UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
State the aggregate market value of the voting stock held by nonaffiliates of
the registrant. Not Applicable
DOCUMENTS INCORPORATED BY REFERENCE
None
Page 1 of 43
<PAGE>
PART I.
ITEM 1. BUSINESS
The Registrant, Dean Witter Realty Yield Plus, L.P. (the
"Partnership"), is a limited partnership organized in January 1987
under the Uniform Limited Partnership Act of the State of Delaware
for the purpose of investing in income-producing properties.
The Managing General Partner of the Partnership is Dean Witter
Realty Yield Plus Inc. (the "Managing General Partner"), a Delaware
corporation which is wholly-owned by Dean Witter Realty Inc.
("Realty"). The Associate General Partner is Dean Witter Realty
Yield Plus Associates, L.P. (the "Associate General Partner"), a
Delaware limited partnership, the general partner of which is the
Managing General Partner. The Managing General Partner manages and
controls all aspects of the business of the Partnership. The terms
of transactions between the Partnership and its affiliates are set
forth in the consolidated financial statements in Item 8 and in Item
13 below.
The Partnership issued 8,909,969 units of limited partnership
interest (the "Units") for $178,199,380. The offering has been
terminated and no additional Units will be sold.
The proceeds from the offering were used to make investments in six
participating mortgage loans and land leases secured by interests in
two retail properties, two office buildings, one residential
property, and an office and parking garage complex. Additionally,
proceeds were used to make an investment in a short-term loan
secured by eleven partnership interests. The Partnership
subsequently acquired the real estate securing all but one of the
foregoing loans through foreclosure or through transfers of
ownership in lieu of foreclosure and sold three properties. The
Partnership's properties and investment in participating mortgage
loan are described in Item 2 below.
The Partnership considers its business to include one industry
segment, investment in real property. Financial information
regarding the Partnership is in the Partnership's financial
statements in Item 8 below.
The Partnership's real property investments are subject to
competition from similar types of properties in the vicinities in
which they are located. Further information regarding competition
and market conditions where the Partnership's properties are located
is set forth in Item 7 below.
The Partnership has no employees.
All of the Partnership's business is conducted in the United States.
<PAGE>
ITEM 2. PROPERTIES
The Partnership's principal offices are located at Two World Trade
Center, New York, New York 10048. The Partnership has no other
offices.
As of December 31, 1996, the Partnership owned directly or through
a partnership interest the following interests in real estate and a
real estate loan. Generally, the leases pertaining to the
properties provide for pass-throughs to the tenants of their pro-
rata share of certain operating expenses. In the opinion of the
Managing General Partner, all of the properties are adequately
covered by insurance.
<TABLE>
<CAPTION>
Date of Initial Net Rentable
Completion/ Investment2 Area Ownership of
Property, location and type Acquisition1 ($000) (000 sq. ft.) Land & Improvements
<S> <C> <C> <C> <C>
Greenway Pointe 1988/1990 $8,315 120 99.99% general part-
Columbia, MD nership interest.4
3 office/R&D
buildings
401 East Ontario Street 1990/1992 $37,000 395 apts 100% through interests
Chicago, IL in general partner-
luxury residential ships and corpora-
building tions.
2600 Michelson Drive 1986-89/1990 $36,000 390 50.81% general part-
Irvine, Ca nership interest.5
3 office buildings
Deptford Crossing3 1991/1992 $18,291 200 100% through interests
Deptford, NJ in general partner-
shopping center ships and corporations.
Genessee Crossing3 1988/1994 $8,640 3096 100% through interests
Flint, MI in general partnerships
shopping center and corporations.
Pine Ridge N/A/1994 $138 2.8 acres 100% through interests
Flint, MI in general partnership
unimproved land and corporations.
Military Crossing N/A/1994 $300 .6 acres 100% through interests
Norfolk, VA in general partnerships
unimproved land and corporations.
One Congress Street 1990,91/1989 $34,350 office-246 58% of a permanent
Boston, MA retail-37 second mortgage
office building and loan.7
garage
</TABLE>
1. Acquisition date is date of foreclosure or in-substance
foreclosure.
2. Estimated fair value on foreclosure or in-substance foreclosure
date, or loan amount.
3. Property is subject to a mortgage loan. See note 7 to the
consolidated financial statements in Item 8.
4. The Managing General Partner owns the remaining .01% general
partnership interest in the partnership.
5. Dean Witter Realty Yield Plus II, L.P. ("Yield Plus II"), an
affiliate of the Partnership owns the remaining 49.19% general
partnership interest. The total cost of the property was
approximately $71 million.
6. Approximately 190,000 sq. ft. at the property is owned by
stores occupying the shopping center.
7. Yield Plus II made the remaining 42% of the loan. The total
loan made was $59.2 million.
Each property was built with on-site parking facilities.
An affiliate of Realty is the property manager for Greenway Pointe,
2600 Michelson Drive, Deptford Crossing and, as of April 1, 1996,
Genessee Crossing.
Further information relating to the Partnership's properties is
included in Item 7 and Notes 4, 5, 6 and 7 to the consolidated
financial statements in Item 8 below.
ITEM 3. LEGAL PROCEEDINGS
On December 27, 1995, a purported class action lawsuit (the "Grigsby
Action") naming various public real estate partnerships sponsored by
Realty (including the Partnership and its Managing General Partner
and Associate General Partner), Realty, Dean Witter Reynolds Inc.
("DWR") and others as defendants was filed in Superior Court in
California. The complaint alleged fraud, negligent
misrepresentation, intentional and negligent breach of fiduciary
duty, unjust enrichment and related claims and sought compensatory
and punitive damages in unspecified amounts and injunctive and other
equitable relief. The defendants removed the case to the United
States District Court for the Southern District of California.
Pursuant to an order of the U.S. District Court for the Southern
District of California entered May 24, 1996, the Grigsby Action was
transferred to the U.S. District Court for the Southern District of
New York.
On February 14, 1996, a purported class action lawsuit (the
"Schectman Action") naming various public real estate partnerships
sponsored by Realty (including the Partnership and its Managing
General Partner), Realty, Dean Witter, Discover & Co. ("DWD") and
DWR as defendants was filed in the Chancery Court of Delaware for
New Castle County (the "Delaware Chancery Court"). On February 23,
1996, a purported class action lawsuit (the "Dosky Action") naming
various public real estate partnerships sponsored by Realty
(including the Partnership and its Managing General Partner),
Realty, DWD, DWR and others as defendants was filed in the Delaware
Chancery Court. On February 29, 1996, a purported class action
lawsuit (the "Segal Action') naming various public real estate
partnerships sponsored by Realty (including the Partnership and its
Managing General Partner), Realty, DWR, DWD and others as defendants
was filed in the Delaware Chancery Court. On March 13, 1996, a
purported class action lawsuit (the "Young Action") naming the
partnership, other unidentified limited partnerships, DWD, DWR and
others as defendants was filed in the Circuit Court for Baltimore
City in Baltimore, Maryland. The defendants removed the Young
Action to the United States District Court for the District of
Maryland.
Thereafter, the Schectman Action, the Dosky Action and the Segal
Action were consolidated in a single action (the "Consolidated
Action") in the Delaware Chancery Court. The Young Action was
dismissed without prejudice. The plaintiffs in the Young Action and
the Grigsby Action joined the Consolidated Action. The Grigsby
Action remains stayed indefinitely subject to being reopened for
good cause.
On October 7, 1996, the plaintiffs in the Consolidated Action filed
a First Consolidated and Amended Class Action Complaint naming
various public real estate partnerships sponsored by Realty
(including the Partnership and its Managing General Partner),
Realty, DWD, DWR and others as defendants. This complaint alleges
breach of fiduciary duty and seeks an accounting of profits,
compensatory damages in an unspecified amount, possible liquidation
of the Partnership under a receiver's supervision and other
equitable relief. The defendants filed a motion to dismiss this
complaint on December 10, 1996.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the fiscal year
to a vote of Unit holders.
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
An established public trading market for the Units does not exist,
and it is not anticipated that such a market will develop in the
future. Accordingly, information as to the market value of a Unit
at any given date is not available. However, the Partnership does
allow its limited partners (the "Limited Partners") to transfer
their Units, if a suitable buyer can be located.
As of March 17, 1997, there were 16,230 holders of limited
partnership interests.
The Partnership is a limited partnership and, accordingly, does not
pay dividends. It does, however, make quarterly distributions of
cash to its partners. Pursuant to the Partnership Agreement,
distributable cash, as defined, is paid 90% to the Limited Partners
and 10% to the general partners (the "General Partners"). Pursuant
to the agreement, $1,239,345 of the General Partner's share of such
net cash flow distributable to them through December 31, 1990, was
deferred subject to receipt by the Limited Partners of an 8% annual
return on their invested capital through that date.
During the year ended December 31, 1996, the Partnership paid cash
distributions aggregating $1.26 per Unit (including approximately
$.72 (a total of $6,414,961) of proceeds from the sale of certain
retail properties sold (the "Shopping Centers Sold") in December
1995). Total distributions were $11,760,832, with $11,226,245
distributed to the Limited Partners and $534,587 to the General
Partners. The distribution of proceeds from the Shopping Centers
Sold was paid 100% to the Limited Partners; the General Partners
deferred receipt of any proceeds. During the year ended December
31, 1995, the Partnership paid quarterly cash distributions
aggregating $.60 per Unit. The total distributions amounted to
$5,939,976, with $5,345,980 distributed to the Limited Partners and
$593,996 distributed to the General Partners.
