<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from _______________ to _______________
Commission file number 0-17602
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CHRISKEN PARTNERS CASH INCOME FUND L.P.
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(Name of small business issuer in its charter)
Delaware 36-3521124
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
345 North Canal Street, Chicago, Illinois 60606
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (312) 454-1626
------------------------------------------
Securities registered under to Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Interests
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(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 .
--- ---
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form and no disclosure will 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-KSB or any amendment to this Form 10-KSB. [x]
Issuer's total gross rental revenues for its most recent fiscal year ended
December 31, 1996 was $2,396,355. The aggregate sales price of the limited
partnership interests (the "Units") held by non-affiliates was $18,866,000
(based on the price at which Units were offered to the public) at December 31,
1996 and March 15, 1997. The aggregate sales price does not reflect market
value; it reflects only the price at which the Units were sold to the public.
Currently, there is no market for the Units and no market is expected to
develop.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Prospectus of the Registrant dated August 28, 1987, as
supplemented and filed pursuant to Rule 424(b) under the Securities Act of
1933, as amended, S.E.C. File No. 33-14921, are incorporated by reference in
Part III of this Annual Report on Form 10-KSB.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
PART I ------
<S> <C> <C>
Item 1. Description of Business.................................................................... 1
Item 2. Description of Properties.................................................................. 2
Item 3. Legal Proceedings.......................................................................... 6
Item 4. Submission of Matters to a Vote of Security Holders........................................ 6
PART II
Item 5. Market for Registrant's Limited Partnership Interests
and Related Security Holder Matters........................................................ 7
Item 6. Management's Discussion and Analysis or Plan of Organization............................... 7
Item 7. Financial Statements....................................................................... 9
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure................................................................... 9
PART III
Item 9. Directors' Executive Officers, Promoters and Control Persons; Compliance with
Section 16(a) of the Exchange Act........................................................ 10
Item 10. Executive Compensation.................................................................... 10
Item 11. Security Ownership of Certain Beneficial Owners and Management............................ 11
Item 12. Certain Relationships and Related Transactions............................................ 11
Item 13. Exhibits and Reports on Form 8-K.......................................................... 12
SIGNATURES 13
INDEX TO FINANCIAL STATEMENTS......................................................................... F-1
</TABLE>
(i)
<PAGE> 3
PART I
Item 1. Description of Business.
ChrisKen Partners Cash Income Fund L.P. (the "Partnership") is a Delaware
limited partnership formed in 1987 for the purpose of acquiring, operating,
holding for investment and disposing of one or more existing income-producing
apartment complexes and/or self-storage facilities. The general partners of the
Partnership are ChrisKen Income Properties, Inc. (the "Managing General
Partner") and ChrisKen Limited Partnership I (the "Associate General Partner")
(collectively, the "General Partners"). The Managing General Partner is an
Illinois corporation, the shares of which are owned by Messrs. Robert W.
Christoph and John F. Kennedy. As of January 1, 1994 and pursuant to written
agreement, Mr. Christoph resigned as an officer and director of the Managing
General Partner and transferred his shares into a voting trust, of which Mr.
Kennedy is the voting trustee. The Associate General Partner is an Illinois
limited partnership of which Mr. Kennedy and ChrisKen Equities, Inc., an
Affiliate of the Partnership, are the general partners. As of January 1, 1994
and pursuant to written agreement, Mr. Christoph converted his general partner
interest in the Associate General Partner into a special limited partner
interest without any management rights.
The Partnership offered its units of limited partnership (the "Units") in a
public offering (the "Offering") pursuant to a Registration Statement on Form
S-11 under the Securities Act of 1933, as amended, which Offering registered
56,000 Units. The Partnership had sold a total of 37,732 Units ($18,866,000)
when the Offering terminated on August 28, 1989. On March 4, 1996, Equity
Resource Fund XVIII (Fund XVIII), which is not affiliated with the Partnership
or its General Partners, submitted an unsolicited offer to the Partnership's
limited partners to purchase up to 1800 Units of the Partnership. As of the
close of the Fund XVIII offer period, April 4, 1996, the Partnership's records
indicate that 317 Units were sold by various limited partners to Fund XVIII. On
March 13, 1996, the General Partners submitted a 30 day offer to the limited
partners whereby the Partnership would purchase up to 1800 Units of the
Partnership. As the result of the Partnership offer, the Partnership purchased
423 Units from limited partners as of the close of the Partnership's offer
period. During the three months ended March 31, 1996, 37,732 Units were
outstanding. However, the Units acquired by the Partnership were retired,
leaving 37,309 Units outstanding at December 31, 1996. The limited partnership
units outstanding for the twelve months ended December 31, 1996 represents the
weighted average of 37,732 units outstanding for the first three months of 1996
and 37,309 units outstanding for the remaining nine months ended December 31,
1996. The cost of the Units purchased by the Partnership was $48,630.
Management believes that neither the Unit sales to Fund XVIII nor the Unit
purchases by the Partnership adversely affect the management or liquidity of the
Partnership.
Capitalized terms not defined herein shall have the meaning ascribed to
them in the Partnership's Prospectus dated August 28, 1987.
The principal investment objectives of the Partnership are: (i)
preservation and protection of capital; (ii) distribution of current cash flow,
a significant portion of which should not be subject to federal income taxes in
the initial years of the Partnership's operation; and (iii) capital
appreciation.
The Partnership used the net proceeds of the Offering (the "Net Proceeds")
to purchase a 99.9% interest in the partnerships which own the Springdale
Apartments, a 199-unit apartment complex located in Waukesha, Wisconsin (the
"Springdale Apartments"), and Gold Coast Self Storage, a 155,997 gross square
foot, seven story self-storage facility located in Chicago, Illinois ("Gold
Coast Storage") (collectively, the "Specified Properties" or individually a
"Property"). Further information concerning each of the Specified Properties is
provided below in Item 2. Properties. Discussion regarding apartment complexes
which may compete with the Springdale Apartments is set forth below in Item 2.
Properties - The Springdale Apartments -- Analysis. Similarly, discussion
regarding storage facilities which may compete with Gold Coast Storage is set
forth below in Item 2. Properties - Gold Coast Storage -- Analysis. The
General Partners of the Partnership believe that both Specified Properties
remain competitive in their respective markets.
The Partnership has no employees. The General Partners believe that
ChrisKen Real Estate Management Company, Inc., the manager of the Specified
Properties, has sufficient personnel and other required resources to discharge
all of its responsibilities to the Partnership. The General Partners and their
Affiliates are permitted to
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perform services for the Partnership. The business of the Partnership is not
seasonal and the Partnership does no foreign or export business.
