<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
---------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
----------------------------------------
Commission file number 0-17610
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FIRST CAPITAL INSURED REAL ESTATE LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Illinois 36-3525946
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Two North Riverside Plaza, Suite 950, Chicago, Illinois 60606-2607
- ------------------------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 207-0020
------------------------------------
Securities registered pursuant to Section 12(b) of the Act: NONE
------------------------------------
Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Assignee Units
------------------------------------
</TABLE>
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
DOCUMENTS INCORPORATED BY REFERENCE:
The First Amended and Restated Agreement of Limited Partnership filed as Exhibit
A to the definitive Prospectus dated August 1, 1988, included in the
Registrant's Registration Statement on Form S-11 (Registration No. 33-15999), is
incorporated herein by reference in Part IV of this report.
EXHIBIT INDEX - PAGE A-1
- ------------------------
<PAGE>
PART I
ITEM 1. BUSINESS
- ------- --------
The registrant, First Capital Insured Real Estate Limited Partnership (the
"Partnership"), is a limited partnership organized in 1987 under the Revised
Uniform Limited Partnership Act of the State of Illinois. The Partnership sold
$68,819,400 in Limited Partnership Assignee Units (the "Units") to the public
from August 1988 to July 1990, pursuant to a Registration Statement on Form S-11
filed with the Securities and Exchange Commission (Registration Statement No.
33-15999). In May 1991, the Partnership returned $28,821,600 to the Limited
Partners, or $41.88 per Unit, representing a return of a portion of the Net
Proceeds of the Offering as a result of the Partnership not having acquired
properties where the purchase price equaled the total equity raised within the
period required by the Policy. Capitalized terms used in this report have the
same meaning as those terms have in the Partnership's Registration Statement.
The business of the Partnership is to invest, on an all cash basis, primarily in
a diversified portfolio of institutional quality, existing, income-producing
real estate, such as shopping centers, office buildings, apartments, warehouses
or any one or more of these categories. From November 1988 through December
1991, the Partnership made two real property investments and purchased a 50%
interest in a joint venture which was formed with an Affiliated partnership for
the purpose of acquiring a 100% interest in certain real property. The
Partnership's joint venture is operated under the common control of First
Capital Financial Corporation (the "General Partner").
Property management services for the Partnership's real estate investments are
provided by Affiliates of the General Partner for fees calculated as a
percentage of gross rents received from the properties.
The real estate business is highly competitive. The results of operations of the
Partnership will depend upon the availability of suitable tenants, real estate
market conditions and general economic conditions which may impact the success
of these tenants. Properties owned by the Partnership frequently compete for
tenants with similar properties owned by others.
As of March 1, 1996, there were ten employees at the Partnership's properties
for on-site property maintenance and administration.
ITEM 2. PROPERTIES (a)(b)
- ------- -----------------
As of December 31, 1995, the Partnership owned, directly or through a joint
venture, the following three property interests, all of which were owned in fee
simple.
<TABLE>
<CAPTION>
Net Leasable Number of Number of
Property Name Location Sq. Footage Units Tenants (c)
- ------------------------- ----------------------- ------------ --------- -----------
<S> <C> <C> <C>
Shopping Center:
- ----------------
Carrollton Crossroads (d) Carrollton, Georgia 303,806 N/A 26 (3)
Office Building:
- ----------------
Lakeview Office Park,
Buildings II and III Indianapolis, Indiana 161,500 N/A 48 (1)
Apartment Complex:
- ------------------
Telegraph Hill
Apartments Albuquerque, New Mexico N/A 200 178
</TABLE>
2
<PAGE>
ITEM 2. PROPERTIES (a)(b) - Continued
- --------------------------------------
(a) For a discussion of significant operating results and major capital
expenditures planned for the Partnership's properties refer to Item 7.
(b) For federal income tax purposes, the Partnership depreciates the
portion of the acquisition costs of its properties allocable to real
property (exclusive of land), and all improvements thereafter, over
useful lives of 40 years utilizing the straight-line method. The
Partnership's portion of real estate taxes for Carrollton Crossroads
Shopping Center ("Carrollton"), Lakeview Office Park, Buildings II and
III ("Lakeview") and Telegraph Hill Apartments ("Telegraph") was
$105,000, $241,500 and $64,300, respectively, for the year ended
December 31, 1995. In the opinion of the General Partner, the
Partnership's properties are adequately insured and serviced by all
necessary utilities.
(c) Represents the total number of tenants as well as the number of
tenants, in parenthesis, that individually occupy more than 10% of the
net leasable square footage of the property.
(d) The Partnership owns a 50% joint venture interest in this property.
N/A - Not applicable.
The following table presents each of the Partnership's properties' occupancy
rates as of December 31 for each of the last five years:
<TABLE>
<CAPTION>
Property Name 1995 1994 1993 1992 1991
- ------------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Carrollton 99% 99% 99% 99% 98%
Lakeview 91% 93% 96% 97% 97%
Telegraph 87% 98% 98% 93% 94%
</TABLE>
The amounts in the following table represent each of the Partnership's
properties' average annual rental rate per square foot for each of the last five
years ended December 31 and were computed by dividing each property's base
rental revenues by its average occupied square footage:
<TABLE>
<CAPTION>
Property Name 1995 1994 1993 1992 1991
- ------------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Carrollton $6.31 $6.30 $5.94 $5.73 $5.77
Lakeview $14.11 $13.11 $13.35 $13.37 $12.83
Telegraph (a) $620.82 $583.33 $523.88 $465.12 N/A
</TABLE>
(a) Average monthly rental rate per unit.
N/A - Not applicable as the property was acquired December 20, 1991.
3
<PAGE>
ITEM 2. PROPERTIES - Continued
- -------------------------------
The following table summarizes the principal provisions of the leases for each
of the tenants which occupy ten percent or more of the rentable square footage
at each of the Partnership's properties, except Telegraph, which has no such
tenants:
<TABLE>
<CAPTION>
Partnership's Share of per Percentage
Annum Base Rents (a) for of Net Renewal
--------------------------- Leasable Options
Final Twelve Expiration Square (Renewal
Months of Date of Footage Options /
1996 Lease Lease Occupied Years)
-------- ------------ ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Carrollton
- ----------
Wal-Mart
(department store) $306,500 $306,500 9/30/2007 41% 6 / 5
Kroger
(grocery store) $159,000 $159,000 12/9/2007 16% 5 / 5
JC Penney
(department store) $ 63,400 $ 63,400 2/28/2008 11% 4 / 5
Lakeview
- --------
National Corporation (b)
(insurance underwriter) $228,400 (b) 4/30/1996 20% None
</TABLE>
(a) The Partnership's share of per annum base rents for each of the
tenants listed above for each of the years between 1996 and the final
twelve months for each of the above leases is no lesser or greater than
the amounts listed in the above table.
(b) Per annum base rents for 1996 are for the period January 1, 1996
through April 30, 1996 (the expiration date of the lease).
The amounts in the following table represent the Partnership's portion of leases
in the year of expiration (assuming no lease renewals) through the year ended
December 31, 2005. Leases in effect at Telegraph have terms of one year or less
and have been excluded from the table.
<TABLE>
<CAPTION>
Number Base Rents
of in Year of % of Total
Year Tenants Square Feet Expiration (a) Base Rents (b)
---- ------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
1996 19 64,508 $367,900 13.78%
1997 10(c) 14,138 $140,400 6.18%
1998 17 39,022 $183,300 9.46%
1999 7 14,689 $ 61,500 3.72%
2000 10 54,105 $107,000 8.12%
2001 2 14,703 $109,800 10.10%
2002 1 2,363 $ 3,600 0.38%
2003 1 4,185 $ 13,300 1.39%
2004 None None None None
2005 4 23,346 $193,400 26.78%
</TABLE>
4
<PAGE>
ITEM 2. PROPERTIES - Continued
- ------- ----------------------
(a) Represents the Partnership's portion of base rents to be collected
each year on expiring leases.
(b) Represents the Partnership's portion of base rents to be collected
each year on expiring leases as a percentage of the Partnership's
portion of the total base rents to be collected on leases in effect as
of December 31, 1995.
(c) Two of these leases are ground leases.