On January 30, 1997, the Partnership paid a cash distribution of
$.13 per Unit. The distribution was $1,286,996, with $1,158,296
distributed to Limited Partners and $128,700 distributed to the
General Partners.
The Partnership anticipates making regular distributions to its
partners in the future.
Sale or financing proceeds will be distributed, to the extent
available: first, 97% to the Limited Partners and 3% to the General
Partners until each Limited Partner has received a return of their
invested capital plus an amount sufficient to provide a 10%
cumulative annual return thereon; second, 100% to the General
Partners until they have received the amount of any net cash flow
previously deferred and not distributed; and third, 85% to the
Limited Partners and 15% to the General Partners. During the year
ended December 31, 1995, the Partnership did not distribute any sale
or financing proceeds.
Taxable income (subject to certain adjustments) will be allocated to
the partners in proportion to the distribution of distributable cash
or sale or financing proceeds, as the case may be (or 90% to the
Limited Partners and 10% to the General Partners if there is no
distributable cash or sale or financing proceeds). Tax losses, if
any, will be allocated 90% to the Limited Partners and 10% to the
General Partners.
ITEM 6. SELECTED FINANCIAL DATA
The following sets forth a summary of selected financial data for
the Partnership:
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
<CAPTION>
For the years ended December 31, 1996, 1995, 1994, 1993, and 1992
19961 19952 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Total revenues $ 20,071,013 $ 34,399,506 $ 29,051,935 $ 21,141,666 $ 14,170,837
(Loss) income before
extraordinary item $ (1,785,073) $ 1,343,582 $ 4,024,6463 $ (7,155,221)3 $(30,160,877)4
Extraordinary item $ - $ - $ 626,375 $ - $ -
Net (loss) income $ (1,785,073) $ 1,343,582 $ 4,651,0213 $ (7,155,221)3 $(30,160,877)4
Per Unit of limited
partnership interest:
(Loss) income
before extraordinary
item $(0.18) $.17 $.41 $(.72) $(3.05)
Extraordinary item $ - $ - $.06 $ - $ -
Net (loss) income $(0.18) $.17 $.47 $(.72) $(3.05)
Cash distribution paid
per Unit of limited
partnership interest5 $ 1.266 $.60 $.60 $.60 $.97
Total assets at
December 31 $126,752,827 $141,753,976 $195,810,917 $175,847,369 $139,074.207
Long term debt due
after one year $ - $ 19,823,736 $ 66,887,850 $ 45,554,079 $ -
</TABLE>
1. Revenues and loss include reserves of $0.7 million on accrued
but unpaid interest on the participating mortgage loan, and
loss also includes $1.0 million impairment loss on the
participating mortgage loan. See Item 7 and Note 6 to the
consolidated financial statements in Item 8.
2. Revenues and income include a $3.3 million gain on sale of
real estate and income is net of a $6.9 million loss on
impairment of real estate. See Item 7 and Notes 4 and 5 to
the consolidated financial statements in Item 8.
3. (Loss) income includes a $12.9 million impairment loss in 1993
on the mortgage loan at One Congress Street, and a $1.7 million
impairment loss in 1994 relating to the same loan.
4. Loss includes a $16.3 million impairment of real estate and a
$15.6 million writedown of loan and reclassification to real
estate upon foreclosure of real estate.
5. Distributions paid to Limited Partners include a return of
capital per Unit of limited partnership interest of $1.26, $0.43,
$0.13, $0.60, and $0.97 for the years ended December 31, 1996,
1995, 1994, 1993 and 1992, respectively, calculated as the excess
of cash distributed per Unit over accumulated earnings per Unit
not previously distributed.
6. Includes approximately $0.72 per Unit of proceeds from sale
of the Shopping Centers Sold. See Note 5 to the Consolidated
Financial Statements.
The above financial data should be read in conjunction with the
consolidated financial statements and the related notes in Item 8.
<PAGE>
ITEM 7. 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. No additional investments are planned.
In many regions of the country, continued restraint of new office
construction and steady leasing have reduced office supply in office
markets and, in certain areas, property values and rental rates are
rising. Generally, suburban office markets are faring better than
downtown markets in major cities. Generally, new construction
remains low by historic standards, and is primarily on a build-to-
suit basis. Currently, the office vacancy level in Boston (the
location of One Congress Street) is approximately 9%. The relative
absence of office construction and growth in demand from high
technology and 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). Vacancies at many office/research and development
properties, such as Greenway Pointe, are declining as
communications, computer and software companies demand additional
space. In the retail sector, continued construction remains brisk
but is primarily limited to bigger "super" stores. A changing
tenant base caused by the domination of certain power center tenants
coupled with bankruptcies and major restructurings of other tenants
and reduced consumer spending is resulting in higher vacancies and
stagnant rents.
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 year ended
December 31, 1996, all of the Partnership's properties, except for
401 East Ontario Street, generated positive cash flow from
operations, and it is anticipated that they will continue to do so
in 1997. Significant repair costs at 401 East Ontario Street caused
property operating expenses there to exceed rental income by
approximately $2.7 million (see Note 4 to the consolidated financial
statements). Also, as described below and in Note 6 to the
consolidated financial statements, the borrower on the One Congress
Street property is in Chapter 11 bankruptcy proceedings and did not
pay approximately $660,000 of its minimum debt service in the fourth
quarter of 1996.
The Partnership's liquidity also has been and will continue to be
affected by the sale of Partnership properties; as properties are
sold, Partnership cash from operations available for distribution
decreases. Because the Partnership sold three shopping centers (the
"Shopping Centers Sold") in December 1995, the Partnership's
aggregate cash flow from operations was reduced by approximately
$2.9 million during the year ended December 31, 1996. The
Partnership accordingly adjusted the quarterly distribution rate to
$.13 per Unit, a 3% annual return on the gross offering proceeds
attributable to the Partnership's remaining investments, beginning
with the first quarter distribution paid in April 1996.
During the year ended December 31, 1996, the Partnership incurred
approximately $1,950,000 (net of contributions by the minority
interest) primarily for tenant-related capital expenditures at 2600
Michelson Drive ($980,000) and Greenway Pointe ($300,000), and
$383,000 for building improvements at 401 East Ontario Street.
Also, in 1996, the Partnership incurred approximately $4.0 million
for repairs on the exterior concrete at 401 East Ontario Street. As
of December 31, 1996, this repair program had been substantially
completed at a total cost of approximately $5.7 million. During the
third quarter of 1996, the Partnership commenced work to repair the
fire and life safety systems at the property; the total cost of this
project is expected to be approximately $3.9 million, of which
approximately $850,000 has been incurred to date. The Partnership
has also incurred approximately $425,000 in legal costs in 1996 in
connection with its lawsuits to recover its repair costs. In 1997,
the Partnership expects to expend approximately $3.1 million for the
remaining repairs. See Note 4 to the consolidated financial
statements.
As of December 31, 1996, the Partnership has commitments to
contribute approximately $390,000, primarily for lease-related
capital expenditures at the Greenway Pointe ($178,000) and Michelson
($175,000, net of minority interest share) properties.
The Partnership's participating mortgage loan is secured by the One
Congress Street property. The General Services Administration
("GSA"), the sole tenant of the office space at the property,
vacated approximately 30% of the space at the property in August
1996, and the lease on its remaining space expires in August 1997.
On October 15, 1996, the owner/borrower filed a voluntary petition
under Chapter 11 of the U.S. bankruptcy code. During the fourth
quarter of 1996, the owner/borrower failed to pay interest on the
loan of approximately $660,000. See Note 6 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.
However, current market rental rates in Boston are significantly
less than in the early 1990's when the GSA lease was entered into.
Therefore, the Partnership believes that the rent to be received by
the owner/borrower after re-leasing the office space at the property
and, as a result, the Partnership's cash flow from the property,
will significantly decrease. In addition, there may be a
significant amount of time before a new tenant is found for this
space, and substantial funds may be required to re-lease the space.
The Partnership believes that during the period of the bankruptcy it
will be unable to collect its interest on the loan in full and that
the bankruptcy may adversely impact future leasing at the property.
Accordingly, the Partnership has determined that its loan is
impaired and has recorded an additional valuation allowance of
$979,000 to reduce the carrying value of the loan to its estimated
fair value.
The Partnership's note payable secured by the Genessee Crossing
shopping center for $8,590,000 matures in May 1997, and the note
payable secured by the Deptford Crossing shopping center, for
approximately $11,400,000, matures in September 1997. The
Partnership is currently discussing refinancing alternatives on
these properties with the lenders. If the Partnership is unable to
refinance one or both of these loans, the Partnership may lose the
property(ies) through foreclosure.
During 1997, the Partnership expects that operating cash flow from
its real estate owned (net of minority interest share), except for
repair costs at 401 East Ontario Street, will exceed distributions
to investors (other than distributions from proceeds from properties
sold). The Partnership expects to pay for capital expenditures and
the 401 East Ontario Street repair costs from cash reserves. Also,
the extent to which Partnership cash flow from the One Congress
Street property will be reduced in 1997 can not be determined at
this time. It is possible that the cash from One Congress Street
along with Partnership cash flow from operations will be
insufficient to fund Partnership cash needs. If this were to occur,
the Partnership might need to fund a portion of distributions to
investors, capital expenditures and contributions to its joint
ventures from cash reserves, or to reduce cash distributions.
Except as discussed above and in the consolidated financial
statements in Item 8 below, the Managing General Partner is not
aware of any trends or events, commitments or uncertainties that may
have a material impact on liquidity.
