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 September 30,
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
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Septembe
r
Decem
ber
30,
31,
1999
1998
<S> <C>
<C>
ASSETS
Investment in unconsolidated $20,055,4 $
partnership 94 19,471,31
1
Real estate:
Land
Buildings and improvements 1,770,000
2,070,000 10,726,61
4 10,580,04
7
Accumulated depreciation 12,496,61 12,650,04
4 7
2,189,510 1,954,876
10,307,10 10,695,17
Real estate held for sale 4 1
Cash and cash equivalents -
300,000
Other assets
4,555,260 6,720,190
360,860 342,396
$37,725,1 $
84 35,082,60
2
LIABILTIES AND
PARTNERS' CAPITAL
$ $
Accounts payable and other liabilites 218,582 382,432
Partners' capital (deficiency):
General partners
Limited partners ($20 per Unit, (7,124,56 (7,405,20
8,909,969 Unit issued) 5) 8)
44,631,16 42,105,37
7 8
Total partners' capital
37,506,60 34,700,17
2 0
$37,725,1 $
84 35,082,60
2
See accompanying notes to consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED INCOME STATEMENTS
Three and nine months ended September 30, 1999 and
1998
<CAPTION>
Three months ended
Nine months ended
September 30,
September 30,
1999
1998
1999 1998
<S> <C> <C> <C> <C>
Revenues:
Rental $ $ $ $
Gains on sales of real 463,771 934,278
1,434,510 7,653,51
estate - - 0
Equity in earnings of 39,941,55
unconsolidated 9 65,193,4
partnership 707,985
1,590,426 58
Interest and other
49,021 277,913 198,489
143,198 196,680
755,263
1,220,7 41,350,43
3,223,425 73,745,4
77 0 29
Expenses:
Property operating
Depreciation and 202,096 388,189 20,361 2,393,74
amortization 9
Interest 83,866 75,623 256,014
General and - - 766,775
administrative 34,117
51,982 140,618 404,509
116,086
390,594
337,944 614,015 416,993 3,955,62
7
Income before minority
interest 882,833 40,736,41
2,806,432 69,789,8
5 02
Minority interest - -
-
13,238,5 47
Net income $ $ $ $56,551,
882,833 40,736,41
2,806,432 255
5
Net income allocated to:
Limited partners $ $ $ $56,147,
General partners 794,550 40,656,93
2,525,789 290
0
88,283 280,643 403,965
79,485
$ $ $ $56,551,
882,833 40,736,41
2,806,432 255
5
Net income per Unit of
limited partnership $ $ $ $ $
interest 0.09 4.56 0.28
6.30
See accompanying notes to consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(DEFICIENCY)
Nine months ended September 30, 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 2,525,789
280,643 2,806,432
Partners' capital (deficiency)
at September 30, 1999 $44,631,167
$(7,124,565) $37,506,602
See accompanying notes to consolidated financial
statements.
</TABLE>
<PAGE>
<tble>
DEAN WITTER REALTY YIELD PLUS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
[CAPTION]
Nine months ended September 30, 1999 and 1998
1999 1998 [S]
[C]
[C]
Cash flows from operating activities:
Net income $
2,806,432
$56,551,255
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in earnings of unconsolidated
partnership (1,590,426)
(143,198)
Depreciation and amortization
256,014
766,775
Gains on sale of real estate -
(65,193,458)
Minority interest in earnings of consolidated
partnership - 13,238,547
(Increase) decrease in other assets (2,916)
399,440 Decrease in accounts payable and other
liabilities (163,850)
(2,859,861)
Net cash provided by operating activities
1,305,254
2,759,500
Cash flows from investing activities:
Distributions from unconsolidated partnership
2,536,973
1,305,175 Contributions to unconsolidated
partnership (1,530,730)
(592,422)
Additions to real estate
(146,567)
(373,404)
Proceeds from sale of real estate, net of closing
costs
- - 136,935,777
Net cash provided by investing activities
859,676 137,275,126
Cash flows from financing activities:
Cash distributions
- -
(98,173,009)
Minority interest in distributions from
consolidated partnership
- -
(31,954,354)
Contributions by minority interest to consolidated
partnership
- - 171,214
Repayments of mortgage note payable
- -
(10,566,268)
Net cash used in financing activities
- -
(140,522,417)
Increase (decrease) in cash and cash equivalents
2,164,930
(487,791)
Cash and cash equivalents at beginning of period
4,555,260
4,584,786
Cash and cash equivalents at end of period $
6,720,190 $ 4,096,995
Supplemental disclosure of cash flow information:
Cash paid for interest $ -
$
404,509
Supplemental disclosure of non-cash investing
activities: Reclassification of land as real
estate held for sale $
300,000
<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. Except for the
gain on sale of the 401 East Ontario Street
property in the third quarter of 1998, the
gain on the sale of the Michelson property in
the second quarter of 1998 and the proceeds
received in 1999 and 1998 pursuant to
litigation settlements (see Note 4), such
adjustments consist only of normal recurring
accruals.
