<PAGE>
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, 1999
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.
(Name of small business issuer in its charter)
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Delaware 36-3521124
- ------------------------------- -------------------
(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
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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, 1999, was $2,769,789. The aggregate sales price of the
limited partnership interests (the "Units") held by non-affiliates was
$18,863,647 (based on the price at which Units were offered to the public) at
December 31, 1999, and March 15, 2000. 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
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<S> <C> <C>
PART I
Item 1. Description of Business............................................................... 1
Item 2. Description of Properties............................................................. 1
Item 3. Legal Proceedings..................................................................... 7
Item 4. Submission of Matters to a Vote of Security Holders ................................. 7
PART II
Item 5. Market for Registrant's Limited Partnership Interests
and Related Security Holder Matters................................................. 8
Item 6. Management's Discussion and Analysis or Plan of Organization.......................... 8
Item 7. Financial Statements................................................................. 11
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure........................................................... 11
PART III
Item 9. Directors' Executive Officers, Promoters and Control Persons; Compliance with Section
16(a) of the Exchange Act ........................................................... 12
Item 10. Executive Compensation............................................................... 12
Item 11. Security Ownership of Certain Beneficial Owners and Management....................... 13
Item 12. Certain Relationships and Related Transactions....................................... 13
Item 13. Exhibits and Reports on Form 8-K..................................................... 14
SIGNATURES....................................................................................... 15
INDEX TO FINANCIAL STATEMENTS....................................................................F-1
</TABLE>
(i)
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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 or controlled by John
F. Kennedy and Mr. John S. Marten. Mr. Marten is the President and a Director of
ChrisKen Real Estate Management Company, Inc., which is the management agent of
the Specified Properties. 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.
The Partnership offered its units of limited partnership (the "Units")
in a public offering pursuant to which it sold a total of 37,732 Units
($18,866,000) when the Offering terminated on August 28, 1989. From time-to-time
the Partnership repurchased and retired Units. In 1996, 1997, and 1999 the
Partnership purchased and retired 423 and 360.858, and 971.0235 Units,
respectively. At December 31, 1998, 36,948.2736 Units were outstanding. At
December 31, 1999 35,977.2501 Units were outstanding. The cost of the Units
repurchased by the Partnership was $411,977.
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) dis tribution 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., ("ChrisKen Management") 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 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
1
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of operations of five to ten years. The Partnership has been operating for more
than ten years. During 1997 the Partnership began marketing the Springdale
Apartments to potential buyers and planned to sell it during 1998. Pursuant to
Statement of Financial Accounting Standards No. 121 "IMPAIRMENT OF LONG-LIVED
ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF" (SFAS No. 121), three
significant accounting events took place in 1997: A) the Springdale Apartments
was reclassified to "Assets Held for Sale", B) in the fourth quarter of 1997 the
recognition of depreciation expense of the Springdale Apartments was
discontinued, and C) a review of the Partnership's carrying value of the
Springdale Apartments required the Partnership to recognize a provision for
impairment of $644,066 in 1997. After extensive negotiations with the intended
buyer regarding the sale of the Property the transaction was terminated in June
1998. The aforementioned SFAS No. 121 sets forth strict guidelines regarding the
classification of assets. Because the Partnership did not meet those guidelines
the Springdale Apartments has been reclassified to Assets Held for Investment
and depreciation expense has been recognized effective June 1998. In connection
with these negotiations, the Partnership incurred costs of $23,302 which were
expensed in 1997, and in 1998 the Partnership incurred disposition and
litigation costs of $77,142. The Partnership intends to hold the Specified
Properties until such time as a 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 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ----------------- --------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Springdale 199 unit residential 96% 88% 91% 97% 97%
Apartments apartment complex
Waukesha, located on 13.9 acres
Wisconsin of land.
Gold Coast 155,997 square foot 81% 89% 90% 88% 87%
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>
(BALANCE OF PAGE INTENTIONALLY LEFT BLANK.)
2
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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.
The Springdale Apartments offer one, two and three bedroom models, with
rents at December 31, 1999, 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 $660-675 677-733 SF $.97 -.92
*1BR, 1 Bath 6 $675-690 677-733 SF $1.00 -.94
2BR, 2 Baths 91 $760-775 936-966 SF $.81-.80
*2BR, 2 Baths 9 $775-790 936-966 SF $.83 -.82
3BR, 2 Baths 19 $925-940 1,150-1,200 SF $.80 -.78
*3BR, 2 Baths 1 $940 1,150 SF $.82
</TABLE>
*Fully Renovated
Although the current rental rates in the table above reflect an average
increase of 4.8% over December 31, 1998 rental rates, recognized lease rates
increased 2.3% during 1999. However, the average economic occupancy of the
Springdale Apartments increased in 1999 to 97% as compared to 94% for 1998.
