7
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION Washington, D.C.
20549
FORM 10-Q
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended March 31,
1999
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from ________
to ________.
Commission File Number: 0-
18148
DEAN WITTER REALTY YIELD PLUS,
L.P.
(Exact name of registrant as specified in governing
instrument)
Delaware 13-
3426531
(State of organization)
(IRS Employer
Identification No.)
2 World Trade Center, New York, NY
10048
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code:
(212) 392-1054
Former name, former address and former fiscal year,
if changed since last report: not applicable
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required
to file such reports), and (2) has been subject
to such filing
requirements for the past 90 days. Yes X No
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<CAPTION>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1999 1998 <S>
<C>
<C>
ASSETS
Real estate:
Land
$
2,070,000 $
2,070,000
Buildings and improvements
10,580,047
10,580,047
12,650,047 12,650,047
Accumulated depreciation
2,032,124
1,954,876
10,617,923 10,695,171
Investment in unconsolidated partnership
20,512,649
19,471,311
Cash and cash equivalents
4,268,759
4,555,260
Deferred expenses, net
152,933
157,127
Other assets
255,747
203,733
$
35,808,011 $ 35,082,602
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and other liabilities $
437,082 $
382,432
Partners' capital (deficiency):
General partners
(7,338,132)
(7,405,208)
Limited partners ($20 per Unit, 8,909,969 Units
issued) 42,709,061
42,105,378
Total partners' capital
35,370,929
34,700,170
$
35,808,011 $ 35,082,602
See accompanying notes to consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED INCOME STATEMENTS
Three months ended March 31, 1999 and 1998
<CAPTION>
1999
1998 <S>
<C>
<C>
Revenues:
Rental $
509,573
$4,200,008
Equity in earnings of unconsolidated partnership
508,614
48,713
Interest and other
54,785
210,730
1,072,972
4,459,451
Expenses:
Property operating
272,223
387,525
Depreciation
77,248
301,573
Amortization
4,194
76,083
Interest -
186,678
General and administrative
48,548
178,760
402,213
1,130,619
Income before minority interest
670,759
3,328,832
Minority interest -
530,592
Net income $
670,759
$2,798,240
Net income allocated to:
Limited partners $
603,683
$2,518,416
General partners
67,076
279,824
$
670,759 $2,798,240
Net income per Unit of limited partnership interest
$ 0.07 $ 0.28
See accompanying notes to consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(DEFICIENCY)
Three months ended March 31, 1999
<CAPTION>
Limited General
Partners Partners
Total <S>
<C> <C>
<C>
Partners' capital (deficiency)
at January 1, 1999 $42,105,378
$(7,405,208) $34,700,170
Net income 603,683
67,076 670,759
Partners' capital (deficiency)
at March 31, 1999 $42,709,061
$(7,338,132) $35,370,929
See accompanying notes to consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 1999 and 1998
<CAPTION>
1999 1998 <S>
<C>
<C>
Cash flows from operating activities:
Net income $
670,759 $
2,798,240
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in earnings of unconsolidated partnership
(508,614) (48,713)
Depreciation and amortization
81,442
377,656
Minority interest in earnings of consolidated
partnership
- - 530,592
Increase in deferred expenses -
(176,561)
(Increase) decrease in other assets
(52,014)
125,468
Increase (decrease) in accounts payable and other
liabilities
54,650
(564,110)
Net cash provided by operating activities
246,223
3,042,572
Cash flows from investing activities:
Contributions to unconsolidated partnership
(1,177,625)
- -
Distributions from unconsolidated
partnership
644,901 870,000
Additions to real estate held for sale
-
(136,359)
Additions to real estate
-
(28,240)
Net cash (used in) provided by investing activities
(532,724)
705,401
Cash flows from financing activities:
Cash distributions
(1,227,596)
Contributions by minority interest to consolidated
partnership
- - 153,925
Net cash used in financing activities -
(1,073,671)
(Decrease) increase in cash and cash equivalents
(286,501)
2,674,302
Cash and cash equivalents at beginning of
period 4,555,260
4,584,786
Cash and cash equivalents at end of period $
4,268,759 $ 7,259,088
Supplemental disclosure of cash flow information:
Cash paid for interest $
- $
186,678
See accompanying notes to consolidated financial
statements.