In January 1996, in addition to the quarterly distribution, the
Partnership distributed the net proceeds from the sale of the
Shopping Centers Sold. All of the net proceeds of $6,414,961
(approximately $.72 per Unit) were distributed to the Limited
Partners; the General Partners deferred receipt of their share of
proceeds.
On January 30, 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 year
ended December 31, 1996 compared to 1995 and 1995 compared to 1994
are primarily attributable to the following:
Rental income decreased in 1996 compared to 1995 primarily due to
the absence in 1996 of rents of approximately $8.7 million from the
Shopping Centers Sold. Rent also decreased at 401 East Ontario
Street by approximately $1.2 million due to lower occupancy and rent
concessions granted to tenants while the repairs at the property are
being completed. The increase in rental income in 1995 compared to
1994 primarily resulted from higher rental income of approximately
$1.5 million at the Midway Crossing, Genessee Crossing and
Farmington Crossroads shopping centers, which began to be included
in operations in 1994 (collectively, the "1994 Shopping Centers").
The remaining increase resulted from higher rental revenue
associated with higher occupancy at Greenway Pointe, 2600 Michelson
Drive and 401 East Ontario Street, partially offset by the loss of
one month of rental income at Hampton Village Centre due to its
sale.
Interest on the participating mortgage loan decreased in 1996
compared to 1995 due to reserves of accrued but uncollected interest
as described above in "Liquidity and Capital Resources". The
increase in interest income from the participating mortgage loan in
1995 compared to 1994 resulted from the higher loan balance
outstanding during 1995.
The gain on sale of real estate resulted from the December 1995 sale
of the Shopping Centers Sold.
Other income decreased in 1996 compared to 1995 primarily because of
the absence in 1996 of a lease termination fee received at Michelson
in 1995. Other income decreased in 1995 compared to 1994 due to the
absence in 1995 of cash received in 1994 from the partnerships which
owned four community shopping centers that were foreclosed upon by
their respective first mortgage lenders, and cash received from the
developer of 401 East Ontario Street in exchange for the Partnership
releasing it from any continuing liability under a deficit guaranty,
offset by the lease termination fee received at Michelson in 1995.
Property operating expenses increased in 1996 compared to 1995 at
401 East Ontario Street by approximately $3.2 million primarily as
a result of higher expenditures for repairs. This increase was
offset by the absence of operating expenses of approximately $3
million relating to the Shopping Centers Sold. Property operating
expenses increased in 1995 compared to 1994 primarily because of the
costs of repair work at 401 East Ontario Street, offset by lower
operating expenses at 2600 Michelson Drive as a result of a
significant refund of prior year real estate taxes.
Interest expense decreased in 1996 compared to 1995 due to the
absence in 1996 of interest of approximately $2.9 million due to the
repayments in the fourth quarter of 1995 of debt relating to the
Shopping Centers Sold, loans payable to affiliates and banks and the
partial paydown of the Deptford Crossing mortgage loan. The
increase in interest expense in 1995 compared to 1994 primarily
resulted from the inclusion in 1995 of a full year's interest on the
mortgage loans on the 1994 Shopping Centers which were acquired in
April 1994.
Depreciation decreased in 1996 compared 1995 primarily due to the
absence in 1996 of depreciation of approximately $801,000, from the
Shopping Centers Sold. This decrease was partially offset by
increased depreciation at the Michelson property resulting from
increased capital expenditures.
General and administrative expenses increased in 1996 compared to
1995 primarily due to additional costs related to the sale of the
Shopping Centers Sold incurred during the first quarter of 1996.
The decrease in general and administrative expense in 1995 compared
to 1994 resulted from the absence of legal costs incurred in
connection with the foreclosures of the 1994 Shopping Centers.
Losses on impairments of real estate and investments in
participating mortgage loans consisted of the provisions for losses
on Deptford Crossing in 1995 and One Congress Street in 1996 and
1994. See Notes 4 and 6 to the consolidated financial statements.
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:
The market for research and development properties in Columbia, MD,
the location of Greenway Pointe, is improving and the vacancy rate
is 7% vs. 13% at the prior year-end. During 1996, average occupancy
at the property was 96%. The building is currently 91% leased but
because Green Springs Health Services Inc., (a tenant which has
leased approximately 28% of the property's space for five years) had
not moved into all of its space by year-end, occupancy at December
31, 1996 was 83% vs 100% at the prior year-end. Green Springs
occupies all of the space given up by G Tech and Caremark during the
fourth quarter of 1996, at a higher rental rate than paid by G Tech
and Caremark. The leases of Energetics (for approximately 27% of
the space) and the Local Government Insurance Trust (for
approximately 13% of the space) expire in 1998 and 2001,
respectively. There are no other tenants occupying more than 10% of
the property.
The luxury residential sub-market in Chicago, IL, location of the
401 East Ontario property, continues to be strong. It has a current
vacancy rate of approximately 4%, and rental rates are increasing.
During 1996, average occupancy at the property was 88%, and, at
December 31, 1996, occupancy was 83% vs. 93% at the prior year-end.
The occupancy at the property has decreased as a result of the
above-mentioned repair work at the property. As of December 31,
1996, the exterior concrete repair program has been substantially
completed. Also, the Partnership expects that the above-described
repairs on the fire and life systems (which began during the third
quarter of 1996) will be intrusive upon residents as work will be
needed to be performed inside each rental unit for up to twelve
days. To maximize tenant retention while these repairs are being
performed, the Partnership has given tenants a temporary rent
concession. Also, each tenant's rent will be abated while work is
being performed inside their units. The effect, if any, of this
repair program on rents and occupancy in the future cannot be
determined at this time.
During 1996, the market vacancy rate for class A office space in
Irvine, California, the location of 2600 Michelson Drive, decreased
from 18% to 16% because the steady absorption of space and the lack
of new construction are leading to a decrease in the amount of
available quality office space. Rental rates have also recently
begun to increase in this market. During 1996, average occupancy at
the property was 93%, and, at December 31, 1996, occupancy was 93%
vs 92% of the prior year-end. The lease of AVCO Financial (for
approximately 22% of the property's space) expires in 2002. There
are no other tenants occupying more than 10% of the property's
space. Leases covering approximately 33% and 28% of the space
expire in 1998 and 1999, respectively.
In 1996, the office vacancy level in the Boston office market, the
location of One Congress Street, decreased from 10% to 9%. Although
this market continues to tighten, rental rates have not increased
significantly. As discussed above, GSA vacated approximately 70,000
square feet of the property's office space in August 1996 and its
lease on the remaining space terminates in August 1997. As a result
of GSA's partial vacancy, occupancy at the office space decreased
from 100% to 70% in 1996 vs. average occupancy of 100% in 1995. In
both 1996 and 1995, the retail space, which is not a significant
portion of the overall space, remained substantially vacant.
The retail market in Deptford, New Jersey, the location of Deptford
Crossing, currently has a vacancy rate of 9%. There are four retail
developments under construction in this market, all of which are
expected to be completed in 1997. This space is being built for
power retailers, traditional anchor tenants and small tenants. The
sales of tenants in the Deptford Crossing property may be negatively
affected by competition from both power retailers and similar
retailers which may move into the new space. Also, the new space
will compete with the Partnership's property as the Partnership
tries to lease its vacant space. During 1996, average occupancy at
the property was 82%, and, at December 31, 1996 occupancy was 83%
vs. 80% at the prior year-end. In January 1997, a tenant, occupying
approximately 8% of the property's space, vacated its space.
Tenants occupying 10% or more of the property's space include T.J.
Maxx (16%), Marshalls (14%), Office Max (13%) and Petsmart (10%);
their leases expire in 2001, 2002, 2002 and 2003, respectively. No
significant amount of leases expire before 2001.
The vacancy rate in Flint, Michigan, the location of the Genesee
Crossing shopping center, has increased to approximately 17% as a
result of the closing of several stores due to bankruptcies. During
1996, and, at December 31, 1996, occupancy at the property remained
at 99%. The lease of the Burlington Coat Factory, for approximately
42% of the property's space, is scheduled to expire in 2009.
Burlington has a "kick-out" option to terminate the lease at any
time if sales are below a threshold amount; sales are currently
below this threshold, but Burlington has not indicated an interest
in vacating its space early. The leases of Jo Ann Fabrics
(approximately 10% of the space) and Fashion Bug (approximately 10%
of the space) expire in 1999 and 2000, respectively. Other leases
totaling approximately 10% of the property's space are scheduled to
expire in 1998. Target Stores owns its store (approximately 102,000
square feet) at the property. A branch of a national home
electronics store and a branch of a national pet store will be
opening on a site adjacent to the property. The Partnership
believes that these new retailers may increase traffic at the
property.
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.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
DEAN WITTER REALTY YIELD PLUS, L.P.
