7
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 period ended September 30, 1997
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: 0-18148
DEAN WITTER REALTY YIELD PLUS, L.P.
(Exact name of registrant as specified in governing instrument)
Delaware 13-3426531
(State of organization) (IRS Employer
Identification No.)
2 World Trade Center, New York, NY 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212)
392-1054
Former name, former address and former fiscal year, if changed
since last report: not applicable
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
Page 1 of 24
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DEAN WITTER REALTY YIELD PLUS, L.P.
BALANCE SHEETS
<CAPTION>
September 30,
December 31,
1997 1996
<S> <C>
<C>
ASSETS
Real estate:
Land $
10,248,274 $ 13,444,875
Buildings and improvements 88,993,810
102,237,481
99,242,084
115,682,356
Accumulated depreciation 17,288,356
18,386,846
81,953,728
97,295,510
Real estate held for sale 5,108,539
- -
Investment in participating mortgage loan, net of
allowance of $15,549,278 18,995,382
18,995,382
Cash and cash equivalents 3,942,447
6,799,320
Deferred expenses, net 1,443,339
1,419,805
Other assets 1,624,404
2,242,810
$113,067,839
$126,752,827
LIABILITIES AND PARTNERS' CAPITAL
Mortgage notes payable $ 10,589,682 $
19,726,496
Accounts payable and other liabilities 3,789,974
3,472,149
Minority interest 18,632,924
19,166,086
33,012,580
42,364,731
Partners' capital (deficiency):
General partners (7,554,316)
(7,121,032)
Limited partners ($20 per Unit, 8,909,969 Units issued)
87,609,575 91,509,128
Total partners' capital 80,055,259
84,388,096
$113,067,839
$126,752,827
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and nine months ended September 30, 1997 and 1996
<CAPTION>
Three months ended Nine
months ended
September 30,
September 30,
1997 1996 1997 1996
<S> <C> <C> <C>
<C>
Revenues:
Rental $4,495,470 $ 4,077,314
$13,126,885 $12,596,322
Interest on participating
mortgage loan 174,071 692,647
349,011 2,070,412
Interest on short-term investments 23,574
107,495 122,919 398,614
Other 131,043
174,065 402,360 403,248
4,824,158 5,051,521
14,001,175 15,468,596
Expenses:
Property operating 2,703,633 4,104,235
9,193,427 10,527,152
Interest 296,517 396,117
1,096,918 1,201,340
Depreciation 970,143 1,028,793
2,917,233 2,880,811
Amortization 106,388 97,865
301,364 330,648
General and administrative 242,589
198,081 724,337 793,967
Loss on impairment of real estate,
and participating mortgage loan - 979,000
- - 979,000
4,319,270 6,804,091
14,233,279 16,712,918
Income (loss) before minority
interests 504,888 (1,752,570)
(232,104) (1,244,322)
Minority interests 212,069 181,231
646,125 596,807
Net income (loss) before extraordinary
item 292,819
(1,933,801) (878,229) (1,841,129)
Extraordinary item:
Gain on extinguishment of debt
due to foreclosure 406,380 -
406,380 -
Net income (loss) $ 699,199 $(1,933,801) $
(471,849) $(1,841,129)
Net income (loss) allocated to:
Limited partners $ 629,279 $(1,740,421) $
(424,664) $(1,657,016)
General partners 69,920 (193,380)
(47,185) (184,113)
$ 699,199 $(1,933,801) $
(471,849) $(1,841,129)
(continued)
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and nine months ended September 30, 1997 and 1996
(continued)
<CAPTION>
Three months ended Nine
months ended
September 30,
September 30,
1997 1996 1997 1996
<S> <C> <C> <C>
<C>
Net income (loss) per Unit of
limited partnership interest:
Net income (loss) before
extraordinary item $ .03 $ (.20) $
(.09) $ (.19)
Extraordinary gain .04 -
.04 -
Net income (loss) $ .07 $ (.20) $
(.05) $ (.19)
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIENCY)
Nine months ended September 30, 1997
<CAPTION>
Limited General