</TABLE>
<PAGE>
DEAN WITTER REALTY YIELD PLUS, L.P.
Notes to Consolidated Financial Statements
1. The Partnership
Dean Witter Realty Yield Plus, L.P. (the
"Partnership") is a limited partnership organized
under the laws of the State of Delaware in 1987.
The Managing General Partner of the
Partnership is Dean Witter Realty Yield Plus Inc.,
which is wholly-owned by Dean Witter Realty Inc.
("Realty").
The financial statements include the
accounts of the Partnership, DW Michelson
Associates, DW Lakeshore Associates, Deptford
Crossing Associates, DW Community Centers
Limited Partnership and DW Maplewood Inc. on
a consolidated basis. All significant
intercompany accounts and transactions have been
eliminated.
The Partnership accounts for its investment in
GCGA Limited Partnership ("GCGA"), the
partnership which owns the One Congress Street
property, under the equity method.
The Partnership's records are maintained on
the accrual basis of accounting for
financial reporting and tax
purposes.
Net income per Unit amounts are calculated by
dividing net income allocated to Limited
Partners, in accordance with the Partnership
Agreement, by the weighted average number of
Units outstanding.
In the opinion of management, the accompanying
financial statements, which have not been
audited, include all
adjustments necessary to present fairly the
results for the interim periods. Such
adjustments consist only of normal recurring
accruals.
These financial statements should be read in
conjunction with the annual
financial statements and notes thereto
included in the Partnership's annual report on
Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31,
1998. Operating results of interim
periods may not be indicative of the operating
results for the entire year.
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
Notes to Consolidated Financial Statements
2. Investment in Unconsolidated Partnership
Summarized financial information of GCGA is as
follows: <CAPTION>
Quarter
ended March
31, 1999
1998
<S> <C> <C>
Revenue
$3,978,874
$ 2,495,901
Expenses:
Interest on second mortgage loan 2,005,848
1,787,625
Other interest 947,193
948,903 Property
operating 1,698,965
1,192,435
Depreciation and amortization 686,114
459,082
5,338,120 4,388,045
Net loss
$(1,359,246)
$(1,892,144)
GCGA's second mortgage loan is the
participating mortgage loan from the
Partnership (58%) and Dean Witter Realty Yield
Plus II L.P., an affiliated public partnership
(42%). The
Partnership does not recognize interest income
on its share of the second mortgage loan;
instead, the Partnership recognizes its share
of GCGA's earnings exclusive of GCGA's interest
expense on the second mortgage loan.
3. Related Party Transactions
An affiliate of Realty provided property
management services for the Deptford Crossing
property in 1999 and 1998 and for the Michelson
property in 1998. The Partnership paid the
affiliate management fees of
approximately $17,000 and $27,000 for the three
months ended March 31, 1999 and 1998,
respectively. These amounts are included in
property operating expenses.
</TABLE>
<PAGE>
DEAN WITTER REALTY YIELD PLUS, L.P.
Notes to Consolidated Financial Statements
Realty performs administrative functions,
processes certain
investor transactions and prepares tax
information for the Partnership. For the
three-month periods ended March 31, 1999 and
1998, the Partnership incurred approximately
$22,000 and $92,000 respectively, for these
services. These amounts are included in general
and administrative expenses.
3. Subsequent Event
In May 1999, the Partnership received cash of
$700,000 and a note receivable of $40,000
pursuant to a negotiated settlement with
one of the parties involved in the the
design and construction of the 401 East
Ontario Street building. The Partnership is
continuing its litigation against the
general contractor and others it deems
responsible for defects in the building which
were repaired by the Partnership between 1995
and 1997. The Partnership incurred legal fees
of approximately $117,000 during the three
months ended March 31, 1999 in connection with
the litigation.