Additionally, occupancy as of December 31, 1999, was 97% (see discussion in Item
6 below). Most tenant leases are for periods of from six months to one year. At
December 31, 1999, there were seven tenants with month to month leases. No
tenants lease more than one unit.
ANALYSIS. The General Partners believe that the following information
reflected market conditions as of December 31, 1999, for apartment complexes
which may compete with the Springdale Apartments.
<TABLE>
<CAPTION>
Competitive Projects
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 $645 685 $.94
B) 1BR/1 Bath $655 708 $.93
A) 2BR/2 Bath $700 943 $.74
B) 2BR/2 Bath $815 1,115 $.73
Monterey * 1BR/1 Bath $655-695 730-860 $.90-.81
(Waukesha) 2BR/2 Bath $740-795 965-1,010 $.77-.79
Willow * 1BR/1 Bath $600-625 630-912 $.95-.69
Creek 2BR/1-1/2 Bath $730-750 940-1,050 $.78-.71
(Waukesha)
</TABLE>
*Does not include heat.; A) = Not Remodeled; B) = Remodeled
3
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The Meadows, which is directly across the street from Springdale
Apartments, completed remodeling its clubhouse, leasing center, fitness
center and game room in 1996, and continues to remodel apartment interiors,
for which higher rents are charged. Monterey is a fourteen-year-old complex
and rental rates do not include heat. Willow Creek is a eleven-to-twelve 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. However,
pursuant to SFAS No. 121, in the fourth quarter of 1997 the recognition of
depreciation was discontinued as the result of the reclassification of the
Springdale Apartments to Assets Held for Sale. Because the Property did not meet
the strict guidelines set forth by SFAS No. 121 the Property was reclassified to
Assets Held for Investment and depreciation expense has been recognized
effective June 1998. The General Partners believe that the Springdale Apartments
are adequately covered by insurance. Material improvements in 1999 primarily
consisted of landscape improvements and new signage, entry door replacements,
heating, ventilation and air conditioning replacement and carpet and appliance
replacement. (see discussion in Item 6. below). Major improvements anticipated
in 2000 include: new playground equipment, landscaping enhancements, new side
walks, curbs, stoops and patios for one building, resurfacing one of the four
parking lots, replacing parking lot lighting, replacing entry doors for
approximately 84 apartments and apartment carpet and appliance replacement on an
as needed basis.
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 1999, with the exception of
approximately 4,647 square feet, were on a month-to-month basis. The average
optimum lease rate for self-storage space is $16.24 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, 1999, approximately 87% of the space
was leased compared to 88% at December 31, 1998. On an economic basis, the
average occupancy was 83% during 1999 and 89% during 1998.
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.
4
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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 $ 30.00 $ 360.00 $22.50
32 8x4x5 56.00 672.00 21.00
40 5x8x9 70.00 840.00 21.00
50 5x10x9 90.00 1,080.00 21.60
64 8x8x9 112.00 1,344.00 21.00
80 8x10x9 125.00 1,500.00 18.75
104 8x13x9 135.00 1,620.00 15.58
144 8x18x9 187.00 2,244.00 15.58
192 12x16x9 230.00 2,760.00 14.38
352 22x16x9 366.00 4,392.00 12.48
</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 $240.00 $2,880.00 $14.40
250 10x25 290.00 3,480.00 13.92
264 12x22 304.00 3,648.00 13.82
300 10x30 345.00 4,140.00 13.80
403 13x31 419.00 5,028.00 12.48
</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 offers sales representatives
429 West Ohio Street 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 $50.00 $600.00 $24.00
50 5x10x8 65.00 780.00 15.60
64 8x8x8 90.00 1,080.00 16.88
80 8x10x8 100.00 1,200.00 15.00
100 10x10x8 125.00 1,500.00 15.00
</TABLE>
(2) East Bank Storage (Two) (This location opened during the fourth
quarter 1996.)
<TABLE>
<CAPTION>
Annual
Cost Cost Cost per
Sq. Ft. Size Per Month Annually Sq. Ft.
------- ---- --------- -------- -------
<S> <C> <C> <C> <C>
25 5x5x8 $45.00 $540.00 $21.60
50 5x10x8 65.00 780.00 15.60
80 8x10x8 95.00 1,140.00 14.25
100 10x10x8 115.00 1,380.00 13.80
150 10x15x8 170.00 2,040.00 13.60
200 10x20x8 210.00 2,520.00 12.60
</TABLE>
5
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(3) Public Storage (This location opened for business in early 1996.)
1129 N. Wells
<TABLE>
<CAPTION>
Annual
Cost Cost Cost per
Sq. Ft. Size Per Month Annually Sq. Ft.
