FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
For Quarter Ended: September 30, 1995
Commission file number: 33-11418
DBSI/TRI EQUITY INCOME FUND A Real Estate Limited Partnership
State of Organization: Idaho Employer ID #: 82-0410175
1070 N. Curtis Rd., Suite 270, Boise, Idaho 83706
Telephone number: (208) 322-5858
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)
Yes [X] No [ ]
(2) has been subject to such filing requirements for the
past 90 days.
Yes [X] No [ ]
<PAGE>
FORM 10-Q
File Number: 3311418
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Included herein on pages 5-10
Item 2 - Mangement's Discussion and Analysis of Financial
Condition and Results of Operations
Included herein on page 3-4
<PAGE>
DBSI/TRI EQUITY INCOME FUND
A Real Estate Limited Partnership
(an Idaho limited partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
September 30, 1995
Liquidity and Capital Resources
The Partnership generates funds primarily from the operation of
rental properties and to a lesser extent from interest on savings
and certificates of deposit.
Funds are used for rental property operating expenses,
distributions to partners, debt service, fixed asset
replacements, capital improvements, management and professional
fees. The Partnership does not anticipate acquiring any
additional properties or refinancing any existing properties.
Vista Cornell Apartments is currently being sold with closing on
October 19, 1995. The general partners believe that the
Partnership will have the liquidity and capital resources to meet
all of its known obligations and commitments.
The cash and cash equivalents position of the Partnership at
September 30, 1995 represented approximately $87,000 available
for Partnership operations, including approximately $62,500 of
reserves and $24,500 of operating cash. There were no external
sources of liquidity and there are no outstanding capital
commitments. The average rate of interest earned on cash
deposits was 3.2%.
Cash Flow and Operations
For the nine months ended September 30, 1995 and 1994 the
projects generated $146,832 and $250,010 respectively of cash
flow from operating activities per the Statements of Cash Flows.
The following adjustments should be made to the cash flow in
order to arrive at an amount comparable to the first year pro
forma funds from operations as shown in the supplement to the
prospectus. First, transitory changes in noncash operating assets
and liabilities of approximately $11,800 should be subtracted,
decreasing cash flow to the actual funds which are being
generated from operations on an ongoing basis. Additionally,
cash flow should be reduced for principal payments of
approximately $8,100 and for normal operations fixed asset
purchases of approximately $35,900. Cash flow should finally be
increased for approximately $11,000 of partnership activity.
After the above adjustments, the three properties combined
annualized funds from operations for the first nine months of
1995 were approximately 52% of the first year pro forma amount.
<PAGE>
In the third quarter of 1995 and 1994 total rental
operations income were $674,355 and $668,311. Real estate
operating expenses increased from $606,407 in 1994 to $687,672 in
1995. The largest expense increases came from on-site management
costs, administrative expenses, and maintenance items at Emerald
Court Apartments. The General Partners have since reduced staff
and changed both on-site and area managers over Emerald Court
Apartments to improve control over discretionary expenditures and
thereby improve operating cash flow for the remainder of 1995.
On October 19,1995, the Partnership closed the sale of Vista
Cornell Apartments to an unrelated buyer for $1,700,000. The
buyer gave a note secured by the property for $1,460,000 and paid
$240,000 cash for the balance. The Partnership paid costs of
sale and prorations of approximately $75,000 (including
commissions to unrelated real estate brokers of $50,000), and
received net cash proceeds of approximately $165,000. The
Partnership used these proceeds to pay the Partnership's note
payable (Note 3) and other Partnership expenses. The buyer's
installment note requires payments of approximately $11,750 per
month including interest of 9% on the unpaid balance. The note
may be prepaid at any time and is due in full on October 19,
1999. The cash flow generated from the interest on the note
should exceed the annualized year to date cash flow of the Vista
Cornell Apartments by approximately 28% or an increase of
$29,000.
Distributions to partners of $244,452 were made in the first
nine months of 1995, with $140,275 from current cash flow from
operations and $104,177 from Partnership reserves. Partnership
net loss after depreciation (on a GAAP basis) for the nine months
ended September 30, 1995 was $13,317. Therefore, 1995 cash
distributions to date have been a return of capital. The
Partnership's intent is to match distributions with ongoing cash
flow from operations.