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS, L.P.
Notes to Consolidated Financial Statements
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.
2. Real Estate Held for Sale
In October 1999, the Managing General Partner
agreed to sell the Military Crossing land and
ground lease, for $350,000, to an
unaffiliated individual. Closing of the sale
is expected to occur in the fourth quarter of
1999. As of September 30, 1999, the
carrying value of the property
($300,000) was reclassified as real estate held
for sale.
3. Investment in Unconsolidated Partnership
Summarized financial information of GCGA is as
follows: <CAPTION>
Three months ended Nine
months ended
September 30,
September 30,
1999 1998 1999
1998
<S> <C> <C> <C> <C>
Revenues $ $
$11,809, $
4,135,79 3,141,14 008 8,294,91
5 4 3
Expenses:
Interest on second
mortgage loan 2,121,39 1,946,87
6,213,11 5,522,12
Other interest 6 7 6 7
Property operating
Depreciation and 946,272 948,068
2,840,20 2,845,18
amortization 2 6
1,595,19 1,521,15
4 5
5,038,60 4,468,92
9 4
618,551 459,082
1,873,
52
1,377,
24 1 6
5,281,41 4,875,18
15,965,4 14,213,4 3 2
48 83
Net loss $(1,145, $(1,734,
$(4,156, $(5,918,
618) 038) 440) 570)
</TABLE>
<PAGE>
DEAN WITTER REALTY YIELD PLUS, L.P.
Notes to Consolidated Financial Statements
GCGA's second mortgage loan is a 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.
4. 401 East Ontario Street Litigation
In May 1999, the Partnership received cash of
$700,000 and an interest- bearing non-recourse
promissory note of $45,000 pursuant to a
negotiated settlement with one of the parties
involved in the design and construction of the
401 East Ontario Street building. Due to
the uncertainty of realization of the note, it
has not been recognized in the financial
statements. Any payment on the note will be
included in net income upon receipt.
In March 1998, the Partnership received
$1.2 million pursuant to a settlement with the
architect and engineer of
the property.
In the years the settlements were received, the
amounts were offset against property operating
expenses.
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 $200,000 during the nine months
ended September 30, 1999 in connection with the
litigation.
5. 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
<PAGE>
DEAN WITTER REALTY YIELD PLUS, L.P.
approximately $48,000 and $64,000 for the nine
months ended September 30, 1999 and 1998,
respectively. These amounts are included in
property operating expenses.
Realty performs administrative functions,
processes certain investor transactions and
prepares tax information for the Partnership.
Effective January 1, 1999, Realty reduced fees
for these services because of the greatly
decreased level of Partnership activity. For
the nine-month periods ended September 30,
1999 and 1998, the Partnership incurred
approximately $53,000 and $223,000,
respectively, for these services. These
amounts are included in general and
administrative expenses.
6. Subsequent Event
On October 27, 1999, the Partnership
distributed $0.53 per Unit to the Limited
Partners. The cash distribution aggregated
$5,090,612, with $4,722,284 million distributed
to the Limited Partners and $368,328 to
the General Partners. The cash distribution was
paid from cash reserves (approximately
$3,685,000), the remaining proceeds from the
1998 sale of the 401 East Ontario Street
property ($890,000) and the proceeds from the
1998 sale of the Pine Ridge land ($515,000).
The sales proceeds were distributed 100% to the
Limited Partners.
<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 nine months ended
September 30, 1999 compared to 1998.
The Managing General Partner has accepted a
bid from an unaffiliated third party to
purchase the Deptford Crossing property, and
the parties are currently negotiating the
terms of a purchase and sale agreement. The
Managing General Partner has agreed to sell the
Military Crossing land and ground lease to an
unaffiliated individual (see Note 2 to the
consolidated financial statements). The
partnership which owns the One Congress
Street property ("GCGA") is currently
marketing the property for sale. 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 (see Note 4 to the
consolidated financial statements) is resolved.