------- ---- --------- -------- -------
<S> <C> <C> <C> <C>
25 5x5x8 $55.00 $660.00 $26.40
50 5x10x8 89.00 1,068.00 21.36
80 8x10x8 130.00 1,560.00 19.50
100 10x10x8 159.00 1,908.00 19.08
200 10x20x8 249.00 2,988.00 14.94
</TABLE>
(4) Strong Box (This property has modified some space
1516 N. Orleans into a temperature controlled cellar)
<TABLE>
<CAPTION>
Annual
Cost Cost Cost per
Sq. Ft. Size Per Month Annually Sq. Ft.
------- ---- --------- -------- -------
<S> <C> <C> <C> <C>
16 4x4x4 $42.00 $504.00 $31.50
25 5x5x8 62.00 744.00 29.76
50 5x10x8 110.00 1,320.00 26.40
64 8x8x8 130.00 1,560.00 24.38
80 8x10x8 158.00 1,896.00 23.70
100 10x10x8 194.00 2,328.00 23.28
144 8x18x8 240.00 2,880.00 20.00
</TABLE>
(5) U-Stor-It
2100 W. Fulton
<TABLE>
<CAPTION>
Annual
Cost Cost Cost per
Sq. Ft. Size Per Month Annually Sq. Ft.
------- ---- --------- -------- -------
<S> <C> <C> <C> <C>
40 5x8x8 $65.00 $780.00 $19.50
50 5x10x8 70.00 840.00 16.80
80 8x10x8 100.00 1,200.00 15.00
100 10x10x8 120.00 1,440.00 14.40
150 10x15x8 150.00 1,800.00 12.00
200 10x20x8 200.00 2,400.00 12.00
250 10x25x8 230.00 2,760.00 11.04
</TABLE>
6
<PAGE>
(6) U-Stor-It
Harrison and Des Plaines Streets
<TABLE>
<CAPTION>
Annual
Cost Cost Cost per
Sq. Ft. Size Per Month Annually Sq. Ft.
------- ---- --------- -------- -------
<S> <C> <C> <C> <C>
50 5x10x8 $70.00 $840.00 $16.80
100 10x10x8 125.00 1,500.00 15.00
125 10x12.5x8 130.00 1,560.00 12.48
150 10x15x8 165.00 1,980.00 13.20
200 10x20x8 180.00 2,160.00 10.80
250 10x25x8 255.00 3,060.00 12.24
300 10x30x8 305.00 3,660.00 12.20
</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 $2,300 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 1999 included the
completion of a new climate controlled section, heating and air conditioning
repairs and replacements, exterior brick replacement and elevator repairs.(see
Item 6. below for further discussion). Major improvements anticipated for 2000
include new fencing around the entire perimeter of the Property, landscaping
enhancements and the replacement of a roof top door.
Item 3. LEGAL PROCEEDINGS.
The Partnership is not a party to any litigation that would have a
material adverse impact upon its business or operations.
Item 4. SUBMISSION OF MATTERS 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.
7
<PAGE>
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."
In 1996 and 1997, 423 and 360.858 Units, respectively, were repurchased
and retired by the Partnership. At December 31, 1998, 36,948.2736 Units were
outstanding. At December 31, 1999, and at March 15, 2000, there were 35,977.2501
Units issued and outstanding, which were held by a total of 1611 Unit holders.
During 1999, 971.0235 Units were repurchased and retired by the Partnership.
The Limited Partners were paid four cash distributions totaling $29.60
per Unit in 1999 and $26.23 per Unit in 1998.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF ORGANIZATION
LIQUIDITY AND CAPITAL RESERVES.
The Partnership had cash and cash equivalents of approximately $708,616
as of December 31, 1999, and $792,816 as of December 31, 1998. The decrease in
cash and cash equivalents on hand is the result of several primary factors: an
increase in accounts receivable and prepaid expenses, additions to investment in
real estate, the redemption of Units by the Partnership, and a decrease in
accounts payable, offset by an increase in revenues and deferred income
generated by the Specified Properties. 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, 1999,
and December 31, 1998 (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.
In October 1999, Bond Purchase, L.L.C., 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 4.9%, or approximately 1,800,
of the outstanding Limited Partnership Units of the Partnership at $271 per
Unit. The Partnership's records indicate
8
<PAGE>
that as of December 31, 1999, 469.27 Units were sold by Limited Partners to Bond
Purchase, L.L.C. The Bond Purchase, L.L.C. offer expired on November 15, 1999.
On October 26, 1999, the General Partners submitted an offer, with an expiration
date of November 26 , 1999, to the Limited Partners whereby the Partnership, its
General Partners and certain affiliates, would purchase up to 4.9% of the
outstanding Units of the Partnership at $285 per Unit. As a result of the
Partnership's offer, its records indicate that 971.0235 Units, or $276,741 in
aggregate, were sold to the Partnership in response to the Partnership's offer.
Management believes that the Unit sales to Bond Purchase, L.L.C., or purchases
of Units by the Partnership will not adversely affect the management or the
liquidity of the Partnership.
RESULTS OF OPERATIONS.