INDEX
(a) Financial statements Page
Independent Auditors' Report
Consolidated Balance Sheets at December 31, 1996 and 1995 18
Consolidated Statements of Operations for the years ended
December 31, 1996, 1995 and 1994 19
Consolidated Statements of Partners' Capital for the years
ended December 31, 1996, 1995 and 1994 20
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 21-22
Notes to Consolidated Financial Statements 23-33
(b) Financial statement schedule
Real Estate and Accumulated Depreciation III 40-42
All schedules other than those indicated above have been omitted
because either the required information is not applicable or the
information is shown in the consolidated financial statements or
notes thereto.<PAGE>
Independent Auditors' Report
To the Partners of
Dean Witter Realty Yield Plus, L.P.:
We have audited the accompanying consolidated balance sheets of Dean
Witter Realty Yield Plus, L.P. and consolidated partnerships (the
"Partnership") as of December 31, 1996 and 1995, and the related
consolidated statements of operations, partners' capital and cash
flows for each of the three years in the period ended December 31,
1996. Our audits also included financial statement schedule III.
These financial statements and the financial statement schedule are
the responsibility of the Partnership's management. Our
responsibility is to express an opinion on the financial statements
and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of Dean
Witter Realty Yield Plus, L.P. and consolidated partnerships as of
December 31, 1996 and 1995, and the results of their operations and
their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting
principles. Also, in our opinion, financial statement schedule III,
when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
Deloitte & Touche LLP
/s/Deloitte & Touche LLP
New York, New York
March 26, 1997
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
<CAPTION>
ASSETS
1996 1995
<S> <C> <C>
Real estate:
Land $ 13,444,875 $ 13,444,875
Buildings and improvements 102,237,481 99,540,590
115,682,356 112,985,465
Accumulated depreciation 18,386,846 14,468,727
97,295,510 98,516,738
Investment in participating mortgage loan, net
of allowance of $15,549,278 and $14,570,278 18,995,382 19,974,382
Cash and cash equivalents 6,799,320 18,939,265
Deferred expenses, net 1,419,805 1,626,335
Other assets 2,242,810 2,697,256
$126,752,827 $141,753,976
LIABILITIES AND PARTNERS' CAPITAL
Mortgage notes payable $ 19,726,496 $ 20,003,736
Accounts payable and other liabilities 3,472,149 4,249,284
Minority interests 19,166,086 19,566,955
42,364,731 43,819,975
Partners' capital (deficiency):
General partners (7,121,032) (6,407,938)
Limited partners ($20 per Unit, 8,909,969
issued and outstanding) 91,509,128 104,341,939
Total partners' capital 84,388,096 97,934,001
$126,752,827 $141,753,976
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
1996 1995 1994
<S> <C> <C>
Revenues:
Rental $17,014,283 $27,033,215 $24,937,731
Interest on participating mortgage loan 2,098,555 2,745,433 2,588,341
Gain on sale of real estate - 3,334,036 -
Interest on short-term investments 476,051 496,283 369,191
Other 482,124 790,539 1,156,672
20,071,013 34,399,506 29,051,935
Expenses:
Property operating 13,009,606 12,942,778 11,601,150
Interest 1,594,580 5,794,644 5,280,383
Depreciation 3,918,119 4,342,062 4,144,709
Amortization 411,090 547,318 410,772
General and administrative 996,930 786,283 1,129,135
Losses on impairment of real estate and
participating mortgage loan 979,000 6,931,459 1,711,683
20,909,325 31,344,544 24,277,832
(Loss) income before minority interests (838,312) 3,054,962 4,774,103
Minority interests 946,761 1,711,380 749,457
(Loss) income before extraordinary item (1,785,073) 1,343,582 4,024,646
Extraordinary item:
Gain on refinancing of debt - - 626,375
Net (loss) income $(1,785,073) $ 1,343,582 $ 4,651,021
Net (loss) income allocated to:
Limited partners $(1,606,566) $ 1,542,627 $ 4,185,919
General partners (178,507) (199,045) 465,102
$(1,785,073) $ 1,343,582 $ 4,651,021
Per Unit of limited partnership interests:
(Loss) income before extraordinary item $(.18) $.17 $.41
Extraordinary item - - .06
Net (loss) income $(.18) $.17 $.47
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
Limited General
Partners Partners Total
<S> <C> <C> <C>
Partners' capital (deficiency)
at January 1, 1994 $109,305,353 $(5,486,003) $103,819,350
Net income 4,185,919 465,102 4,651,021
Cash distributions (5,345,980) (593,996) (5,939,976)
Partners' capital (deficiency)
at December 31, 1994 108,145,292 (5,614,897) 102,530,395
Net income 1,542,627 (199,045) 1,343,582
Cash distributions (5,345,980) (593,996) (5,939,976)
Partners' capital (deficiency)
at December 31, 1995 104,341,939 (6,407,938) 97,934,001
Net loss (1,606,566) (178,507) (1,785,073)
Cash distributions (11,226,245) (534,587) (11,760,832)
Partners' capital (deficiency)
at December 31, 1996 $ 91,509,128 $(7,121,032) $ 84,388,096
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (1,785,073) $ 1,343,582 $ 4,651,021
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation and amortization 4,329,209 4,889,380 4,555,481
Minority interest in earnings of consolidated
partnerships 946,761 1,711,380 749,457
Losses on impairment of real estate and
participating mortgage loan 979,000 6,931,459 1,711,683
Gain on sale of real estate - (3,334,036) -
Increase in deferred expenses (204,560) (593,204) (624,948)
Decrease (increase) in other assets 454,446 (802,195) (231,675)
Decrease in accounts payable and other
liabilities (777,135) (366,257) (473,368)
Net cash provided by operating activities 3,942,648 9,780,109 10,337,651
Cash flows from investing activities:
Additions to real estate (2,696,891) (821,485) (2,465,304)
Proceeds from sales of real estate,
net of closing costs - 57,343,595 -
Investments in participating mortgage loan - (390,034) (1,318,423)
Release of cash in escrow - 5,000,000 -
Net cash (used in) provided by investing activities (2,696,891) 61,132,076 (3,783,727)
Cash flows from financing activities:
Repayments of mortgage notes payable (277,240) (37,711,141) (8,878,006)
Cash distributions (11,760,832) (5,939,976) (5,939,976)
Minority interest in distributions from
consolidated partnerships (2,297,113) (2,507,440) (1,357,785)
Contributions by minority interest to
consolidated partnerships 949,483 489,992 989,425
Repayments of bank loans - (9,350,557) (267,180)
(Repayments to) loans from affiliates - (1,726,524) 3,409
Proceeds from bank loans - - 8,555,404
Effect of the change in cash from acquisitions
of partnerships - - 253,660
Net cash used in financing activities (13,385,702) (56,745,646) (6,641,049)
(Decrease) increase in cash and cash equivalents (12,139,945) 14,166,539 (87,125)
Cash and cash equivalents at beginning of year 18,939,265 4,772,726 4,859,851
Cash and cash equivalents at end of year $ 6,799,320 $ 18,939,265 $ 4,772,726
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,594,580 $ 5,794,644 $ 5,280,383
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994
<S> <C> <C> <C>
Supplemental disclosure of non-cash investing activities:
Real estate acquired through foreclosure
of mortgage loans $ - $ - $(25,731,946)
Mortgage notes payable assumed $ - $ - $ 25,598,317
Other assets acquired through
foreclosures $ - $ - $ (95,541)
Accounts payable and accrued
liabilities acquired through
foreclosures $ - $ - $ 482,830
Foreclosure of real estate:
Real estate $ - $ - $ 4,150,000
Mortgage note $ - $ - $(4,150,000)
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
DEAN WITTER REALTY YIELD PLUS, L.P.
Notes to Consolidated Financial Statements
December 31, 1996, 1995 and 1994
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 to invest in the development and operation of income-producing
properties. 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 Partnership issued 8,909,969 units of limited partnership
interests (the "Units") for $178,199,380. No additional Units will
be sold.
2. Summary of Significant Accounting Policies
The financial statements include the accounts of the Partnership, DW
Columbia Gateway Associates, DW Michelson Associates, DW Lakeshore
Associates, Deptford Crossing Associates, Hampton Crossing
Associates, DW Community Centers Limited Partnership, and DW
Maplewood Inc. (effective April 4, 1994) on a consolidated basis.
The Partnership's records are maintained on the accrual basis of
accounting for financial reporting and tax purposes. The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Real estate acquired in settlement of loans was recorded at the
lower of the book value of the investment or estimated fair value of
the property at the date of foreclosure or in-substance foreclosure.
Costs of improvements to the properties are capitalized and repairs
are expensed. Depreciation is recorded on the straight-line method.
At least annually, and more often if circumstances dictate, the
Partnership evaluates the recoverability of the net carrying value
of its real estate and any related assets. As part of this
evaluation, the Partnership assesses, among other things, whether
there has been a significant decrease in the market value of any of
its properties. If events or circumstances indicate that the net
carrying value of a property may not be recoverable, the expected
future net cash flows from the property are estimated for a period
of approximately five years (or a shorter period if the Partnership
expects that the property may be disposed of sooner), along with
estimated sales proceeds at the end of the period. If the total of
these future undiscounted cash flows were less than the carrying
amount of the property, the property would be written down to its
fair value as determined (in some cases with the assistance of
outside real estate consultants) based on discounted cash flows, and
a loss on impairment recognized by a charge to earnings. The
Partnership's accounting policy complies with Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of".
The Partnership also periodically evaluates the collectibility of
both interest and principal of its investment in the participating
mortgage loan to determine whether it is impaired. The mortgage
loan is considered to be impaired when, based on current information
and events, it is probable that the Partnership will be unable to
collect all amounts due according to the existing contractual terms
of the loan. When the mortgage loan is considered to be impaired,
the Partnership establishes a valuation allowance equal to the
difference between a) the carrying value of the loan, and b) the
present value of the expected cash flows from the loan at its
effective interest rate, or, for practical purposes, at the
estimated fair value of the real estate collateralizing the loan.
The Partnership's accounting policy complies with Statements of
Financial Accounting Standards No. 114 and No. 118 with respect to
accounting by creditors for impairment of a loan.
