<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended June 30, 1996
------------------------------------------------------
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
----------------------------------------------------
FIRST CAPITAL INSURED REAL ESTATE LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3525946
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Riverside Plaza, Suite 950, Chicago, Illinois 60606-2607
- ------------------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
(312) 207-0020
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(Registrant's telephone number, including area code)
Not applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
--- ---
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
Partnership's Registration Statement on Form S-11, is incorporated herein by
reference in Part I of this report.
<PAGE>
BALANCE SHEETS
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
June 30,
1996 December 31,
(Unaudited) 1995
- --------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial
and residential rental properties:
Land $ 3,369,700 $ 3,369,700
Buildings and improvements 25,468,400 24,963,900
- --------------------------------------------------------------------------
28,838,100 28,333,600
Accumulated depreciation and amortization (5,874,000) (5,359,700)
- --------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 22,964,100 22,973,900
Cash and cash equivalents 1,250,700 3,829,000
Investments in debt securities 2,694,600
Rents receivable 90,600 124,100
Deferred insurance premium (net of accumulated
amortization of $862,800 and $776,200,
respectively) 794,000 880,600
Other assets 1,100 18,100
- --------------------------------------------------------------------------
$27,795,100 $27,825,700
- --------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 432,800 $ 415,800
Due to Affiliates 20,500 16,500
Security deposits 101,600 93,300
Distributions payable 451,100 451,100
Other liabilities 17,200 73,100
- --------------------------------------------------------------------------
1,023,200 1,049,800
- --------------------------------------------------------------------------
Partners' capital:
General Partner (deficit) (1,039,600) (958,400)
Limited Partners (688,194 Units issued and
outstanding) 27,811,500 27,734,300
- --------------------------------------------------------------------------
26,771,900 26,775,900
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$27,795,100 $27,825,700
- --------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the six months ended June 30, 1996 (Unaudited) and the year ended December
31, 1995
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital,
January 1, 1995 $ (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
Net income for the six months ended
June 30, 1996 9,000 889,200 898,200
Distributions for the six months ended
June 30, 1996 (90,200) (812,000) (902,200)
- ------------------------------------------------------------------------------
Partners' (deficit) capital,
June 30, 1996 $(1,039,600) $27,811,500 $26,771,900
- ------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended June 30, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1996 1995
- ------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $1,200,800 $1,119,900
Interest 57,300 55,100
- ------------------------------------------------------------------------
1,258,100 1,175,000
- ------------------------------------------------------------------------
Expenses:
Depreciation and amortization 291,200 227,500
Property operating:
Affiliates 43,200 64,900
Nonaffiliates 120,400 127,000
Real estate taxes 89,900 101,200
Insurance--Affiliate 15,200 9,600
Repairs and maintenance 139,300 138,500
General and administrative:
Affiliates 10,500 5,100
Nonaffiliates 33,500 48,600
- ------------------------------------------------------------------------
743,200 722,400
- ------------------------------------------------------------------------
Net income $ 514,900 $ 452,600
- ------------------------------------------------------------------------
Net income allocated to General Partner $ 5,100 $ 4,500
- ------------------------------------------------------------------------
Net income allocated to Limited Partners $ 509,800 $ 448,100
- ------------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
(688,194 Units outstanding) $ 0.74 $ 0.65
- ------------------------------------------------------------------------
</TABLE>
STATEMENTS OF INCOME AND EXPENSES
For the six months ended June 30, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1996 1995
- ------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $2,429,500 $2,220,400
Interest 105,800 110,100
- ------------------------------------------------------------------------
2,535,300 2,330,500
- ------------------------------------------------------------------------
Expenses:
Depreciation and amortization 600,900 456,200
Property operating:
Affiliates 106,900 139,100
Nonaffiliates 297,300 280,700
Real estate taxes 201,600 219,900
Insurance--Affiliate 26,100 24,500
Repairs and maintenance 306,400 258,300
General and administrative:
Affiliates 23,700 15,600
Nonaffiliates 74,200 87,400
- ------------------------------------------------------------------------
1,637,100 1,481,700
- ------------------------------------------------------------------------
Net income $ 898,200 $ 848,800
- ------------------------------------------------------------------------
Net income allocated to General Partner $ 9,000 $ 8,500
- ------------------------------------------------------------------------
Net income allocated to Limited Partners $ 889,200 $ 840,300
- ------------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
(688,194 Units outstanding) $ 1.29 $ 1.22
- ------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 898,200 $ 848,800
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 600,900 456,200
Changes in assets and liabilities:
Decrease in rents receivable 33,500 34,200
Decrease (increase) in other assets 17,000 (700)
Increase in accounts payable and accrued expenses 17,000 87,400
Increase (decrease) in due to Affiliates 4,000 (22,600)
(Decrease) increase in other liabilities (55,900) 8,800
- ----------------------------------------------------------------------------
Net cash provided by operating activities 1,514,700 1,412,100
- ----------------------------------------------------------------------------
Cash flows from investing activities:
Payments for capital and tenant improvements (504,500) (690,800)
(Increase) in investments in debt securities (2,694,600)
- ----------------------------------------------------------------------------
Net cash (used for) investing activities (3,199,100) (690,800)
- ----------------------------------------------------------------------------
Cash flows from financing activities:
Distributions paid to Partners (902,200) (902,300)
Increase in security deposits 8,300 500
- ----------------------------------------------------------------------------
Net cash (used for) financing activities (893,900) (901,800)
- ----------------------------------------------------------------------------
Net (decrease) in cash and cash equivalents (2,578,300) (180,500)
Cash and cash equivalents at the beginning of the
period 3,829,000 4,005,200
- ----------------------------------------------------------------------------
Cash and cash equivalents at the end of the period $1,250,700 $3,824,700
- ----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
June 30, 1996
1. 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.