COMPARISON OF 1999 TO 1998. Occupancy at the Springdale Apartments was
97% at December 31, 1999, and December 31, 1998. Economic occupancy at
Springdale Apartments averaged approximately 97% during 1999. Management
anticipates that occupancy will average 95 - 97% during 2000. Leased space at
Gold Coast Storage was 87% at December 31, 1999, compared to 88% at December 31,
1998. On an economic basis, the average occupancy at Gold Coast Storage during
1999 was 83% and 89% in 1998. At December 31, 1999, the average optimum annual
lease rate for self-storage space was $16.24 as compared to $14.63 one year
earlier. The General Partners believe that occupancy, on a square footage basis,
at Gold Coast Storage during 2000 will range from 81-86% during 2000. 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 1999 attributable to the Specified Properties
($2,769,789) increased by approximately 5.1% from 1998 ($2,635,326). Rental
revenue increased for Springdale Apartments (approximately 6.7%) from $1,498,122
for the year ended December 31, 1998, to $1,599,058 for the year ended December
31, 1999, due primarily to increased rental rates, lower vacancy loss, lower
rental concessions and employee unit costs in 1999. The General Partners
anticipate that rental revenue at Springdale Apartments will improve from 1999
levels during 2000 due to stabilized market conditions. Rental revenue increased
at Gold Coast Storage (approximately 3.0%) from $1,137,204 for the year ended
December 31, 1998, to $1,170,731 for the year ended December 31, 1999. Rental
income at Gold Coast increased in 1999 due to a 3.6% increase in effective
rental rates, partially offset by a 22% decrease in parking income. 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 improve during 2000.
Material improvements at Springdale Apartments in 1999 primarily
consisted of landscape improvements and new signage ($12,346), entry door
replacements ($14,175), water heater and air conditioning replacement ($23,632),
replacement of appliances ($29,235), and carpeting replacement ($41,323). Major
improvements at Gold Coast included heating and air conditioning repair and
replacement ($14,985), elevator repairs ($8,292), and exterior brick replacement
($5,475).
Overall expenses in 1999 attributable to the Specified Properties
($1,923,491) increased by approximately 2.6% from 1998 ($1,875,597). Expenses in
1999 attributable to Springdale Apartments ($1,067,366) increased by
approximately 4.5% from 1998 ($1,021,204) due primarily to the resumption of
depreciation expense, partially offset lower property operating and general and
administrative expenses. In 1997, for financial reporting purposes pursuant to
SFAS No. 121, Springdale Apartments was reclassified as "Assets Held for Sale"
which resulted in the suspension of the recognition of depreciation expense.
However, negotiations with a potential buyer of the property were terminated on
June 1, 1998. At that time, also pursuant to SFAS 121, the Property was
reclassified as "Held for Investment" and depreciation expense was resumed. Had
depreciation been continued while the Property was classified as an "Asset Held
for Sale", depreciation expense would have been $132,591 higher in 1998, with a
corresponding decrease in net income. Property operating and maintenance
expenses were lower in 1999 due to capitalization of heating and air
conditioning, carpet and appliance replacement costs, as well as certain
electrical and grounds expenditures as additions to investment in real estate.
During the majority of the first six months of 1998 this type of expenditure was
treated as current period expense, as set forth in SFAS 121. Property operation
expenses at Springdale Apartments also decreased during the year ended December
31, 1999, as compared to one year earlier, primarily due to decreased water and
sewer and security expense, partially offset by increased heating fuel, grounds
supplies and maintenance, swimming pool supplies and repairs, heating
ventilation and air conditioning repair and replacement and structural repairs.
Water and sewer expenses are lower in 1999 than in 1998. Heating fuel costs
increased in 1999 versus 1998. Real estate taxes at the Springdale Apartments
decreased slightly in 1999 as compared to 1998. Advertising expense increased
14% at the Property during 1999 as compared to 1998. General and administrative
expenses at the Springdale Apartments decreased during 1999, as compared to
1998, primarily due to legal fees and property disposition
9
<PAGE>
costs incurred in 1998 for which there are no comparable expenses in 1999.
General and administrative expenses also decreased due to lower office and
administrative expenses , payroll tax, payroll administration and workers
compensation expense reductions, partially offset by higher answering service
expense and office and administrative salaries. Repairs and maintenance expense
at Springdale Apartments increased in 1999, as compared to 1998, due to higher
janitorial costs. Management fees at Springdale Apartments increased during 1999
as compared to 1998 due to higher total revenue in 1999.
