UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
Commission file number 33-17577
U.S. Realty Income Partners L.P.
(Exact name of registrant as specified in its charter)
Delaware 62-1331754
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
P. O. Box 50507, Nashville, Tennessee 37205
(Address of principal executive offices) (Zip Code)
Registrant's telephone, including area code (615) 665-5959
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
NOT APPLICABLE NOT APPLICABLE
Securities registered pursuant to section 12(g) of the Act:
NOT APPLICABLE
(Title of class)
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 II of this Form 10-K or any amendment to this
Form 10-K. Yes X No
The aggregate sales price of the limited partnership interests subscribed
for by non-affiliates was $4,858,000 at March 31, 1999. There is no public
market for these interests.
U.S. REALTY INCOME PARTNERS L.P.
1998 FORM 10-K ANNUAL REPORT
INDEX
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 4
Item 4. Submission of Matters to a Vote of Limited Partners. . . . . . 4
PART II
Item 5. Market for the Registrant's Limited Partnership
Interests and Related Limited Partner Matters. . . . . . . . . 5
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . 6
Item 8. Financial Statements and Supplementary Data. . . . . . . . . . 12
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . . . . . 12
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . 13
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . 14
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 13. Certain Relationships and Related Transactions . . . . . . . . 15
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Prospectus of the Registrant dated November 30, 1987, as
supplemented through December 1998 and filed pursuant to Rule 424(b), are
hereby
incorporated by reference.
PART 1
Item 1. Business
U.S. Realty Income Partners L.P. (the "Partnership") is a Delaware limited
partnership formed in 1987 for the purpose of acquiring, operating, holding and
ultimately disposing of existing incomeproducing residential andcommercial real
estate properties.The Partnership sold $4,858,000 limited partnership interests
(the "Units") through November 30, 1989, when it terminated its public offering
(the "Offering") pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933, as amended, which Offering registered 20,000 Units. The
Partnership began admitting limited partners on May 15, 1988.
The principal investment objectives of the Partnership are: (i)
preservation and protection of capital; (ii) long-term capital appreciation;
(iii) distribution of current cash flow, some of which may not be subject to
federal income taxes in the early years of the Partnership's operations; (iv)
build-up of equity through reduction of mortgage indebtedness on Partnership
properties; (v) a diversified real estate portfolio; and (vi)federal income tax
deductions during the initial years of the Partnership's operations whichmay be
used to offset income from the Partnership and possibly other passive sources.
The Partnership is managed by the general partner of the Partnership
Vanderbilt Realty Joint Venture (the "General Partner"). Vanderbilt Realty
Associates, Inc., acts as the managing partner of the General Partner. The
General Partner has the responsibility for the initial selection,evaluation and
negotiation of the investments for the Partnership. In making the Partnership's
investments, the General Partner considered various real property and financial
factors,including the condition and use of the property,the prospects for long-
range liquidity,income-producing capacity,long-term appreciation and income tax
considerations. In addition, the General Partner considers the possible effect
of shortages of materials, supplies and energy sources.As of December 31, 1992,
the Partnership had fully invested the proceeds raised in its offering through
the purchase of two properties through joint venture arrangements.
The Partnership invested in property only if one or more of the following
conditions were met: (1) during the period of at least one year preceding the
purchase, the property generated(or would have generated if leases currently in
existence had been in effect) cash flow in an amount estimated to be
consistent with the Partnership's objectives; or(2)for a period of at least two
years, the projection of income from the property based on executed leases or
other appropriate guarantees indicates the Partnership should obtain from the
property cash flow consistent with its investment objectives.
The Partnership has no employees.The General Partner and its affiliates are
permitted to perform services for the Partnership for acompetitive fee and have
done so.
The business of the Partnership is not seasonal and the Partnership does no
foreign or export business.
A presentation of information about industry segments is not applicable
because the Partnership operates solely in the real estate industry.
Item 2. Properties.
In October 1988, the Partnership acquired a 66.67% interest in a Tennessee
joint venture known as Bellevue Plaza Partners owning as its primary asset an
improved shopping center located in Nashville, Tennessee. The joint venture
interest was acquired for a purchase price of $1,500,000. Please refer to
Supplement No.2 dated October 26,1988 for additional information concerning the
acquisition of this joint-venture interest which supplement is incorporated
herein by reference.
In November 1988, the Partnership acquired a 50% ownership interest in a
joint venture known as DR/US West End General Partnership, a Virginia general
partnership (the "DR/US Joint Venture").The DR/US Joint Venture owned an office
building located in Nashville, Tennessee. See Supplement No. 3 dated November
29,1988 for additional information concerning this property which supplement is
incorporated herein by reference. The Partnership purchased its interest for an
initial contribution of $900,000. In order to retain its 50% interest, the
Partnership contributed an additional $1,035,000 to the DR/US Joint Venture by
August 1989. In 1991, an additional $150,000 was contributed as part of a
Chapter 11 reorganization. In 1995, the DR/US Joint Venture contributed its
equity position in the office building to Daniels Southeast Venture. See
"Liquidity and Capital Resources".
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to the Limited Partners during the fourth quarter
ended December 31, 1998.
PART II
Item 5. Market for the Registrant's Limited Partnership Interests and Related
Limited Partner Matters.
At December 31, 1998, the Partnership had admitted Limited Partners holding
4,858 Units.