A presentation of information about industry segments is not applicable
because the Partnership operates solely in the real estate industry. The
Partnership, by virtue of its ownership in real estate, is subject to federal
and state laws and regulations covering various environmental issues. The
Managing General Partner is not aware of any potential liability related to
environmental issues or conditions that would be material to the Partnership.
Item 2. Description of Properties.
The Partnership holds the Specified Properties described below on an
unencumbered or all cash basis. In identifying the Specified Properties, the
General Partners considered various real property and financial factors,
including the condition and use of such Properties, the prospects for long-range
liquidity, income-producing capacity, possible long-term appreciation prospects
and income tax considerations. The Partnership will not acquire additional
properties. The Partnership originally expected to begin an orderly liquidation
of the Specified Properties after a period of operations of five to ten years.
Although the Partnership has been operating for more than nine years, it has no
present intent to commence liquidation. The Partnership intends to hold the
Specified Properties until such time as sale or other disposition appears to be
advantageous to achieving the Partnership's investment objectives or it appears
that such objectives will not be met. In deciding whether to sell or refinance
a Property, the Partnership will consider factors such as potential capital
appreciation, cash flow and federal income tax considerations, including
possible adverse federal income tax consequences to the Limited Partners. The
net proceeds of any such sale or refinancing would be distributed to the
Partners in accordance with the terms of the Partnership Agreement.
Occupancy/Leased Space
<TABLE>
<CAPTION>
Description of
Name and Location Property 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- -------------------------- -------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Springdale 199 unit residential 90% 96% 95% 96% 88%
Apartments apartment complex
Waukesha, located on 13.9 acres
Wisconsin of land.
Gold Coast 155,997 square foot 72% 76% 83% 81% 89%
Storage (145,000 until 6/88)
Chicago, self-storage facility
Illinois with 99,040 leasable
square feet (78,023
before 6/88) of space.
</TABLE>
____________________
The Springdale Apartments.
General. The Partnership holds a 99.9% interest, as sole general partner,
in Springdale Associates Ltd., a Delaware limited partnership affiliated with
the Partnership (hereinafter "Springdale Associates"). ChrisKen Limited
Partnership I, the Partnership's Associate General Partner holds the remaining
.1% interest as the sole limited partner of Springdale Associates. Springdale
Associates owns the land and buildings located at 2407-17 Springdale Road,
Waukesha (Waukesha County), Wisconsin (the "Springdale Apartments").
Property. The Springdale Apartments comprise a multi-family rental complex
built in 1972, consisting of 199 rental units located in eight separate
buildings on 13.9 acres of land. Each building is a two-story structure, with
some buildings having exposed basements which allow for another level of
apartments on the exposed sides.
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The Springdale Apartments offer one, two and three bedroom models, with
rents at December 31, 1996 as follows:
<TABLE>
<CAPTION>
Average
No. of Rent Approximate Rent/Sq.Ft.
Apart- Per Apartment (Includes
Apartment Type ments Month Size Heat)
-------------- ------ -------- ----------- -----------
<S> <C> <C> <C> <C>
1BR, 1 Bath 73 $595-620 677-733 SF $.88-.85
*1BR, 1 Bath 6 $620-635 677-733 SF $.92-.87
2BR, 2 Baths 91 $695-720 936-966 SF $.74-.75
*2BR, 2 Baths 9 $720-735 936-966 SF $.77-.76
3BR, 2 Baths 19 $855-885 1,150-1,200 SF $.74.-74
*3BR, 2 Baths 1 $890 1,150 SF $.77
</TABLE>
*Fully Renovated
Although the current rents in the table above reflect a slight increase
over December 31, 1995, recognized lease rates increased 1.75% during 1996.
The average economic occupancy of the Springdale Apartments was 94% for 1996
and 96% for 1995. Occupancy as of December 31, 1996 was 88% (see discussion in
Item 6 below). All tenant leases are for periods of from six months to one
year and no tenants lease more than one unit.
Analysis. The General Partners believe that the following information
reflected market conditions as of December 31, 1996 for apartment complexes
which may compete with the Springdale Apartments.
COMPETITIVE PROJECTS
<TABLE>
<CAPTION>
Apartment Average
Rent Size Rent/Sq.Ft.
Rent Per (Average (Includes
Project Apartment Type Month in SF) Heat)
- -------- -------------- ----- ---------- ----------
<S> <C> <C> <C> <C>
Meadows A) 1BR/1 Bath $580 685 $.85
B) 1BR/1 Bath $630 708 $.89
A) 2BR/2 Bath $660 943 $.70
B) 2BR/2 Bath $775 1,115 $.70
Monterey * 1BR/1 Bath $645-685 730-860 $.88-.80
(Waukesha) 2BR/2 Bath $735-770 965-1,010 $.76-.76
Willow * 1BR/1 Bath $535-575 630-912 $.85-.63
Creek 2BR/1-1/2 Bath $660-685 940-1,050 $.70-.65
(Waukesha)
</TABLE>
*Does not include heat.
A = Not Remodeled
B = Remodeled
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The Meadows, which is directly across the street from Springdale
Apartments, completed remodeling it's clubhouse, leasing center, fitness center
and game room in 1996, and continues to remodel apartment interiors, for which
higher rents are charged. Monterey is an eleven-year-old complex and rental
rates do not include heat. Willow Creek is a eight-to-nine year old complex
located next to Springdale Apartments. Willow Creek, whose rental rates do not
include heat, comprises 168 units.
The Springdale Apartments are being depreciated using 27.5 year
straight-line depreciation for the portion of its federal income tax basis
allocable to non-tax-exempt Limited Partners and using a 40-year straight-line
depreciation for the portion allocable to tax-exempt Limited Partners. The
General Partners believe that the Springdale Apartments are adequately covered
by insurance. Material improvements in 1996 primarily consisted of re-roofing
the Property's buildings, replacement of appliances, and completing the
remaining half of the building exterior siding, window shutter, and gutter
replacement project that began in 1995 (see discussion in Item 6. below). Major
improvements anticipated in 1997 include; replacing the iron fencing around the
swimming pool, repairing and/or replacing pool area concrete and tile, replace
approximately 100 wood balconies, replace approximately 130 hallway and basement
doors, renovate approximately twenty apartments, add forty enclosed garages,
apartment appliance replacement, re-carpet certain apartments and common halls,
and re-asphalt the parking lot.
Gold Coast Storage.
General. The Partnership has a 99.9% interest, as the sole general
partner, in Chicago I Self-Storage, Ltd., an Illinois limited partnership
affiliated with the Partnership (the "Halsted Partnership"). ChrisKen Limited
Partnership I, the Associate General Partner, holds the remaining .1% interest
as the sole limited partner of the Halsted Partnership. The Halsted
Partnership owns the land and buildings located at 1015 North Halsted, Chicago,
Illinois ("Gold Coast Storage").