Partners Partners Total
<S> <C> <C>
<C>
Partners' capital (deficiency)
at January 1, 1997 $91,509,128
$(7,121,032) $84,388,096
Net loss (424,664)
(47,185) (471,849)
Cash distributions (3,474,889)
(386,099) (3,860,988)
Partners' capital (deficiency)
at September 30, 1997 $87,609,575
$(7,554,316) $80,055,259
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 1997 and 1996
<CAPTION>
1997 1996
<S> <C>
<C>
Cash flows from operating activities:
Net loss $ (471,849) $
(1,841,129)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 3,218,597
3,211,459
Minority interest in earnings of
consolidated partnership 646,125
596,807
Loss on impairment of real estate, and
participating mortgage loan -
979,000
Gain on extinguishment of debt (406,380)
- -
Increase in deferred expenses (324,898)
(101,891)
Decrease in other assets 506,396
109,579
Increase in accounts payable
and other liabilities 320,575
642
Net cash provided by operating activities
3,488,566 2,954,467
Cash flows from investing activities:
Additions to real estate (758,350)
(2,198,670)
Cash flows from financing activities:
Repayments of mortgage note payable (546,814)
(202,360)
Cash distributions (3,860,988)
(10,473,873)
Contributions by minority interest to
consolidated partnership 311,484
914,514
Minority interest in distributions from
consolidated partnership (1,490,771)
(1,490,606)
Net cash used in by financing activities
(5,587,089) (11,252,325)
Decrease in cash and cash equivalents (2,856,873)
(10,496,528)
Cash and cash equivalents at beginning of period
6,799,320 18,939,265
Cash and cash equivalents at end of period $ 3,942,447 $
8,442,737
Supplemental disclosure of cash flow information:
Cash paid for interest $ 794,027 $
1,201,340
(continued)
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 1997 and 1996
(continued)
<CAPTION>
1997 1996
<S> <C>
<C>
Supplemental disclosure of non-cash investing activities:
Reclassification of real estate held for sale:
Real estate, at cost:
Land $ 1,387,066 $
- -
Buildings and improvements 7,171,556
- -
Accumulated depreciation (3,450,083)
- -
Real estate held for sale $ 5,108,539 $
- -
Supplemental disclosures of non-cash financing activities:
Extinguishment of debt and loss of real estate
through foreclosure:
Balance due on mortgage note payable $(8,590,000) $
- -
Write off:
Real estate:
Land 1,809,535
- -
Building 6,830,465
- -
Accumulated depreciation (565,640)
- -
8,074,360
Decrease in other assets 112,010
- -
Decrease in accounts payable and other liabilities
(2,750) -
Gain on extinguishment of debt due
to foreclosure $ (406,380) $
- -
See accompanying notes to consolidated financial
statements.
</TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
Notes to Consolidated Financial Statements
1. The Partnership
Dean Witter Realty Yield Plus, L.P. (the "Partnership")
is a limited partnership organized under the laws of
the State of Delaware in 1987. The Managing General
Partner of the Partnership is Dean Witter Realty Yield
Plus Inc., which is wholly-owned by Dean Witter Realty
Inc. ("Realty").
The financial statements include the accounts of the
Partnership, DW Columbia Gateway Associates, DW
Michelson Associates, DW Lakeshore Associates, Deptford
Crossing Associates, DW Community Centers Limited
Partnership and DW Maplewood Inc. on a consolidated
basis. All significant intercompany accounts and
transactions have been eliminated.
The Partnership's records are maintained on the accrual
basis of accounting for financial reporting and tax
purposes.
Net income (loss) per Unit amounts are calculated by
dividing net income (loss) allocated to Limited
Partners, in accordance with the Partnership Agreement,
by the weighted average number of Units outstanding.