ITEM 3. LEGAL PROCEEDINGS
- ------- -----------------
(a & b) The Partnership and its properties were not a party to, nor the subject
of, any material pending legal proceedings, nor were any such proceedings
terminated during the quarter ended December 31, 1995. Ordinary routine
litigation incidental to the business which is not deemed material was
maintained during the quarter ended December 31, 1995.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
(a,b,c & d) None.
5
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S EQUITY AND RELATED SECURITY HOLDER MATTERS
- ------- ----------------------------------------------------------------------
There has not been, nor is there expected to be, a public market for Units.
As of March 1, 1996, there were 4,721 Holders of Units.
ITEM 6. SELECTED FINANCIAL DATA
- ------- -----------------------
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total revenues $ 4,948,100 $ 4,751,900 $ 4,652,900 $ 4,398,200 $ 4,345,500
Net income (loss) $ 525,600 $(2,342,800) $ 1,564,500 $ 1,571,800 $ 2,102,000
Net income (loss) allocated to
Limited Partners $ 520,300 $(2,319,400) $ 1,548,900 $ 1,556,100 $ 2,081,000
Net income (loss) allocated to Limited
Partners per Unit (688,194 Units issued
and outstanding) $ 0.76 $ (3.37) $ 2.25 $ 2.26 $ 3.02
Total assets $27,825,700 $29,056,800 $33,120,400 $32,738,800 $33,766,200
Distributions to Limited Partners
per Unit (688,194 Units issued and
outstanding) (a) $ 2.36 $ 2.36 $ 1.32 $ 2.92 $ 44.52
Return of capital to Limited Partners
per Unit (688,194 Units issued and
outstanding) (b) $ 1.60 $ 2.36 None $ 0.66 $ 41.50
Other data:
- -----------
Investment in commercial rental
properties (net of accumulated
depreciation and amortization) $22,973,900 $23,894,600 $28,677,400 $27,881,100 $27,842,700
Number of real property interests
owned at December 31 3 3 3 3 3
</TABLE>
6
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA - Continued
- ------- -----------------------------------
(a) Distributions to Limited Partners per Unit for the year ended
December 31, 1991 included a return of a portion of the Net Proceeds of
the Offering of $41.88.
(c) For the purposes of this table, return of capital represents
either: the amount by which distributions, if any, exceed net income
for each respective year or; total distributions, if any, in years when
the Partnership incurs a net loss. Pursuant to the Partnership
Agreement, Capital Investment is only reduced by distributions of Sale
or Refinancing Proceeds. Accordingly, return of capital as used in the
above table does not impact Capital Investment.
The following table includes a reconciliation of Cash Flow (as defined in the
Partnership Agreement) to cash flow provided by operating activities as
determined by generally accepted accounting principles ("GAAP"):
<TABLE>
<CAPTION>
For the Years Ended December 31,
------------------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Cash Flow (as defined in the
Partnership Agreement) (a) $ 2,672,800 $ 2,535,900 $ 2,146,700 $ 1,820,200 $ 2,419,300
Items of reconciliation:
Premium amortization 296,500 502,400 312,100
Portfolio Management Fee 180,500 180,500 100,900 223,300 201,900
Professional fees paid from Offering
proceeds (47,200)
Changes in current assets and liabilities:
(Increase) decrease in current assets (39,000) 19,700 68,500 42,800 106,900
Increase (decrease) in current
liabilities 35,500 (119,600) 108,500 7,300 128,000
----------- ----------- ----------- ----------- ------------
Net cash provided by operating activities $ 2,849,800 $ 2,616,500 $ 2,721,100 $ 2,596,000 $ 3,121,000
=========== =========== =========== =========== ============
Net cash (used for) investing activities $(1,233,800) $ (201,700) $(1,734,100) $(1,409,800) $ (6,418,500)
=========== =========== =========== =========== ============
Net cash (used for) financing activities $(1,792,200) $(1,601,200) $(1,291,400) $(2,070,500) $(31,557,500)
=========== =========== =========== =========== ============
</TABLE>
7
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA - Continued
- ------- -----------------------------------
(a) Cash Flow is defined in the Partnership Agreement as Partnership
cash revenues earned from operations (excluding tenant deposits,
proceeds from the Policy after payment of outstanding obligations of
the Partnership, and proceeds from Major Capital Events), minus all
cash expenses incurred (including Operating Expenses, payments of
Policy premiums and any loans and debt service related thereto,
payments of the Portfolio Management Fee and any reserves of revenues
from operations deemed reasonably necessary by the General Partner),
except capital expenditures and lease acquisition expenditures.
The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing on pages A-1 through A-7
in this report and the supplemental schedule on pages A-8 and A-9.
8
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The ordinary business of the Partnership is expected to pass through its life
cycle in three phases: (i) the Offering of Units and Investment in Properties;
(ii) the operation of properties and (iii) the sale of properties.
The Partnership commenced the Offering of Units on August 1, 1988 and began
operations on October 17, 1988, after achieving the required minimum
subscription level. On July 31, 1990, the Offering was Terminated upon the sale
of 688,194 Units. In May 1991, the Partnership returned $28,821,600 to the
Limited Partners, or $41.88 per Unit, representing a return of a portion of the
Net Proceeds of the Offering as a result of the Partnership not having acquired
properties where the purchase price equaled the total equity raised within the
period required by the Policy. From November 1988 through December 1991, the
Partnership made two real property investments and purchased a 50% interest in
a joint venture which was formed with an Affiliated partnership for the purpose
of acquiring a 100% interest in certain real property.
The estimated fair market value of Lakeview Office Park, Building II and III
("Lakeview"), which accounted for 45% of the Partnership's total rental
revenues for the year ended December 31, 1995, has been adversely affected by
uncertainty surrounding the health care industry. As of December 31, 1995, 62%
of Lakeview's leasable square footage is leased to tenants in the health care
industry. In addition, the largest tenant at Lakeview, which occupies 20% of
the property's leasable square footage, is vacating the property on April 30,
1996. A replacement tenant has been secured at a per square foot rate which is
considerably less than the former tenant. The Partnership will incur
substantial costs associated with this tenant, such as improvements to their
space, moving allowance and a leasing commission. The Partnership anticipates
that continued concessions to new and renewing tenants may be necessary as
leases expire.
The General Partner has historically reviewed significant factors regarding the
Partnership's properties to determine that the properties are carried at lower
of cost or market, and where appropriate has made value impairment adjustments.
These factors include, but are not limited to: 1) recent and/or budgeted
operating performance; 2) research of market conditions; 3) economic trends
affecting major tenants; 4) economic factors related to the region where the
properties are located and 5) when available, recent property appraisals. As a
result of the current year review, the Partnership has recorded a (loss) from a
provision for value impairment of $(1,300,000) for the year ended December 31,
1995, relating to Lakeview. For more details related to this provision, see
Note 6 of Notes to Financial Statements. The General Partner will continue to
evaluate real estate market conditions affecting each of the Partnership's
properties, in its efforts to maximize the realization of proceeds on their
eventual disposition. The recording of the provision for value impairment does
not impact cash flows as defined by GAAP or Cash Flow (as defined in the
Partnership Agreement).
OPERATIONS
The table below is a recap of certain operating results of each of the
Partnership's properties for the years ended December 31, 1995, 1994 and 1993.
The discussion following the table should be read in conjunction with the
Financial Statements and Notes thereto appearing in this report.
<TABLE>
<CAPTION>
Comparative Operating Results
(a)
For the Years Ended December 31,
--------------------------------
1995 1994 1993
- ---------------------------------------------------------
<S> <C> <C> <C>
LAKEVIEW OFFICE PARK, BUILDINGS II & III
Rental revenues $2,100,000 $2,117,700 $2,288,000
- ---------------------------------------------------------
Property net income (b) $ 630,400 $ 524,400 $ 738,200
- ---------------------------------------------------------
Average occupancy 86% 90% 97%
- ---------------------------------------------------------
TELEGRAPH HILL APARTMENTS
Rental revenues $1,402,100 $1,390,700 $1,253,300
- ---------------------------------------------------------
Property net income $ 671,700 $ 692,300 $ 597,100
- ---------------------------------------------------------
Average occupancy 91% 96% 96%
- ---------------------------------------------------------
CARROLLTON CROSSROADS SHOPPING CENTER
Rental revenues $1,164,300 $1,094,800 $1,017,200
- ---------------------------------------------------------
Property net income $ 627,200 $ 549,000 $ 463,400
- ---------------------------------------------------------
Average occupancy 98% 99% 99%
- ---------------------------------------------------------
</TABLE>
(a) Excludes certain income and expense items which are not directly related to
individual property operating results such as interest income and general
and administrative expenses.