Overall expenses attributable to Gold Coast Storage in 1999 ($856,125)
remained consistent with 1998 ($854,392). Property operation expense at Gold
Coast Storage increased for the year ended December 31, 1999, as compared to the
same period one year earlier, due to increased electricity, heating ventilation
and air conditioning repairs, electrical supplies and repairs and the
replacement of the fire pump control unit damaged in an electrical storm, offset
by lower water and sewer, gas and fuel and rubbish removal expense. Real estate
taxes at Gold Coast Storage decreased approximately 2% in 1999 as compared to
1998. Repairs and maintenance expense at Gold Coast Storage decreased in 1999 as
compared to 1998 primarily due to lower structural repairs, painting and
decorating, and maintenance payroll costs, partially offset by increased grounds
supplies and maintenance and janitorial expenses. Advertising expense at Gold
Coast Storage increased during 1999 as compared to 1998 due to increased third
party costs and fees and enhanced marketing efforts. Depreciation and
amortization expense at Gold Coast Storage increased slightly in 1999, as
compared to 1998, due to capitalized expenditures in 1999. Overall general and
administrative expenses at Gold Coast Storage decreased in 1999, as compared to
1998, due to lower professional fees, worker compensation and property insurance
and a 48% reduction in bad debt expense, partially offset by increased office
and administrative costs, leasing commissions and salaries paid to Property
staff, and pager and answering service expense. Management fee expense at Gold
Coast Storage is higher in 1999 as compared to 1998 due to higher total revenue
in 1999.
For the year ended December 31, 1999, the Springdale Apartments had net
income of $609,251 as compared to $543,295 for the year ended December 31, 1998,
due to an increase in rental revenues offset by increased expenses as discussed
above. Net income for 1999 ($370,775) from Gold Coast Storage increased by
approximately 6% from 1998 ($349,700) as a result of the factors affecting
rental revenue and expenses as detailed above.
Partnership interest income during 1999 decreased to $36,024 from
$39,575 during 1998 because during part of 1999 funds were held by the
Springdale Apartments in interest bearing accounts which generated offsetting
interest income at the Property. Partnership administrative expenses for 1999
decreased to $34,864 from $36,013 in 1998 due to decreased bank fees, offset by
software expenditures. Partnership professional fees for 1999 decreased to
$1,852 from $2,392 in 1998. Audit and accounting fees in 1999 decreased to
$22,000 from $40,500 in 1998 primarily due a timing difference in payments for
services received.
The combined net income of the Specified Properties and Partnership for
1999 ($957,335) increased from 1998 ($853,665) as the result of the factors
discussed above.
Distributions to Limited Partners in 1999 totaled $1,093,807, compared
to 1998 distributions of $969,556. Distributions on a per unit basis to Limited
Partners in 1999 ($29.60) compared to 1998 ($26.23), of which $3.94 and $5.60
per unit, respectively, was a return of capital on a federal income tax basis.
Net income per Unit in 1999 ($23.38) increased from 1998 ($20.79) 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.
IMPACT OF YEAR 2000.
In prior periods, the Partnership discussed the nature and progress of
its plans to become Year 2000 ready. In late 1999 the Partnership completed its
remediation and testing of systems. As a result of those planning and
implementation efforts, the Partnership experienced no significant disruptions
in mission critical information technology and non-information technology
systems and believes those systems successfully responded to the Year 2000 date
change. The Partnership is unaware of any material problems resulting from Year
2000 issues, either with its internal systems or the products and services of
third parties. Springdale Apartments capitalized approximately $396 in computer
equipment and incurred expenses of $633 in 1999 in connection with remediating
its systems. Gold Coast capitalized approximately $3,198 in computer equipment
and incurred expenses of $868 in 1999 in connection with remediating its
systems. Each Property will expense $125 in related costs in 2000. The
Partnership incurred no expense in 1999 in connection with remediating its
system. The Partnership does not anticipate any additional expense resulting
from Year 2000 issues. The Partnership will continue to monitor its mission
critical computer applications and those
10
<PAGE>
of its suppliers and vendors throughout the year 2000 to ensure that any latent
Year 2000 matters that may arise are addressed promptly.
Some statements in this Form 10-KSB are forward looking and actual
results may differ materially from those stated. As discussed herein, among the
factors that may affect actual results are changes in rental rates, occupancy
levels in the market place in which the Springdale Apartments and Gold Coast
Storage compete and/or unanticipated changes in expenses or capital
expenditures.
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.
(BALANCE OF PAGE INTENTIONALLY LEFT BLANK.)
11
<PAGE>
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.
Issued and outstanding shares of the Managing General Partner are owned
or controlled by Messrs. John F. Kennedy and John S. Marten. Mr. Marten is the
President and a Director of ChrisKen Real Estate Management Company, Inc., which
is the management agent of the Specified Properties. 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.