Because the determination of fair value is based upon projections of
future economic events such as property occupancy rates, rental
rates, operating cost inflation and market capitalization rates
which are inherently subjective, the amounts ultimately realized at
disposition may differ materially from the net carrying value as of
December 31, 1996. The cash flows used to evaluate the
recoverability of the assets and to determine fair value are based
on good faith estimates and assumptions developed by the Managing
General Partner. Unanticipated events and circumstances may occur
and some assumptions may not materialize; therefore actual results
may vary from the estimates and the variances may be material. The
Partnership may provide additional write-downs, which could be
material, in subsequent years if real estate markets or local
economic conditions change.
Cash and cash equivalents consist of cash and highly liquid
investments with maturities, when purchased, of three months or
less.
Deferred expenses consist of origination fees in connection with the
participating mortgage loan and leasing commissions. Origination
fees are amortized over the loan term, which approximates the
effective yield method. Leasing commissions are amortized over the
applicable lease terms.
Rental income is accrued on a straight-line basis over the terms of
the leases. Accruals in excess of amounts payable by tenants
pursuant to their leases (resulting from rent concessions or rents
which periodically increase over the term of a lease) are recorded
as receivables and included in other assets.
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.
No provision for income taxes has been made in the financial
statements, since the liability for such taxes is that of the
partners rather than the Partnership.
The accounting policies used for tax reporting purposes differ from
those used for financial reporting as follows: (a) depreciation is
calculated using accelerated methods, (b) rental income is
recognized based on the payment terms in the applicable leases, and
(c) writedowns for impairments of real estate and the participating
mortgage loan are not deductible. In addition, offering costs are
treated differently for tax and financial reporting purposes. The
tax basis of the Partnership's assets and liabilities is
approximately $59 million higher than the amounts reported for
financial statement purposes at December 31, 1996.
3. Partnership Agreement
The Partnership Agreement provides that net cash flow, as defined,
will be paid 90% to the Limited Partners and 10% to the General
Partners. Pursuant to the Agreement, $1,239,345 of the General
Partners' share of such net cash flow distributable to them through
December 31, 1990 was deferred, subject to receipt by the Limited
Partners of an 8% annual return on their invested capital.
Sale or financing proceeds will be distributed, to the extent
available: first, 97% to the Limited Partners and 3% to the General
Partners until the Limited Partners receive a return of their
invested capital plus an amount sufficient to provide a 10%
cumulative annual return thereon; second, 100% to the General
Partners until they have received the amount of any net cash flow
previously deferred and not distributed; and third, 85% to the
Limited Partners and 15% to the General Partners.
Taxable income generally will be allocated to the partners in
proportion to the distribution of distributable cash or sale or
financing proceeds, as the case may be (or 90% to the Limited
Partners and 10% to the General Partners if there is no
distributable cash or sale or financing proceeds). Tax losses, if
any, are allocated 90% to the Limited Partners and 10% to the
General Partners.
Distributions paid to Limited Partners include returns of capital
per Unit of limited partnership interest of $1.26, $0.43 and $0.13,
for the years ended December 31, 1996, 1995 and 1994, respectively,
calculated as the excess of cash distributed per Unit over
accumulated earnings per Unit not previously distributed.
4. Investments in Real Estate
2600 Michelson Drive, Irvine, California
The property is owned by a subsidiary partnership of DW Michelson
Associates ("DW Michelson"), a general partnership which is owned
50.81% by the Partnership and 49.19% by Dean Witter Realty Yield
Plus II, L.P. ("Yield Plus II"), an affiliated partnership. An
affiliate of the developer of the property is obligated to DW
Michelson on two promissory notes which originated in 1991 totaling
approximately $1.1 million. The notes are due December 31, 1999,
bear interest at 8.5% per annum and require monthly payments of
approximatley $15,000. Because of the uncertainty of their
realization, the principal amounts of these notes were not
recognized in the financial statements. Payments of the promissory
notes are included in other income when received.
An affiliate of Realty manages the property.
Greenway Pointe, Columbia, Maryland
In 1990, the Partnership acquired Greenway Pointe, which consists of
three office/research and development buildings and land from the
borrower for an amount equal to the then-outstanding loan balance.
An affiliate of Realty manages the property.
401 East Ontario Street, Chicago, Illinois
In January 1994, the Partnership acquired the property, a high rise
luxury apartment building, by deed in lieu of foreclosure. In
addition, the former owner/borrower paid the Partnership $350,000
(included in other income) in exchange for the Partnership's and
Realty's releasing the principals of the owner/borrower from any
continuing liability under their deficit guarantee to the
Partnership.
In late February 1995, cracks and spalling were observed on certain
portions of the concrete exterior. The worst spalls were removed
and temporary repairs were completed. Beginning in March 1995, the
Partnership retained the services of three independent engineering
firms which completed studies and submitted separate reports. The
reports confirmed that cracking and spalling of this nature is
highly unusual for a building of this age, and attribute the
problems to both the defective design and construction of the
building. The Partnership also retained two architectural firms to
work with the engineers in developing permanent repair
specifications. Drawings and specifications for the exterior
concrete repair work were submitted to five qualified contractors
for bidding purposes; the contract was awarded to the lowest bidder.
Permanent repair work began in September 1995 and was completed in
October 1996. Total costs of the repair work approximated $5.7
million of which $4.0 million and $1.7 million were expended in 1996
and 1995, respectively. During the third quarter of 1996, the
building's primary insurance carrier, which denied that these
repairs were covered by the Partnership's policy, paid $125,000 to
the Partnership in settlement of this matter. Litigation continues
against those the Partnership deems responsible for the defects in
the design and construction of the building, including the
architect, structural engineer, general contractor and others.
During the third quarter of 1996, it was discovered that certain of
the building's interior walls did not meet the city of Chicago's
fire code requirements. The Partnership retained the services of
nationally recognized consultants to investigate, test, and conduct
a thorough review of all the building fire and life safety systems.
Their reports concluded that the existing fire and life safety
systems will function if called upon to do so and the building is
safe for continued occupancy, although the reports also recommended
fixing some problems they identified with those systems. The
Partnership notified the city of Chicago of the matter, and the City
agreed with the Partnership's proposed corrections. The Partnership
notified the building's tenants of these deficiencies. The
Partnership commenced repair work during the third quarter of 1996,
and expects the work to be completed by the end of 1997. The cost
of these measures is estimated to be approximately $3.9 million, of
which approximately $850,000 was incurred in 1996. In addition, a
rent concession was offered to the residents in order to maintain
occupancy. The building's insurance carriers have been notified,
and the Partnership has added this matter to the litigation
concerning the repair work on the exterior concrete of the building.
Litigation is being vigorously pursued but there can be no assurance
that any amounts will be recovered. Legal fees of approximately
$425,000 and $215,000 were incurred in 1996 and 1995, respectively.
Deptford Crossing, Deptford, New Jersey
In 1993, the Partnership acquired the property, a community shopping
center, as a result of a transfer of ownership interests in lieu of
foreclosure.
Because of continuing weakness in the Deptford, New Jersey retail
market, and the likelihood that such weakness would persist for
several years, in the third quarter of 1995, the Partnership
concluded that the property was impaired. Accordingly, the
Partnership recorded a loss on impairment of the property of
approximately $6,931,000 at September 30, 1995.
The property is subject to a first mortgage loan. See note 7.
An affiliate of Realty manages the property.
Genesee Crossing Shopping Center and Miscellaneous Land Parcels
The Genesee Crossing shopping center and miscellaneous land parcels
in Flint MI and Norfolk VA were acquired in settlement of loans made
by the Partnership to their owners in 1990. See Note 5.
An affiliate of Realty manages the Genessee Crossing Shopping
Center.
The locations, years of acquisition through foreclosure or in-
substance foreclosure and net carrying values of the Partnership's
properties are as follows:
<TABLE>
<CAPTION>
Year of December 31,
Property Acquisition 1996 1995
<S> <C> <C> <C>
2600 Michelson Drive, Irvine, CA 1990 $38,361,437 $38,512,516
Greenway Pointe, Columbia, MD 1990 5,340,001 5,666,304
401 East Ontario Street, Chicago, IL 1992 34,425,513 34,746,550
Deptford Crossing, Deptford, NJ 1992 10,652,052 10,903,021
Genessee Crossing, Flint, MI 1994 8,081,760 8,253,600
Pine Ridge (land), Flint, MI 1994 134,747 134,747
Military Crossing (land), Norfolk VA 1994 300,000 300,000
$97,295,510 $98,516,738
</TABLE>
5. Real Estate Sold
On October 19, 1995, the Partnership and certain of its subsidiaries
entered into an agreement with New Plan Realty, to sell the land and
buildings which comprise the Hampton Village Centre, Midway
Crossing, Farmington Crossroads and Genessee Crossing shopping
centers (which are described in more detail below). The agreement
was subsequently amended to, among other things, eliminate the sale
of the Genessee Crossing shopping center.
The closing of the sale of the Hampton Village Centre, Midway
Crossing and Farmington Crossroads shopping centers, for a
negotiated sales price of approximately $58,250,000, took place on
December 11, 1995.
At closing, a portion of the sales proceeds were used to prepay the
existing mortgages encumbering Hampton Village Centre and Farmington
Crossroads, secured borrowings under two bank lines of credit and
the loan from an affiliate. After reserves relating to the cost of
repairs of the 401 East Ontario Street property, the Partnership
distributed approximately $6.4 million to the Limited Partners in
January 1996. See Notes 7 and 10.
The aggregate net income and cash flow from operations from the
shopping centers sold for the year ended December 31, 1995 was
approximately $1,870,000 and $2,550,000, respectively. Interest
expense relating to the loans secured by the shopping centers was
approximately $3,600,000.