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP"). 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 GAAP
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 information included in these financial statements is unaudited;
however, in management's opinion, all adjustments (consisting of only normal,
recurring accruals) necessary for a fair presentation of the results of
operations for the periods included have been made. Results of operations for
the quarter and six months ended June 30, 1996, are not necessarily indicative
of the operating results for the year ending December 31, 1996.
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
Partners' capital was included in the financial statements.
Commercial and residential rental properties held for investment are recorded
at cost, net of any provisions for value impairment, and depreciated (exclusive
of amounts, if any, allocated to land and value impairments) on the straight-
line method over their estimated useful lives. Upon classifying a commercial or
residential rental property as held for disposition, no further depreciation or
amortization of such property is provided for in the financial statements.
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.
During the first quarter of 1996, the Partnership adopted 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 also addressed the accounting for
long-lived assets that are expected to be disposed of. The adoption of the
Standard did not have a material effect on the Partnership's financial
statements.
Cash equivalents are considered all highly liquid investments with an original
maturity of three months or less when purchased.
Investments in debt securities are comprised of corporate debt securities and
are classified as held-to-maturity. These investments are carried at their
amortized cost basis in the financial statements. As of June 30, 1996 these
securities had a fair market value of $2,690,400 and unrealized losses of
$4,200. Substantially all of these securities had maturities of less than one
year when purchased.
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 1995
statements in order to provide comparability with the 1996 statements. These
reclassifications had no effect on net income or Partners' (deficit) capital.
Reference is made to the Partnership's annual report for the year ended
December 31, 1995, for a description of other accounting policies and
additional details of the Partnership's financial condition, results of
operations, changes in Partners' capital and changes in cash balances for the
year then ended. The details provided in the notes thereto have not changed
except as a result of normal transactions in the interim or as otherwise
disclosed herein.
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 quarter. 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 quarter was less than
0.625% of the gross value of the Partnership's assets in such prior quarter,
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 quarter, 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 quarter. For the quarter and six months ended June 30,
1996, the General Partner was entitled to a Portfolio Management Fee of $45,100
and $90,200, 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 quarter
and six months ended June 30, 1996, the General Partner was allocated Net
Profits of $5,100 and $9,000, respectively.
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter and six months ended June 30, 1996 were as follows:
<TABLE>
<CAPTION>
Paid
----------------
Six
Quarter Months Payable
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Property management and leasing fees $46,800 $ 90,900 $15,600
Reimbursement of property insurance premiums, at cost 26,100 26,100 None
Reimbursement of expenses, at cost:
--Accounting 6,900 15,300 3,800
--Investor communication 11,100 14,400 1,100
--Legal 400 6,200 None
- -------------------------------------------------------------------------------
$91,300 $152,900 $20,500
- -------------------------------------------------------------------------------
</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.
4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the Partnership's annual report for the year ended
December 31, 1995 for a discussion of the Partnership's business.