Per $1,000 investment (on the basis of a $1,000 investment
made at the inception of the escrow and offering) quarterly
distributions have been made in the following amounts: escrow
period - $83; October 1988 through February 1990 - $18; April
1990 through February 1991 - $19; and May 1991 through July 1995
- - $18.
<PAGE>
<TABLE>
DBSI/TRI EQUITY INCOME FUND
A REAL ESTATE LIMITED PARTNERSHIP
(an Idaho limited partnership)
BALANCE SHEETS
<CAPTION>
ASSETS September 30, 1995 December 31, 1994
__________________ _________________
<S> <C> <C>
Rental property:
Land $567,500 $567,500
Buildings and improvements 4,568,497 4,557,725
Furniture and fixtures 300,222 275,128
_________ _________
5,436,219 5,400,353
Less accumulated depreciation (1,130,843) (1,005,747)
__________ __________
4,305,376 4,394,606
Cash and cash equivalents 24,831 41,956
Prepaid expenses 2,409 2,464
Reserves 62,489 39,693
Tenant security deposits 25,550 25,496
Intangible costs (net) (Note 4) 39,959 38,107
__________ __________
Total assets $4,460,614 $4,542,322
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND CAPITAL
<S> <C> <C>
Accounts payable 24,562 $23,732
Interest payable 23,375 $16,879
Taxes payable 18,230 5,964
Note payable affiliate (Note 3) 158,000
Mortgage payable (Note 2) 1,967,889 1,976,032
Tenant security deposits payable 22,742 16,130
_________ _________
Total liabilities 2,214,798 2,038,737
_________ _________
Partners' capital 2,245,816 2,503,585
__________ __________
Total liabilities and capital $4,460,614 $4,542,322
<FN>
The Accompanying Notes are an Integral Part of these Financial
Statements
</TABLE>
<PAGE>
<TABLE>
DBSI/TRI EQUITY INCOME FUND
A REAL ESTATE LIMITED PARTNERSHIP
(an Idaho limited partnership)
STATEMENTS OF EARNINGS
<CAPTION>
Nine Months Ended Nine Months Ended
REVENUES September 30, 1995 September 30, 1994
__________________ __________________
<S> <C> <C>
Tenant rent $651,955 $638,800
Interest income 137 1,944
Other income 22,263 27,567
_______ _______
674,355 668,311
EXPENSES
Interest 158,449 152,423
Depreciation 125,096 126,316
Property tax and insurance 72,598 64,133
Utilities 75,538 73,150
Maintenance and repairs 105,567 71,490
Administrative 65,621 40,770
Management fees 27,963 27,963
On-site manager 47,992 42,627
Amortization 8,848 7,535
_______ _______
687,672 606,407
_______ _______
Net income ($13,317) $61,904
</TABLE>
<TABLE>
STATEMENTS OF PARTNERS' CAPITAL
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1995 September 30, 1994
__________________ __________________
<S> <C> <C>
Beginning capital $2,503,585 $2,778,683
Distributions (244,452) (187,487)
Net income (13,317) 61,556
__________ __________
Ending capital $2,245,816 $2,652,752
<FN>
The Accompanying Notes are an Integral Part of these Financial
Statements
</TABLE>
<PAGE>
<TABLE>
DBSI/TRI EQUITY INCOME FUND
A REAL ESTATE LIMITED PARTNERSHIP
(an Idaho limited partnership)
STATEMENTS OF CASH FLOWS
<CAPTION>
CASH FLOWS FROM Nine Months Ended Nine Months Ended
OPERATING ACTIVITIES September 30, 1995 September 30, 1994
__________________ __________________
<S> <C> <C>
Net income ($13,317) $61,904
Adjustments to reconcile net
income to cash flows from
operating activities
Depreciation and amortization 133,944 133,851
Changes in operating assets
and liabilities
Prepaid expenses 55 15,561
Tenant security deposits (54) (153)
Accounts payable 830 20,055
Interest payable 6,496
Taxes payable 12,266 15,614
Tenant security deposits payable 6,612 3,178
______ _______
Net cash provided by operating
activities 146,832 250,010
CASH FLOWS FROM
INVESTING ACTIVITIES
Rental property purchases (35,866) (29,868)
Increase in reserves (22,796) (36)
________ _______
Net used in investing activities (58,662) (29,904)
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from financing 158,000
Increase in intangible costs (10,700)
Principal payments on loans (8,143) (7,353)
Distributions to partners (244,452) (268,965)
_________ _________
Net cash used in financing activities (105,295) (276,318)
Net decrease in cash and
cash equivalents (17,125) (56,212)
Cash and cash equivalents at
beginning of period 41,956 100,513
_______ _______
Cash and cash equivalents at