Hampton Village Centre, Rochester Hills, Michigan
The Partnership had made three participating mortgage loans totaling
approximately $13,300,000 to Hampton Village Centre (the "Center").
The Partnership's borrower had also obtained a first mortgage loan
of $29,000,000, secured by Phase I of the Center, on which interest-
only was payable monthly through May 1997 at 9.375%.
Prior to 1994, the Partnership obtained effective control of the
entity which owned the Center, and began accounting for it as if the
Center were owned. During the first quarter of 1994, the
Partnership indirectly acquired all of the partnership interests of
Hampton Crossing Associates not previously owned by it.
Contractors who worked on the property had brought claims of about
$2,000,000 against the borrower and had filed liens against the
Center. During 1994, the Partnership settled all but one of these
claims for approximately $300,000. Settlement of the remaining
claim in 1995 did not have a material impact on the financial
statements.
An affiliate of Realty managed the property.
Shopping Centers Investments, Michigan, Ohio, and Tennessee
In 1990, the Partnership loaned $6,000,000 to the partners of the
developer of eleven community shopping centers and the Hampton
Crossing and Deptford Crossing properties. The loan was secured by
interests in eleven partnerships which owned the eleven community
shopping centers and undeveloped land, all of which were encumbered
by mortgages. Three of the Centers were sold during the second
quarter of 1991. The borrower defaulted on the loan in August 1991.
The Partnership reserved the loan in full as of December 31, 1992.
In April 1994, the Partnership obtained sole control of the
partnerships which own the Hickory Ridge Crossing, Midway Crossing
and Genessee Crossing community shopping centers and joint control
of the partnership which owns the Farmington Crossroads Center. At
that date, the Partnership consolidated these partnerships and
recorded their assets and liabilities at estimated fair values. The
Partnership also retained two parcels of land not subject to
mortgages.
During 1994, the mortgagees foreclosed on five of the properties,
including the Hickory Ridge Crossing center, which was encumbered by
a $4,150,000 mortgage.
6. Investment in Participating Mortgage
One Congress Street, Boston, Massachusetts
The Partnership and Yield Plus II made a $59.2 million participating
second mortgage loan on the One Congress Street property, which
consists of an office building and parking garage. Base interest on
the loan is payable at 8% and the first $250,000 of net revenues in
any calendar year from the property is payable as additional
interest. The Partnership and Yield Plus II also own a 58% interest
in adjusted net revenue and capital proceeds generated by the
property. The loan is due in 1999.
The Partnership and Yield Plus II have fully funded their loan
commitments of $34.35 and $24.85 million, respectively.
In August 1996, the General Services Administration ("GSA"), which
leased all of the office space at the property, vacated
approximately 70,000 square feet (approximately 30% of the office
space) pursuant to its one-time cancellation option on a portion of
its space. The GSA's annual rent for this space approximated $2.5
million. The lease on GSA's remaining space at the property expires
in August 1997. The owner/borrower has a pending claim against the
GSA relating to the original construction of its space.
In 1993, the Partnership concluded that the value of the One
Congress Street property and the Partnership's related loan were
impaired. Accordingly, as of December 31, 1993, the Partnership
established an allowance of approximately $12.9 million against the
loan. The $1.7 million loss on impairment in 1994 represents
approximately $1.3 million funded and reserved in 1994 and
approximately $0.4 million reserved in 1994 and funded in early
1995.
In 1991, one of the general partners of the general partner of the
owner/borrower of the One Congress Street property filed a voluntary
petition under Chapter 11 of the Bankruptcy Code. In 1996, as part
of the reorganization, control over this general partner's interest
in the property was transferred to a trustee in bankruptcy.
In October 1996, the owner/borrower defaulted on the participating
mortgage loan by failing to timely pay its debt service.
Thereafter, the Partnership and Yield Plus II 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. The Partnership is currently
attempting to negotiate a settlement agreement with the
owner/borrower. The ultimate outcome of these negotiations and
their effect on the financial statements cannot be determined at
this time. The owner/borrower remains current on its debt service
payments to its first mortgage lender and the property's real estate
taxes have been paid.
The Partnership believes that during the bankrtupcy period it will
be unable to collect its interest on the loan in full and that the
bankruptcy may adversely impact future leasing at the property.
Accordingly, the Partnership has determined that the loan is
impaired and has recorded an additional valuation allowance of
$979,000 to reduce the carrying value of the loan to its estimated
fair value, and has reserved accrued but unpaid interest of
approximately $660,000 as of December 31, 1996.
7. Mortgage Notes Payable
The Partnership's properties are subject to first mortgage notes as
follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Mortgage note due September 30, 1997; $11,136,496 $11,413,736
secured by the Deptford Crossing Shopping
Center: Interest at the Partnership's
election of LIBOR plus .375%, the bank's
quoted variable rate plus 1.375% or the
bank's fixed rate: interest and $15,000
of principal payable monthly through
maturity.
Mortgage notes due May 15, 1997; secured 8,590,000 8,590,000
by the Genessee Crossing Shopping Center:
interest-only payable monthly at 9.375%
$19,726,496 $20,003,736
</TABLE>
The fair value of the mortgage notes payable are approximately equal
to their carrying values. The fair value is estimated by
discounting future principal and interest payments using current
lending rates and market conditions for instruments with similar
maturities and credit quality.
The mortgage note securing the Deptford Crossing property,
originally maturing in March 1996, was modified in November 1995.
As part of the modification, the maturity of the note was extended
until March 1997, with an option, which has been exercised, to
extend to September 1997, and the semiannual principal payments of
$53,910 were revised to monthly principal payments of $15,000, plus
additional quarterly principal payments equal to excess cash (as
defined in the refinancing agreement). The Partnership had provided
a $5 million letter of credit, secured by Partnership cash reserves,
to the lender to secure repayment. As part of the restructuring,
$4.5 million of the cash reserves were used to repay principal and
$500,000 was used to establish an escrow account. Approximately
$132,000 of the escrow account was released to the Partnership to
fund capital expenditures at the property in 1996. At December 31,
1996, the interest rate was 6.97% on the loan.
8. Loans Payable
In August 1994, the Partnership increased its existing $3 million
bank line of credit to $5 million and borrowed the available amount
of approximately $4.1 million. Contemporaneously, the Partnership
established an additional $6 million line of credit with the bank
and borrowed approximately $4.5 million.
These borrowings were used to repay mortgage loans secured by the
Midway Crossing Shopping Center aggregating approximately $8.2
million (after forgiveness of $626,375 of the loan by the
mortgagee), and delinquent real estate taxes and closing costs
totaling approximately $312,000. The remaining borrowings were used
to increase Partnership cash reserves.
Borrowings under both of the bank lines of credit, which bore
interest at the prime rate plus one quarter percent and were secured
by certain of the Partnership's properties were repaid in December
1995 from the proceeds from the sale of three shopping centers.
9. Leases
Minimum future rentals under noncancellable operating leases as of
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
<S> <C>
1997 $ 9,134,981
1998 7,772,189
1999 5,416,508
2000 4,212,276
2001 3,259,548
Thereafter 3,284,099
Total $33,079,601
</TABLE>
The Partnership has determined that all leases relating to its
properties are operating leases. These leases range in term from
one to fiften years, and generally provide for fixed minimum rent
with rental escalation and/or expense reimbursement clauses.
10. Related Party Transactions
An affiliate of Realty provided property management services for
four properties in 1996, 1995 and 1994. The Partnership paid the
affiliate property management fees (included in property operating
expenses) of $327,000, $327,228 and $316,768 for the years ended
December 31, 1996, 1995 and 1994, respectively.
Realty performs administrative functions, and processes certain
investor and tax information on behalf of the Partnership. For the
years ended December 31, 1996, 1995 and 1994, Realty was reimbursed
$387,000, $445,383 and $422,199, respectively (included in general
and administrative expenses), for these services.
As of December 31, 1996, Realty and its affiliate were owed $59,000,
which is included in accounts payable and other liabilities.
In 1991, the Partnership borrowed funds from an affiliate of Realty
to fund investments in participating mortgage loans and capital
expenditures. Interest expense, which was calculated using the
prime rate, was $154,491 in 1995 and $123,508 in 1994. The loan was
repaid in December 1995 out of the proceeds of the sale of the
shopping centers (see Note 5).
11. 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 courts.
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.
12. Subsequent Event
On January 30, 1997, the Partnership paid a cash distribution of
$.13 per Unit. The distribution was $1,286,996, with $1,158,296
distributed to the Limited Partners and $128,700 distributed to the
General Partners.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership is a limited partnership and has no directors or
officers.
The directors and executive officers of the Managing General Partner
are as follows:
Position with the
Name Managing General Partner
William B. Smith Chairman of the Board of Directors
E. Davisson Hardman, Jr. President and Director
Lawrence Volpe Controller and Director
Ronald T. Carman Secretary and Director
All of the directors have been elected to serve until the next
annual meeting of the Shareholders of the Managing General Partner
or until their successors are elected and qualify. Each of the
officers has been elected to serve until his successor is elected
and qualifies.
William B. Smith, age 53, is a Managing Director of Dean Witter
Realty Inc. and has been with Dean Witter Realty Inc. since 1982.
He is an Executive Vice President of Dean Witter Reynolds Inc.
E. Davisson Hardman, Jr., age 47 is a Managing Director of Dean
Witter Realty Inc. and has been with Dean Witter Realty Inc. since
1982.
Lawrence Volpe, age 49, is a Director and the Controller of Dean
Witter Realty Inc. He is a Senior Vice President and Controller of
Dean Witter Reynolds Inc., which he joined in 1983.