(b) Property net income excludes provisions for value impairment of $1,300,000
and $4,000,000, which were included in the Statements of Income and
Expenses for the years ended December 31, 1995 and 1994, respectively (see
Note 6 of Notes to Financial Statements for additional information).
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1995 TO THE YEAR ENDED DECEMBER 31,
1994
Net income (loss) for the Partnership for the year ended December 31, 1995
increased by $2,868,400 when compared to the year ended December 31, 1994.
During the years ended December 31, 1995 and 1994, the Partnership reported
(losses) from provisions for value impairment on Lakeview of $(1,300,000) and
$(4,000,000), respectively. For further information, see table above and the
notes thereto as well as Note 6 of Notes to Financial Statements.
Net income, exclusive of the provisions for value impairment, for the
Partnership for the year ended December 31, 1995 increased by $168,400 when
compared to the year ended December 31, 1994. This increase was due to
increases of $106,000 and $78,200 in operating results at Lakeview and
Carrollton Crossroads Shopping Center ("Carrollton"), respectively, as well as
an increase of $71,900 in interest income earned on short-term investments due
to an increase in the average interest rate earned on these investments.
Partially offsetting the increase was an increase of $21,400 in general and
administrative expenses due to higher appraisal fees, printing and mailing
expenses and professional service fees, partially offset by lower data
processing costs, as well as a decrease of $20,600 in operating results at
Telegraph Hill Apartments ("Telegraph").
9
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
Rental revenues increased $124,300, or 3%, for the year ended December 31, 1995
when compared to the year ended December 31, 1994. The primary factors which
contributed to the increase were: 1) the write-off in 1994 of prior year rents
charged and subsequently credited to a tenant upon extension of its lease at
Lakeview; 2) an increase starting July 1, 1995 in the base rental rate charged
to the major tenant at Lakeview to an above market rate to allow the major
tenant to stay in the building for an additional ten months before relocating
out of the building to a space presently under construction; 3) an increase of
$75,500 in percentage rental income at Carrollton resulting from higher tenant
sales which determine the amount of percentage rents to be paid to the
Partnership and 4) an increase in the average monthly rental rate per unit at
Telegraph. Partially offsetting the increase in rental revenues were decreases
in tenant expense reimbursements of $106,700 at Lakeview, primarily due to the
use of new base years in tenant lease renewals during 1994 and 1995, and
$13,800 at Carrollton as a result of an underestimate of 1993 reimbursements
which were billed and received in 1994.
Depreciation and amortization expense decreased $31,500 for the year ended
December 31, 1995 when compared to the year ended December 31, 1994, primarily
as a result of the provision for value impairment recorded in December 1994 for
Lakeview, partially offset by an increase in amortization of the Partnership's
Premium.
Insurance expense decreased $17,900 for the year ended December 31, 1995, when
compared to the prior year. The decrease was primarily due to lower group rates
on the Partnership's combined insurance coverage as a result of a minimal
amount of claims made over the past several years.
Property operating expenses decreased $5,300 for the years under comparison.
The decrease was primarily due to lower property management and leasing fees
(resulting from lower rental revenues) at Lakeview, partially offset by an
increase in professional service fees at Lakeview and higher utility costs at
Telegraph.
Repairs and maintenance expense for the years under comparison increased
$54,100 primarily due to an increase in professional fees at Lakeview
associated with space planning for potential new and renewing tenants and an
increase in maintenance salaries at Telegraph, primarily as a result of
additional personnel.
Real estate tax expense increased $7,000 for the year ended December 31, 1995
when compared to the year ended December 31, 1994 primarily due to an increase
at Carrollton as a result of an underestimate of 1994 taxes which were paid in
1995.
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1994 TO THE YEAR ENDED DECEMBER 31,
1993
Net (loss) for the Partnership for the year ended December 31, 1994 was
$(2,342,800) when compared to net income of $1,564,500 for the year ended
December 31, 1993. This reduction of $3,907,300 was primarily due to the
Partnership's provision for value impairment of $4,000,000 for Lakeview during
1994 (see discussion above).
Net income for the Partnership, exclusive of the provision for value
impairment, for the year ended December 31, 1994 increased by $92,700 when
compared to the year ended December 31, 1993. The increase in net income for
the years under comparison was primarily due to: 1) increases of $95,200 and
$85,600 in operating results at Telegraph and
Carrollton, respectively; 2) lower general and administrative expenses of
$76,000 primarily due to 1993 charges for Indiana state and county income and
sales taxes relating to the tax years 1989, 1990, and 1992, and a decrease in
professional service fees and printing and mailing costs and 3) increased
interest income earned on short-term investments of $54,300 primarily due to an
increase in the average interest rate earned on these investments as well as an
increase in the funds available for investment. Partially offsetting the
increase was lower operating results of $213,800 at Lakeview.
Rental revenues increased $44,700, or 1%, for the year ended December 31, 1994
when compared to the year ended December 31, 1993. The primary factors which
contributed to the increase were: 1) increases in the average monthly rental
rate per unit at Telegraph and the average base rental rate at Carrollton; 2)
the expansion at Carrollton of a major tenant's leasable square footage in May
1993 from 87,092 square feet to 124,128 square feet, which represented a 14%
increase in the total leasable square footage of Carrollton and 3) increases in
tenant expense reimbursements of $18,200 at Lakeview and $16,900 at Carrollton.
Partially offsetting the increase was a decrease in rental revenue at Lakeview
as a result of a decrease in the average annual occupancy rate at Lakeview as
well as the 1994 write-off of prior year rents charged and subsequently
credited to a tenant as a result of negotiations regarding the renewal and
extension of the tenant's lease and the expansion of the leasable square
footage the tenant will occupy in 1995. Due to soft market conditions, lack of
larger tenants and increased competition by neighboring buildings for medical
leases, rental rates and occupancy levels at Lakeview have declined. Also, due
to the uncertainty surrounding health care reform, several of the medical-
related tenants at Lakeview are trying to consolidate and form large health
provider groups. In addition, several tenants vacated to purchase or build
their own buildings.
Repairs and maintenance expense for the years under comparison decreased
$41,100 primarily due to: 1) the absence of the expenditures for the extensive
parking lot repairs at Carrollton in 1993; 2) a decrease in property
maintenance salaries and expenses at Telegraph and 3) a decrease in
professional fees at Lakeview associated with space planning for potential new
and renewing tenants.
Real estate tax expense decreased $12,500 between the years under comparison
primarily due to a decrease at Carrollton as a result of an underestimate of
prior year real estate taxes which were paid in 1993.
Property operating expenses increased $51,400 for the years under comparison.
The increase was due to increases in professional service fees at Lakeview and
property management and leasing fees (resulting from an increase in rental
revenues) at Telegraph.
To increase and/or maintain occupancy levels at the Partnership's properties,
the General Partner, through its Affiliated asset and property management
groups, continues to take the following actions: 1) implementation of marketing
programs, including hiring of third-party leasing agents or providing on-site
leasing personnel, advertising, direct mail campaigns and development of
building brochures; 2) early renewal of existing tenant leases and addressing
any expansion needs these tenants may have; 3) promotion of local broker events
and networking with local brokers; 4) networking with national level retailers;
5) cold-calling other businesses and tenants in the market area; and 6)
providing
10
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
rental concessions or competitively pricing rental rates depending on market
conditions.
The rate of inflation has remained relatively stable during the years under
comparison and has had a minimal impact on the operating results of the
Partnership. The nature of various tenants lease clauses protects the
Partnership, to some extent, from increases in the rate of inflation. Certain
of the lease clauses provide for the following: 1) annual rent increases based
on the Consumer Price Index or graduated rental increases; 2) percentage rents
at its shopping center, for which the Partnership receives as additional rent a
percentage of tenants' sales over predetermined breakeven amounts and 3) total
or partial tenant reimbursement of property operating expenses (e.g., common
area maintenance, real estate taxes, etc.).
LIQUIDITY AND CAPITAL RESOURCES
One of the Partnership's objectives is to dispose of its properties when market
conditions allow for the achievement of the maximum possible sales price. In
the interim, the Partnership continues to manage and maintain its properties.