In the opinion of management, the accompanying
financial statements, which have not been audited,
include all adjustments necessary to present fairly the
results for the interim periods. Except for reserves
of uncollected interest relating to the participating
mortgage loan, the gain on extinguishment of debt due
to foreclosure and the reclassificaiton of real estate
held for sale in 1997 and the loss on impairment of the
participating mortgage loan in 1996, such adjustments
consist only of normal recurring accruals.
These financial statements should be read in
conjunction with the annual financial statements and
notes thereto included in the Partnership's annual
report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31,
1996.
DEAN WITTER REALTY YIELD PLUS, L.P.
Notes to Consolidated Financial Statements
Operating results of interim periods may not be
indicative of the operating results for the entire
year.
The Financial Accounting Standards Board has recently
issued several new accounting pronouncements.
Statement No. 128, "Earnings per Share" establishes
standards for computing and presenting earnings per
share, and Statement No. 129, "Disclosure of
Information about Capital Structure" establishes
standards for disclosing information about an entity's
capital structure. These two standards will be
effective for the Partnership's 1997 year-end financial
statements. Statement No. 130, "Reporting
Comprehensive Income" establishes standards for
reporting and display of comprehensive income and its
components. Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information"
establishes standards for the way that public business
enterprises report information about operating segments
in annual financial statements and requires that those
enterprises report selected information about operating
segments in interim financial reports issued to
shareholders. It also establishes standards for
related disclosure about products and services,
geographic areas, and major customers. These two
standards are effective for the Partnership's 1998
financial statements.
Management of the Partnership does not believe that
these new standards will have any effect on the
Partnership's computation or presentation of net income
or net income per unit of limited partnership interest,
or its disclosures of capital structure, or other
disclosures.
2. Real Estate
The Partnership's mortgage note payable secured by the
Genessee Crossing shopping center matured in May 1997.
The Partnership was unable to refinance the loan
without making an additional equity investment in the
property. The Partnership determined that in light of
its estimate of the property's market value such an
DEAN WITTER REALTY YIELD PLUS, L.P.
Notes to Consolidated Financial Statements
additional investment would not be in the Partnership's
best interest. As a result, the lender took the
property in foreclosure on August 15, 1997. Since the
amount of the mortgage note payable ($8,590,000)
exceeded the net book value of the property
($8,183,620) at that date, the Partnership recognized
an extraordinary gain on the extinguishment of debt
($406,380) in the third quarter of 1997.
In October 1997, the Partnership agreed to sell the
Greenway Pointe property, for $11,100,000, to TA Realty
Corp., an unaffiliated party. Closing of the sale is
expected to occur in the fourth quarter of 1997. At
September 30, 1997, the carrying value of the property
($5,108,539) was reclassified to real estate held for
sale.
3. Investment in Participating Mortgage Loan
In October 1996, the owner/borrower of the One Congress
Street property defaulted on the participating mortgage
loan (the "Loan") made by the Partnership (58%) and an
affiliate, Dean Witter Realty Yield Plus II, L.P. (42%)
("Yield Plus II"; and collectively, with the
Partnership, the "Lender") by failing to timely pay its
debt service. Thereafter, the Lender accelerated the
Loan and attempted to take possession of the property.
On October 15, 1996, the owner/borrower filed a
voluntary petition under Chapter 11 of the U.S.
Bankruptcy Code.
During the nine-month period ended September 30, 1997,
the owner/borrower paid to the Partnership $349,011 of
$2,055,353 total interest due. The Partnership
reserved the remaining accrued but unpaid interest. As
of September 30, 1997, the Partnership's total reserves
against accrued but unpaid interest approximate
$2,363,000.
DEAN WITTER REALTY YIELD PLUS, L.P.