OPERATIONS
The table below is a recap of the Partnership's share of certain operating
results of each of its properties for the quarters and six months ended June
30, 1996 and 1995. 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 Quarters For the Six Months
Ended Ended
6/30/96 6/30/95 6/30/96 6/30/95
- ----------------------------------------------------------
<S> <C> <C> <C> <C>
LAKEVIEW OFFICE PARK, BUILDINGS II & III
Rental revenues $559,000 $480,700 $1,156,900 $943,600
- ----------------------------------------------------------
Property net income $235,800 $143,200 $ 358,800 $237,800
- ----------------------------------------------------------
Average occupancy 79% 80% 86% 83%
- ----------------------------------------------------------
TELEGRAPH HILL APARTMENTS
Rental revenues $338,800 $333,800 $ 660,000 $693,100
- ----------------------------------------------------------
Property net income $149,100 $163,100 $ 286,900 $333,900
- ----------------------------------------------------------
Average occupancy 95% 87% 92% 92%
- ----------------------------------------------------------
CARROLLTON CROSSROADS SHOPPING CENTER (50%)
Rental revenues $303,000 $305,500 $ 612,600 $583,700
- ----------------------------------------------------------
Property net income $163,400 $172,900 $ 337,900 $319,900
- ----------------------------------------------------------
Average occupancy 98% 96% 98% 98%
- ----------------------------------------------------------
</TABLE>
(a) Excludes certain income and expense items which are not directly related to
individual property operating results such as Partnership interest income,
general and administrative expenses and amortization of the deferred insurance
premium on the CNA policy.
Unless otherwise disclosed, discussions of fluctuations between 1996 and 1995
refer to both the quarters and six months ended June 30, 1996 and 1995.
Net income for the quarter and six months ended June 30, 1996 increased $62,300
and $49,400, respectively, when compared to the quarter and six months ended
June 30, 1995. The increases were primarily the result of improved operating
results at Lakeview Office Park, Buildings II & III ("Lakeview") for both
periods and at Carrollton Crossroads Shopping Center ("Carrollton") for the
six-month period along with a decrease in general and administrative expenses
which was primarily due to a decrease in data processing and legal fees,
partially offset by an increase in salaries and accounting fees. Partially
offsetting the increases were decreases in the operating results at Telegraph
Hill Apartments ("Telegraph") for both periods under comparison and at
Carrollton for the quarterly period.
Rental revenues increased $80,900 or 7.2% and $209,100 or 9.4%, respectively,
for the quarter and six months ended June 30, 1996 when compared to the quarter
and six months ended June 30, 1995. The increase for the quarterly periods was
primarily the result of an increase in: 1) the base rental rate charged to the
major tenant at Lakeview to an above market rate to allow the tenant to extend
its lease for a period of ten months beginning July 1, 1995, 2) tenant expense
reimbursements at Lakeview, 3) the base rental income at Carrollton due to an
increase in the rates charged to new and renewing tenants and 4) the escalation
income for common area maintenance at Carrollton. Partially offsetting the
increase for the quarter was a decrease in percentage rents at Carrollton. For
the six-month periods under comparison, the increase was primarily due to the
increase in base rents at Lakeview and Carrollton, as previously discussed,
partially offset by a decrease in base rents at Telegraph which was primarily
the result of a first quarter decrease in average occupancy rate.
Property operating expenses decreased $28,300 and $15,600, respectively, for
the quarterly and six month periods under comparison. The decreases were
primarily the result of decreased property management fees at Lakeview and
decreased utilities and professional fees at Telegraph. Partially offsetting
the decreases were increases in salaries at Lakeview and increased property
management and leasing fees at Telegraph.
Real estate tax decreased $11,300 and $18,300 for the quarter and six months
ended June 30, 1996 when compared to the quarter and six months ended June 30,
1995. The decreases were primarily the result of an overestimate of the expense
in 1995 at Lakeview. Partially offsetting these decreases were increases at
Telegraph which were the result of an increase in the assessed value of the
property.
Depreciation and amortization expense increased $63,700 and $144,700,
respectively, for the quarterly and six month periods under comparison. The
increases were primarily the result of an increase in depreciation expense at
Lakeview which was due to increased tenant improvements. Partially offsetting
the increase at Lakeview was a decrease in expense due to the effect of the
provision for value impairment recorded for Lakeview during the year ended
December 31, 1995.
Repairs and maintenance increased $48,100 for the six months ended June 30,
1996 when compared to the six months ended June 30, 1995. The increase was
primarily due to increased cleaning and snow removal costs at Lakeview, an
expenditure in 1996 to fix the boiler at Telegraph and roof repairs completed
in 1996 at Carrollton.
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
property brochures; 2) early renewal of existing tenants' 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 rental concessions or competitively pricing rental rates depending on
market conditions.
LIQUIDITY AND CAPITAL RESOURCES
One of the Partnership's objectives is to dispose of its properties when market
conditions allow for the achievement
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
of the maximum possible sales price. In the interim, the Partnership continues
to manage and maintain it 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. To the extent cumulative cash distributions exceed net income, such
excess distributions will be treated as a return of capital. Cash Flow (as
defined in the Partnership Agreement) is generally not equal to net income or
cash flows as defined by generally accepted accounting principles ("GAAP"),
since certain items are treated differently under the Partnership Agreement
than under GAAP. Management 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 flows as defined by GAAP. The following table 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 be considered as
an alternative to the results disclosed in the Statements of Income and
Expenses and Statements of Cash Flow.