Notwithstanding the Partnership's intention relative to property sales, another
primary objective of the Partnership is to provide cash distributions to
Partners from Partnership operations. Cash Flow (as defined in the Partnership
Agreement) is generally not equal to Partnership net income or cash flows as
defined by GAAP since certain items are treated differently under the
Partnership Agreement than under GAAP. The General Partner believes that to
facilitate a clear understanding of the Partnership's operations, an analysis
of Cash Flow (as defined in the Partnership Agreement) should be examined in
conjunction with an analysis of net income or cash flow as defined by GAAP. The
table in Item 6. Selected Financial Data of this report includes a
reconciliation of Cash Flow (as defined in the Partnership Agreement) to cash
flow provided by operating activities as defined by GAAP. Such amounts are not
indicative of actual distributions to Partners and should not necessarily be
considered as an alternative to the results disclosed in the Statements of
Income and Expenses and Statements of Cash Flows.
Cash Flow (as defined in the Partnership Agreement) increased $136,900 for the
year ended December 31, 1995 when compared to the year ended December 31, 1994
due to the increase in net income, as previously discussed, exclusive of
depreciation and amortization expense as well as the provisions for value
impairment.
The decrease in the Partnership's cash position as of December 31, 1995 when
compared to December 31, 1994 was the result of distributions made to Partners
and expenditures for capital and tenant improvements and leasing costs
exceeding the net cash provided by operating activities. Liquid assets of the
Partnership as of December 31, 1995 were comprised of undistributed cash from
operating activities retained for working capital purposes.
Net cash provided by operating activities increased $233,300 for the year ended
December 31, 1995 when compared to the year ended December 31, 1994 and
continues to be the Partnership's primary source of funds. The increase was due
to increases in the net cash provided by operating activities from Carrollton
and Telegraph as well as the increase in interest income and lower general and
administrative expenses, as previously discussed, partially offset by reduced
net cash provided by operating activities from Lakeview.
The Partnership's (use of) cash for investing activities was for capital and
tenant improvements and leasing costs made at its properties, which increased
from $(201,700) for the year ended December 31, 1994 to $(1,233,800), of which
$1,126,400 was used at Lakeview primarily for tenant improvements, for the year
ended December 31, 1995. The Partnership maintains working capital reserves to
pay for capital expenditures, such as building and tenant improvements and
leasing costs. The Partnership has budgeted to spend approximately $1,325,000
during the year ending December 31, 1996. This budgeted amount relates to
anticipated capital and tenant improvements and leasing costs of approximately:
1) $1,150,000 at Lakeview; 2) $100,000 at Telegraph and 3) $75,000 at
Carrollton. The General Partner believes these improvements and leasing costs
are necessary in order to increase and/or maintain occupancy levels in
competitive markets, maximize rental rates charged to new and renewing tenants
and to prepare the properties for eventual disposition.
Net cash (used for) financing activities changed from $(1,601,200) for the year
ended December 31, 1994 to $(1,792,200) for the year ended December 31, 1995.
This change was primarily due to an increase in the distributions paid to
Partners in 1995.
The General Partner continues to take a conservative approach to projections of
future rental income and to maintain higher levels of cash reserves due to the
anticipated capital and tenant improvements and leasing costs necessary to be
made at the Partnership's properties during the next several years. As a result
of this, cash continues to be retained to supplement working capital reserves.
For the year ended December 31, 1995, Cash Flow (as defined in the Partnership
Agreement) retained to supplement working capital reserves was $1,048,700.
Distributions to Limited Partners for the quarter ended December 31, 1995 were
declared in the amount of $0.59 per Unit. Cash distributions are made 60 days
after the last day of each fiscal quarter. The amount of future distributions
to Partners will ultimately be dependent upon the performance of the
Partnership's investments as well as the General Partner's determination of the
amount of cash necessary to supplement working capital reserves to meet future
liquidity requirements of the Partnership. Accordingly, there can be no
assurance as to the amount and/or availability of cash for future distributions
to Partners.
11
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------
The response to this item is submitted as a separate section of this report. See
page A-1 "Index of Financial Statements, Schedule and Exhibits."
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
- ------- -----------------------------------------------------------
AND FINANCIAL DISCLOSURE
------------------------
None.
12
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------
(a) DIRECTORS
---------
The Partnership has no directors. First Capital Financial Corporation
("FCFC") is the General Partner. The directors of FCFC, as of March
29, 1996, are shown in the table below. Directors serve for one year or
until their successors are elected. The next annual meeting of FCFC will be
held in June 1996.
<TABLE>
<CAPTION>
Name Office
---- ------
<S> <C>
Samuel Zell . . . . . . . . . . . . . . . . . . Chairman of the Board
Douglas Crocker II. . . . . . . . . . . . . . . Director
Sheli Z. Rosenberg. . . . . . . . . . . . . . . Director
Sanford Shkolnik. . . . . . . . . . . . . . . . Director
</TABLE>
Samuel Zell, 54, has been a Director of the General Partner since
1983 (Chairman of the Board since December 1985) and is Chairman of the
Board of Great American Management and Investment, Inc. ("Great American").
Mr. Zell is also Chairman of the Board of Equity Financial and Management
Company ("EFMC") and Equity Group Investments, Inc. ("EGI"), and is a
trustee and beneficiary of a general partner of Equity Holdings Limited, an
Illinois Limited Partnership, a privately owned investment partnership. He
is also Chairman of the Board of Directors of Anixter International Inc.,
Falcon Building Products, Inc. and American Classic Voyages Co. He is
Chairman of the Board of Trustees of Equity Residential Properties Trust. He
is a Director of Quality Food Centers, Inc. and Sealy Corporation. He is
Chairman of the Board of Directors and Chief Executive Officer of Capsure
Holdings Corp. and Manufactured Home Communities, Inc. and Co-Chairman of
the Board of Revco D.S., Inc. Mr. Zell was President of Madison Management
Group, Inc. ("Madison") prior to October 4, 1991. Madison filed for
protection under the Federal bankruptcy laws on November 8, 1991.
Douglas Crocker II, 55, has been President and Chief Executive Officer since
December 1992 and a Director since January 1993 of the General
Partner. Mr. Crocker has been an Executive Vice President of EFMC since
November 1992. Mr. Crocker has been President, Chief Executive Officer and
trustee of Equity Residential Properties Trust since March 31, 1993. He was
President of Republic Savings Bank, F.S.B. ("Republic") from 1989 to June
1992 at which time the Resolution Trust Company took control of Republic.
Mr. Crocker is a member of the Board of Directors of Horizon Group, Inc.
Sheli Z. Rosenberg, 54, was President and Chief Executive Officer of the
General Partner from December 1990 to December 1992 and has been a
Director of the General Partner since September 1983; was Executive
Vice President and General Counsel for EFMC from October 1980 to November
1994; has been President and Chief Executive Officer of EFMC and EGI since
November 1994; has been a Director of Great American since June 1984 and is
a Director of various subsidiaries of Great American. She is also a Director
of Anixter International Inc., Capsure Holdings Corp., American Classic
Voyages Co., Falcon Building Products, Inc., Jacor Communications, Inc.,
Revco D.S., Inc., Sealy Corporation and CFI Industries, Inc. She was
Chairman of the Board from January 1994 to September 1994; Co-Chairman of
the Board from September 1994 until March 1995 of CFI Industries, Inc. She
is also a trustee of Equity Residential Properties Trust. Ms. Rosenberg is a
Principal of Rosenberg & Liebentritt, P.C., counsel to the Partnership, the
General Partner and certain of their Affiliates. Ms. Rosenberg was Vice
President of Madison prior to October 4, 1991. Madison filed for protection
under the Federal bankruptcy
13
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - Continued
- -------- --------------------------------------------------------------
(a) DIRECTORS - (continued)
-----------------------
laws on November 8, 1991. She has been Vice President of First Capital
Benefit Administrators, Inc. ("Benefit Administrators") since July 22, 1987.
Benefit Administrators filed for protection under the Federal Bankruptcy
laws on January 3, 1995.
Sanford Shkolnik, 57, has been a Director of the General Partner
since December 1985. Mr. Shkolnik has been Executive Vice President of EFMC
since 1976. He is Chairman of the Board and Chief Executive Officer of SC
Management, Inc., which is general partner of Equity Properties and
Development Limited Partnership, a nationally ranked shopping center
management company.