The Partnership does not currently intend to list the Units on a national
securities exchange, and there is no public market for the Units. If a public
market for the Units does not develop, the Partnership may, in the sole
discretion of the General Partner,repurchase Units under certain circumstances,
as set forth in the Partnership's prospectus. At the request of a limited
partner,other than a resident of the State of California,who wishes to sell all
or a part of the Limited Partner's Units, the General Partner may assist such
Limited Partner in locating a purchaser,within the limit of applicable laws and
regulations. Neither the General Partner nor the Partnership is obligated to
redeem or repurchase Units.
Item 6. Selected Financial Data.
U.S. Realty Income Partners L.P.
(a Delaware limited partnership)
Year Ended December 31,
1998 1997 1996
Selected Income Statement Data:
Rental Income $593,069 $ 732,267 $ 743,689
Interest Income 16,883 6,236 3,212
Interest Expense 352,958 357,889 362,845
Operating Expense 226,415 210,126 230,326
Income from Joint Venture 47,344 30,709 20,845
Net Income (Loss) ($ 71,808) $ 4,065 ($ 52,640)
Net Income (Loss) Per
Limited Partnership Interest ($ 14.04) $ .79 ($ 10.29)
U.S. Realty Income Partners L.P.
(a Delaware limited partnership)
Year Ended December 31,
1998 1997 1996
Selected Balance Sheet Data:
Property and Improvements-Net $3,729,821 $3,885,252 $4,040,633
Investments in Joint Venture 1,000 1,000 1,000
Notes Payable 3,505,577 3,557,105 3,600,032
Cash Distributions to Limited
Partners 0 0 0
Cash Distributions per Limited
Partnership Interest 0 0 0
The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing elsewhere in this annual
report.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
As of December 31, 1998, the Partnership had raised $4,858,000 in funds from
Limited Partners. The Partnership's offering terminated in November 1989.
During 1988 the Partnership purchased interests in two joint ventures
located in Nashville, Tennessee.
Bellevue
In October 1988, the Partnership acquired a 66.67% interest in a Tennessee
joint venture known as Bellevue Plaza Partners holding as its primary asset a
shopping center located in Nashville, Tennessee("Bellevue") which was renovated
in 1988.The Bellevue property was 100% leased at the end of 1993 - 1996. Lease
rent from the tenants amounts to $48,367 per occupancy month. In addition, the
tenants pay common area maintenance charges of $5,881 per month for a total of
$54,248 per month.
On February 1, 1989, the joint venture obtained a $3,800,000 first mortgage
loan on this property from an unaffiliated lender. The mortgage bears interest
at a rate of 10% per annum and requires monthly installments of interest only
through February 1, 1991. Monthly debt service was $31,667 until March 1991 at
which time monthly installments of principal and interest rose to $33,743. The
loan became due on February 1, 1997. The mortgage holder, Mass Mutual, has
continued to extend the mortgage.A refinancing will occur when the vacant space
is re-leased and the pollution problem with Ted's Cleaners is financed. The
State of Tennessee has promulgated rulesandregulations pertaining to state wide
pollution problems. Ted's Cleaners has made application to the Industry "Super
Fund" to obtain money to clean up the pollution.The problem should be addressed
this spring. Hopefully, there will be a final resolution this year.
Haverty's moved from the center at the end of Occtober, 1997.We have reached an
agreement with T. J. Maxx/Marshalls for 28,300 sq. ft. Our Partnership has
completed work on the space which includes tear out, removal of existing
fixtures, providing a separate meter,upgrading the elctrical supply and putting
the HVAC in good working order.The tenant was responsible for the completion of
any work to make the space suitable to the tenant. As our Partnership does not
have extensive reserves, the tenant has fronted the cost of this and the
Partnership will repay the amount from the first two years lease payments. The
term of the lease is 10 years. Lease payments will yield approximately $50,000
more revenue to the Partnership each year after the first two years than
received from the lease with Haverty's. However, for the next two years, this
center will only break even on a cash flow basis. The Partnership has paid
debt service on a current basis.
DR/US West End
In November 1988, the Partnership acquired a 50% ownership interest in a
joint venture known as DR/US West End General Partnership (the "Joint Venture")
which owns an office building located in Nashville, Tennessee.The Partnership's
Joint Venture partner is Daniel West End LimitedPartnership,the general partner
of which is the Daniel Corporation ("Daniel"). The property was 95% occupied at
December 31, 1994, 1995 and 1996. When Gresham and Smith moved last March the
Partnership began a program to re-lease the 65,000 sq. ft. of space. As of this
date, all but 1,400 sq. ft. has been re-leased. In 1998 the Partnership will
have to fund tenant build out and brokerage commissions in an amount of
$1,300,000. This will have to come from operational cash flow. Lastly, a new
roof and decking for the building were completed in 1997.
The partnership contributed 3310WestEnd office building to a new partnership in
July 1995. A major reason for this was we had one tenant, Gresham and Smith,
leasing 65000 square feet out of a total of 107000 square feet with their lease
ending in 1998. They have terminated their lease and moved from the building.
Our contribution of 3310 in 1995 to the new partnership with Prudential Life
Insurance paying off the mortgage was a wise decision. It now enables the
partnership to have sufficient cash flow to pay for these costs. If we had not
made that change, our partnership would not have the cash flow to pay these
expenses and the partnership would stand a good chance of losing the building.
Properties in Raleigh, NC
These properties consist of one 110,000 sq. ft. building (Center 98) and four
50,000 sq. ft. buildings (Park). These buildings are operating according to
schedule. Prudential Life Insurance Company has funded the Partnership with
approximately $7,280,000 to build a garage and a new 55,600 sq. ft. building
which was completed at the end of 1998.Approximately 95% of this space has been
leased. The new parking garage will have 178 spaces.