The following is a list of the executive officers and directors of the
Managing General Partner as of March 15, 2000:
Name Age Position
---- --- ---------
John F. Kennedy 49 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 26 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, 1999, by the Partnership to the General Partners or their
Affiliates and a description of the transactions giving rise to such
compensation:
<TABLE>
<CAPTION>
Description of Transaction and Amount of
Entity Receiving Compensation Compensation
- ------------------------------ ------------
<S> <C>
Reimbursement of property operating payroll costs to
Affiliate of General Partners $273,865
Property Management Fee to Affiliate of the General Partners $155,720
----------
Total $429,585
==========
</TABLE>
12
<PAGE>
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) To the best knowledge of the Partnership, as of December 31, 1999,
and March 15, 2000, 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, 1999, and March 15, 2000, 35,977 Units were
beneficially owned by 1611 Limited Partners.
Item 12. CERTAIN RELATIONSHIPS AND RELATED 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 $155,720
and $146,360 in 1999 and 1998, respectively, for such management services. In
addition, the Partnership reimbursed ChrisKen Management for payroll expenses
for personnel directly related to property operations totaling $273,865 and
$262,219 in 1999 and 1998, 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 1999 and 1998 the Partnership recognized rental revenue of
$21,000 and $27,000, respectively, from this lease. Mr. Kennedy and Mr. John S.
Marten, President of ChrisKen Management, each own 235 Limited Partner Units.
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.
(BALANCE OF PAGE INTENTIONALLY LEFT BLANK.)
13
<PAGE>
Item 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are included herein or incorporated by
reference:
<TABLE>
<CAPTION>
Number Exhibit
- ------ -------
<S> <C>
(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).
(F-1) Index to Financial Statements.
Report of Independent Auditors F-2
Financial Statements:
Consolidated Balance Sheet - December 31, 1999 F-3
Consolidated Statements of Income for the Years Ended
December 31, 1999 and 1998 F-4
Consolidated Statements of Partners' Capital (Deficit) for
the Years Ended December 31, 1999 and 1998 F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999 and 1998 F-6
Notes to Consolidated Financial Statements F-7
27 Financial Data Schedule
(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, 1999.
</TABLE>
14
<PAGE>
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 17, 2000 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 17, 2000 By: /s/ John F. Kennedy
------------------------------------
John F. Kennedy, Director
and President of the Managing
General Partner
15
<PAGE>
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, 1999.............................F-3
Consolidated Statements of Income for the Years Ended
December 31, 1999 and 1998..............................................F-4
Consolidated Statements of Partners' Capital for the Years
Ended December 31, 1999 and 1998........................................F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999 and 1998..............................................F-6
Notes to Consolidated Financial Statements.................................F-7
</TABLE>
F-1
<PAGE>
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, 1999, and the related consolidated statements of income,
partners' capital, and cash flows for each of the two years in the period
ended December 31, 1999. 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 auditing standards generally
accepted in the United States. 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, 1999, and the consolidated
results of its operations and its cash flows for each of the two years in the
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
ERNST & YOUNG
Chicago, Illinois
March 7, 2000
F-2
<PAGE>
CHRISKEN PARTNERS CASH INCOME FUND L.P.
(A DELAWARE LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents ................................ $ 708,616
Restricted cash .......................................... 377,320
Accounts receivable ...................................... 43,889
Prepaid expenses ......................................... 19,938
------------
1,149,763
Investment in real estate, at cost:
Land .................................................. 2,220,195
Land improvements ..................................... 33,539
Buildings and improvements ............................ 10,861,135
Equipment ............................................. 360,528
------------
13,475,397
Accumulated depreciation .............................. (2,576,625)
------------
10,898,772
------------
Total assets ............................................. $ 12,048,535
============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses .................... $ 47,817
Tenants' security deposits ............................... 93,211
Deferred rental income ................................... 121,379
Accrued real estate taxes ................................ 300,200
------------
Total liabilities ........................................ 562,607
Partners' capital, 35,977 limited partnership units issued
and outstanding ....................................... 11,485,928
------------
Total liabilities and partners' capital .................. $ 12,048,535
============
</TABLE>
SEE ACCOMPANYING NOTES.
F-3
<PAGE>
CHRISKEN PARTNERS CASH INCOME FUND L.P.
(A DELAWARE LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998
-----------------------
<S> <C> <C>
REVENUE
Rental .............................................................. $2,769,789 $2,635,326
Interest ............................................................ 46,011 43,392
Other ............................................................... 123,741 129,449
-----------------------
Total revenue ....................................................... 2,939,541 2,808,167
EXPENSES
Property operations ................................................. 216,719 223,069
Real estate taxes ................................................... 300,905 304,892
Repairs and maintenance ............................................. 295,210 296,481
Advertising ......................................................... 89,741 83,975
Depreciation ........................................................ 529,772 391,866
General and administrative .......................................... 394,139 507,859
Management fees - affiliate ......................................... 155,720 146,360
-----------------------
Total expenses ...................................................... 1,982,206 1,954,502
-----------------------
Net income .......................................................... $ 957,335 $ 853,665
=======================
Net income allocated to general partners ............................ $ 95,734 $ 85,367
=======================
Net income allocated to limited partners ............................ $ 861,601 $ 768,298
=======================
Net income allocated to limited partners per weighted-average
limited partnership unit outstanding ............................... $ 23.38 $ 20.79
=======================
Weighted-average limited partnership units outstanding .............. 36,852 36,948
=======================
</TABLE>
SEE ACCOMPANYING NOTES.