(b,c & e) EXECUTIVE OFFICERS
------------------
The Partnership does not have any executive officers. The executive officers
of the General Partner as of March 29, 1996 are shown in the table.
All officers are elected to serve for one year or until their successors are
elected and qualified.
<TABLE>
<CAPTION>
Name Office
---- ------
<S> <C>
Douglas Crocker II.................. President and Chief Executive Officer
Arthur A. Greenberg................. Senior Vice President
Norman M. Field..................... Vice President - Finance and Treasurer
</TABLE>
PRESIDENT AND CEO - See Table of Directors above.
Arthur A. Greenberg, 55, has been Senior Vice President of the
General Partner since August 1986. Mr. Greenberg was Executive Vice
President and Chief Financial Officer of Great American from December 1986
to March 1995. Mr. Greenberg also is an Executive Vice President of EFMC
since 1971, and President of Greenberg & Pociask, Ltd. He is Senior Vice
President since 1989 and Treasurer since 1990 of Capsure Holdings Corp. Mr.
Greenberg is a Director of American Classic Voyages Co. and Chairman of the
Board of Firstate Financial A Savings Bank. Mr. Greenberg was Vice President
of Madison prior to October 4, 1991. Madison filed for protection under the
Federal bankruptcy laws on November 8, 1991.
Norman M. Field, 47, has been Vice President of Finance and Treasurer of the
General Partner since February 1984, and also served as Vice
President and Treasurer of Great American from July 1983 until March 1995.
Mr. Field has been Treasurer of Benefit Administrators since July 22, 1987.
He also served as Vice President of Madison until October 4, 1991. He was
Chief Financial Officer of Equality Specialties, Inc. ("Equality"), a
subsidiary of Great American, from August 1994 to April 1995. Equality was
sold in April 1995.
(d) FAMILY RELATIONSHIPS
There are no family relationships among any of the foregoing directors and
officers.
(f) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
With the exception of the bankruptcy matters disclosed under Items 10 (a),
(b), (c) and (e), there are no involvements in certain legal proceedings
among any of the foregoing directors and officers.
14
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
- -------- ----------------------
(a,b,c & d) As stated in Item 10, the Partnership has no officers or directors.
Neither the General Partner, nor any director or officer of the General Partner,
received any direct remuneration from the Partnership during the year ended
December 31, 1995. However, the General Partner and its Affiliates do compensate
directors and officers of the General Partner. For additional information see
Item 13 (a) Certain Relationships and Related Transactions.
(e) None.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------
(a) As of March 1, 1996, the following Limited Partner was known by the
Partnership to own beneficially more than 5% of the Partnership's 688,194 Units
outstanding:
<TABLE>
<CAPTION>
Name and Address Amounts and Nature of Percent
Title of Class of Beneficial Owner Beneficial Ownership of Class
- -------------------------------- ----------------------------- -------------------------------- --------------
<S> <C> <C> <C>
Limited County Employees and Officers $5,376,300 (53,763 Units) 7.81%
Partnership Annuity and Benefit Fund of Direct Ownership
Units Cook County, 118 North Clark
Street, Room 1072, Chicago,
Illinois 60602
</TABLE>
(b) The Partnership has no directors or executive officers. As of March 1,
1996, the executive officers and directors of the General Partner, as a group,
did not own any Units.
(c) None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
(a) Certain Affiliates of the General Partner provide leasing, property
management and supervisory services to the Partnership. Compensation for these
property management services with respect to residential real property
investments may not exceed the lesser of: (i) the compensation customarily
charged in arm's-length transactions in the same geographic location and for a
comparable property or (ii) 5% of the gross receipts from the property being
managed. Compensation for property management services with respect to
commercial real property investments may not exceed the lesser of: (i) the
compensation customarily charged in arm's-length transactions in the same
geographic area and for a comparable property; (ii) 6% of the gross receipts
from the property being managed where the General Partner or Affiliates provide
leasing, re-leasing and leasing related services, or (iii) 3% of gross receipts
where the General Partner or Affiliates do not perform leasing, re-leasing and
leasing related services. For the year ended December 31, 1995, these Affiliates
were entitled to supervisory and property management and leasing fees of
$275,200. In addition, other Affiliates of the General Partner were entitled to
receive $86,400 for fees and reimbursements from the Partnership for insurance,
personnel services and other miscellaneous services. Compensation for these
services are on terms which are fair, reasonable and no less favorable to the
Partnership than reasonably could be obtained from unaffiliated persons. As of
December 31, 1995, total fees and reimbursements of $16,500 were due to
Affiliates.
In accordance with the Partnership Agreement, as compensation for services
rendered in managing the affairs of the Partnership, the General Partner is
entitled to receive subsequent to July 31, 1990, the Termination of the
Offering, a Portfolio Management Fee, payable quarterly, with respect to such
fiscal
15
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - Continued
- -------- ----------------------------------------------------------
year. The Portfolio Management Fee is an amount equal to the lesser of (i)
0.00625 of the gross value of the Partnership's assets plus, to the extent the
Portfolio Management Fee paid in any prior year was less than 0.00625 of the
gross value of the Partnership's assets in such prior year, the amount of such
deficit, or (ii) an amount equal to the remainder obtained by subtracting the
aggregate amount previously paid to the General Partner as Portfolio Management
Fees during such fiscal year, from an amount equal to 10% of the Partnership's
aggregate distributable Cash Flow (as defined in the Partnership Agreement)
(computed prior to deduction for Portfolio Management Fees) for such fiscal
year. For the year ended December 31, 1995, the General Partner was entitled to
and paid a Portfolio Management Fee of $180,500.
In accordance with the Partnership Agreement, Net Profits and Net Losses
(exclusive of Net Profits and Net Losses from a Major Capital Event) are
allocated 1% to the General Partner and 99% to the Limited Partners as a group.
Net Losses from a Major Capital Event are allocated (prior to giving effect to
any distributions of Sale Proceeds from said Major Capital Event): first, to the
General Partner and Limited Partners with positive balances in their Capital
Accounts, in proportion to and to the extent of such positive balances; and
second, the balance, if any, 1% to the General Partner and 99% to the Limited
Partners as a group. Net Profits from a Major Capital Event are allocated (prior
to giving effect to any distribution of Sale Proceeds from said Major Capital
Event): first, Net Profits in the amount of the Minimum Gain attributable to the
property that is the subject of such Major Capital Event are allocated to the
General Partner and Limited Partners with negative balances in their Capital
Accounts, in proportion to and to the extent of such negative balances; second,
to the General Partner and each Limited Partner in proportion to and to the
extent of the amounts, if any, of Sale Proceeds to be distributed to the General
Partner or each such Limited Partner with respect to such Major Capital Event
pursuant to the Partnership Agreement; and third, the balance, if any, 1% to the
General Partner and 99% to the Limited Partners as a group. Notwithstanding the
foregoing, there shall be allocated to the General Partner not less than 1% of
all items of Partnership income, gain, loss, deduction and credit during the
existence of the Partnership. For the year ended December 31, 1995, the General
Partner was allocated Net Profits of $5,300, which included a (loss) from a
provision for value impairment of $(13,000).
(b) Rosenberg & Liebentritt, P.C. ("Rosenberg"), serves as legal counsel to the
Partnership, the General Partner and certain of their Affiliates. Sheli Z.
Rosenberg, President and Chief Executive Officer of the General Partner from
December 1990 to December 1992 and a director of the General Partner since
December 1983, is a Principal of Rosenberg. For the year ended December 31,
1995, Rosenberg was entitled to $22,400 for legal fees from the Partnership. As
of December 31, 1995, all fees due to Rosenberg have been paid. Compensation for
these services are on terms which are fair, reasonable and no less favorable to
the Partnership than reasonably could be obtained from unaffiliated persons.
(c) No management person is indebted to the Partnership.
(d) None.
16
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- -------- -----------------------------------------------------------------
(a,c & d) See Index of Financial Statements, Schedule and Exhibits on page A-1
of Form 10-K.