In the next couple of months a nationally known brokerage firm will be retained
to determine the market value of the office buildings and secureany interest in
the purchase of them.
With the circumstances regarding the shopping center and the $1,300,000 payment
due on the 3310 Office Building, it does not appear there will be any cash
distribution in 1998 from operations. However, if the study and interest
regarding the office buildings prove positive, there is a possibility of one or
more sales of the office buildings. Our Partnership will make distributions to
the partners when this occurs.
Liquidity and Capital Resources
On November 1, 1988, for an initial investment of $900000,the Partnership
acquired a 50% interest in the DR/US West End General Partnership (the "DR/US
Joint Venture"), a Tennessee general partnership formed to own and operate a
commercial office building in Nashville, Tennessee(the "3310 Office Building").
In view of the expiration of the lease for the largest tenant of the 3310
Office Building and the maturity of the senior debt on the property, the DR/US
Joint Venture began to consider future plans for the 3310OfficeBuilding as well
asa sale of the property and discussed possible alternatives withthird parties,
including the Prudential Life Insurance Company of America ("Prudential").
Effective August 1995, the DR/US Joint Venture contributed all of its
assets to a newly formed limited partnership, the Daniel S.E. Limited
Partnership, a Virginia limited partnership (the US/Daniel Venture"). The
US/Daniel Venture then contributed its assets to anewlyformed limited liability
company known as Prudential/Daniel Office Venture, LLC, (the "PruDan L.L.C").
The members of PruDan LLC are the US/Daniel Venture and Prudential.
The assets of PruDan LLC consist of: (1) the 3310 Office Building, a
107,000 square foot office building in Nashville, Tennessee; (2) the Somerset
Park Business Center,a 108,113 square foot six-story office building located in
Raleigh, North Carolina; and (3)Somerset Park, 207,326 square feet in four two-
story office building located in Raleigh, North Carolina (items 2 and 3 are
collectively referred to as the "somerset Buildings"). The assets of PruDan LLC
reflect indirect capital contributions from the Partnership, Daniel Realty
Company("DRC") and First Daniel Realty Development Corporation(collective, with
DRC, "Daniel") and Prudential valued at $1,361,445, $2,131,055 and $31,432,500,
respectively, or equity interests of 3.9%, 6.1% and 90.0%, respectively. The
Partnership's capitalcontribution consisted of its interest inthe assets of the
DR/US Joint Venture, principally the 3310 Office Building. Daniel's capital
contribution consisted of its interest in the assets of the DR/US Joint Venture
(valued at $355,600) and is interest in the Somerset Buildings (valued at
$1,775,455).Prudential's capital contribution consisted of payoff of $7,537,955
of debt on the 3310 Office Building,plus $120,000 for a new roof repair escrow,
purchasing Metropolitan Life Insurance's interest in the Somerset Buildings,
payoff of debt on the Somerset Buildings, and transactions costs including due
diligence, closing costs, and fees for professional services (legal and
accounting) totalling 1.5% of the transaction.
In reaching the decision to contribute the Partnership's interest in the
DR/US Joint Venture to the PruDan LLC, the General Partners considered a number
of factors:
(1)The 3310 Office Building was subject to a first mortgage loan with a
principal debt balance at June 30, 1995 of $6,634,502, bearing
interest at 9%, and scheduled to mature in April 1997.
(2) A single tenant, Gresham & Smith ("G&S"), occupied 45.9% of the
space in the 3310 Office Building providing base annual lease income
of $932,000 pursuant to a lease scheduled to terminate in October,
1998, less than nineteen months after maturity of the debt on the
property. This lease has been terminated.
(3) Based on its present projections, the DR/US Joint Venture estimated
that all of the existing cash flow between now and the year 2000
would be required to pay the debt expense and establish a reserve
necessary to find a replacement tenant for G&S or to make necessary
tenant improvements. The General Partners estimate that
approximately $1,200,000 could be required to make necessary
improvements to secure new tenants.
In making these considerations, the General Partners considered two
alternatives to the formation of the PruDanLLC;refinancing and sale of the 3310
Office Building.With the uncertainty surrounding the G&S lease, it was unlikely
that another lender would be willing to make a loan. G&S would not commit to
extend their lease at this time and even if a new loan could be procured, it is
unlikely that there would be sufficient proceeds to pay off the existing debt.
The mortgage problem created by the timing of the G&S lease expiration also
served to increase the difficulty in a sale of the property. For these reasons,
the General Partners believe the PruDanLLC presented the most viable option for
the Partnership.
The General Partners believe the Partnership's investment in the PruDan LLC
accomplished the following objectives:
(1)Eliminated the mortgage problem created by the expiration of the G&S
lease by retiring all debt on the 3310 Office Building;
(2) Reduced the direct risk to the Partnership involving the potential
expiration of the G&S lease and the potential loss of cash flow.
(3) Establishment of a strong working relationship with Prudential, an
entity with significant capital resources.
(4) Diversification of risk from single asset, single location to
multiple assets in different locations; and
(5) Access to cash flow from Bellevue Plaza formerly used for debt
service on the 3310 Office Building and now available for
distribution to the Partnership's limited partners.
These objectives were accomplished without requiring any additional debt or the
need for capital contributions from the Partnership's limited partners.