F-4
<PAGE>
CHRISKEN PARTNERS CASH INCOME FUND L.P.
(A DELAWARE LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
PARTNERS' CAPITAL ACCOUNTS
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
-------------------------------------------
<S> <C> <C> <C>
Balance at January 1, 1998 ............ $ 342,888 $ 11,672,144 $ 12,015,032
Distributions (A) ..................... -- (969,556) (969,556)
Net income ............................ 85,367 768,298 853,665
-------------------------------------------
Balance at December 31, 1998 .......... 428,255 11,470,886 11,899,141
Repurchase of limited partnership units -- (276,741) (276,741)
Distributions (A) ..................... -- (1,093,807) (1,093,807)
Net income ............................ 95,734 861,601 957,335
-------------------------------------------
Balance at December 31, 1999 .......... $ 523,989 $ 10,961,939 $ 11,485,928
===========================================
</TABLE>
Note (A): Summary of quarterly cash distributions paid per limited partnership
unit:
<TABLE>
<CAPTION>
1999 1998
--------------
<S> <C> <C>
First quarter $ 7.57 $ 6.61
Second quarter 6.30 6.47
Third quarter 7.82 6.54
Fourth quarter 7.91 6.61
</TABLE>
SEE ACCOMPANYING NOTES.
F-5
<PAGE>
CHRISKEN PARTNERS CASH INCOME FUND L.P.
(A DELAWARE LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998
--------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .......................................... $ 957,335 $ 853,665
Adjustments to reconcile net income to net cash flows
provided by operating activities:
Depreciation ................................... 529,772 391,866
Net changes in operating assets and liabilities:
Increase in accounts receivable .............. (5,237) (1,253)
Increase in prepaid expenses ................. (17,347) 19,548
Decrease in accounts payable and accrued
real estate taxes .......................... (64,952) (8,703)
Increase in deferred rental income ........... 26,658 7,304
Increase in tenants' security deposits ....... 1,253 15,808
--------------------------
Net cash flows provided by operating activities ..... 1,427,482 1,278,235
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to investment in real estate .............. (141,134) (110,233)
--------------------------
Cash flows used in investing activities ............. (141,134) (110,233)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of limited partnership units ............. (276,741) --
Distributions to limited partners ................... (1,093,807) (969,556)
--------------------------
Cash flows used in financing activities ............. (1,370,548) (969,556)
--------------------------
Net increase (decrease) in cash and cash equivalents (84,200) 198,446
Cash and cash equivalents, beginning of year ........ 792,816 594,370
--------------------------
Cash and cash equivalents, end of year .............. $ 708,616 $ 792,816
==========================
</TABLE>
SEE ACCOMPANYING NOTES.
F-6
<PAGE>
CHRISKEN PARTNERS CASH INCOME FUND L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1. NATURE OF BUSINESS
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.
During 1999, the Partnership offered to repurchase up to 1,810 limited
partnership units at $285 per unit. A total of 971 units were submitted to
the Partnership for repurchase pursuant to this offer.
SEGMENTS OF BUSINESS
The Partnership owns and operates rental real estate located in the midwest
United States. It has two segments of business, a residential apartment
complex and a self-storage facility, neither of which utilizes long term
leases. No single tenant is significant to the Partnership's business.