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K for the quarter ended December 31, 1995.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FIRST CAPITAL INSURED REAL ESTATE
LIMITED PARTNERSHIP
BY: FIRST CAPITAL FINANCIAL CORPORATION
GENERAL PARTNER
Dated: March 29, 1996 By: /s/ DOUGLAS CROCKER II
----------------- -----------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ SAMUEL ZELL March 29, 1996 Chairman of the Board
- ---------------------------- -------------- and Director of the
SAMUEL ZELL General Partner
/s/ DOUGLAS CROCKER II March 29, 1996 President, Chief Executive
- ---------------------------- -------------- Officer and Director of the
DOUGLAS CROCKER II General Partner
/s/ SHELI Z. ROSENBERG March 29, 1996 Director of the General
- ---------------------------- -------------- Partner
SHELI Z. ROSENBERG
/s/ SANFORD SHKOLNIK March 29, 1996 Director of the General
- ---------------------------- -------------- Partner
SANFORD SHKOLNIK
/s/ NORMAN M. FIELD March 29, 1996 Vice President - Finance
- ---------------------------- -------------- and Treasurer
NORMAN M. FIELD
18
<PAGE>
INDEX OF FINANCIAL STATEMENTS, SCHEDULE AND EXHIBITS
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
Pages
-------------
Report of Independent Auditors A - 2
Balance Sheets at December 31, 1995 and 1994 A - 3
Statements of Partners' Capital for the Years
Ended December 31, 1995, 1994, and 1993 A - 3
Statements of Income and Expenses for the Years
Ended December 31, 1995, 1994, and 1993 A - 4
Statements of Cash Flows for the Years Ended
December 31, 1995, 1994, and 1993 A - 4
Notes to Financial Statements A - 5 to A - 7
SCHEDULE FILED AS PART OF THIS REPORT
III - Real Estate and Accumulated Depreciation
as of December 31, 1995 A - 8 to A - 9
All other schedules have been omitted as inapplicable, or for the reason that
the required information is shown in the financial statements or notes thereto.
EXHIBITS FILED AS PART OF THIS REPORT
EXHIBITS (3 & 4) First Amended and Restated Certificate and Agreement of
Limited Partnership as set forth on pages A-1 through A-35 of the Partnership's
definitive Prospectus dated August 1, 1988, included in the Partnership's
Registration Statement on Form S-11 (Registration No. 33-15999), filed pursuant
to Rule 424(b), is incorporated herein by reference.
EXHIBIT (13) Annual Report to Security Holders
- ------------
The 1994 Annual Report to Limited Partners is being sent under separate cover,
not as a filed document and not via EDGAR, for the information of the
Commission.
EXHIBIT (27) Financial Data Schedule
- ------------
A - 1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Partners
First Capital Insured Real Estate Limited Partnership
Chicago, Illinois
We have audited the accompanying balance sheets of First Capital Insured Real
Estate Limited Partnership as of December 31, 1995 and 1994, and the related
statements of income and expenses, Partners' Capital and cash flows for each of
the three years in the period ended December 31, 1995, and the schedule listed
in the accompanying index. These financial statements and schedule are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 financial position of First Capital Insured Real
Estate Limited Partnership as of December 31, 1995 and 1994, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
Ernst & Young LLP
Chicago, Illinois
March 1, 1996
A-2
<PAGE>
BALANCE SHEETS
December 31, 1995 and 1994
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial and residential rental
properties:
Land $ 3,369,700 $ 3,869,700
Buildings and improvements 24,963,900 24,530,100
- --------------------------------------------------------------------------
28,333,600 28,399,800
Accumulated depreciation and amortization (5,359,700) (4,505,200)
- --------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 22,973,900 23,894,600
Cash and cash equivalents 3,829,000 4,005,200
Rents receivable 124,100 101,200
Deferred insurance premium (net of accumulated
amortization of $776,200 and $603,000,
respectively) 880,600 1,053,800
Other assets 18,100 2,000
- --------------------------------------------------------------------------
$27,825,700 $29,056,800
- --------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 415,800 $ 403,100
Due to Affiliates 16,500 43,300
Security deposits 93,300 80,900
Distributions payable 451,100 451,100
Other liabilities 73,100 23,500
- --------------------------------------------------------------------------
1,049,800 1,001,900
- --------------------------------------------------------------------------
Partners' (deficit) capital:
General Partner (958,400) (783,200)
Limited Partners (688,194 Units issued and
outstanding) 27,734,300 28,838,100
- --------------------------------------------------------------------------
26,775,900 28,054,900
- --------------------------------------------------------------------------
$27,825,700 $29,056,800
- --------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 1995, 1994 and 1993
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital,
January 1, 1993 $(494,000) $32,141,200 $31,647,200
Net income for the year ended December
31, 1993 15,600 1,548,900 1,564,500
Distributions for the year ended December
31, 1993 (100,900) (908,500) (1,009,400)
- -------------------------------------------------------------------------------
Partners' (deficit) capital, December 31,
1993 (579,300) 32,781,600 32,202,300
Net (loss) for the year ended December
31, 1994 (23,400) (2,319,400) (2,342,800)
Distributions for the year ended December
31, 1994 (180,500) (1,624,100) (1,804,600)
- -------------------------------------------------------------------------------
Partners' (deficit) capital, December 31,
1994 (783,200) 28,838,100 28,054,900
Net income for the year ended December
31, 1995 5,300 520,300 525,600
Distributions for the year ended December
31, 1995 (180,500) (1,624,100) (1,804,600)
- -------------------------------------------------------------------------------
Partners' (deficit) capital, December 31,
1995 $(958,400) $27,734,300 $26,775,900
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
A-3
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the years ended December 31, 1995, 1994 and 1993
(All dollars rounded to nearest 00s except per Unit amounts)
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Rental $4,727,500 $ 4,603,200 $4,558,500
Interest 220,600 148,700 94,400
- ----------------------------------------------------------------------------
4,948,100 4,751,900 4,652,900
- ----------------------------------------------------------------------------
Expenses:
Depreciation and amortization 1,027,700 1,059,200 979,600
Property operating:
Affiliates 276,600 297,400 290,500
Nonaffiliates 589,600 574,100 529,600
Real estate taxes 410,700 403,700 416,200
Insurance--Affiliate 49,100 67,000 62,100
Repairs and maintenance 581,200 527,100 568,200
General and administrative:
Affiliates 40,800 33,800 26,400
Nonaffiliates 146,800 132,400 215,800
Provision for value impairment 1,300,000 4,000,000
- ----------------------------------------------------------------------------
4,422,500 7,094,700 3,088,400
- ----------------------------------------------------------------------------
Net income (loss) $ 525,600 $(2,342,800) $1,564,500
- ----------------------------------------------------------------------------
Net income (loss) allocated to General
Partner $ 5,300 $ (23,400) $ 15,600
- ----------------------------------------------------------------------------
Net income (loss) allocated to Limited
Partners $ 520,300 $(2,319,400) $1,548,900
- ----------------------------------------------------------------------------
Net income (loss) allocated to Limited
Partners per Unit (688,194 Units issued
and outstanding) $ 0.76 $ (3.37) $ 2.25
- ----------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995, 1994 and 1993
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 525,600 $(2,342,800) $ 1,564,500
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation and amortization 1,027,700 1,059,200 979,600
Provision for value impairment 1,300,000 4,000,000
Changes in assets and liabilities:
(Increase) decrease in rents receivable (22,900) 18,200 57,500
(Increase) decrease in other assets (16,100) 1,500 11,000
Increase (decrease) in accounts payable
and accrued expenses 12,700 (125,800) 96,200
(Decrease) increase in due to
Affiliates (26,800) 10,500 3,100
Increase (decrease) in other
liabilities 49,600 (4,300) 9,200
- ----------------------------------------------------------------------------------
Net cash provided by operating
activities 2,849,800 2,616,500 2,721,100
- ----------------------------------------------------------------------------------
Cash flows from investing activities:
Payments for capital and tenant
improvements (1,233,800) (201,700) (1,734,100)
- ----------------------------------------------------------------------------------
Net cash (used for) investing
activities (1,233,800) (201,700) (1,734,100)
- ----------------------------------------------------------------------------------
Cash flows from financing activities:
Distributions paid to Partners (1,804,600) (1,605,800) (1,315,300)
Increase in security deposits 12,400 4,600 23,900
- ----------------------------------------------------------------------------------
Net cash (used for) financing
activities (1,792,200) (1,601,200) (1,291,400)
- ----------------------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents (176,200) 813,600 (304,400)
Cash and cash equivalents at the beginning
of the year 4,005,200 3,191,600 3,496,000
- ----------------------------------------------------------------------------------
Cash and cash equivalents at the end of
the year $ 3,829,000 $ 4,005,200 $ 3,191,600
- ----------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
A-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement filed with the Securities and
Exchange Commission on Form S-11. Definitions of these terms are contained in
Article III of the First Amended and Restated Agreement of Limited Partnership,
which is included in the Registration Statement and incorporated herein by
reference.