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 nine months ended September
30, 1999, occupancy at both the parking garage
and the office space at the property remained
at 100%. The retail space, which is not a
significant portion of the overall space,
remained substantially vacant. No significant
leases expire before 2003.
<PAGE>
In 1989, the Partnership and Dean Witter Realty
Yield Plus II, L.P., an affiliate,
(collectively, the "New GP"), made a
participating second mortgage loan to GCGA. On
October 27, 1997, the loan was restructured
and the New GP became the generalpartner of
GCGA. Subsequently, theNew 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 the overall garage space to
determine what additional repairs are required.
During the first quarter of 1999, the
engineering firm issued its preliminary report
to GCGA, and during the second quarter of
1999, a second engineering firm reviewed
the first firm's work for
reasonableness and completeness. The New GP
is currently working with the engineering firms
to determine and plan the necessary repair work.
Based on the engineers' reports, the New GP
believes that the cost of such repairs
could be
significant. However, the New GP does not
expect to begin any repair work until 2000.
GCGA will fund the repair costs by
borrowing additional funds from the New
GP; the
Partnership will fund 58% of such new borrowing.
The retail market in Deptford, New Jersey, the
location of Deptford Crossing, is an
improving market, with no new construction.
During the three months ended September 30,
1999, occupancy at the property remained at
approximately 84%. No significant leases expire
before 2001.
During the third quarter of 1999, the
Partnership leased 5% of the vacant space at
Deptford Crossing to a new tenant. This tenant
will occupy its space beginning in the first
quarter of 2000. In connection with the new
lease, the Partnership has a commitment to
fund building-related
capital expenditures and leasing
commissions totaling $677,000.
The Managing General Partner has determined that
the surface of the parking lot at Deptford
Crossing is in need of repair. An engineer
hired by the Managing General Partner
determined the necessary repair work. The
Managing General Partner believes that the
cost of such repairs could be significant,
and is currently seeking a contractor to make
the repairs. Repair work is expected to begin in
2000.
<PAGE>
The Partnership will fund any capital costs
required for the Deptford Crossing property and
its share of the additional GCGA loan from its
cash reserves. However, any costs which have
not been funded by the time of the closing of
the sale of a property may instead be deducted
from the sale price.
During the three and nine-month periods ended
September 30, 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 the period the Partnership
continues to own its interest in the properties.
As discussed in Note 4 to the
consolidated financial statements, the
Partnership received $700,000 in May 1999
pursuant to a negotiated settlement relating to
the ongoing 401 East Ontario Street property
litigation.
During the nine months ended September 30,
1999, cash flow from operations (including
the $700,000 litigation settlement) and
distributions from GCGA exceeded capital
expenditures relating to the Deptford Crossing
property and the Partnership's contributions to
GCGA to fund its share of tenant improvements
and leasing commissions at the One Congress
Street property.
The Partnership did not pay any cash
distributions during the nine months ended
September 30, 1999. In October 1999, the
Partnership made cash distributions of cash
reserves and proceeds from sales of
properties (see Note 6 to the consolidated
financial statements). The Partnership believes
that its remaining cash reserves are adequate
for its needs during the remainder of 1999 and
2000. Generally, future cash distributions
will be paid from proceeds received from the
sales of the One Congress Street, Deptford
Crossing and Military Crossing properties
and any remaining cash reserves.
Except as discussed above and in the
consolidated financial statements, the Managing
General Partner is not aware of any trends or
events, commitments or uncertainties that may
have a material impact on liquidity.
<PAGE>
Operations
Fluctuations in the Partnership's operating
results for the three and nine-month periods
ended September 30, 1999 compared to 1998
are primarily attributable to the
following:
The sales of the Michelson (April 1998) and 401
East Ontario Street (July 1998) properties caused
the 1998 gains on sales of real estate.
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
1998 sales of properties.
The 1999 increases in equity in earnings of
GCGA are 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.
Property operating expenses also decreased for
the ninemonth period ended September 30, 1999
due to the receipt of the $700,000 litigation
settlement mentioned above. In March 1998, the
Partnership received $1,200,000 pursuant to
settlements relating to the 401 East
Ontario Street litigation. Property operating
expenses of the Deptford Crossing property
during the three and nine-month periods ended
September 30, 1999 were approximately $151,000
and $492,000 respectively.
There was no interest expense in 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 in 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.
<PAGE>
Year 2000 Readiness
Many of the world's computer systems (including
those in noninformation technology equipment
and systems) currently record years in a two-
digit format. If not addressed, such computer
systems may be unable to properly interpret
dates beyond the year 1999, which could
lead to
business
disruptions in the U.S. and internationally (the
"Year 2000" issue). The potential costs and
uncertainties associated with the Year 2000
issue may depend on a number of factors,
including software, hardware and the nature of
the industry in which a company operates.