Ronald T. Carman, age 45, is a Director and the Secretary of Dean
Witter Realty Inc. He is a Senior Vice President and Associate
General Counsel of Dean Witter, Discover & Co. and Dean Witter
Reynolds Inc., which he joined in 1984.
There is no family relationship among any of the foregoing persons.
ITEM 11. EXECUTIVE COMPENSATION
The General Partners are entitled to receive cash distributions,
when and as cash distributions are made to the Limited Partners, and
a share of taxable income or tax loss. Descriptions of such
distributions and allocations are in Item 5 above. The General
Partners received cash distributions totalling $534,587, $593,996
and $593,997 during the years ended December 31, 1996, 1995 and
1994, respectively. In 1996, the General Partners deferred
distribution of their share of the sales proceeds from the December
1995 sale of three shopping centers.
The General Partners and their affiliates were paid certain fees and
reimbursed for certain expenses. Information concerning such fees
and reimbursements is contained in Note 10 to the consolidated
financial statements in Item 8 above.
The directors and executive officers of the Partnership's Managing
General Partner received no renumeration from the Partnership.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) No person is known to the Partnership to be the beneficial
owner of more than five percent of the Units.
(b) The executive officers and directors of the Managing General
Partner own the following Units as of March 17, 1997:
<TABLE>
<CAPTION>
(3)
Amount and
(1) (2) Nature of
Title of Class Name of Beneficial Owner Beneficial
Ownership
<S> <C> <C>
Limited All directors and executive *
Partnership officers of the Managing
Interests General Partner, as a group
</TABLE>
*Own, by virtue of ownership of limited partnership interests in the
Associate General Partner, less than 1% of the Units of the
Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As a result of their being partners of a limited partnership which
is the limited partner of the Associate General Partner, certain
current and former officers and directors of the Managing General
Partner also own indirect general partnership interests in the
Partnership. The Partnership Agreement of the Partnership provides
that cash distributions and allocations of income and loss to the
General Partners shall be distributed or allocated 50% to the
Managing General Partner and 50% to the Associate General Partner.
The General Partners' share of cash distributions and income or loss
is described in Item 5 above.
All of the outstanding shares of common stock of the Managing
General Partner are owned by Dean Witter Realty Inc., a Delaware
corporation which is a wholly-owned subsidiary of Dean Witter,
Discover & Co. The general partner of the Associate General Partner
is Dean Witter Realty Yield Plus Inc., which is a wholly-owned
subsidiary of Dean Witter Realty Inc. The limited partner of the
Associate General Partner is LSYP 87, L.P., a Delaware limited
partnership. Certain current and former officers and directors of
the Managing General Partner are partners of LSYP 87, L.P.
Additional information with respect to the directors and executive
officers and compensation of the Managing General Partner and
affiliates is contained in Items 10 and 11 above.
The 401 East Ontario Street property was developed by a joint
venture between a third party developer and an entity comprised of
former and current Realty executives, several of whom are former or
current executive officers of the Managing General Partner. In
January 1994, the Partnership obtained ownership of the property by
deed-in-lieu of foreclosure.
The Hampton Village Centre property was developed by Hampton
Crossing Associates, a joint venture between the Partnership and an
entity comprised of former and current Realty executives, several of
whom are former or current executive officers of the Managing
General Partner. In the first quarter of 1994, the Partnership
indirectly obtained ownership of all the partnership interests in
Hampton Crossing Associates.
The One Congress Street property was developed by a partnership
between a Maryland-based developer and an entity comprised of former
Realty executives, some of whom were formerly executive officers of
the Managing General Partner. This entity withdrew as a partner of
the borrower in September 1993, so the borrower partnership is now
controlled solely by the Maryland-based developer.
The General Partners and their affiliates were paid certain fees and
reimbursed for certain expenses. Information concerning such fees
and reimbursements is contained in Note 10 to the Consolidated
Financial Statements in Item 8 above. The Partnership believes that
the payment of fees and the reimbursement of expenses to the General
Partners and their affiliates are on terms as favorable as would be
obtained from unrelated third parties.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) The following documents are filed as part of this Annual
Report:
1. Financial Statements (see Index to Financial Statements
filed as part of Item 8 of this Annual Report).
2. Financial Statement Schedules (see Index to Financial
Statements filed as part of Item 8 of this Annual
Report).
3. Exhibits
(3)(a) Amended and Restated Agreement of Limited Partnership
dated as of April 29, 1987 set forth in Exhibit A to the
Prospectus included in Registration Statement Number 33-
11648 is incorporated herein by reference.
(3)(b) Certificate of Limited Partnership dated as of April 29,
1987 incorporated by reference in Registration Statement
Number 33-11648 is incorporated herein by reference.
(4)(a) Amended and Restated Agreement of Limited Partnership
dated as of April 29, 1987 set forth in Exhibit A to the
Prospectus included in Registration Statement Number 33-
11648 is incorporated herein by reference.
(4)(b) Certificate of Limited Partnership dated as of April 29,
1987 incorporated by reference in Registration Statement
Number 33-11648 is incorporated herein by reference.
(10)(a) Partnership Agreement for DW Michelson Associates dated
March 14, 1988. Incorporated by reference to Exhibit
10(a) to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995.
(10)(b) First Mortgage Promissory Note, dated April 26, 1989,
between the Government Center Garage Realty Trust (Maker)
and Dean Witter Realty Yield Plus, L.P. (Holder) was
filed as Exhibit to Amendment No. 2 to Current Report on
Form 8-K on April 26, 1989 and is incorporated herein by
reference.
(10)(c) Construction Loan Agreement, dated April 26, 1989,
between Government Center Garage Realty Trust, as
Borrower and Dean Witter Realty Yield Plus, L.P. and Dean
Witter Realty Yield Plus II, L.P., as Lender was filed as
Exhibit to Amendment No. 2 to Current Report on Form 8-K
on April 26, 1989 and is incorporated herein by
reference.
(10)(d) Intercreditor Agreement among Dean Witter Realty Yield
Plus, L.P., Dean Witter Realty Yield Plus II, L.P., and
Realty Management Services Inc. dated as of April 26,
1989 was filed as Exhibit to Amendment No. 2 to Current
Report on Form 8-K on April 26, 1989 and is incorporated
herein by reference.
(10)(e) First Amendment to Construction Loan Agreement dated
October 12, 1989 between Government Center Garage Realty
Trust, as Borrower and Dean Witter Realty Yield Plus,
L.P. and Dean Witter Realty Yield Plus II, L.P., as
Lender. Incorporated by reference to Exhibit 10(e) to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995.
(10)(f) Amended and Restated Construction Loan/Office Loan
Promissory Note dated October 12, 1989 between Government
Center Garage Realty Trust (Maker) and Dean Witter Realty
Yield Plus, L.P. (Holder). Incorporated by reference to
Exhibit 10(f) to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995.
(10)(g) Second Amendment to Construction Loan Agreement dated
June 22, 1990 between Government Center Garage Realty
Trust, as Borrower and Dean Witter Realty Yield Plus,
L.P. and Dean Witter Realty Yield Plus II, L.P., as
Lender. Incorporated by reference to Exhibit 10(g) to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995.
(10)(h) First Amendment to Amended and Restated Construction
Loan/Office Loan Promissory Note dated June 22, 1990
between Government Center Garage Realty Trust (Maker) and
Dean Witter Realty Yield Plus, L.P. (Holder).
Incorporated by reference to Exhibit 10(h) to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995.
(10)(i) Supplemental Loan Agreement dated September 20, 1993
between Government Center Garage Realty Trust, as
Borrower and Dean Witter Realty Yield Plus, L.P. and Dean
Witter Realty Yield Plus II, L.P., as Lender.
Incorporated by reference to Exhibit 10(i) to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995.
(10)(j) Second Amendment to Notes dated September 20, 1993
between Government Center Garage Realty Trust (Maker) and
Dean Witter Realty Yield Plus, L.P. and Dean Witter
Realty Yield Plus II, L.P., (Holders). Incorporated by
reference to Exhibit 10(j) to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1995.
(21) Subsidiaries:
Deptford Crossing Associates, a New Jersey
limited partnership. Hampton Crossing
Associates, a Michigan limited partnership.
DW Lakeshore Associates, an Illinois limited partnership.
DW Columbia Gateway Associates, a Maryland limited partnership.
DW Michelson Associates, a California limited partnership.
(27) Financial Data Schedule
(d) Financial Statement Schedules
1. Financial Statements of GCGA Limited Partnership, owner
of an office building/parking garage located in Boston,
Massachusetts. To be filed by 10-K/A when received by
GCGA Limited Partnership.
<PAGE>
<TABLE>
SCHEDULE III
DEAN WITTER REALTY YIELD PLUS, L.P.