<PAGE>
DEAN WITTER REALTY YIELD PLUS, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION
AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Liquidity and Capital Resources
The Partnership completed a $178,199,380 public
offering in 1987. The Partnership has no
plans to raise additional capital.
As a result of property sales in 1998,
Partnership cash flow from operations
decreased during the three months ended March
31, 1999 compared to 1998.
The Managing General Partner is currently
marketing for sale the Deptford Crossing
property and the Military Crossing unimproved
land. The partnership which owns the One
Congress Street property ("GCGA") has accepted a
bid from an unaffiliated third party to purchase
the property, and the parties are currently
negotiating the terms of a purchase and sale
agreement. The limited partners of GCGA have
30 days in which they can match the third party
offer to buy the property. There can be no
assurance that any of these properties will be
sold.
The Partnership will not terminate until
the remaining property interests are sold and
the outstanding litigation with respect to the
401 East Ontario property is resolved.
The retail market in Deptford, New Jersey, the
location of Deptford Crossing, currently has
a vacancy rate of 5%. During the three
months ended March 31, 1999, occupancy at the
property increased from 81% to 84%. No
significant leases expire before 2001.
The Partnership has commitments to fund
$205,000 of tenant related capital
expenditures and building improvements at the
Deptford Crossing property as of March 31, 1999.
<PAGE>
Currently, the vacancy rate in the downtown
Boston office market, the location of
One Congress Street, is
approximately 7% and rental rates in this market
are stable. There is no new significant
construction in this market. During the three
months ended March 31, 1999, occupancy of the
office space at the property increased to 100%
as an agency of the government of the
Commonwealth of
Massachusetts (the "Agency") began occupying
18% of the space in January 1999 under a five-
year lease. The lease of the Government
Services Administration ("GSA"), which
occupies the remaining 82% of the office space
and a portion of the property's retail space,
expires no earlier than August 1, 2003. The
lease with Kinney Systems, Inc. for all of the
property's parking lot space also expires in
2003. The remainder of the retail space,
which is not a significant
portion of the overall space,
remains
substantially vacant.
The GSA lease requires GCGA to fund tenant
improvements of up to $2,580,000 and
leasing commissions of up to
$1,409,000. GSA is required to repay GCGA
for tenant
improvement costs that GCGA pays over
$1,280,000 (plus interest at 8%) in monthly
installments over five years. The maximum
amount of the Partnership's share of these
tenant-related expenditures (58%) is
approximately $2,315,000 (of which $754,000
would be repaid by GSA, as described above). The Partnership has
paid approximately
$2,176,000 of such expenditures through
March 31, 1999 (including $870,000 which was
paid during the first quarter of 1999).
During the three months ended March 31, 1999, the
Partnership also contributed approximately
$272,000 to GCGA for the Partnership's
share of the costs needed to
substantially complete the tenant improvements
and fund the leasing commissions relating to
the Agency lease. The Partnership's share of
GCGA's total tenant-related capital
expenditures relating to the Agency lease
approximated $338,000.
<PAGE>
The Partnership and Dean Witter Realty Yield
Plus II, L.P., an affiliate, (collectively,
the "New GP") became the general partners of
GCGA on October 21, 1997. Subsequently, the New
GP identified several areas of the parking
garage at the One Congress Street property
which were in need of repair. In 1998, the New
GP had GCGA fund repairs for
several of the problems at the garage that
the New GP believed required immediate
attention, and hired an
engineering firm to investigate all of the
garage's space to determine what additional
repairs are required to safely operate the
garage. During the first quarter of 1999, the
engineering firm issued its preliminary report
to GCGA, and the New GP hired a second
engineering firm to review the first firm's
work for reasonableness and completeness. Once
the engineers' reports are final, the New GP
will put out the recommended repair work to
contractors for bids. Based on the initial
report, the New GP believes that the cost of
such repairs could be significant. If the
prospective buyer of the One Congress Street
property agrees to acquire the property "as
is", the repair costs could be funded by
reducing the sales price of the property. To the
extent that GCGA is required to fund the repair
costs itself, GCGA will require the Partnership
to fund its 58% share of such costs.