Notes to Consolidated Financial Statements
On October 27, 1997, the Lender entered into a
settlement agreement with the owner/borrower (the
"Agreement"). As part of the Agreement, a new
corporation which is jointly owned by the Partnership
and Yield Plus II in proportion to their participations
in the Loan, has become the sole general partner (with
a 19% ownership interest) (the "New General Partner")
of the owner/borrower. The Partnership and Yield Plus
II have agreed to make all decisions concerning the
property jointly. The Lender has retained an affiliate
of the owner/borrower's original general partner as
property manager.
The Agreement also provides for the following:
(a) as a result of their interests in the New General
Partner, the Partnership and Yield Plus II are
required to make additional loans to fund future
tenant improvements at the property (the "New
Loans") in proportion to their participations in
the Loan. Any New Loans will bear interest at
12%, payable monthly from available cash flow
generated by the property after payment of debt
service on the first mortgage loan and certain
operating escrows;
(b) the interest rate on the principal of the Loan,
default penalties and past due interest thereon
aggregating approximately $12.3 million has been
increased to 10%, payable monthly from available
cash flow generated by the property after payment
of debt service on the New Loans;
(c) any future unpaid debt service will accrue
interest at 10%; and
(d) the Partnership's and Yield Plus II's interest in
adjusted net revenue and capital proceeds
generated by the property was increased from 58%
to 80%.
DEAN WITTER REALTY YIELD PLUS, L.P.
Notes to Consolidated Financial Statements
The Agreement has effectively changed the Partnership
from a participating lender to an equity owner in a
joint venture which owns the One Congress Street
property. As a result, the Partnership will receive
its share of net cash flow from the property (as it did
prior to the bankruptcy) and it will be required to
expend its share of costs for building improvements,
tenant improvements and leasing commissions in
connection with the leasing of vacant space as is
customary in most real estate markets.
In the Partnership's financial statements, as of
October 27, 1997, the investment in the Loan will be
replaced by an investment in a joint venture; partners'
capital will not be affected by these changes.
Thereafter, the Partnership will not recognize interest
income on the Loan; instead it will record its equity
in earnings or loss of the joint venture. The joint
venture will record rental income, property operating
expenses, interest expense and depreciation.
4. Mortgage Notes Payable
The Partnership's mortgage note payable secured by the
Deptford Crossing shopping center matured on September
16, 1997. The lender has agreed to forebear all rights
and remedies provided in the loan through November 14,
1997 if the Partnership avoids any other default
provision in the loan agreement, pays monthly debt
service equal to net cash flow from operations of the
property as defined in the loan agreement and
reimburses the lender for all of its expenses caused by
the forbearance. The Partnership is exploring its
financing options which will enable it to repay the
mortgage loan and keep the property; however, if the
Partnership is unsuccessful in obtaining alternative
financing, the property may be lost in foreclosure.
DEAN WITTER REALTY YIELD PLUS, L.P.
Notes to Consolidated Financial Statements
5. Related Party Transactions
Realty and an affiliate of Realty currently provide
property management services for three of the
Partnership's properties. Through August 15, 1997 and
during 1996, the affiliate also provided such services
for the Genessee Crossing property. The Partnership
paid Realty and its affiliate management fees of
approximately $179,000 and $172,000 for the nine months
ended September 30, 1997 and 1996, respectively. These
amounts are included in property operating expenses.
Realty performs administrative functions, processes
certain investor transactions and prepares tax
information for the Partnership. For the nine-month
periods ended September 30, 1997 and 1996, the
Partnership incurred approximately $295,000 and
$290,000, respectively, for these services. These
amounts are included in general and administrative
expenses.
As of September 30, 1997, Realty and its affiliate were
owed a total of approximately $53,000 for the above-
mentioned services.
6. Litigation
Various public partnerships sponsored by Realty
(including the Partnership and its Managing General
Partner) are defendants in purported class action
lawsuits pending in state and federal court. The
complaints allege a number of claims, including breach
of fiduciary duty, fraud and misrepresentation, and
seek an accounting of profits, compensatory and other
damages in an unspecified amount, possible liquidation
of the Partnership under a receiver's supervision and
other equitable relief. The defendants are vigorously
defending these actions. It is impossible to predict
the effect, if any, the outcome of these actions might
have on the Partnership's financial statements.