Additionally, companies must coordinate with
other entities with
which
they
electronically interact. The Partnership and
the Managing General Partner recognize the
importance of insuring that its business
operations are not disrupted as a result of the
Year 2000 issue and have taken a number of steps
to insure that Year 2000 issues are identified
and remediated.
The Managing General Partner has assessed
its internal computer information systems
and is taking steps to remediate its
mission-critical systems (at no cost to the
Partnership). The Managing General Partner
is
also
surveying and communicating with vendors
(primarily property
managers and banks) with whom it has important
financial and operating relationships, to
determine the extent to which they are
vulnerable to Year 2000 issues, in order either
to insure compliance or develop contingency
plans to mitigate the risk associated with
a non-compliant vendor. This process is
expected to be completed during the fourth
quarter of 1999.
In addition, the Managing General Partner and
these vendors are currently evaluating and
assessing those missioncritical computer
systems in the Partnership's properties not
related to information technology. These
systems, which generally operate in a building
include, without limitation, telecommunication,
security (such as card-access door lock
systems), energy management and elevator
systems. As a result of the technology used
in this type of equipment, it is possible
that this equipment may not be repairable and
accordingly may require complete replacement by
the
<PAGE>
Partnership. Because this assessment is
ongoing, the total cost of bringing all
systems and equipment into Year 2000 compliance
has not been
fully quantified. Based upon available
information, the General Partner does not
believe that these costs will have a material
adverse effect on the Partnership's business,
financial condition or results. However, it
is possible that there could be adverse
consequences to the Partnership as a result
of Year 2000 issues that are outside the
Partnership's control. The General Partner is
evaluating these issues and developing
contingency plans where appropriate.
There are many risks associated with the Year
2000 issue, including the possibility of a
failure of computer and noninformation
technology systems. Such failures could cause
system malfunctions which may have a material
adverse effect on the Partnership or its
properties. In addition, even if the General
Partner successfully remediates its Year 2000
issues, the Partnership can be materially
and adversely affected by failures of third
parties to remediate their own Year 2000
issues. The Partnership recognizes the
uncertainty of such external dependencies since
it can not directly control the remediation
efforts of third parties. The failure of third
parties with which the Partnership has financial
or operational relationships such as
banks, tenants, vendors, property managers
and utilities, to remediate their computer
and non-information technology systems issues
in a timely manner could result in a material
financial risk to the Partnership.
If the above mentioned risks are not
remedied, the Partnership may experience
business interruption or shutdown, financial
loss, or regulatory actions.
Inflation
Inflation has been consistently low during
the periods presented in the consolidated
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.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly
caused this report to be signed on its
behalf by the undersigned thereunto duly
authorized.
DEAN WITTER REALTY
YIELD PLUS, L.P.
By: Dean Witter Realty
Yield Plus Inc.
Managing General
Partner
Date: November 12, 1999
By:
_/s/E. Davisson Hardman, Jr.
E. Davisson Hardman,
Jr.
President
Date: November 12, 1999 By:
/s/Charles
M. Charrow
Charles S. Charrow
Controller
(Principal Financial
and
Accounting Officer)
<PAGE>
DEAN WITTER REALTY YIELD PLUS, L.P.
Quarter Ended September 30, 1999
Exhibit Index
Exhibit No. Description
27 Financial Data Schedule
E1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Registrant is a limited partnership which invests in real estate joint
ventures. In accordane with industry practice, its balance sheet is
unclassified. For full information, refer to the accompanying unaudited
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 6,720,190
<SECURITIES> 0
<RECEIVABLES> 342,396
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 37,725,184<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 37,506,602<F2>
<TOTAL-LIABILITY-AND-EQUITY> 37,725,184<F3>
<SALES> 0
<TOTAL-REVENUES> 3,223,425<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 416,993
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,806,432
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,806,432
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,806,432
<EPS-BASIC> 0.28<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net investments
in real estate of $10,307,104, real estate held for sale of
$300,000 and an investment in unconsolidated
partnership of $20,055,494.
<F2>Represents partners' capital.
<F3>Liabilities include accounts payable and other liabilites of $218,582.
<F4>Total revenue includes rent of $1,434,510 equity in earnings of $1,590,426
and interest and other revenue of $198,489.
<F5>Represents net income per Unit of limited partnership interest.
</FN>
</TABLE>