The operational results of the Partnership for the years ended December 31,
1998, 1997 and 1996 are summarized below:
Year Ended December 31, 1998:
JOINT VENTURE
BELLEVUE PARTNERSHIP TOTAL
Revenues $ 607,244 $ 50,052 $ 657,296
Operating Expenses 170,199 56,216 226,415
Interest 352,958 - 352,958
Depreciation & Amort. 166,907 10,428 177,335
690,064 66,644 756,708
Net Operating Income (Loss) ( 82,820) ( 16,592) ( 99,412)
Partnership Share 66 2/3% 100%
Partnership Net Income (Loss) ($ 55,216) ($ 16,592) ($ 71,808)
Partnership Cash Flow ($ 175,486) ($ 6,164) ($ 181,650)
Year Ended December 31, 1997:
JOINT VENTURE
BELLEVUE PARTNERSHIP TOTAL
Revenues $ 736,661 $ 32,551 $ 769,212
Operating Expenses 155,771 54,355 210,126
Interest 357,889 - 357,889
Depreciation & Amort. 166,056 10,428 176,484
Refinancing Costs 2,500 - 2,500
682,216 64,783 746,999
Net Operating Income (Loss) 54,445 ( 32,232) 22,213
Partnership Share 66 2/3% 100%
Partnership Net Loss $ 36,297 ($ 32,232) $ 4,065
Partnership Cash Flow $ 207,110 ($ 21,804) $ 185,306
Year Ended December 31, 1996:
JOINT VENTURE
BELLEVUE PARTNERSHIP TOTAL
Revenues $745,340 $ 22,406 $ 767,746
Operating Expenses 151,322 79,004 230,326
Interest 362,845 - 362,845
Depreciation & Amort. 165,680 20,675 186,355
Refinancing Costs 28,543 - 28,543
708,390 99,679 808,069
Net Operating Loss ( 36,950) ( 77,273) ( 40,323)
Partnership Share 66 2/3% 100%
Partnership Net Loss $ 24,633 ($ 77,273) ($ 52,654)
Partnership Cash Flow $ 193,244 ($ 56,598) ($ 136,646)
The Partnership has utilized the proceeds of the offering as set forth under
"Estimated Use of Proceeds of the Offering," in the Partnership's Prospectus to
acquire, operate and hold for investment existing income producing residential
and commercial real estate properties. Since the proceeds of the offering are
less than the maximum amount the Partnership was unable to diversify its
investments to the extent initially desired.
The Partnership has established a working capital reserve of 5% of the gross
proceeds of the offering. After May 15, 1990 the Partnership's Prospectus
provided that the working capital reserve could be reduced to 3% depending upon
the Partnership's experience with its properties. At December 31, 1998, the
Partnership had $295,485 in cash and cash equivalents. This represents 6.1% of
capital raised. In the event such reserves are insufficient to satisfy
unanticipated costs,the Partnership will be required to borrow additional funds
to meet such costs.
Due to the ongoing commitments with the lenders on the Joint Venture, the
General Partner has deemed it advisable not to make any cashdistributions since
May 1990. The General Partner does not expect to make cash distributions in
1999.
Item 8. Financial Statements and Supplementary Data.
See Index to Financial Statements on Page F-l of Form 10-K for Financial
Statements and Financial Statement schedules, where applicable.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Partnership.
The General Partner of the Partnership is Vanderbilt Realty Joint Venture, a
Tennessee general partnership. The constituent partners of Vanderbilt Realty
Joint Venture are Vanderbilt Realty Associates, Inc., a Tennessee corporation
wholly owned by Mr. Robert Bond Miller, and American Financial Planners Group,
Inc., a New York corporation. The Partnership is managed by the General Partner
through Miller & Associates, Inc., an Affiliate of the General Partner.
The following persons are the principal representatives of the constituent
partners of the General Partner and are responsible for the daytoday operations
of the Partnership:
Name Age
Robert Bond Miller 63
Donald R. Zoch 42
Lee Rosenberg 45
Robert Bond Miller. Mr. Miller serves as President of Vanderbilt Realty
Associates, Inc., and Miller & Associates, Inc. Prior to establishing Miller &
Associates, Inc., he served as President of Jacques-Miller, Inc., which he co-
founded in 1969. During this tenure, Jacques-Miller, Inc., and its affiliates
acquired over 165 properties valued in excess of $600million and raised a total
of $350 million in capital from 15,500 investors.
From 1965 to 1968, Mr. Miller was in charge of the Nashville office of
Blair, Follin, Allen & Walker, where he was responsible for sales and
installation of fringe benefit programs, including life, disability and health
insurance plans. Previously he was associated with Massachusetts Mutual Life
Insurance Co., from 1960 to 1965, during which time he became a Life Member of
the Million Dollar Roundtable and earned the Chartered Life Underwriter
designation. A founding member of the International Association of Financial
Planners (IAFP), he established the organization's Nashville Chapter and served
as its first President.
Mr. Miller received a Bachelor of Science degree in Aeronautics from St.
Louis University. Following graduation, he served three years in the U.S. Air
Force, receiving his honorable discharge as a first lieutenant.
Donald R. Zoch. Mr. Zoch is an executive officer of American Financial
Planners Group, Inc. Mr. Zoch has lectured extensively in this field and is a
Certified Financial Planner, Registered Investment Advisor and is licensed with
the National Association of Security Dealers, Inc. ("NASD"). Zoch & Zoch
Financial Group,Inc.has been active in the financial planning field since 1975;
Mr. Zoch was an Adjunct Professor at the College of Financial Planning in New
Jersey and received a Bachelor of Arts degree in Business from Catholic
University of America, Washington, D.C.