end of period $24,831 $44,301
<FN>
The Accompanying Notes are an Integral Part of these Financial
Statements
</TABLE>
<PAGE>
DBSI/TRI EQUITY INCOME FUND
A REAL ESTATE LIMITED PARTNERSHIP
(an Idaho limited partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
For the Nine Months Ended September 30, 1995 and 1994
1. SUMMARY OF PARTNERSHIP ORGANIZATION AND SIGNIFICANT
ACCOUNTING POLICIES
Partnership Organization. DBSI/TRI Equity Income Fund - A Real
Estate Limited Partnership, was formed on November 15, 1986 with
general partners DBSI Housing Inc., an Idaho corporation, and
Tomlinson Realty Investment II, an Idaho general partnership.
The business purpose of the Partnership is to acquire and operate
leveraged multi-family housing projects primarily in the
Northwestern United States. The partnership agreement provides
that the Partnership will be dissolved no later than December 31,
2036, unless sooner terminated as provided in the agreement.
The Partnership acquired three properties during the offering
period: Vista Cornell Apartments, an existing 46 unit project;
Oak Square Apartments, an existing 22 unit project, both located
in the Portland, Oregon metropolitan area; and Emerald Court
Apartments, a new 68 unit apartment project located in the
Seattle metropolitan area.
Operating profits and losses exclusive of losses from the sale or
disposition of Partnership properties and cash distributions, are
allocated 98 percent to limited partners and two percent to
general partners. After the limited partners have received
distributions equal to a 7% annual simple interest return on
their capital contributions the general partners receive
additional distributions equal to 5% of total distributions.
Proceeds from sale or refinancings are to be distributed 100
percent to the limited partners until they have received
cumulative distributions equal to their capital contributions
plus an amount equal to ten percent per annum, then 85 percent to
the limited partners and 15 percent to the general partners.
Significant Accounting Policies. The balance sheets include only
those assets, liabilities, and partners' capital which relate to
the business of the Partnership and do not include any assets,
liabilities, revenues or expenses attributable to the partners'
activities. No partners receive salaries from the Partnership
for services. No provision has been made for federal and state
income taxes since these taxes are the personal responsibility of
the partners.
Loan fees are amortized over the estimated life of the note (ten
years) beginning in May, 1989.
<PAGE>
Rental property is recorded at cost. Depreciation is computed by
the Modified Accelerated Cost Recovery System (MACRS) or
straight-line method over the estimated useful lives of the
assets as follows: buildings and structural improvements - 15 to
32 years; furniture and fixtures - 5 to 12 years. Expenditures
for maintenance and repairs are charged to operating expenses as
incurred. The cost and accumulated depreciation of assets sold
or otherwise retired are removed from the accounts and gain or
loss on disposition is included in the results of operations.
Cash and cash equivalents include cash in banks (except for
security deposits and reserve bank accounts) and bank
certificates of deposit with original maturities of ninety days
or less. Reserves consist of bank deposits maintained for
replacements and repairs, property taxes, insurance, Partnership
reserves and return to owners.
2. MORTGAGES PAYABLE
A $2,020,000 loan from York Associates to the Partnership was
used for the purchase of Emerald Court Apartments in May, 1989.
The loan is secured by a deed of trust on the Emerald Court
Apartments. At September 30, 1995, the carrying value of Emerald
Court Apartments was $2,850,502 ($3,558,787 cost basis of land,
buildings, improvements and equipment, net of $708,285
accumulated depreciation). Principal and interest at 10.25
percent are payable on the note in monthly installments of
$17,753 through June, 1999. After that date, York Associates
holds a call option which, if exercised at that date, would
require a balloon payment of $1,916,363.