Property. Gold Coast Storage is a seven-story, loft-type industrial
building constructed in approximately 1930 for use as a light manufacturing
facility and warehouse. In 1982, the building was converted to a self-storage
facility by a prior owner. When acquired, the building contained a total gross
floor area of approximately 145,000 square feet, in addition to a full basement
area, and was constructed with load-bearing exterior masonry walls and wood
floors and joists. The foundation walls are masonry with exterior elevations
of common brick and face brick. The office areas in the front of the building
are provided with heating, ventilation and air conditioning systems which the
General Partners believe to be in satisfactory condition. The storage areas of
the building are heated to temperatures held in the 50 degree Fahrenheit range
by ceiling-mounted space heaters with fans. The building is serviced by two
freight elevators and has a TV security system, fire escape and sprinkler
system. The Gold Coast Storage parking lot has 40 spaces for automobiles.
Lessees of rental units in self-storage facilities include individuals,
small businesses, professionals and to some extent, large businesses.
Individuals usually rent space for the storage of furniture, household
appliances, personal belongings, motor vehicles, boats, campers, motorcycles
and household goods. Businesses normally rent space for storage of excess
inventory, records and equipment. Such usage may be on a long-term or
short-term basis. Substantially all leases for storage space in 1996, with the
exception of approximately 9,525 square feet, were on a month-to-month basis.
The average lease rate for self-storage space is $12.65 per square foot,
although rates on individual storage areas vary, based upon the number of
square feet in the specific storage area. At December 31, 1996, approximately
89% of the space was leased compared to 81% at December 31, 1995. On an
economic basis, the average occupancy during 1996 was 84% as compared to 80%
during 1995. The General Partners believe that the increase of leased space in
1996, as compared to the prior year, is the result of a combination of several
factors which include continued marketing efforts, and moderately improved
economic conditions.
The Partnership has obtained insurance covering the contents of rented
storage units where damage is due to negligence or malfeasance. However, the
scope of this type of insurance is limited and will not cover wrongful action
deemed to be willful. The expense of defending and, where appropriate,
settling or paying such claims is an added cost of business to be borne by the
Partnership. Although the past experience of ChrisKen Management would
indicate that such claims should not materially affect the Partnership's
financial condition or its results of operations, no assurance can be given
regarding the number or amount of such claims or the cost of defending or
disposing of them, which the Partnership may have to bear.
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The size and type of self-storage units which are available are set forth
in the chart below:
(1) Gold Coast Storage - Interior
<TABLE>
<CAPTION>
Annual
Cost Cost Cost per
Sq. Ft. Size per month Annually Sq. Ft.
------- ------- --------- -------- --------
<S> <C> <C> <C> <C>
16 4x4x4 $26.00 $312.00 $19.50
32 8x4x5 36.00 432.00 13.50
40 5x8x9 49.00 588.00 14.70
50 5x10x9 65.00 780.00 15.60
64 8x8x9 79.00 948.00 14.81
80 8x10x9 95.00 1,140.00 14.25
104 8x13x9 129.00 1,548.00 14.88
144 8x18x9 154.00 1,848.00 12.83
192 12x16x9 170.00 2,040.00 10.63
352 22x16 352.00 4,224.00 12.00
</TABLE>
(2) Gold Coast Storage - Exterior
<TABLE>
<CAPTION>
Annual
Cost Cost Cost per
Sq. Ft. Size per month Annually Sq. Ft.
------- ----- --------- --------- -------
<S> <C> <C> <C> <C>
200 10x20 $200.00 $2,400.00 $12.00
250 10x25 250.00 3,000.00 12.00
264 12x22 264.00 3,168.00 12.00
300 10x30 300.00 3,600.00 12.00
403 13x31 403.00 4,836.00 12.00
</TABLE>
Analysis. The General Partners believe that the following information
reflects the current market conditions for self-storage space for those
facilities which may compete with Gold Coast Storage.
(1) East Bank Storage (One) (This location now offers sales
429 West Ohio Street representatives a business center
which includes private offices and
free local telephone use and copier
service.)
<TABLE>
<CAPTION>
Annual
Cost Cost Cost per
Sq. Ft. Size per month Annually Sq. Ft.
------- ----- --------- --------- -------
<S> <C> <C> <C> <C>
25 5x5x4 $45.00 $540.00 $21.60
50 5x10x8 60.00 720.00 14.40
64 8x8x8 75.00 900.00 14.06
80 8x10x8 85.00 1,020.00 12.75
100 10x10x8 110.00 1,320.00 13.20
</TABLE>
(2) East Bank Storage (Two) (This property opened during the fourth
quarter 1996 and is holding it's lease rates
artificially low during lease up.)
<TABLE>
<CAPTION>
Annual
Cost Cost Cost per
Sq. Ft. Size per month Annually Sq. Ft.
------- ----- --------- --------- -------
<S> <C> <C> <C> <C>
25 5x5x8 $20.00 $240.00 $9.60
50 5x10x8 35.00 420.00 8.40
80 8x10x8 60.00 720.00 9.00
100 10x10x8 75.00 900.00 9.00
150 10x15x8 99.00 1,188.00 7.92
200 10x20x8 135.00 1,620.00 8.10
</TABLE>
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(3) Public Storage
1129 N. Wells (This location opened for business in early 1996.)
<TABLE>
<CAPTION>
Annual
Cost Cost Cost per
Sq. Ft. Size per month Annually Sq. Ft.
------- ------- --------- -------- --------
<S> <C> <C> <C> <C>
25 5x5x8 $49.00 $588.00 $23.52
50 5x10x8 76.00 912.00 18.24
80 8x10x8 108.00 1,296.00 16.20
100 10x10x8 130.00 1,560.00 15.60
200 10x20x8 237.00 2,844.00 14.22
</TABLE>
(4) Strong Box
1516 N. Orleans (This property has modified some space into a
temperature controlled wine cellar.)
<TABLE>
<CAPTION>
Annual
Cost Cost Cost per
Sq. Ft. Size per month Annually Sq. Ft.
------- ------- --------- -------- --------
<S> <C> <C> <C> <C>
16 4x4x4 $23.00 $276.00 $17.25
25 5x5x8 50.00 600.00 24.00
50 5x10x8 83.00 996.00 19.92
64 8x8x8 100.00 1,200.00 18.75
80 8x10x8 119.00 1,428.00 17.85
100 10x10x8 145.00 1,740.00 17.40
144 8x18x8 171.00 2,052.00 14.25
</TABLE>
Parking lot spaces are leased to an Affiliate of Gold Coast Storage which
operates a rental truck service. Rent is paid on a month-to-month basis and is
based on volume of rentals as an indication of use of the space. Rent of the
parking lot space is expected to average approximately $1,650 per month.