ORGANIZATION:
The Partnership was formed on June 30, 1987, by the filing of a Certificate and
Agreement of Limited Partnership with the Recorder of Deeds of Cook County,
Illinois, and commenced the Offering of Units on August 1, 1988. The required
minimum subscription level was reached, and Partnership operations commenced on
September 16, 1988. The Partnership was formed to invest, on an all cash basis,
primarily in a diversified portfolio of institutional quality income producing
real estate such as shopping centers, office buildings, apartments, warehouses
or any one or more of these categories.
The Partnership Agreement provides that the Partnership will be dissolved on or
before December 31, 2017. The Limited Partners, by a majority vote, may
dissolve the Partnership at any time.
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles. Under this method of accounting, revenues are
recorded when earned and expenses are recorded when incurred.
Preparation of the Partnership's financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The financial statements include the Partnership's 50% interest in a joint
venture with an Affiliated partnership. This joint venture was formed for the
purpose of acquiring a 100% interest in certain real property and is operated
under the common control of the General Partner. Accordingly, the Partnership's
pro rata share of the venture's revenues, expenses, assets, liabilities and
capital was included in the financial statements.
The Partnership is not liable for federal income taxes as the Partners
recognize their proportionate share of the Partnership income or loss in their
individual tax returns; therefore, no provision for income taxes is made in the
financial statements of the Partnership. In addition, it is not practicable for
the Partnership to determine the aggregate tax bases of the Limited Partners;
therefore, the disclosure of the difference between the tax bases and the
reported assets and liabilities of the Partnership would not be meaningful.
Commercial and residential rental properties are recorded at cost, net of any
provisions for value impairment, and depreciated (exclusive of amounts
allocated to land) on the straight-line method over their estimated useful
lives. Lease acquisition fees are recorded at cost and amortized over the life
of the lease. Repair and maintenance costs are expensed as incurred;
expenditures for improvements are capitalized and depreciated over the
estimated life of the improvements.
The General Partner periodically reviews significant factors regarding the
properties to determine that the properties are carried at the lower of cost or
fair market value. These factors include, but are not limited to, the General
Partner's experience in the real estate industry, an evaluation of recent
operating performance against expected results, economic trends or factors
affecting major tenants or the regions in which the properties are located, and
where available, information included in recent appraisals of properties.
Based on this analysis, where it is anticipated that the carrying value of an
investment property will not be recovered, the General Partner has deemed it
appropriate to reduce the basis of the properties for financial reporting
purposes to fair market value. Such fair market value is the General Partner's
best estimate of the amounts expected to be realized were such properties sold
as of the Balance Sheet date, based upon current information available. The
ultimate realization may differ from these amounts. Provisions, where
applicable, are reflected in the accompanying Statements of Income and Expenses
in the year such evaluations have been made. For additional information see
Note 6.
Cash equivalents are considered all highly liquid investments with an original
maturity of three months or less when purchased.
The Partnership's financial statements include financial instruments, including
receivables and trade liabilities. The fair value of financial instruments,
including cash and cash equivalents, was not materially different from their
carrying value at December 31, 1995 and 1994.
Deferred insurance premiums paid on the Continental Casualty Company (CNA)
insurance policy are amortized on the straight-line method over a ten-year
period ending in the year 2001.
Certain reclassifications have been made to the previously reported 1994 and
1993 statements in order to provide comparability with the 1995 statements.
These reclassifications have no effect on net income (loss) or Partners'
capital (deficit).
2. RELATED PARTY TRANSACTIONS:
In accordance with the Partnership Agreement, as compensation for services
rendered in managing the affairs of the Partnership, the General Partner is
entitled to receive subsequent to July 31, 1990, the Termination of the
Offering, a Portfolio Management Fee, payable quarterly, with respect to such
fiscal year. The Portfolio Management Fee is an amount equal to the lesser of
(i) 0.625% of the gross value of the Partnership's assets plus, to the extent
the Portfolio Management Fee paid in any prior year was less than 0.625% of the
gross value of the Partnership's assets in such prior year, the amount of such
deficit, or (ii) an amount equal to the remainder obtained by subtracting the
aggregate amount previously paid to the General Partner
A-5
<PAGE>
as Portfolio Management Fees during such fiscal year, from an amount equal to
10% of the Partnership's aggregate distributable Cash Flow (as defined in the
Partnership Agreement) (computed prior to deduction for Portfolio Management
Fees) for such fiscal year. For the years ended December 31, 1995, 1994 and
1993, the General Partner was entitled to and paid a Portfolio Management Fee
of $180,500, $180,500 and $100,900, respectively.
In accordance with the Partnership Agreement, Net Profits and Net Losses
(exclusive of Net Profits and Net Losses from a Major Capital Event) are
allocated 1% to the General Partner and 99% to the Limited Partners as a group.
Net Losses from a Major Capital Event are allocated (prior to giving effect to
any distributions of Sale Proceeds from said Major Capital Event): first, to
the General Partner and Limited Partners with positive balances in their
Capital Accounts, in proportion to and to the extent of such positive balances;
and second, the balance, if any, 1% to the General Partner and 99% to the
Limited Partners as a group. Net Profits from a Major Capital Event are
allocated (prior to giving effect to any distribution of Sale Proceeds from
said Major Capital Event): first, Net Profits in the amount of the Minimum Gain
attributable to the property that is the subject of such Major Capital Event
are allocated to the General Partner and Limited Partners with negative
balances in their Capital Accounts, in proportion to and to the extent of such
negative balances; second, to the General Partner and each Limited Partner in
proportion to and to the extent of the amounts, if any, of Sale Proceeds to be
distributed to the General Partner or each such Limited Partner with respect to
such Major Capital Event pursuant to the Partnership Agreement; and third, the
balance, if any, 1% to the General Partner and 99% to the Limited Partners as a
group. Notwithstanding the foregoing, there shall be allocated to the General
Partner not less than 1% of all items of Partnership income, gain, loss,
deduction and credit during the existence of the Partnership. For the year
ended December 31, 1995, the General Partner was allocated Net Profits of
$5,300, which included a (loss) from a provision for value impairment of
$(13,000). For the year ended December 31, 1994, the General Partner was
allocated Net (Losses) of $(23,400), which included a (loss) from a provision
for value impairment of $(40,000). For the year ended December 31, 1993, the
General Partner was allocated Net Profits of $15,600.
Fees and reimbursements paid and payable by the Partnership to Affiliates were
as follows:
<TABLE>
<CAPTION>
For the Years Ended December 31, 1995
--------------------------------------------------
1995 1994 1993
---------------- ---------------- ----------------
Paid Payable Paid Payable Paid Payable
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Property management and
leasing fees $304,700 $ 9,200 $270,900 $38,700 $272,700 $29,000
Reimbursement of property
insurance premiums, at
cost 49,100 None 64,300 None 60,400 None
Reimbursement of expenses,
at cost:
--Accounting 19,500 5,700 21,000 3,100 17,500 1,900
--Investor communication 15,000 1,600 9,800 1,500 9,800 1,200
--Legal 22,400 None 19,600 None 31,100 700
--Other 100 None None None None None
- ------------------------------------------------------------------------------
$410,800 $16,500 $385,600 $43,300 $391,500 $32,800
- ------------------------------------------------------------------------------
</TABLE>
On-site property management for the Partnership's properties is provided by
Affiliates of the General Partner for fees ranging from 3% to 6% of gross rents
received from the properties.