DEAN WITTER REALTY YIELD PLUS, L.P.
Notes to Consolidated Financial Statements
7. Subsequent Cash Distributions
On October 29, 1997, the Partnership paid a cash
distribution of $.13 per Unit to Limited Partners. The
cash distribution aggregated $1,286,996 with $1,158,296
distributed to Limited Partners and $128,700
distributed to the General Partners.
DEAN WITTER REALTY YIELD PLUS, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Liquidity and Capital Resources
The Partnership raised $178,199,380 through a public
offering which terminated in 1987. The Partnership has
no plans to raise additional capital.
The Partnership originally invested in seven loans or
land leases. Due to the past weakness in real estate
markets, most of the properties did not generate
sufficient cash flow to fully service their debt. As a
result, prior to December 31, 1994, the Partnership
acquired all but one of the properties in which it
originally invested. As described in Note 2 to the
consolidated financial statements, on October 27, 1997,
the Partnership acquired an ownership interest in a
joint venture which owns the remaining property. No
additional investments are planned.
Employment growth, especially in business services and
technology industries, has increased demand for office
and office/research and development space. Such
increasing demand and the limited amount of speculative
construction has resulted in falling vacancies, rising
rents and increasing property values in many markets.
Some markets are faring better than others and, in
certain areas, improved market conditions can support
new construction. Recently, the vacancy rate in the
downtown financial markets and government center of
Boston (the location of One Congress Street) decreased
to 5%. The relative absence of office construction and
growth in demand from professional service firms has
recently resulted in an absorption of office space and
an increase in rental rates in the class A office
market in Orange County, CA (the location of 2600
Michelson Drive). The office/research and development
markets surrounding Columbia, MD (the location of the
Greenway Pointe property) currently have a 6% vacancy
rate and increasing rental rates. However, in the
retail sector, a changing tenant base (caused by the
domination of certain power center tenants coupled with
bankruptcies and major restructuring of other tenants)
and past overbuilding has caused high vacancies and
stagnant rents.
DEAN WITTER REALTY YIELD PLUS, L.P.
As disclosed in Note 2 to the consolidated financial
statements, the Genesee Crossing retail center was
obtained by the lender on August 15, 1997. During the
nine-months ended September 30, 1997, Partnership cash
flow from the Genessee Crossing property was
approximately $22,000.
Also, as disclosed in Note 2 to the consolidated
financial statements, the Partnership has agreed to
sell the Greenway Pointe property for $11.1 million.
The sale is expected to close in fourth quarter of
1997. During the three- and nine-month periods ended
September 30, 1997, Partnership cash flow from this
property was $225,000 and $623,000, respectively.
As disclosed in Note 4 to the consolidated financial
statements, the Partnership's mortgage note payable
secured by the Deptford Crossing shopping center, for
approximately $10,590,000, matured in September 1997.
The lender has granted the Partnership a temporary
forbearance period; however, if the Partnership is
unable to sell the property or obtain alternative
financing, the Partnership may lose the property
through foreclosure. During the three- and nine-month
periods ended September 30, 1997, Partnership cash flow
from the Deptford Crossing property was approximately
$129,000 and $316,000, respectively.
The Managing General Partner has identified a potential
purchaser of the 2600 Michelson Drive property and has
begun to negotiate a sale agreement. The Managing
General Partner expects to market for sale the
Partnership's remaining investments over the next two
years. However, there is no assurance that the
Partnership will be able to sell its property interests
in the near future.