During the quarter ended March 31, 1999,
the Deptford Crossing and One Congress
Street property interests generated positive
cash flow from operations, and it is
anticipated that they will continue to do
so for the remainder of 1999.
During the quarter ended March 31, 1999, the
Partnership's contributions to GCGA exceeded
cash flow from operations and distributions
from GCGA. This deficiency was funded with
Partnership cash reserves.
The Partnership did not pay any cash
distributions during the three months ended
March 31, 1999. Generally, future cash
distributions will be paid from proceeds
received from the sales of the One Congress
Street and Deptford Crossing properties and
cash reserves.
Except as discussed above and in the
consolidated financial statements, the Managing
General Partner is not aware of any trends or
evets, commitments or uncertainties that may
have a material impact on liquidity.
<PAGE>
Operations
Fluctuations in the Partnership's operating
results for the quarter ended March 31, 1999
compared to 1998 are primarily attributable to
the following:
Rental revenues, interest and other
revenues, property operating expenses,
depreciation and amortization expenses, and
general and administrative expenses decreased
in 1999 compared to 1998 as a result of the
sales of the Michelson and 401 East Ontario
Street properties in April 1998 and July 1998,
respectively.
Equity in earnings of unconsolidated
partnership increased in 1999 compared to 1998
primarily due to an increase in occupancy at
the office space at the One Congress Street
property from 70% in 1998 to 100% in 1999.
There was no interest expense during the first
quarter of 1999 because the debt secured by
the 401 East Ontario property was repaid in
July 1998.
There was no minority interest in the
Partnership's net income from the Michelson
property during the first quarter of 1999 due to
the sale of the property in April 1998.
There were no other individually significant
factors which caused changes to revenues or
expenses.
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>
DEAN WITTER REALTY YIELD PLUS, L.P.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
An exhibit index has been filed as
part of this Report on Page E1.
(b) Reports on Form 8-K.
None.
<PAGE>
DEAN WITTER REALTY YIELD PLUS, L.P.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly
caused this report to be signed on its
behalf by the undersigned thereunto duly
authorized.
DEAN WITTER REALTY
YIELD PLUS II,
L.P.
By: Dean Witter Realty
Yield Plus Inc.
Managing General
Partner
Date: May 14, 1999
By:
_/s/E. Davisson Hardman, Jr.
E. Davisson Hardman,
Jr.
President
Date: May 14, 1999 By:
/s/Charles M.
Charrow
Charles S. Charrow
Controller
(Principal Financial
and
Accounting Officer)
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
Quarter Ended March 31, 1999
Exhibit Index
<CAPTION>
Exhibit No. Description
<S> <C>
27 Financial Data Schedule
E1 </TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Registrant is a limited partnership which invests in real estate and real
estate joint ventures. In accordance with industry practive, its balance
sheet is unclassified. For full information, refer to the accompanying
unaudited financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 4,268,759
<SECURITIES> 0
<RECEIVABLES> 161,621
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 35,808,011<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 35,370,929<F2>
<TOTAL-LIABILITY-AND-EQUITY> 35,808,011<F3>
<SALES> 0
<TOTAL-REVENUES> 1,072,972<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 402,213
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 670,759
<INCOME-TAX> 0
<INCOME-CONTINUING> 670,759
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 670,759
<EPS-PRIMARY> 0.07<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets included net investments
in real estate of $10,617,923, net investment in unconsolidated partnership of
20,512,649, net deferred expenses of 152,933 and other assets of 94,126.
<F2>Represents partners' capital.
<F3>Liabilities include accounts payable and other liabilities of 437,082.
<F4>Total revenue includes rent of 509,573 equity in earnings of unconsolidated
partnership of 508,614 and interest and other revenue of 54,785.
<F5>Represents net income per Unit of limited partnership interest.
</FN>
</TABLE>