3. NOTES PAYABLE
The Partnership borrowed $158,000 through the second quarter of
1995 from an affiliate of the General Partner. This loan bears
interest at the General Partner's bank borrowing rate of prime
plus 1.5% (10.25% as of September 30). The loan proceeds provide
funds for short term operating cash flow needs of the Seattle
project and enables the Partnership to maintain the distribution
rate during the period of the lower operating cash flow. The
loan was repaid with proceeds from the sale of Vista Cornell
Apartments.
4. INTANGIBLE COSTS
As of September 30, 1995 loan fees amounted to $96,980 with
accumulated amortization of $57,021 leaving a net amount of
$39,959.
<PAGE>
5. SUBSEQUENT EVENT
On October 19,1995, the Partnership closed the sale of Vista
Cornell Apartments to an unrelated buyer for $1,700,000. The
buyer gave a note secured by the property for $1,460,000 and paid
$240,000 cash for the balance. The Partnership paid costs of
sale and prorations of approximately $75,000 (including
commissions to unrelated real estate brokers of $50,000), and
received net cash proceeds of approximately $165,000. The
Partnership used these proceeds to pay the Partnership's note
payable (Note 3) and other Partnership expenses. The buyer's
installment note requires payments of approximately $11,750 per
month including interest of 9% on the unpaid balance. The note
may be prepaid at any time and is due in full on October 19,
1999. The cash flow generated from the interest on the note
should exceed the annualized year to date cash flow of the Vista
Cornell Apartments by approximately 28% or an increase of
$29,000.
6. NET INCOME (LOSS) FROM RENTAL PROPERTIES
The following schedule details separate rental property and
partnership operations for the year ended September 30, 1995.
_____________________________________________________
Emerald Vista Oak Partnership
Court Apts Cornell Apt Square Apts Operations Total
_____________________________________________________
REVENUES
Tenant rent $358,407 $186,571 $106,977 $651,955
Interest income 100 $37 137
Other income 13,327 7,132 1,804 22,263
_____________________________________________________
371,834 193,703 108,781 37 674,355
EXPENSES
Interest 151,633 6,816 158,449
Depreciation 83,250 27,446 14,400 125,096
Tax and insurance 37,619 24,338 10,641 72,598
Utilities 36,893 27,965 10,680 75,538
Maintenance 56,041 38,650 10,876 105,567
Administrative 40,682 8,352 4,594 11,993 65,621
Management fees 13,455 9,594 4,914 27,963
On-site manager 30,327 12,464 5,201 47,992
Amortization 8,848 8,848
_____________________________________________________
449,900 148,809 61,306 27,657 687,672
_____________________________________________________
Net income(loss) ($78,066) $44,894 $47,475 ($27,620) ($13,317)
_____________________________________________________
_____________________________________________________
<PAGE>
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.
DBSI/TRI EQUITY INCOME FUND
A Real Estate Limited Partnership
Date 11/09/95 by _________________________
Douglas L. Swenson, President of
DBSI Housing Inc., general partner of
DBSI/TRI EQUITY INCOME FUND
A Real Estate Limited Partnership
Date 11/09/95 by _________________________
Charles E. Hassard, Secretary-Treasurer
and principal financial officer of
DBSI Housing Inc., the Idaho corporation
that is a general partner and principal
financial officer of
DBSI/TRI EQUITY INCOME FUND
Real Estate Limited Partnership
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 24831
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 155238
<PP&E> 5436219
<DEPRECIATION> 1130843
<TOTAL-ASSETS> 4460614
<CURRENT-LIABILITIES> 246909
<BONDS> 1967889
<COMMON> 0
0
0
<OTHER-SE> 2245816
<TOTAL-LIABILITY-AND-EQUITY> 4460614
<SALES> 0
<TOTAL-REVENUES> 674355
<CGS> 0
<TOTAL-COSTS> 529223
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 158449
<INCOME-PRETAX> (13317)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13317)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13317)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