F-7
<PAGE>
CHRISKEN PARTNERS CASH INCOME FUND L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. NATURE OF BUSINESS (CONTINUED)
Information related to these segments for the years ended December 31, 1999 and
1998 is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
------------------------------------------------------------
RESIDENTIAL SELF
APARTMENT STORAGE
COMPLEX FACILITY PARTNERSHIP CONSOLIDATED
------------------------------------------------------------
<S> <C> <C> <C> <C>
Property operating revenues . $ 1,666,630 $ 1,226,900 $ -- $ 2,893,530
Property operating expenses . (606,092) (452,203) -- (1,058,295)
------------------------------------------------------------
Operating income ............ 1,060,538 774,697 -- 1,835,235
Reconciliation to net income:
General and administrative
expense ................ (132,930) (202,494) (58,715) (394,139)
Depreciation expense ..... (328,344) (201,428) -- (529,772)
Interest income .......... 9,987 -- 36,024 46,011
------------------------------------------------------------
Net income (loss) ........... $ 609,251 $ 370,775 $ (22,691) $ 957,335
============================================================
Capital improvements ........ $ 121,500 $ 19,634 $ -- $ 141,134
============================================================
Total assets ................ $ 6,592,785 $ 4,748,824 $ 706,925 $ 12,048,535
============================================================
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
------------------------------------------------------------
RESIDENTIAL SELF
APARTMENT STORAGE
COMPLEX FACILITY PARTNERSHIP CONSOLIDATED
------------------------------------------------------------
<S> <C> <C> <C> <C>
Property operating revenues . $ 1,560,682 $ 1,204,093 $ -- $ 2,764,775
Property operating expenses . (598,976) (371,826) -- (970,802)
------------------------------------------------------------
Operating income ............ 961,706 832,267 -- 1,793,973
Reconciliation to net income:
General and administrative
expense ................ (231,550) (281,379) (78,905) (591,834)
Depreciation expense ..... (190,678) (201,188) -- (391,866)
Interest income .......... 3,817 -- 39,575 43,392
------------------------------------------------------------
Net income (loss) ........... $ 543,295 $ 349,700 $ (39,330) $ 853,665
============================================================
Capital improvements ........ $ 71,089 $ 39,144 $ -- $ 110,233
============================================================
Total assets ................ $ 7,052,309 $ 4,903,621 $ 553,859 $ 12,498,789
============================================================
</TABLE>
F-8
<PAGE>
CHRISKEN PARTNERS CASH INCOME FUND L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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
During 1997, the Partnership began marketing the property owned by Springdale
to potential buyers and planned to sell it during 1998. In accordance SFAS
No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR
LONG-LIVED ASSETS TO BE DISPOSED OF, the Partnership reclassified the real
estate property owned by Springdale to assets held for sale during 1997 and
discontinued recognition of depreciation expense.
In February 1998, a lawsuit was filed against the Partnership by a
prospective buyer of the Springdale Property. The lawsuit was settled as of
June 1, 1998, and the Partnership has ceased marketing the Property and has
no present plans to dispose of the Property. Accordingly, as of June 1, 1998,
the Springdale Property is no longer considered as assets held for sale and
the net book value of $6,664,000 has been reclassified as an investment in
real estate.
Depreciation of property and improvements held for investment is computed
using the straight-line method over the estimated useful lives of the assets.
Nonresidential properties are depreciated over 31.5 years, and related
equipment is depreciated over seven years. Prior to the decision to hold the
Springdale Property for sale, residential property was depreciated over 27.5
years and related equipment was depreciated over 7 years. As of June 1, 1998,
depreciation for residential property is based on the net book value of the
property and is computed by the straight-line method over the remaining 16.75
year life of the residential property and average remaining 3.5 year life for
equipment.
F-9
<PAGE>
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 operating 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
SFAS 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
accounting principles generally accepted in the United States 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-10
<PAGE>
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 accounting
principles generally accepted in the United States 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 1999 and
1998 is approximately $142,582 lower and $6,076 greater, respectively, than
the taxable income of the Partnership. The aggregate cost of real estate for
federal income tax purposes at December 31, 1999 is $13,130,242.
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 1999 and 1998 were not sufficient to meet the Annual Preferred
Return.
Net sale or 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.
F-11
<PAGE>
CHRISKEN PARTNERS CASH INCOME FUND L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. PARTNERSHIP AGREEMENT (CONTINUED)
The Partnership shall continue until December 31, 2027, unless sooner
terminated pursuant to the applicable provisions of the Partnership Agreement.
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, 1999, cash restricted for working capital reserve purposes was $377,320.
5. RELATED PARTY TRANSACTIONS
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 1999 and 1998 were $155,720 and $146,360, respectively. The
management agreements are subject to annual renewal. In addition, the
Partnership reimburses ChrisKen for personnel costs directly attributable to
property operations, totaling $273,865 and $290,950 in 1999 and 1998,
respectively. These costs are included in property operations expenses in the
accompanying consolidated statements of income.
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 $21,000 and
$27,000 in 1999 and 1998, respectively.
6. OTHER MATTERS
In February 1998, a lawsuit was filed against the Partnership by a
prospective buyer of the property owned by Springdale regarding termination
of the contract to sell the property. The lawsuit was settled as of June 1,
1998. Settlement costs and related legal fees charged to general and
administrative expense pertaining to this matter amounted to $77,142 in 1998.
F-12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000815278
<NAME> CHRISKEN PARTNERS CASH INCOME FUND, L.P.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,085,936
<SECURITIES> 0
<RECEIVABLES> 43,889
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,149,763
<PP&E> 13,475,397
<DEPRECIATION> 2,576,625
<TOTAL-ASSETS> 12,048,535
<CURRENT-LIABILITIES> 562,607
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 11,485,928
<TOTAL-LIABILITY-AND-EQUITY> 12,048,535
<SALES> 2,769,789
<TOTAL-REVENUES> 2,939,541
<CGS> 0
<TOTAL-COSTS> 1,954,502
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 957,335
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 957,335
<EPS-BASIC> 23.38
<EPS-DILUTED> 23.38
</TABLE>