Gold Coast Storage is being depreciated using a part 31.5-year and part
19-year straight-line depreciation method for the portion of its federal income
tax basis allocable to non-tax-exempt Limited Partners and using a 40-year
straight-line depreciation method for the portion allocable to tax-exempt
Limited Partners. Major improvements during 1996 included replacing two heat
pumps, and partial replacement of the burglar alarm/security camera system (see
Item 6. below for further discussion). Major improvements anticipated for 1997
include completing the replacement of the burglar/security camera system, and
adding water pumps to the heating system.
Item 3. Legal Proceedings.
Other than ordinary and routine litigation incidental to the Partnership's
business, the Partnership is not a party to any material legal proceeding nor,
to the best of its knowledge, are any such proceedings either pending or
threatened.
Item 4. Submission of Matter to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of the Partnership's fiscal year covered by this report.
6
<PAGE> 9
PART II
Item 5. Market for Registrant's Limited Partnership Interests and Related
Security Holder Matters.
The Units are not readily transferable. There is no public market for the
Units and it is not currently expected that any will develop. There are
restrictions upon the transferability of the Units, including the requirement
that the General Partners consent to any transferee becoming a substituted
Limited Partner (which consent may be granted or withheld at the sole
discretion of the General Partners). In addition, restrictions on transfer may
be imposed under federal and state securities laws.
The Revenue Act of 1987 contains provisions which may have an adverse
impact on investors in certain "publicly traded partnerships." If the
Partnership were to be classified as a "publicly traded partnership," income
attributable to the Units would be characterized as portfolio income and the
gross income attributable to Units acquired by tax-exempt entities would be
unrelated business income, with the result that the Units could be less
marketable. The General Partners will, if necessary, take appropriate steps to
ensure that the Partnership will not be deemed a "publicly traded partnership."
At December 31, 1995, there were 37,732 Units issued and outstanding.
However, as the result of the aforementioned Unit purchase offer from the
Partnership to the Limited Partners, 423 Units were purchased and retired by
the Partnership. Therefore, effective April 1, 1996, 37,309 Units were
outstanding. At December 31, 1996 and March 15, 1997, there were 37,309 Units
issued and outstanding which were held by a total of 1756 Unit holders.
The Limited Partners were paid four cash distributions totaling $22.61 per
Unit in 1996 and $17.49 per Unit in 1995.
Item 6. Management's Discussion and Analysis or Plan of Organization
The Partnership had cash and cash equivalents of approximately $650,259 as
of December 31, 1996 and $663,387 as of December 31, 1995. The reduction in
cash and cash equivalents on hand is the result of several primary factors: an
increase in distributions in 1996, offset by a decrease in major repairs to the
Specified Properties during 1996 (see discussion below) and an increase in net
income in 1996 as compared to 1995. The Partnership's restricted cash,
representing operating and contingency reserves (the "Reserve"), was funded by
proceeds from the Offering and had a balance of $377,320 on December 31, 1996
and December 31, 1995 (amount represents 2% of the gross proceeds of the
Offering as required by the Limited Partnership Agreement). The Reserve is
available for unanticipated contingencies and capital improvements and repairs
at the Specified Properties (see additional discussion below).
The source of future liquidity and cash distributions to the Partners is
dependent primarily upon cash generated by the Specified Properties and
secondarily through the sale or financing of these properties.
The Partnership's Reserve is intended to assist the Partnership in
maintaining liquidity to meet cash requirements. Based upon a review of the
existing leases and occupancy levels at the Springdale Apartments and Gold
Coast Storage and further based upon the Partnership's investment objectives
and the fact that the Specified Properties are held on an all-cash basis in
connection with such acquisitions, the General Partners do not anticipate a
lack of liquidity. In the event the Reserve is insufficient to meet cash or
liquidity needs, the Partnership would be required to borrow funds to meet such
costs. Nonetheless, in addition to the Reserve discussed above, the General
Partners believe that the equity in the Partnership's Specified Properties
which are now held on an all-cash basis, will provide additional sources of
liquidity, if required. The General Partners therefore believe that, if
required, the Partnership would be able to obtain financing collateralized by
the Properties in order to provide funds to meet working capital needs.
7
<PAGE> 10
Results of Operations.
Comparison of 1996 to 1995. Occupancy at the Springdale Apartments was
88% at December 31, 1996, compared to 96% at December 31, 1995. Occupancy at
Springdale Apartments had averaged approximately 93% during the first ten
months of the year but declined during the latter part of 1996 due to an
uncustomary high number of tenant evictions and tenants who vacated units prior
to their lease expiration. Accounts Receivable for 1996 has been
sufficiently reserved for in connection with these events. Management
anticipates that occupancy will return to 95% during the first and second
quarters of 1997. Leased space at Gold Coast Storage was 89% at December 31,
1996, compared to 81% at December 31, 1995. On an economic basis, the average
occupancy at Gold Coast Storage during 1996 was 84% as compared to 80% during
1995. At December 31, 1996, the average annual lease rate for self-storage
space was $12.65 as compared to $9.04 one year earlier. The General Partners
believe that the increase in occupancy at Gold Coast Storage, on an economic
basis, reflects continued marketing efforts, and moderately improved market
conditions. The General Partners believe that occupancy, on a square footage
basis, at Gold Coast Storage during 1997 will remain at approximately 90%.
Management continues to aggressively market both apartment units at the
Springdale Apartments and lease space at Gold Coast Storage in order to
increase occupancy percentages at both locations.
Overall rental revenue in 1996 attributable to the Specified Properties
($2,396,355) increased by approximately 4.65% from 1995 ($2,289,899). Rental
revenue decreased for Springdale Apartments (approximately .7%) from $1,495,283
for the year ended December 31, 1995 to $1,485,484 for the year ended December
31, 1996, due primarily to higher rental rates offset by lower occupancy, and
higher employee and model unit costs in 1996 as compared to 1995. The General
Partners anticipate that rental revenue at Springdale Apartments will improve
from 1996 levels during 1997 due to anticipated increases in occupancy. Rental
revenue increased at Gold Coast Storage (approximately 14.6%) from $794,616 for
the year ended December 31, 1995 to $910,871 for the year ended December 31,
1996. Rental income at Gold Coast increased in 1996 due to a 9% increase in
effective rental rates and a 14.9% increase in economic occupancy. Larger
storage units rent at lower per square foot rates as compared to smaller
storage units. The General Partners believe that rental revenue at Gold Coast
Storage should continue to improve during 1997.