The Partnership's liquidity depends upon the cash flow
from operations of its real estate investments,
interest received on its participating mortgage loan
and expenditures for building improvements and tenant
improvements and leasing commissions in connection with
the leasing of space. During the three- and nine-month
periods ended September 30, 1997, all of the
Partnership's properties, except for 401 East Ontario
Street during the nine-month period ending September
30, 1997, generated positive cash
DEAN WITTER REALTY YIELD PLUS, L.P.
flow from operations, and it is anticipated that they
will continue to do so during the remainder of 1997 and
in 1998. Significant repair costs at 401 East Ontario
Street caused property operating expenses there to
exceed rental income by approximately $766,000 during
the nine-month period ended September 30, 1997. Also,
as described in Note 3 to the consolidated financial
statements, the owner/borrower of the One Congress
Street property was in Chapter 11 bankruptcy
proceedings until October 27, 1997, and did not pay
approximately $511,000 and $1,706,000 of its minimum
debt service to the Partnership in the three- and nine-
month periods ended September 30, 1997, respectively.
The Partnership's liquidity also has been and will
continue to be affected by the disposition of
Partnership properties; as properties are disposed of,
Partnership cash from operations available to fund
investor distributions and capital expenditures
decreases.
During the nine-months ended September 30, 1997, the
Partnership incurred approximately $772,000 (net of
contributions by the minority interest) primarily for
tenant-related capital expenditures at Greenway Pointe
(approximately $364,000) and 2600 Michelson Drive
(approximately $320,000); no other individual property
accounted for a significant portion of the remaining
expenditures.
The Partnership also incurred approximately $0.7
million and $2.7 million for repairs of the fire and
life safety systems at 401 East Ontario Street in the
three- and nine-month periods ended September 30, 1997.
The repair project has been substantially completed as
of September 30, 1997, and the total repair costs are
expected to be approximately $3.7 million, of which
approximately $3.6 million has been incurred to date.
The Partnership also incurred approximately $197,000 of
legal costs in 1997 in connection with its lawsuits to
recover its costs to repair the concrete exterior walls
(completed 1996) and the fire and life safety systems.
The Partnership is currently engaged in settlement
discussions with certain parties to the litigation.
DEAN WITTER REALTY YIELD PLUS, L.P.
During the nine-month period ended September 30, 1997,
interest from the participating mortgage loan and cash
flow from operations of real estate owned (net of
minority interest share), except for repair costs at
401 East Ontario Street, exceeded distributions to
investors. The Partnership funded the repair costs and
capital expenditures from cash flow from operations and
cash reserves.
As of September 30, 1997, the Partnership has
commitments to contribute approximately $327,000 for
lease-related capital expenditures at the Michelson
($187,000) and Greenway Pointe ($140,000) properties.
On October 27, 1997, the Partnership negotiated a
settlement with the owner/borrower of the participating
mortgage loan, who had filed a voluntary petition under
Chapter 11 of the U.S. bankruptcy code in October 1996.
See Note 2 to the consolidated financial statements.
The cash flow generated from the lease of the garage at
the One Congress Street property is projected to be
sufficient to pay the debt service due under the first
mortgage loan on the property.
The lease at the One Congress Street property with the
General Services Administration ("GSA"), the sole
tenant of the office space at the property, expired
July 31, 1997. GSA continues to occupy its remaining
office space, and GSA and the owner/borrower are
negotiating a new lease. If the negotiations with the
GSA are not successful, there may be a significant
amount of time before a new tenant is found for this
space, and the rent to be received from a new tenant
and, as a result, the Partnership's cash flow from the
property may significantly decrease.
Until a new lease is signed with GSA at One Congress
Street, the Partnership can not determine the amount of
operating cash flow it will receive from the One
Congress Street property during the remainder of 1997
and in 1998, and the amount of tenant improvements it
will need to fund. If the Partnership incurs cash
shortfalls in the future, the Partnership will use its
cash
DEAN WITTER REALTY YIELD PLUS, L.P.
reserves to fund a portion of cash distributions to
investors and it might need to reduce cash
distributions.
Other assets decreased during the nine-month period
ended September 30, 1997 primarily due to the
application of cash held in escrow in accordance with
the terms of the Deptford mortgage note payable against
principal of the note by the lender when the note
matured in September 1997.