Lee Rosenberg. Mr. Rosenberg is an executive officer of American Financial
Planners Group,Inc. and has more than 16 years experience in financial planning
Mr. Rosenberg has been a partner in ARS Financial Services,Inc., Valley Stream,
New York, a firm specializing in personal financing planning for more than five
years.He is a Certified Financial Planner, Registered Investment Advisor and is
licensed with the NASD, and is currently a member and serves on the Board of
Directors of the Long Island Society of the Institute of Certified Financial
Planners as well as being a Director of the NewYork Chapter ofNational Speakers
Association.
Mr. Rosenberg received a Bachelor of Arts degree in Business from Brooklyn
University, Brooklyn, New York.
There are no family relationships among executive officers and directors.
Miller & Associates, Inc.
Miller & Associates, Inc. was formed in 1986 by four individuals who were
officers of Jacques-Miller, Inc., a Tennessee corporation, which acts as a
general partner in real estate limited partnerships. Three of these four
individuals are no longer affiliated with Miller & Associates, Inc. Mr. Robert
Bond Miller is the sole shareholder of Miller & Associates, Inc.
Mr. Miller, the president of Miller & Associates, Inc. served as president
of Jacques-Miller,Inc., a company he co-founded in 1969.In addition, Mr. Miller
served as a general partner of Jacques-Miller Associates, an affiliate of
Jacques-Miller, Inc., which entity served as a general partner of various
investment partnerships sponsored by Jacques-Miller, Inc.
Item 11. Executive Compensation.
The Partnership is required to pay certain fees, make distributions and
allocate a share of the profits and losses of the Partnership to the General
Partner. See pages 11 to 13 of the Prospectus of the Partnership, which pages
are incorporated herein by reference, for a discussion of the compensation
payable to the General Partner and its Affiliates, as well as Note G to the
Financial Statements included herein.
The General Partner and its Affiliates may not be reimbursed by the
Partnership for its overhead costs or expenses,and no overhead costsor expenses
of the General Partner or its Affiliates can be allocated to or paid by the
Partnership. However, direct costs may be reimbursed, including employee time
spent on Partnership matters. The foregoing reimbursements of expenses will be
made regardless of whether any distributions of Operating Cash Flow are made to
the Limited Partners.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) Limited Partners were admitted beginning May 15, 1988 and admissions
ceased in November1989,at which time the Partnership's offering terminated. As
of this date, the Partnership is not aware of any person or group who has
subscribed for more than 5% of the outstanding Units.
(b) The officers and directors of the general partners of the General
Partner of the Partnership as a group have subscribed for the following Units:
Amount of Class Beneficial Ownership Percent of Class
Units of Limited
Partnership Interest None 0%
No officer or director of the general partners of the General Partner
possesses a rightto acquire beneficial ownership of additional Units other than
those noted above.
Item 13. Certain Relationships and Related Transactions.
The Partnership is subject to various conflicts of interest arising out of
its relationship with the General Partner and its Affiliates.All agreements and
arrangements, including those relating to compensation, between the Partnership
and the General Partner and its Affiliates are not the result of arm's-length
negotiations.
Affiliates of the General Partner have been general partners or managers of
other limited partnerships or groups of investors, which have invested in real
properties. In addition, the General Partner and its Affiliates have and
continue to form and manage or advise additional public and private real estate
investment entities. The General Partner and its Affiliates will have conflicts
of interest in allocating management time,servicesand functions between various
existing partnerships and any future partnerships which they may organize or
serve, as well as other business ventures in which they are involved. Miller &
Associates, Inc., which, for a property management fee, may perform property
management services for Partnership properties, and may also, in the future,
solicit outside property management accounts.
Many of the officers and directors of the constituent partners of the
General Partner are also officers and directors of one or more entities(many of
which are affiliated with the General Partner) which engage in the development,
brokerage, sale, operation or management of real estate.
The General Partner and its Affiliates do intend to sponsor privately
offered real estate partnerships although it is not anticipated that the
investment objectives of such partnerships will be the same as those of the
Partnership.
The General Partner has certain interests in the Operating Cash Flow, Net
Sale or Refinancing Proceeds and profits and losses of th Partnership. Because
the timing and amount of Operating Cash Flow, Net Sale or Refinancing Proceeds
and profits and losses of the Partnership received by, or allocated to, the
Limited Partners may be affected by decisions of the General Partner, including
the timing of a sale of any of the Partnership properties,the establishment and
maintenance of reasonable reserves, the timing of expenditures, the level of
mortgage amortization and other matters,the General Partner may have a conflict
of interest with respect to such determinations.
Where conflicts arise from anticipated transactions with Affiliates of the
General Partner, the limitations described below have been adopted.
While the Partnership will make no loans to the General Partner or its
Affiliates, the Partnership may borrow money from the General Partner or its
Affiliates but only on terms as to interest rate, security, fees and other
charges at least as favorable to the Partnership as that changedby unaffiliated
lending institutions in the same locality on comparable loans for the same
purpose.
The General Partners and its Affiliates are not prohibited from providing
services to, and otherwise dealing or doing business with,persons who deal with
the Partnership, although there are no present arrangements with respect to any
such services. However, no rebates or "give-ups" may be received by the General
Partner or any of its Affiliates, nor may the General Partner or any such
Affiliates participate in any reciprocal business arrangement which would have
the effect of circumventing any of the provisions of the Agreement.
Zoch & Zoch Financial Group, Inc., a broker-dealer affiliated with the
General Partner, acted as Selling Agent in the offering but did not receive
selling commissions.
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
(1) (2) Financial Statements and Schedules
(See index of financial statements filed with this annual report included in
Item
8.)