Material improvements at Springdale in 1996 primarily consisted of
replacing building roofs ($69,901); replacement of appliances ($35,667); and
completing the remaining half of the building exterior siding, window shutter,
and gutter replacement project which began in 1996 ($120,900). Major
improvements at Gold Coast included replacing two heat pumps ($10,242); and
partial replacement of the burglar alarm/security camera system ($8,327).
Overall expenses in 1996 attributable to the Specified Properties
($1,904,362) increased by approximately 5.5% from 1995 ($1,805,554). Expenses
in 1996 attributable to Springdale Apartments ($1,154,738) increased by
approximately 5.5% from 1995 ($1,094,762). Property operation expenses at
Springdale Apartments increased during the year ended December 31, 1996 as
compared to one year earlier primarily due to increased water/sewer and heating
fuel costs, rubbish removal, carpet replacement, and grounds maintenance.
Rubbish removal costs increased due to increased user and landfill costs.
Carpet replacement increased due to tenants vacating units with old, worn, and
dated carpet. Grounds maintenance increased in 1996 due to parking lot
seal-coating and concrete walk replacement expenditures. Real estate taxes at
Springdale Apartments were lower in 1996 as compared to 1995 due to a
legislative reduction in tax rates affecting the 1996 tax year. Advertising
expense decreased at Springdale Apartments during 1996 as compared to 1995 due
to the reclassification of leasing commission expense for the current period to
general and administrative expense. Depreciation and amortization expense at
Springdale Apartments increased in 1996 as compared to 1995 due to the affects
of capitalizing certain expenditures in 1995 and 1996. General and
administrative expenses at Springdale Apartments increased during 1996 as
compared to 1995 due to increased administrative staff payroll costs (due to
the reclassification of leasing commission expense from advertising expense),
and bad debt expense, offset by reduced telecommunication costs. Bad debt
expense increased due to an unusually high number of tenants who vacated their
apartments prior to the expiration of their lease (see discussion above).
Repairs and maintenance expense at Springdale Apartments increased in 1996 as
compared to 1995 due to higher swimming pool personnel payroll costs,
janitorial costs, and apartment painting and decorating expenses. Swimming
pool personnel costs increased due to a county ordinance requiring the presence
of a pool guard whenever the pool is open for use. Janitorial costs increased
due to in-house staff shortages resulting in the use of more costly contracted
services. Higher apartment turnover and vacancy resulted in increased
apartment painting and decorating expenditures. Management fees at Springdale
Apartments decreased during 1996 as compared to 1995 due to lower total revenue
in 1996.
8
<PAGE> 11
Expenses attributable to Gold Coast Storage in 1996 ($749,624) increased by
approximately 5.5% from 1995 ($710,792). Property operation expense at Gold
Coast Storage increased for the year ended December 31, 1996 as compared to the
same period one year earlier due to increased protection and security
expenditures as the result of City of Chicago fire regulation and building code
changes and increased utility costs offset by decreased grounds maintenance
expense due to the absence of certain expenditures not incurred in the current
period, and a credit from the Property's rubbish removal service from 1995 which
was absorbed in 1996. Real estate taxes at Gold Coast Storage increased a
moderate 1.7% in 1996 as compared to 1995. Repairs and maintenance expense at
Gold Coast Storage decreased in 1996 as compared to 1995 primarily due to the
nonrecurring nature of heating equipment repair expenditures in 1995 that were
not experienced in 1996. Advertising expense at Gold Coast Storage increased
during 1996 as compared to 1995 due to increased third party costs and fees and
enhanced marketing efforts, partially offset by the reclassification of leasing
commission expense to general and administrative expense. Depreciation and
amortization expense at Gold Coast Storage increased in 1996 as compared to 1995
due to the affects of the capitalization of certain expenditures during 1996 and
1995. General and administrative expenses at Gold Coast Storage increased in
1996 as compared to 1995 due to increased bad debt expense, employer related
payroll costs, and the enforcement of a parking lot sales tax ordinance by the
City of Chicago against the Property, offset by reduced administrative personnel
costs as the result of reductions in hours worked. Bad debt expense increased
because the auction value of items abandoned by former space renters was
insufficient to offset their delinquent account balances. Employer related
payroll expenses increased due to the implementation of an employee benefits
program. Management fee expense at Gold Coast Storage is higher in 1996 as
compared to 1995 due to higher total revenue in 1996.
Net income for 1996 ($405,458) from Springdale Apartments decreased by
approximately 15% from 1995 ($477,452) due to a decrease in rental revenues and
increased expenses, as discussed above. Net income for 1996 ($244,747) from
Gold Coast Storage increased by approximately 55.6% from 1995 ($157,336) as a
result of the factors affecting rental revenue and expenses as detailed above.
Partnership interest income during 1996 increased to $40,173 from $31,611
during 1995 primarily due to increased investment interest rates. Partnership
administrative expenses for 1996 increased to $27,238 from $15,707 in 1995 due
to increased investor communications related to the Equity Resource and
Partnership Unit purchase offers. Audit and accounting fees in 1996 decreased
to $51,350 from $59,989 in 1995 as the result of a negotiated reduction in
fees. Other miscellaneous expenses during 1996 decreased to $6,345 from $6,532
in 1995.
The combined net income of the Specified Properties and Partnership for
1996 ($605,445) increased by approximately 3.6% from 1995 ($584,171) as the
result of the factors discussed above.
Distributions to Limited Partners in 1996 totaled $837,521, an increase
from 1995 distributions of $660,113. Distributions on a per unit basis to
Limited Partners in 1996 ($22.61) increased from 1995 ($17.49), of which $3.98
and $-0- per unit, respectively was a return of capital on a federal income tax
basis. Net income per Unit in 1996 ($14.57) increased from 1995 ($13.93)
primarily as the result of the factors detailed above affecting the Specified
Properties. The General Partners anticipate distributions and net income per
Unit to increase in the future due to a projected increase in occupancy and
rental rates, and controlled expenses at the Specified Properties.
Inflation.
Inflation has several types of potentially conflicting impacts on real
estate investments. Short-term inflation can increase real estate operating
costs which may or may not be recovered through increased rents and/or sales
prices, depending on general or local economic conditions. In the long-term,
inflation can be expected to increase operating costs and replacement costs and
may lead to increased rental revenues and real estate values.
Item 7. Financial Statements
See Index to Financial Statements on Page F-1 of this Form 10-KSB for
Financial Statements.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
9
<PAGE> 12
PART III
Item 9. Directors' Executive Officers, Promoters and Control Persons:
Compliance with Section 16(a) of the Exchange Act.
The Partnership does not have directors or officers. The General Partners
of the Partnership are ChrisKen Income Properties, Inc., an Illinois
corporation, as Managing General Partner, and ChrisKen Limited Partnership I,
an Illinois limited partnership, as Associate General Partner.