Except as discussed above and in the consolidated
financial statements, the Managing General Partner is
not aware of any trends or events, commitments or
uncertainties that may have a material impact on
liquidity.
On October 29, 1997, the Partnership paid a cash
distribution of $.13 per Unit to Limited Partners. The
cash distribution aggregated $1,286,996 with $1,158,296
distributed to Limited Partners and $128,700
distributed to the General Partners.
Operations
Fluctuations in the Partnership's operating results for
the three- and nine-month periods ended September 30,
1997 compared to 1996 are primarily attributable to the
following:
Rental revenue at the 401 East Ontario Street property
increased by $314,000 and $476,000 during the three-
and nine-month periods ended September 30, 1997,
respectively, compared to 1996, primarily due to the
end of rental concessions and free rent granted to
tenants while significant repairs were being performed
at the property. As discussed above, all repair work
at the property was substantially completed as of
September 30, 1997. Also, rental rates for certain
apartment types at the property were raised twice
during the year.
Interest on the participating mortgage loan decreased
in 1997 compared to 1996 due to reserves of accrued but
uncollected interest as described above.
DEAN WITTER REALTY YIELD PLUS, L.P.
Interest income on short-term investments decreased in
1997 compared to 1996 because the Partnership had less
cash available for investment because it used
significant amounts of cash reserves to fund the
repairs at the 401 East Ontario Street property and
capital expenditures. Also, during the first quarter
of 1996, the Partnership earned interest on cash from
the December 1995 sale of three shopping centers until
such cash was distributed to Limited Partners in
January 1996.
Property operating expenses decreased in 1997 compared
to 1996 primarily as a result of higher expenditures
for repairs and related litigation at 401 East Ontario
Street during 1996. During the three- and nine-month
periods ended September 30, 1997, the total repair
costs were $810,000 and $2,995,000, respectively;
during the three- and nine-month periods ended
September 30, 1996, these costs were $2,123,000 and
$4,428,000, respectively.
Interest expense decreased in 1997 compared to 1996 due
to the extinguishment of the mortgage note payable
relating to the Genessee Crossing shopping center in
August 1997. See Note 2 to the consolidated financial
statements.
During the third quarter of 1996, the Partnership
recorded a loss on the impairment of its participating
mortgage loan.
During the third quarter of 1997, the Partnership
recognized an extraordinary gain from the
extinguishment of the mortgage note payable
collateralized by the Genessee Crossing shopping
center. See Note 2 to the consolidated financial
statements.
There were no other individually significant factors
which caused changes to revenues or expenses.
A summary of the office, retail, residential and
research and development building markets where the
Partnership's properties are located, and the
performance of each property is as follows:
DEAN WITTER REALTY YIELD PLUS, L.P.
During the third quarter of 1997, the vacancy rate in
the research and development market of Columbia, MD,
the location of Greenway Pointe, remained at 6%. Also,
rental rates are increasing in this market, and there
is no significant new construction. During the third
quarter of 1997, occupancy at the property remained at
100%. Leases totaling 31% of the property's space are
scheduled to expire in 1998. In October 1997, the
Partnership agreed to sell this property. See Note 2
to the consolidated financial statements.
The luxury residential sub-market in Chicago, IL, the
location of the 401 East Ontario property, continues to
be strong. It has a current vacancy rate of less than
4%, and rental rates are increasing. During the third
quarter of 1997, occupancy at the property increased to
87% as a result of increased marketing efforts and the
completion of the above-mentioned repairs of the fire
and life safety systems.
During the third quarter of 1997, the market vacancy
rate for class A office space in Irvine, California,
the location of 2600 Michelson Drive, decreased
slightly to 14%. Rental rates have increased in this
market because of the continued strong demand for
quality class A space and the lack of significant new
construction. During the third quarter of 1997,
occupancy at the property increased to 95%. Leases on
approximately 26% and 17% of the space at the property
expire in 1998 and 1999, respectively.