(3) Exhibits
(a) Restated Limited Partnership Agreement of the Partnership
is hereby incorporated by reference to the Prospectus of
the Partnership dated November 30, 1987, as filed with
the Securities and Exchange Commission, File No. 33-17577,
as supplemented December 28, 1987, October 26, 1988, and
November 29, 1988.
(b) Annual Report
(b)The following reports on Form 8-K were filed since the beginning of the
last quarter of the period covered by this report:
DATE
None
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.
U.S. REALTY INCOME PARTNERS L.P.
By: Vanderbilt Realty Joint Venture
the General Partner
By: Vanderbilt Realty Associates, Inc.
its Managing General Partner
By: Robert Bond Miller
Robert Bond Miller
President, Director, Chief
Executive Officer, Chief Financial
Officer and Chief Accounting
Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 295,485
<SECURITIES> 0
<RECEIVABLES> 32,901
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,309,927
<DEPRECIATION> 1,580,106
<TOTAL-ASSETS> 4,473,135
<CURRENT-LIABILITIES> 124,348
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 973,739
<TOTAL-LIABILITY-AND-EQUITY> 4,473,135
<SALES> 609,952
<TOTAL-REVENUES> 657,296
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 403,750
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 352,958
<INCOME-PRETAX> (71,808)
<INCOME-TAX> (71,808)
<INCOME-CONTINUING> (71,808)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (71,808)
<EPS-PRIMARY> (14.04)
<EPS-DILUTED> (14.04)
</TABLE>
U.S. Realty Income Partners, L.P.
(A Limited Partnership)
FINANCIAL STATEMENTS AND SCHEDULES
December 31, 1998, 1997 and 1996
(With Independent Auditors' Report Thereon)
U.S. Realty Income Partners, L.P.
(A Limited Partnership)
Table of Contents
Page
Number
Independent Auditors' Report 1
Financial Statements:
Balance Sheets 2
Statements of Operations 3
Statements of Partnership Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6-12
Independent Auditors' Report on Accompanying Schedules 13
Schedules:
Schedule V - Property and Improvements 14
Schedule VI - Accumulated Depreciation of
Property and Improvements 15
Independent Auditors' Report
Members of the Partnership
U.S. Realty Income Partners, L.P.
Nashville, Tennessee
We have audited the balance sheets of U.S. Realty Income
Partners, L.P. (a limited partnership) (the Partnership) as of
December 31, 1998 and 1997 and the related statements of
operations, partnership equity, and cash flows for the years
ended December 31, 1998, 1997 and 1996. The financial statements
are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits 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 U.S. Realty Income Partners, L.P. as of December 31, 1998 and
1997 and the results of its operations and its cash flows for the
years ended December 31, 1998, 1997 and 1996, in conformity with
generally accepted accounting principles.
January 26, 1999
Murfreesboro, Tennessee S/N Dempsey Vantrease & Follis PLLC
U. S. Realty Income Partners, L.P.
(A Limited Partnership)
BALANCE SHEETS
December 31, 1998 and 1997
Assets
1998 1997
Cash $ 295,485 $ 477,135
Tenant receivables 32,901 1,996
Property, plant and equipment, net of
accumulated depreciation of
$1,580,106 in 1998 and $1,424,675
in 1997 3,729,821 3,885,252
Investment in joint venture 1,000 1,000
Other assets 413,928 256,079
Total assets $ 4,473,135 $4,621,462
Liabilities and Partnership Equity
Notes payable $ 3,505,577 $3,557,105
Accounts payable 874 1,187
Accrued expenses 123,474 120,548
Total liabilities 3,629,925 3,678,840
Commitments and contingent liabilities
Minority partners' interest in joint
venture (130,529) (102,925)
Partnership equity:
General Partners, no units authorized (187,690) (184,100)
Limited Partners, 4,858 units
authorized, issued, and
outstanding 1,161,429 1,229,647
Net partnership equity 973,739 1,045,547
$ 4,473,135 $4,621,462
See accompanying notes to financial statements.
2
U.S. Realty Income Partners, L.P.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996
Revenues:
Rental income $ 533,070 $626,672 $ 629,035
Common area maintenance 59,999 105,595 114,654
Interest 16,883 6,236 3,212
Total revenues 609,952 738,503 746,901
Expenses:
Interest 352,958 357,889 362,845
Legal and professional 20,818 18,268 24,510
Depreciation 155,431 155,381 155,430
Amortization 21,904 21,103 30,925
Property taxes 78,229 75,460 68,047
Leasing and administrative 48,436 44,323 75,068
Management fees 21,783 27,650 27,121
Repairs and maintenance 31,889 24,889 23,583
Refinancing costs - 2,500 28,543
Utilities 16,545 11,998 8,814
Insurance 8,715 7,538 3,183
Total expenses 756,708 746,999 808,069
Net loss before minority
interest and loss from joint
venture (146,756) (8,496) (61,168)
Minority partner's interest in
operating (profit) loss 27,604 (18,148) (12,317)
Loss from operations (119,152) (26,644) (73,485)
Income from joint venture 47,344 30,709 20,845
Net earnings (loss) $ (71,808) $ 4,065 $ (52,640)
Net earnings (loss) per unit $ (14.04) $ .79 $ (10.29)
Weighted average number of units 4,858 4,858 4,858
See accompanying notes to financial statements.
3
U.S. Realty Income Partners, L.P.