All issued and outstanding shares of the Managing General Partner are
owned by Messrs. Robert W. Christoph and John F. Kennedy. As of January 1,
1995 and pursuant to written agreement, Mr. Christoph resigned as an officer
and director of the Managing General Partner and transferred his shares into a
voting trust which terminates on December 31, 2003. Mr. Kennedy is the voting
trustee of this voting trust and has the power to exercise all voting rights
with respect to Mr. Christoph's shares; Mr. Christoph retains the economic and
beneficial interest in such shares. The sole officer of the Managing General
Partner is John F. Kennedy, who is President and Secretary. Mr. Kennedy is its
sole director. The general partners of the Associate General Partner are Mr.
Kennedy and ChrisKen Equities, Inc., an Affiliate. As of January 1, 1995 and
pursuant to written agreement, Mr. Christoph converted his general partner
interest in the Associate General Partner into a special limited partner
interest without any management rights.
The following is a list of the executive officers and directors of the
Managing General Partner as of March 15, 1997:
Name Age Position
---- ---- --------
John F. Kennedy 46 Director, President and Secretary
John F. Kennedy holds a Bachelor of Arts degree in Psychology from DePaul
University. Mr. Kennedy co-founded The ChrisKen Group with Mr. Christoph and
has been an officer, director, and shareholder of its affiliated companies as
they have been formed or incorporated. Mr. Kennedy has been a Director,
President (Vice President until 1994) and Secretary of the Managing General
Partner since 1986, Secretary of ChrisKen Real Estate Management Company, Inc.
and is a general partner of the Associate General Partner. Prior to
co-founding The ChrisKen Group, he was involved from 1977 to 1978 with
marketing various properties for American Invesco, a condominium conversion
firm headquartered in Chicago. Mr. Kennedy served as Vice President of
marketing for a privately held real estate securities firm based in Hawaii from
1978 to 1980.
Mr. Kennedy has been a licensed real estate broker since 1981 and is
currently a general partner in 29 privately-offered real estate partnerships
located primarily in the Midwest. He also serves as a principal of the general
partners of ChrisKen Growth & Income L.P. II, a public real estate limited
partnership.
Item 10. Executive Compensation.
The Partnership does not have directors or officers. Furthermore, the
Partnership is not required to pay the officers and directors of its General
Partners any current nor any proposed compensation in such capacities.
However, the Partnership is required to pay certain fees, make distributions
and allocate a share of the profits or losses of the Partnership to the General
Partners as described under the caption "Management Compensation" on pages 16
through 19 of the Partnership's Prospectus, which description is incorporated
herein by reference.
The following is a schedule of the compensation paid for the period ended
December 31, 1996 by the Partnership to the General Partners or their
Affiliates and a description of the transactions giving rise to such
compensation:
10
<PAGE> 13
Description of Transaction and Amount of
Entity Receiving Compensation Compensation
------------------------------------------------------------ ------------
Reimbursement of property operating payroll costs to
Affiliate of General Partners $231,133
Property Management Fee to Affiliate of the General Partners $134,736
--------
Total $365,869
========
Item 11. Security Ownership of Certain Beneficial Owners and Management.
(a) To the best knowledge of the Partnership, as of December 31, 1996 and
March 15, 1997, no person held more than five percent (5%) of the Units.
(b) The Partnership, as an entity, does not have any directors or
officers. As of December 31, 1996 and March 15, 1997, 37,309 Units were
beneficially owned by 1756 Limited Partners.
Item 12. Certain Relationships and Relaxed Transactions.
ChrisKen Real Estate Management Company, Inc. ("ChrisKen Management"), an
Affiliate of the General Partners, provides management services for the
properties owned by the Partnership. The manager's duties and responsibilities
include supervision of the day-to-day management of the operations of the
Properties, the rendition of long-range planning services and rendering such
assistance and consultation to the Managing General Partner as may be necessary
to provide for the efficient administration and the protection of the
Properties. Any fees for management services will be in addition to the
General Partners' distributive share of cash flow. ChrisKen Management earned
$134,736 and $132,802 in 1996 and 1995, respectively, for such management
services. In addition, the Partnership reimbursed ChrisKen Management for
payroll expenses for personnel directly related to property operations totaling
$231,133 and $266,087 in 1996 and 1995, respectively.
There may be conflicts of interest on the part of ChrisKen Management
since ChrisKen Management may be rendering similar services to other
partnerships. However, the General Partners believe that ChrisKen Management
has sufficient personnel and other required resources to discharge all of its
responsibilities to the various properties that it manages and will manage in
the future on behalf of the Partnership.
Neither the General Partners nor their Affiliates are prohibited from
providing services to, and otherwise dealing or doing business with, persons
who deal with the Partnership. However, no rebates or "give ups" may be
received by the General Partners or any such Affiliates of the General
Partners, nor may the General Partners or any such Affiliates participate in
any reciprocal business arrangements which would have the effect of
circumventing any of the provisions of the Limited Partnership Agreement.
The Partnership may enter into other transactions with an Affiliate,
provided that such transactions will be conducted by the General Partners on
terms which are not less favorable to the Partnership than those available from
others, the fees and other terms of the contact are fully disclosed and such
party must have been previously engaged in such business independently of the
Partnership and as an ordinary and ongoing business.
An affiliate of the General Partners leases space at Gold Coast Storage.
During 1996 and 1995 the Partnership recognized rental revenue of $20,400 and
$25,000, respectively, from this lease. On October 1, 1996, Mr. Kennedy
purchased 95.3 Units at $226 per Unit from a Limited Partner vis-a-vis a public
auction conducted by an independent third party.
Upon the sale or refinancing of a real estate investment purchased by the
Partnership, the General Partners will receive real estate brokerage
commissions in an amount equal to the lesser of: (a) 3% of the gross sales
price of the property; or (b) 1/2 of the competitive real estate commission if
they have rendered such services; provided, however, that payment of such
commissions to the General Partners shall be subordinated to receipt by the
Limited Partners of their Adjusted Investment and Preferential Distribution.
Reference is made to Note 5 of the Notes to the Consolidated Financial
Statements for amounts paid to related parties.
11
<PAGE> 14
Item 13. Exhibits and Report on Form 8-K.
(a) The following exhibits are included herein or incorporated by
reference:
Number Exhibit
(3) Certificate of Limited Partnership (incorporated by reference from
Exhibit 3 of the Registrant's Form S-11 Registration Statement filed
June 9, 1987, S.E.C. File No. 33-14921).
(4) Limited Partnership Agreement of Registrant dated as of August 3, 1987
(incorporated by reference from Exhibit 3.1, Registrant's Form S-11
Registration Statement filed June 9, 1987, S.E.C. File No. 33-14921).
