement is further conditioned upon final
approval by the Court as well as certain other conditions and is subject to
certain rights of termination detailed in the consent solicitation material
being mailed to the Limited Partners.
If the necessary consents of Limited Partners for dissolution are obtained,
the Partnership will be dissolved even if all necessary approvals for the
Settlement Agreement are not obtained or the Settlement Agreement is
otherwise terminated. In general, upon the dissolution of the Partnership,
negative tax consequences may accrue to the partners. Recent appraisal
indicate that the fair market value of the Properties is less than their
carrying amounts. If the Properties are sold, proceeds from such sales may
be less than these carrying amounts or the recent appraisal amounts.
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The financial statements do not include any adjustments that might result
should the Limited Partners vote to liquidate the Partnership.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's cash balance of $828,769 at March 31, 1996 includes
$110,211 to pay accrued liabilities, and cash generated from operations of
the Joint Ventures and distributed to the Partnership.
The Partnership derives its revenues primarily from its equity interests in
the Joint Ventures. Accordingly, the Partnership's share of cash flow from
the Joint Ventures depends on the performance of the Properties. Cash flow
generated by the Properties is first to be used to fund tenant improvements,
leasing commissions and capital improvements, if any. Any remaining cash
flow is then distributed to the Co-Venturers. The Partnership also received
interest income on the balance in its restricted cash account and short-term
investments.
The Partnership's only operating costs were general and administrative
expenses which primarily include audit and tax return preparation fees,
printing and postage costs for quarterly and annual reports, and
reimbursements to the General Partners for reimbursable expenses incurred in
accordance with the Partnership Agreement. Such general and administrative
expenses, which are not expected to fluctuate materially, totaled $50,600 for
the three months ended March 31, 1996.
As of February 3, 1996 the space previously leased to Lawrence Jewelry
consisting of an entire building has become available. Portions of this space
have already been leased to new tenants and the Co-Venturers have
determined that an estimated $250,000 in tenant improvements will be
necessary. Accordingly, Eden Woods' cash flow from operations has been
utilized to fund such improvements. In addition, cash flow in excess of
charges for tenant improvements has been held in escrow to pay the first half
of the year's property taxes totaling $221,124 which are due on May 15, 1996.
There are no other material capital commitments.
Cornell and NewMarket are expected to generate adequate cash flow to fund
their own operations. During the quarter ended March 31, 1996, Cornell and
NewMarket distributed $116,734 and $44,258 to the Partnership, respectively.
As discussed above, cash flow for the first quarter at Eden Woods used to
fund the new tenant improvements, as well as property taxes.
The Partnership expects sufficient cash flow to be generated from its Joint
Venture investments to meet its current and future operating requirements.
However, if the Partnership does not have sufficient funds to meet its future
operating requirements, the General Partners, at their sole discretion, may
borrow money on behalf of the Partnership from unaffiliated third parties
subject to the terms of the Partnership Agreement. The Partnership may also
utilize its restricted cash to meet such future operating requirements. If
such a circumstance were to occur, the Partnership would thereafter seek to
replenish the balance in its restricted cash account.
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RESULTS OF OPERATIONS
The decrease in the Partnership's net income for the quarter ended March 31,
1996 as compared to the corresponding period in 1995 is the result of a
decrease in interest income and a slight increase in general and
administrative expenses.
Cornell's net income increased by $11,000 for the three months ended March
31, 1996 compared to the corresponding 1995 period primarily due an
increase in tenant reimbursements for improvements. Eden Woods' net income
increased by approximately $4,000 for the three months ended March 31, 1996
primarily due to a decrease in amortization and depreciation expense on
prepaid leasing commissions and tenant improvements, respectively.
NewMarket's net income decreased by approximately $16,000 for the three
months ended March 31, 1996 as compared to the corresponding period in
1995 due primarily to a decline in rental rates as well as a 5% decrease in
occupancy. The retail market in which NewMarket is located continues to
experience rapid development including the addition of new superstores. This
development has led to increased price competition among the retail segment.
Recognizing that high occupancy is vital to the success of a mall, Management
has responded to this increased price competition by lowering rental rates so
existing tenants do not vacate.
Occupancy at Cornell, Eden Woods, and NewMarket was 95%, 87%, and 91%,
respectively, as of March 31, 1996, as compared to 95%, 98%, and 96%,
respectively, as of March 31, 1995.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Incorporated by reference to Item 3 of Form 10-K for the fiscal year
ended December 31, 1995.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
None
(b) REPORTS ON FORM 8-K
None
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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 on May 13, 1995.
NYLIFE Realty Income Partners I, L.P.
By: NYLIFE Realty Inc.
General Partner
By: /s/ Kevin M. Micucci
-----------------------------------
Kevin M. Micucci
President and Controller
(Principal Executive, Financial and
Accounting Officer)
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