Real Estate and Accumulated Depreciation
December 31, 1996
<CAPTION>
Initial Cost to Partnership (A)
Building and
Description Encumbrances Land Improvements Total
<S> <C> <C> <C> <C>
Residential Building, Chicago, IL $ - $ 4,063,111 $ 32,936,889 $ 37,000,000
Office Building, Columbia, MD - 1,976,457 6,338,507 8,314,964
Office Buildings, Irvine, CA - 6,549,305 61,019,949 67,569,254
Shopping Center, Deptford, NJ 11,136,496 6,250,094 12,041,180 18,291,274
Shopping Center, Flint, MI 8,590,000 1,709,535 6,830,465 8,540,000
Land
Pine Ridge, Flint, MI - 134,747 - 134,747
Land
Military Crossing, Norfolk, VA - 300,000 - 300,000
$19,726,496 $20,983,249 $119,166,990 $140,150,239
Cost Loss on
Capitalized Impairment
Subsequent of Land and
Description Acquisition Real Estate Land
Residential Building, Chicago, IL $ 772,427 $ $ 4,063,111
Office Building, Columbia, MD 2,717,757 (2,719,485) 1,387,066
Office Buildings, Irvine, CA 5,307,970 (24,202,321) 4,080,416
Shopping Center, Deptford, NJ 587,228 (6,931,459) 1,770,000
Shopping Center, Flint, MI - - 1,709,535
Land
Pine Ridge, Flint, MI - - 134,747
Land
Military Crossing, Norfolk, VA - - 300,000
$9,385,382 $(33,853,265) $13,444,875
</TABLE>
<PAGE>
<TABLE>
SCHEDULE III (continued)
<CAPTION>
Gross Amount
at which Carried at End of Period (B)
Buildings and Depreciation Date of
Description Improvements Total (c) Construction
<S> <C> <C> <C> <C>
Residential Building, Chicago, IL $ 33,709,316 $ 37,772,427 $ 3,346,914 1990
Office Building, Columbia, MD 6,926,170 8,313,236 2,973,235 1988
Office Buildings, Irvine, CA 44,594,487 48,674,903 10,313,466 1986 - 1989
Shopping Center, Deptford, NJ 10,177,043 11,947,043 1,294,991 1991
Shopping Center, Flint, MI 6,830,465 8,540,000 458,240 1998
Land
Pine Ridge, Flint, MI - 134,747 - N/A
Land
Military Crossing, Norfolk, VA 300,000 - N/A
$102,237,481 $115,682,356 $18,386,846
Life on
which Depreciation
in Latest Income
Description Date Acquired Statements is Computed
Residential Building, Chicago, IL December 1992 40 years
Office Building, Columbia, MD May 1990 15-40 years
Office Buildings, Irvine, CA November 1990 15-40 years
Shopping Center, Deptford, NJ December 1992 40 years
Shopping Center, Flint, MI April 1994 40 years
Pine Ridge, Flint, MI June 1994 -
Military Crossing, Norfolk, VA April 1994 -
</TABLE>
Notes:
(A) The basis in the properties for financial reporting purposes is net
realizable value of fair maket value at the date of foreclosure or
in-substance foreclosure. The loss in the amount of $26,921,806 on
foreclosure of real estate does not reduce the basis for federal
income tax purposes.
<PAGE>
<TABLE>
(B) Reconciliation of real estate owned:
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Balance at beginning of period $112,985,465 $174,652,851 $150,605,601
Additions during period:
Acquisition through foreclosures - - 25,731,946
Improvements 2,696,891 821,485 2,465,304
Deductions during year:
Foreclosure of real estate - - (4,150,000)
Sale of real estate - (55,557,412) -
Losses on impairment of real estate - (6,931,459) -
Balance at end of period $115,682,356 $112,985,465 $174,652,851
(C) Reconciliation of accumulated depreciation:
1996 1995 1994
Balance at beginning of year $ 14,468,727 $ 12,098,192 $ 7,953,483
Depreciation expense 3,918,119 4,342,062 4,144,709
Sale of real estate - (1,971,527) -
Balance at end of period $ 18,386,846 $ 14,468,727 $ 12,098,192
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By: /s/E. Davisson Hardman, Jr. Date: March 26, 1997
E. Davisson Hardman, Jr.
President
By: /s/Lawrence Volpe Date: March 26, 1997
Lawrence Volpe
Controller
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
DEAN WITTER REALTY YIELD PLUS INC.
Managing General Partner
/s/William B. Smith Date: March 26, 1997
William B. Smith
Chairman of the Board of Directors
/s/E. Davisson Hardman, Jr. Date: March 26, 1997
E. Davisson Hardman, Jr.
Director
/s/Lawrence Volpe Date: March 26, 1997
Lawrence Volpe
Director
/s/Ronald T. Carman Date: March 26, 1997
Ronald T. Carman
Director<PAGE>
DEAN WITTER REALTY YIELD PLUS, L.P.
Year Ended December 31, 1997
Exhibit Index
Exhibit
No. Description
(3)(a) Amended and Restated Agreement of Limited Partnership
dated as of April 29, 1987 set forth in Exhibit A to the
Prospectus included in Registration Statement Number 33-
11648 is incorporated herein by reference.
(3)(b) Certificate of Limited Partnership dated as of April 29,
1987 incorporated by reference in Registration Statement
Number 33-11648 is incorporated herein by reference.
(4)(a) Amended and Restated Agreement of Limited Partnership
dated as of April 29, 1987 set forth in Exhibit A to the
Prospectus included in Registration Statement Number 33-
11648 is incorporated herein by reference.
(4)(b) Certificate of Limited Partnership dated as of April 29,
1987 incorporated by reference in Registration Statement
Number 33-11648 is incorporated herein by reference.
(10)(a) Partnership Agreement for DW Michelson Associates dated
March 14, 1988. Incorporated by reference to Exhibit
10(a) to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995.
(10)(b) First Mortgage Promissory Note, dated April 26, 1989,
between the Government Center Garage Realty Trust (Maker)
and Dean Witter Realty Yield Plus, L.P. (Holder) was
filed as Exhibit to Amendment No. 2 to Current Report on
Form 8-K on April 26, 1989 and is incorporated herein by
reference.
(10)(c) Construction Loan Agreement, dated April 26, 1989,
between Government Center Garage Realty Trust, as
Borrower and Dean Witter Realty Yield Plus, L.P. and Dean
Witter Realty Yield Plus II, L.P., as Lender was filed as
Exhibit to Amendment No. 2 to Current Report on Form 8-K
on April 26, 1989 and is incorporated herein by
reference.
E1<PAGE>
DEAN WITTER REALTY YIELD PLUS, L.P.
Year Ended December 31, 1997
Exhibit Index
(continued)
Exhibit
No. Description
(10)(d) Intercreditor Agreement among Dean Witter Realty Yield
Plus, L.P., Dean Witter Realty Yield Plus II, L.P., and
Realty Management Services Inc. dated as of April 26,
1989 was filed as Exhibit to Amendment No. 2 to Current
Report on Form 8-K on April 26, 1989 and is incorporated
herein by reference.
(10)(e) First Amendment to Construction Loan Agreement dated
October 12, 1989 between Government Center Garage Realty
Trust, as Borrower and Dean Witter Realty Yield Plus,
L.P. and Dean Witter Realty Yield Plus II, L.P., as
Lender. Incorporated by reference to Exhibit 10(e) to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995.
(10)(f) Amended and Restated Construction Loan/Office Loan
Promissory Note dated October 12, 1989 between Government
Center Garage Realty Trust (Maker) and Dean Witter Realty
Yield Plus, L.P. (Holder). Incorporated by reference to
Exhibit 10(f) to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995.
(10)(g) Second Amendment to Construction Loan Agreement dated
June 22, 1990 between Government Center Garage Realty
Trust, as Borrower and Dean Witter Realty Yield Plus,
L.P. and Dean Witter Realty Yield Plus II, L.P., as
Lender. Incorporated by reference to Exhibit 10(g) to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995.
(10)(h) First Amendment to Amended and Restated Construction
Loan/Office Loan Promissory Note dated June 22, 1990
between Government Center Garage Realty Trust (Maker) and
Dean Witter Realty Yield Plus, L.P. (Holder).
Incorporated by reference to Exhibit 10(h) to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995.
E2
<PAGE>
DEAN WITTER REALTY YIELD PLUS, L.P.
Year Ended December 31, 1997
Exhibit Index
(continued)
Exhibit
No. Description
(10)(i) Supplemental Loan Agreement dated September 20, 1993
between Government Center Garage Realty Trust, as
Borrower and Dean Witter Realty Yield Plus, L.P. and Dean
Witter Realty Yield Plus II, L.P., as Lender.
Incorporated by reference to Exhibit 10(i) to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995.
(10)(j) Second Amendment to Notes dated September 20, 1993
between Government Center Garage Realty Trust (Maker) and
Dean Witter Realty Yield Plus, L.P. and Dean Witter
Realty Yield Plus II, L.P., (Holders). Incorporated by
reference to Exhibit 10(j) to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1995.
(27) Financial Data Schedule
E3
<TABLE> <S> <C>
<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 audited financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 6,799,320
<SECURITIES> 0
<RECEIVABLES> 406,143
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 126,752,827<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 84,388,096<F2>
<TOTAL-LIABILITY-AND-EQUITY> 126,752,827<F3>
<SALES> 0
<TOTAL-REVENUES> 20,071,013<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 19,282,506
<LOSS-PROVISION> 979,000
<INTEREST-EXPENSE> 1,594,580
<INCOME-PRETAX> (1,785,073)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,785,073)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,785,073)
<EPS-PRIMARY> (.18)<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net investments
in real estate of $97,295,510, net investments in participating mortgage
loan of $18,995,382, net deferred expenses of $1,419,805 and other assets
of $1,836,667.
<F2>Represents partners' capital.
<F3>Liabilities include mortgage notes payable of $19,726,496, minority
interests of $19,166,086, and accounts payable and other liabilities of
$3,472,149.
<F4>Total revenue includes rent of $17,014,283, interest on participating
mortgage loan of $2,098,555, interest on short-term investments of $476,051
and other revenue of $482,124.
<F5>Represents net income per Unit of limited partnership interest.
</FN>
</TABLE>