(A Limited Partnership)
STATEMENTS OF PARTNERSHIP EQUITY
Years Ended December 31, 1998, 1997 and 1996
Limited General
Partners Partners Total
Distributive share of net earnings 95% 5% 100%
Balance at December 31, 1995 1,275,793 (181,671) 1,094,122
Net loss of 1996 (50,008) (2,632) (52,640)
Balance at December 31, 1996 1,225,785 (184,303) 1,041,482
Net earnings of 1997 3,862 203 4,065
Balance at December 31, 1997 1,229,647 $(184,100) $1,045,547
Net loss of 1998 (68,218) (3,590) (71,808)
Balance at December 31, 1998 $1,161,429 $(187,690) $ 973,739
See accompanying notes to financial statements.
4
U.S. Realty Income Partners, L.P.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996
Cash Flows from Operating Activities
Net loss from operations $(119,152) $(26,644) $ (73,485)
Adjustments to reconcile net
income to cash provided by
operating activities:
Minority partner's
interest in net profit
(loss) of consolidated
partnership (27,604) 18,148 12,317
Depreciation 155,431 155,381 155,430
Amortization 21,904 21,103 30,925
(Increase) decrease in:
Tenant receivable (30,905) 4,039 (3,283)
Other assets (179,753) (10,198) 35,000
Increase (decrease) in:
Accounts payable (313) (1,361) (157)
Accrued expenses 2,926 37,056 1,625
Net cash provided by operating
activities (177,466) 197,524 158,372
Cash Flows from Investing Activities
Distribution from
joint venture 47,344 30,709 20,845
Net cash used in investing
activities 47,344 30,709 20,845
Cash Flows from Financing Activities
Repayments on mortgage note (51,528) (42,927) (42,571)
Net cash used in financing
activities (51,528) (42,927) (42,571)
Net (decrease) increase in
cash and cash equivalents (181,650) 185,306 136,646
Cash and cash equivalents
at beginning of year 477,135 291,829 155,183
Cash and cash equivalents
at end of year $295,485 $477,135 $291,829
See accompanying notes to financial statements.
5
U.S. Realty Income Partners, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Years Ended December 31, 1998, 1997 and 1996
1. Summary of Significant Accounting Policies
Organization
U.S. Realty Income Partners, L.P. (the Partnership) was formed as a
limited partnership under the laws of the state of Delaware on
September 23, 1987. The Partnership was formed to acquire, operate,
hold for investment and dispose of residential and commercial
property. The general partner is Vanderbilt Realty Joint Venture, a
Tennessee partnership. Limited partners were admitted beginning on
May 15, 1988. The partnership controls certain shopping center
property, located in Nashville, Tennessee, through its 66-2/3%
interest in Bellevue Plaza Partners, a Tennessee joint venture. This
joint venture's assets, liabilities and operations are included in
these financial statements and represent the partnership's primary
business. Minority interests represent the 33-1/3% interest held in
such joint venture by an unaffiliated party.
The Partnership files its tax return and prepares its financial
statements under the accrual method of accounting.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Partnership
considers cash on hand, demand deposits with financial institutions,
and highly liquid financial instruments with a maturity of three
months or less to be cash and cash equivalents.
Property and Improvements
Property and improvements are recorded at the acquisition cost.
Depreciation is provided for in amounts sufficient to relate the cost
of depreciable assets to operations over their estimated service
lives, using straight-line and accelerated methods.
Investment in Joint Venture
Investment in joint venture currently represents the partnership's
indirect 4.17% interest in Prudential/Daniel Office Venture, LLC,
which is stated at cost (note 3).
6
U.S. Realty Income Partners, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
For the Years Ended December 31, 1998, 1997 and 1996
1. Summary of Significant Accounting Policies, (Continued)
Revenue Recognition
Rent is recorded as income over the lease terms as rents become
receivable according to provisions of the leases. Rent from leases
containing rent-free periods is recognized on a straight-line basis,
with the related straight-line rent included in tenant receivables
until payments of rent begin. The receivables are reduced in each
subsequent month by the excess of the monthly payments over the
income.
Earnings per Unit
Earnings per unit are based on the weighted average of limited partner
units outstanding.
Income Taxes
The financial statements include only the assets and liabilities and
results of operations which relate to the business of the Partnership.
No provisions have been made for federal and state income taxes as
such taxes are the personal responsibility of the partners.
Partnership Allocations
Partnership allocations are made in accordance with the limited
partnership agreement. Cash distributions, net earnings or loss and
taxable income or loss are generally allocated 95% to the limited
partners and 5% to the general partner. Liquidation proceeds are
generally allocated 85% to the limited partners and 15% to general
partners, after replenishment of negative capital accounts and return
of limited partners' capital and preferred returns.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
7
U.S. Realty Income Partners, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
For the Years Ended December 31, 1998, 1997 and 1996
2. Property and Improvements
Property and improvements located at Bellevue Plaza consist of the
following:
1998 1997
Buildings and improvements $ 4,895,626 $4,895,626
Less accumulated depreciation (1,580,106) (1,424,675)
3,315,520 3,470,951
Land 414,301 414,301
$ 3,729,821 $3,885,252
During the years ended December 31, 1998, 1997 and 1996, the
Partnership recognized depreciation of $155,431, $155,381,
and $155,430, respectively.
3. Investment in Joint Venture
The Partnership held a 50% interest in DR/US West End General
Partnership, a general partnership joint venture formed to own and
operate a commercial office building in Nashville, Tennessee.