3. FUTURE MINIMUM RENTALS:
The Partnership's share of future minimum rental income due on noncancelable
leases as of December 31, 1995 was as follows:
<TABLE>
<S> <C>
1996 $ 2,670,200
1997 2,273,000
1998 1,937,900
1999 1,652,200
2000 1,317,700
Thereafter 5,636,200
--------------
$15,487,200
--------------
</TABLE>
The Partnership is subject to the usual business risks associated with the
collection of the above-scheduled rentals. In addition to the amounts scheduled
above, the Partnership expects to receive rental revenue from operating expense
and real estate tax expense reimbursements and percentage rents. Percentage
rents earned for the years ended December 31, 1995, 1994 and 1993 were $79,300,
$3,900 and $800, respectively. Leases in effect at Telegraph Hill Apartments
have terms of one year or less and have been excluded from the above schedule.
4. INCOME TAX:
The Partnership utilizes the accrual basis of accounting for both income tax
reporting and financial statement purposes. Financial statement results will
differ from income tax results due to the use of differing depreciation lives
and methods, the recognition of rents received in advance as taxable income and
the Partnership's provisions for value impairment. The net effect of these
accounting differences for the year ended December 31, 1995 was that the income
for tax reporting purposes was greater than the net income for financial
statement purposes by $1,437,600. The aggregate cost of commercial rental
properties for federal income tax purposes at December 31, 1995 was
$33,691,100.
A-6
<PAGE>
5. DEFERRED INSURANCE PREMIUM:
The Partnership has obtained an insurance policy (the "Policy") from CNA which
will, in effect, insure that, if all Net Proceeds of the Offering are invested
or allocated to investment in properties, the cumulative amount of Insured Cash
Available for Distribution from all sources, as determined in accordance with
the Policy and related agreements, including the Appraised Values of the
properties then owned by the Partnership, will equal at least 100% of an amount
equal to the Original Capital Contribution on the tenth anniversary of the day
on which the last property is acquired by the Partnership (the Final
Acquisition Date). Liability and the amount of payment under the Policy will be
subject to certain conditions and limitations. The Policy is intended to cover
economic or functional obsolescence of the properties, but does not apply to
certain losses, costs, penalties or expenses. Payments of any amounts due under
the Policy will be made to the Partnership after the tenth anniversary of the
Final Acquisition Date. The premium for the Policy equaled 4.6% of the Original
Capital Contribution allocated to properties, payable to CNA as and when each
property which is endorsed under the Policy is acquired. The Policy is not a
guarantee that Limited Partners will receive distributions equal to 100% of
their Original Capital Contributions to the Partnership.
6. PROVISIONS FOR VALUE IMPAIRMENT:
Due to regional factors and other matters relating specifically to the
Partnership's office property, there is uncertainty as to the Partnership's
ability to recover the net carrying value of Lakeview Office Buildings, II and
III ("Lakeview") during its remaining estimated holding period. Accordingly, it
was deemed appropriate to reduce the basis of Lakeview by recording (losses)
from provisions for value impairment of $(1,300,000) and $(4,000,000) during
the years ended December 31, 1995 and 1994, respectively. The provisions for
value impairment were considered non-cash events for the purpose of the
Statements of Cash Flow and were not utilized in the determination of Cash Flow
(as defined in the Partnership Agreement) and were material fourth quarter
adjustments pursuant to Accounting Principles Board Opinion No. 28, "Interim
Financial Reporting". No other material adjustments were made in the fourth
quarters.
Beginning on January 1, 1996 the Partnership will adopt Financial Accounting
Standards Board Statement No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" (the "Standard"). The
Standard established guidance for determining if the value of defined assets
are impaired, and if so, how impairment losses should be measured and reported
in the financial statements. The Standard is effective for fiscal years
beginning after December 15, 1995. The General Partner believes that, based on
the current circumstances, the adoption on January 1, 1996 of the Standard will
not materially affect the Partnership's financial position or results of
operations.
A-7
<PAGE>
FIRST CAPITAL INSURED REAL ESTATE LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
Column A Column C Column D Column E Column F
- ----------------------- ------------------------- ------------------------- --------------------------------------- ------------
Initial cost Costs capitalized Gross amount at which
to Partnership subsequent to acquisition carried at close of period
------------------------- ------------------------- ---------------------------------------
Buildings Buildings Accumulated
and Improve- Carrying and Depreciation
Description Land Improvements ments Costs (1) Land Improvements Total (2)(3) (2)
- ----------------------- ---------- ------------ ---------- --------- ---------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OFFICE BUILDING:
- ----------------
Lakeview Office Park,
Buildings II and III
(Indianapolis, IN)(4) $1,606,800 $13,018,100 $2,344,900 $ 79,000 $1,234,800 $10,514,000 $11,748,800(5) $3,090,600
SHOPPING CENTER:
- ----------------
Carrollton Crossroads
Shopping Center
(Carrollton, GA)
(50% interest) 1,002,500 7,766,800 1,511,100 76,200 1,002,500 9,354,100 10,356,600 1,619,700
APARTMENT COMPLEX:
- ------------------
Telegraph Hill
Apartments
(Albuquerque, NM) 1,132,400 4,599,700 395,400 100,700 1,132,400 5,095,800 6,228,200 649,400
---------- ---------- --------- ------- ---------- ----------- ----------- ----------
$3,741,700 $25,384,600 $4,251,400 $255,900 $3,369,700 $24,963,900 $28,333,600 $5,359,700
========== =========== ========== ======== ========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Column A Column G Column H Column I
- ------------------- --------- -------- ------------
Life on
which
depreciation
in latest
Date income
of con- Date statements
Description struction Acquired is computed
- ------------------- --------- -------- ------------
<S> <C> <C> <C>
OFFICE BUILDING:
- ----------------
Lakeview Office Park,
Buildings II and III 35 (7)
(Indianapolis, IN)(4) (6) 5/89 2-7 (8)
SHOPPING CENTER:
- ----------------
Carrollton Crossroads
Shopping Center
(Carrollton, GA) 35 (7)
(50% interest) 1988 11/88 3-5 (8)
APARTMENT COMPLEX:
- ------------------
Telegraph Hill
Apartments 35 (7)
(Albuquerque, NM) 12/85 12/91 3-10 (8)
</TABLE>
Column B - Not Applicable.
See accompanying notes on the following page.
A-8
<PAGE>
FIRST CAPITAL INSURED REAL ESTATE LIMITED PARTNERSHIP
NOTES TO SCHEDULE III
Note 1. Consists of legal fees, appraisal fees, title costs and other related
professional fees.
Note 2. The following is a reconciliation of activity in columns E and F:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994 December 31, 1993
-------------------------- -------------------------- --------------------------
Accumulated Accumulated Accumulated
Cost Depreciation Cost Depreciation Cost Depreciation
----------- ------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at
beginning of year $28,399,800 $4,505,200 $32,198,100 $3,520,700 $30,464,000 $2,582,900
Additions during
period:
Improvements 1,233,800 201,700 1,734,100
Provisions for
depreciation 854,500 984,500 937,800
Deductions during
period:
Provision for value
impairment (1,300,000) (4,000,000)
----------- ---------- ----------- ---------- ----------- ----------
Balance at
end of year $28,333,600 $5,359,700 $28,399,800 $4,505,200 $32,198,100 $3,520,700
=========== ========== =========== ========== =========== ==========
</TABLE>
Note 3. The aggregate cost for federal income tax purposes as of December 31,
1995 was $33,691,100.
Note 4. Costs capitalized included payments to the seller to satisfy the
Partnership's obligation under an earnout agreement.
Note 5. Includes provisions for value impairment. See Note 6 in Notes to
Financial Statements for additional information.
Note 6. Lakeview Office Park Building II was completed in 1987; Lakeview Office
Park Building III was completed in 1988.
Note 7. Estimated useful life for building.
Note 8. Estimated useful life for improvements.
A-9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 3,829,000
<SECURITIES> 0
<RECEIVABLES> 124,100
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,953,100
<PP&E> 28,333,600
<DEPRECIATION> 5,359,700
<TOTAL-ASSETS> 27,825,700
<CURRENT-LIABILITIES> 976,700
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 26,775,900
<TOTAL-LIABILITY-AND-EQUITY> 27,825,700
<SALES> 0
<TOTAL-REVENUES> 4,948,100
<CGS> 0
<TOTAL-COSTS> 1,907,200
<OTHER-EXPENSES> 187,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 525,600
<INCOME-TAX> 0
<INCOME-CONTINUING> 525,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 525,600
<EPS-PRIMARY> 0.76
<EPS-DILUTED> 0.76
</TABLE>