(10)(1) Property Management Agreement between Registrant and ChrisKen Real
Estate Management Company (incorporated by reference from Exhibit
19.1 to the Registrant's Form S-11 Registration Statement filed
June 9, 1987, S.E.C. File No. 33-14921).
(28)(1) Pages 16-19 of final Prospectus dated August 28, 1987 as filed with the
Securities and Exchange Commission pursuant to Rule 424(b) promulgated
under the Securities Act of 1933, as amended.
(b) Reports on Form 8-K.
The Partnership did not file any reports on Form 8-K during the quarter
ended December 31, 1996.
12
<PAGE> 15
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CHRISKEN PARTNERS CASH INCOME FUND L.P.
By: ChrisKen Income Properties, Inc.,
Managing General Partner
Date: March 25, 1997 By: /s/ John F. Kennedy
---------------------------
John F. Kennedy
Director and President
In accordance with 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.
Date: March 25, 1997 By: /s/ John F. Kennedy
----------------------------
John F. Kennedy, Director
and President of the Managing General
Partner
13
<PAGE> 16
Chrisken Partners Cash Income Fund L.P.
(A Delaware Limited Partnership)
Index to Consolidated Financial Statements
<TABLE>
<S> <C>
Report of Independent Auditors............................. F-2
Consolidated Financial Statements
Consolidated Balance Sheet - December 31, 1996............. F-3
Consolidated Statements of Income for the Years Ended
December 31, 1996 and 1995................................ F-4
Consolidated Statements of Partners' Capital for the Years
Ended December 31, 1996 and 1995.......................... F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996 and 1995................................ F-6
Notes to Consolidated Financial Statements................. F-7
</TABLE>
F-1
<PAGE> 17
Report of Independent Auditors
To the Partners
Chrisken Partners Cash Income Fund L.P.
We have audited the accompanying consolidated balance sheet of Chrisken
Partners Cash Income Fund L.P. (a Delaware limited partnership), as of December
31, 1996, and the related consolidated statements of income, partners' capital,
and cash flows for each of the two years in the period ended December 31, 1996.
These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Chrisken Partners
Cash Income Fund L.P., at December 31, 1996, and the consolidated results of
its operations and its cash flows for each of the two years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
----------------------
ERNST & YOUNG LLP
Chicago, Illinois
March 14, 1997
F-2
<PAGE> 18
Chrisken Partners Cash Income Fund L.P.
(A Delaware Limited Partnership)
Consolidated Balance Sheet
December 31, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and cash equivalents $ 650,259
Restricted cash 377,320
Accounts receivable 26,934
Prepaid expenses 32,136
-----------
1,086,649
Investment in real estate, at cost:
Land 2,220,195
Buildings and improvements 14,019,379
Equipment 375,307
-----------
16,614,881
Accumulated depreciation (4,212,085)
-----------
12,402,796
-----------
Total assets $13,489,445
===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 104,000
Tenants' security deposits 67,440
Deferred income and prepaid rent 72,792
Accrued real estate taxes 302,359
-----------
Total liabilities 546,591
Partners' capital, 37,309 limited partnership
units issued and outstanding 12,942,854
-----------
Total liabilities and partners' capital $13,489,445
===========
</TABLE>
See accompanying notes.
F-3
<PAGE> 19
Chrisken Partners Cash Income Fund L.P.
(A Delaware Limited Partnership)
Consolidated Statements of Income
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995
------------- -------------
REVENUE
<S> <C> <C>
Rental $2,396,355 $2,289,899
Interest 40,173 31,611
Other 158,212 150,442
---------- ----------
Total revenue 2,594,740 2,471,952
EXPENSES
Property operations 281,405 235,579
Real estate taxes 301,790 330,119
Repairs and maintenance 264,522 246,520
Advertising 66,365 66,932
Depreciation and amortization 529,417 510,878
General and administrative 411,060 364,951
Management fees - Affiliate 134,736 132,802
---------- ----------
Total expenses 1,989,295 1,887,781
---------- ----------
Net income $ 605,445 $ 584,171
========== ==========
Net income allocated to general partners $ 60,545 $ 58,417
========== ==========
Net income allocated to limited partners $ 544,900 $ 525,754
========== ==========
Net income allocated to limited partners per
limited partnership units outstanding $ 14.57 $ 13.93
========== ==========
Limited partnership units outstanding 37,309 37,732
========== ==========
</TABLE>
See accompanying notes.
F-4
<PAGE> 20
Chrisken Partners Cash Income Fund L.P.
(A Delaware Limited Partnership)
Consolidated Statements of Partners' Capital
Years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
PARTNERS' CAPITAL ACCOUNTS
GENERAL PARTNERS LIMITED PARTNERS TOTAL
-----------------------------------------------
<S> <C> <C> <C>
Balance at January 1, 1995 $210,379 $13,089,123 $13,299,502
Distributions (A) - (660,113) (660,113)
Net income 58,417 525,754 584,171
-------- ----------- -----------
Balance at December 31, 1995 268,796 12,954,764 13,223,560
Distributions (A) - (837,521) (837,521)
Net income 60,545 544,900 605,445
Repurchase of limited partnership units - (48,630) (48,630)
-------- ----------- -----------
Balance at December 31, 1996 $329,341 $12,613,513 $12,942,854
======== =========== ===========
</TABLE>
Note (A): Summary of quarterly cash distributions paid per limited
partnership unit:
<TABLE>
<CAPTION>
1996 1995
-------------------------
<S> <C> <C>
First quarter $5.04 $4.41
Second quarter 5.04 4.31
Third quarter 6.23 4.36
Fourth quarter 6.30 4.41
</TABLE>
See accompanying notes.
F-5
<PAGE> 21
Chrisken Partners Cash Income Fund L.P.
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 605,445 $ 584,171
Adjustments to reconcile net income to net cash flows
provided by operating activities:
Depreciation and amortization 529,417 510,878
Provision for doubtful accounts - 11,712
Net changes in operating assets and liabilities:
Increase in accounts receivable (14,500) (14,730)
Increase in prepaid expenses (2,393) (25,334)
Increase (decrease) in accounts payable and accrued
real estate taxes 14,844 (81,470)
Decrease in deferred income and prepaid rent (7,648) (8,219)
Increase in tenants' security deposits 6,142 1,231
Decrease in due to affiliates - (3,917)
---------- ----------
Net cash flows provided by operating activities 1,131,307 974,322
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to investment in real estate (258,284) (483,297)
---------- ----------
Cash flows used in investing activities (258,284) (483,297)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of limited partnership units (48,630) -
Distributions (837,521) (660,113)
---------- ----------
Cash flows used in financing activities (886,151) (660,113)
---------- ----------
Net decrease in cash and cash equivalents (13,128) (169,088)
Cash and cash equivalents, beginning of year 663,387 832,475
========== ==========
Cash and cash equivalents, end of year $ 650,259 $ 663,387
========== ==========
</TABLE>
See accompanying notes.