During the third quarter of 1997, the downtown Boston
office market, the location of One Congress Street,
continued to strengthen and experienced a slight
increase in rental rates. There is no significant new
construction in this market. As discussed above, GSA
is the sole tenant of the office space, which is 70%
occupied at September 30, 1997. The owner/borrower is
negotiating a new lease with GSA because GSA's existing
lease expired July 31, 1997. GSA still occupies its
space while it negotiates a new lease. Also, the
retail space, which is not a significant portion of the
overall space, remained substantially vacant at
September 30, 1997.
DEAN WITTER REALTY YIELD PLUS, L.P.
During the third quarter of 1997, the vacancy rate in
the retail market in Deptford, New Jersey, the location
of Deptford Crossing, remained at 5%. There are two
retail developments which opened in the second quarter
of 1997 and two retail developments planned for
construction in the near future. This space will be
primarily occupied by large "big box" tenants, and the
Partnership anticipates that the new centers will
benefit the tenants at Deptford Crossing because the
new retailers will increase consumer traffic in the
Deptford market. During the third quarter of 1997,
occupancy at the property remained at 77%. No
significant amount of leases expire before 2001.
Inflation
Inflation has been consistently low during the periods
presented in the financial statements and, as a result,
has not had a significant effect on the operations of
the Partnership or its properties.
DEAN WITTER REALTY YIELD PLUS, L.P.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
An exhibit index has been filed as part of
this Report on Page E1.
(b) Report on Form 8-K.
None.
DEAN WITTER REALTY YIELD PLUS, L.P.
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.
DEAN WITTER REALTY YIELD
PLUS, L.P.
By: Dean Witter Realty Yield
Plus Inc.
Managing General Partner
Date: November 14, 1997 By: /s/E.
Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: November 14, 1997 By:
/s/Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
DEAN WITTER REALTY YIELD PLUS, L.P.
Quarter Ended September 30, 1997
Exhibit Index
Exhibit No. Description
27 Financial Data Schedule
E1
[ARTICLE] 5
[LEGEND]
Registrant is a limited partnership which invests in real estate,
participating mortgage loans, and real estate joint ventures. In
accordance with industry practice, its balance sheet is unclassified. For
full information, refer to the accompanying unaudited financial statements.
<TABLE>
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] DEC-31-1997
[PERIOD-END] SEP-30-1997
[CASH] 3,942,447
[SECURITIES] 0
[RECEIVABLES] 816,644
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 0
[DEPRECIATION] 0
[TOTAL-ASSETS] 113,067,839<F1>
[CURRENT-LIABILITIES] 0
[BONDS] 0
[COMMON] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 80,055,259<F2>
[TOTAL-LIABILITY-AND-EQUITY] 113,067,839<F3>
[SALES] 0
[TOTAL-REVENUES] 14,001,175<F4>
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 13,782,486
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 1,096,918
[INCOME-PRETAX] (878,229)
[INCOME-TAX] 0
[INCOME-CONTINUING] (878,229)
[DISCONTINUED] 0
[EXTRAORDINARY] 406,380
[CHANGES] 0
[NET-INCOME] (471,849)
[EPS-PRIMARY] (.05)<F5>
[EPS-DILUTED] 0
<FN>
<F1>In addition to cash and receivables, total assets include net investments
in real estate of $81,953,728, real estate held for sale of $5,108,539, net
investment in participating mortgage loans of $18,995,382, net deferred
expenses of $1,443,339 and other assets of $807,760.
<F2>Represents partners' capital.
<F3>Liabilities include mortgage notes payable of $10,589,682, minority
interest of $18,632,924, and accounts payable and other liabilities of
$3,789,974.
<F4>Total revenue includes rent of $13,126,885, interest on participating
mortgage loan of $349,011, interest on short-term investments of
$122,919 and other revenue of $402,360.
<F5>Represents net income per Unit of limited partnership interest.
</FN>
</TABLE>