<TABLE>
<CAPTION>
Comparative
Cash Flow Results
For the Six Months
Ended
6/30/96 6/30/95
- -----------------------------------------------------------------------------
<S> <C> <C>
Cash Flow (as defined in the Partnership Agreement) $ 1,408,900 $1,214,800
Items of Reconciliation:
Portfolio Management Fee 90,200 90,200
Decrease in current assets 50,500 33,500
(Decrease) increase in current liabilities (34,900) 73,600
- -----------------------------------------------------------------------------
Net cash provided by operating activities $ 1,514,700 $1,412,100
- -----------------------------------------------------------------------------
Net cash (used for) investing activities $(3,199,100) $ (690,800)
- -----------------------------------------------------------------------------
Net cash (used for) financing activities $ (893,900) $ (901,800)
- -----------------------------------------------------------------------------
</TABLE>
Cash Flow (as defined in the Partnership Agreement) increased $194,100 for the
six months ended June 30, 1996 when compared to the six months ended June 30,
1995 due primarily to the increase in net income, as previously discussed,
exclusive of depreciation and amortization expense.
The decrease in the Partnership's cash position for the six months ended June
30, 1996 was primarily the result of investments in debt securities,
distributions paid to Partners and expenditures for capital, tenant improvement
and leasing costs exceeding net cash provided by operating activities. Liquid
assets (including cash, cash equivalents and investments in debt securities) as
of June 30, 1996 were comprised of amounts held for working capital purposes.
Net cash provided by operating activities increased $102,600 for the six months
ended June 30, 1996 when compared to the six months ended June 30, 1995 and
continues to be the Partnership's primary source of funds. This increase was
due to increases in the net cash provided by operating activities from
Carrollton and Lakeview, partially offset by reduced net cash provided by
operating activities from Telegraph.
Net cash used for investing activities increased $2,508,300 for the six months
ended June 30, 1996 when compared to the six months ended June 30, 1995. The
increase was due to an increase in investment in debt securities partially
offset by a decrease in expenditures made for capital, tenant improvements and
leasing costs. The Partnership maintains working capital reserves to pay for
capital expenditures, such as capital, tenant improvement and leasing costs.
The increase in investments in debt securities is a result of the extension of
the maturities of certain of the Partnership's short-term investments in an
effort to maximize the return on these amounts as they are held for working
capital purposes. These investments are of investment-grade and generally
mature less than one year from their date of purchase. The Partnership spent
$504,500 during the six months ended June 30, 1996 and has projected to spend
approximately $350,000 during the remainder of 1996. This projected amount
relates to anticipated capital, tenant improvement and leasing costs of
approximately: 1) $185,000 at Lakeview, 2) $100,000 at Carrollton and 3)
$65,000 at Telegraph. Actual amounts expended in 1996 may vary depending on a
number of factors including actual leasing activity and other market conditions
throughout the year. 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, comprised substantially of
distributions to Partners, remained relatively stable for the periods under
comparison.
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, tenant improvement 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 six months ended June 30, 1996, Cash Flow (as defined in the Partnership
Agreement) retained to supplement working capital reserves was $596,900.
Distributions to Limited Partners for the quarter ended June 30, 1996 were
declared in the amount of $406,000 or $0.59 per Unit. Cash distributions are
made 60 days after the last day of each fiscal quarter. The amount of future
distributions to Limited 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 amounts and/or availability of cash for
future distributions to Partners.
6
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K:
- -----------------------------------------
(a) Exhibits: None
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the quarter ended
June 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST CAPITAL INSURED REAL ESTATE LIMITED PARTNERSHIP
By: FIRST CAPITAL FINANCIAL CORPORATION
GENERAL PARTNER
Date: August 14, 1996 By: /s/ DOUGLAS CROCKER II
--------------- --------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: August 14, 1996 By: /s/ NORMAN M. FIELD
--------------- --------------------------------------
NORMAN M. FIELD
Vice President - Finance and Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,250,700
<SECURITIES> 2,694,600
<RECEIVABLES> 90,600
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,035,900
<PP&E> 28,838,100
<DEPRECIATION> 5,874,000
<TOTAL-ASSETS> 27,795,100
<CURRENT-LIABILITIES> 1,006,000
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 26,771,900
<TOTAL-LIABILITY-AND-EQUITY> 27,795,100
<SALES> 0
<TOTAL-REVENUES> 2,535,300
<CGS> 0
<TOTAL-COSTS> 938,300
<OTHER-EXPENSES> 97,900
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 898,200
<INCOME-TAX> 0
<INCOME-CONTINUING> 898,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 898,200
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.29
</TABLE>