F-6
<PAGE> 22
Chrisken Partners Cash Income Fund L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements
Years ended December 31, 1996 and 1995
1. ORGANIZATIONAL DATA
Chrisken Partners Cash Income Fund L.P. (CPCIF) is a Delaware limited
partnership, organized on May 4, 1987, with Chrisken Income Properties, Inc.
(Managing General Partner) and Chrisken Limited Partnership I as the General
Partners. Pursuant to a public offering (the Offering), CPCIF sold 37,732
limited partnership units at $500 for each unit. CPCIF has 99.9% ownership
interests in Springdale Associates, Ltd. (Springdale) and Chicago I
Self-Storage, Ltd. (Self-Storage). Springdale owns a 199-unit residential
complex located in Waukesha, Wisconsin, and Self-Storage owns a 155,997 square
foot self-storage facility located in Chicago, Illinois.
2. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
CPCIF, Springdale, and Self-Storage (collectively the Partnership).
Intercompany balances and transactions have been eliminated. Amounts
attributable to the minority interests in Springdale and Self-Storage have not
been reflected as those amounts are not material.
CASH EQUIVALENTS
The Partnership considers all highly liquid investments with an original
maturity of three months or less when purchased to be cash equivalents.
INVESTMENT IN REAL ESTATE
Depreciation of property and improvements is computed using the straight-line
method over the estimated useful lives of the assets. Residential and
nonresidential properties are depreciated over 27.5 years and 31.5 years,
respectively, and equipment is depreciated over seven years.
F-7
<PAGE> 23
Chrisken Partners Cash Income Fund, L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RENTAL REVENUE
The Partnership recognizes rental revenues as they are due in accordance with
the terms of the respective tenant leases. This method of rental recognition
approximates a straight-line basis due to the short-term nature (generally one
year or less) of tenant leases.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," requires disclosure of fair value information
about financial instruments, whether or not recognized in the balance sheet,
for which it is practical to estimate that value. Substantially all financial
instruments reflected in the Partnership's consolidated balance sheet,
consisting of cash and cash equivalents, restricted cash, accounts receivable,
and accounts payable, are, by their terms, equivalent with respect to carrying
and fair values. Management is not aware of the existence of any
off-balance-sheet financial instruments.
INCOME TAXES
The Partnership is not liable for federal income taxes. Each partner includes
his proportionate share of partnership income or loss in his own tax return.
Therefore, no provision for income taxes is made in the consolidated financial
statements of the Partnership.
USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
F-8
<PAGE> 24
Chrisken Partners Cash Income Fund, L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements (continued)
3. BASIS OF PRESENTATION
The Partnership maintains its accounting books and records in accordance with
the Internal Revenue Code's rules and regulations. The accompanying
consolidated financial statements are prepared in accordance with generally
accepted accounting principles which will differ from the federal income tax
basis method of accounting due to the different treatment of various items as
specified in the Internal Revenue Code; principally depreciation expense and
prepaid rent. The net effect of these accounting differences is that the net
income in the financial statements for 1996 and 1995 is approximately $169,000
and $135,000, respectively, less than the taxable income of the Partnership.
The aggregate cost of real estate for federal income tax purposes at December
31, 1996, is $12,599,344.
4. PARTNERSHIP AGREEMENT
The Partnership Agreement provides that profits, losses, and cash distributions
be allocated 10% to the General Partners and 90% to the Limited Partners,
except that: (a) cash distributions to the General Partners will be
subordinated to the Limited Partners receiving their noncumulative,
noncompounded annual preferred return of 7% per annum on their aggregate
contributed capital (the Annual Preferred Return), as defined; and (b) the
special allocation provisions, as defined, in the event of a refinancing, sale,
or other disposition of the property of the Partnership. Distributions to
partners in 1996 and 1995 were not sufficient to meet the Annual Preferred
Return.
Net sale of refinancing proceeds, as defined, to the extent distributed, will
be allocated to the Limited Partners until the Limited Partners receive
distributions equal to their adjusted investment in the Partnership, together
with an amount, to the extent not previously paid, necessary to yield an annual
return on their adjusted investment of 10% per annum, which shall be cumulative
but noncompounded. Thereafter, 85% of any additional net sale or refinancing
proceeds will be allocated to the Limited Partners, and 15% will be allocated
to the General Partners. Net proceeds from a sale may not be reinvested in new
properties by the Partnership after the Partnership has completed its second
year of operations. Net proceeds from a refinancing will be reinvested only to
the extent necessary for improvements and repairs to existing properties.
The Partnership shall continue until December 31, 2027, unless sooner
terminated pursuant to the applicable provisions of the Partnership Agreement.
F-9
<PAGE> 25
Chrisken Partners Cash Income Fund, L.P.
(A Delaware Limited Partnership)
Notes to Consolidated Financial Statements (continued)
4. PARTNERSHIP AGREEMENT (CONTINUED)
The Partnership Agreement provides that the Partnership is to maintain working
capital reserves in an amount not less than 2% of the proceeds of the Offering.
However, to the extent that these reserves are utilized to fund unanticipated
cash requirements, the reserves can be decreased. At December 31, 1996, cash
restricted for working capital reserve purposes was $377,320.
Effective April 1, 1996, the Partnership purchased and retired approximately
423 limited partnership units from the limited partners at a cost of $48,630.
5. RELATED PARTY TRANSACTIONS
During 1996, the President of the Managing General Partner purchased from the
limited partners 95.3 limited partnership units of the Partnership at a cost of
$226/unit.
The Partnership pays management fees to Chrisken Real Estate Management
Company, Inc. (Chrisken), an affiliate of the General Partners. Management
fees are calculated at 5% of gross collections, as defined, for Springdale and
6% of gross collections, as defined, for Self-Storage. Total management fees
for 1996 and 1995 were $134,736 and $132,802, respectively. The agreement is
subject to annual renewal. In addition, the Partnership reimburses Chrisken
for personnel costs directly attributable to property operations, totaling
$231,133 and $266,087 in 1996 and 1995, respectively. These costs are included
in property operation expenses in the accompanying consolidated statements of
income.
In 1996 and 1995, an affiliate of the General Partners rented space at
Self-Storage. Rent was based on a percentage of net income of the affiliate
and totaled $20,400 and $25,000, respectively.
F-10
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000815278
<NAME> CHRISKER PARTNERS CASH INCOME FUND LP
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,027,579
<SECURITIES> 0
<RECEIVABLES> 26,934
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,086,649
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0
0
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</TABLE>