Effective July 28, 1995, the partnership exchanged its interest in the
assets of DR/US West End General Partnership (DR/US) for an indirect
4.17% equity interest (held through a limited partnership interest in
Daniel S.E. Office Limited Partnership) in Prudential/Daniel Office
Venture, LLC (the LLC). The LLC, which is controlled by Prudential
Life Insurance Company of America, owns six office buildings
(including the DR/US property) located in Nashville, Tennessee and
Raleigh, North Carolina. Management believes the fair value of the
partnership's interest in the LLC approximates capital contributions
recognized by the LLC (for the 4.17% interest) amounting to
$1,361,445. Such capital contributions were valued based on
management's (unaudited) estimated values of the contributed
properties. The LLC interest has been valued in these financial
statements at $1,000, the partnership's carrying value in the DR/US
investment.
8
U.S. Realty Income Partners, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
For the Years Ended December 31, 1998, 1997 and 1996
3. Investment in Joint Venture, (Continued)
The partnership's income from its joint venture investments is
determined as follows:
1998 1997 1996
Distributions from Prudential/Daniel
Office Venture, LLC $47,344 $ 30,709 $ 20,845
4. Related Party Transactions
Administration expenses (fees and other costs and expenses) paid to
the general partner or its affiliates amounted to $40,500 in 1998,
$36,000 in 1997 and $65,000 in 1996.
5. Note Payable
The Partnership has a note payable to a financial institution
amounting to $3,505,577 and $3,557,105 as of December 31, 1998 and
1997. The note bears an interest rate of 10% per annum with monthly
installments of principal and interest of $33,743 payable until July
1, 1999, when the remaining balance will be due. The note is
collateralized by a deed of trust on the Bellevue Plaza property.
6. Reconciliation of Financial Statements and Tax Returns
1998 1997 1996
Net income (loss), per
financial statements $ (71,808) $ 4,065 $ (52,640)
Items treated differently
on the tax return:
Net operating loss 33,855 1,038 (4,003)
Amortization (14,148) (14,140) (14,149)
Net loss, per tax returns $ (52,101) $ (9,037) $ (70,792)
The Partnership's federal income tax return is subject to audit and
possible adjustment by the Internal Revenue Service.
9
U.S. Realty Income Partners, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
For the Years Ended December 31, 1998, 1997 and 1996
7. Other Assets
Other assets consist of:
1998 1997
Acquisition fees $ 328,447 $ 328,447
Lease acquisition costs 58,583 -
Deferred commissions 148,656 41,021
535,686 369,468
Less accumulated amortization (123,408) (115,039)
412,278 254,429
Accounts receivable from affiliate 1,650 1,650
$ 413,928 $ 256,079
Acquisition fees are amortized over the life of the acquired property,
which is 31.5 years. Deferred commissions and lease acquisition costs
are amortized over the terms of the related leases.
8. Leases of Lessor
Bellevue Plaza leases property to others under noncancellable
operating leases requiring fixed monthly payments over various terms.
At December 31, 1998, future minimum lease receipts were as follows:
Year Ending December 31:
1999 $ 430,748
2000 434,766
2001 565,530
2002 469,273
2003 378,833
2004 and after 1,090,408
$3,369,558
9. Supplemental Cash Flow Information
Interest paid totaled $353,387 in 1998, $328,247 in 1997 and $362,845
in 1996.
10
U.S. Realty Income Partners, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
For the Years Ended December 31, 1998, 1997 and 1996
10. Financial Instruments
The estimated fair values of the partnership's financial instruments,
as of December 31, 1998 and 1997, were as follows (in thousands):
1998 1997
Carrying Fair Carrying Fair
Amount Value Amount Value
Financial assets:
Cash and cash equivalents $295 $ 295 $477 $ 477
Receivables 33 33 2 2
Investment in joint
venture 1 1,361 1 1,361
$329 $1,689 $480 $1,840
Financial liabilities:
Notes payable $3,506 $3,506 $3,557 $3,557
Accounts payable 1 1 1 1
Accrued expenses 123 123 121 121
$3,630 $3,630 $3,679 $3,679
Methods and assumptions used in estimating fair values are summarized
as follows:
Cash and cash equivalents - Carrying amounts represent a reasonable
estimate of fair values.
Trade accounts receivable and payable, and accrued expenses - Carrying
values of these accounts approximate fair value due to their short
maturities.
Investment in joint venture - Management's estimate of fair value, as
of December 31, 1998, is based on unaudited estimated values of the
underlying real estate. Management believes the fair value of the
partnership's interest in the LLC approximates capital contributions
recognized by the LLC (for the 4.17% interest) amounting to
$1,361,445. Such capital contributions were valued based on
management's (unaudited) estimated values of the contributed
11
U.S. Realty Income Partners, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
For the Years Ended December 31, 1998, 1997 and 1996
10. Financial Instruments (Continued)
properties. The LLC interest has been valued in these financial
statements at $1,000, the partnership's carrying value in the DR/US
investment. (note 3)
Note Payable - Carrying value of the note payable approximates market
value since the terms of the note are similar to those available in
the current market.
11. Credit Concentration
The Partnership maintains cash balances at various financial
institutions. Deposits at banks are insured by the Federal Deposit
Insurance Corporation up to $100,000 at each bank and are within
insured limits at December 31, 1998. Deposits with brokerages are
insured by the Securities Investor Protection Corporation (SIPC) up to
$100,000 for claims for cash and $400,000 for coverage on securities.
The Partnership's deposits at brokerages are also within these limits
at December 31, 1998.
12. Environmental Contingency
The shopping center property the partnership controls (described in
note 1) has environmental problems due to a current tenant. The
tenant operates in an industry that has a superfund established by the
State of Tennessee. This superfund is available to the businesses in
this industry, however, the state has yet to promulgate rules and
regulations for use of these funds. Management anticipates no related
liability to the partnership since management believes that the
current tenant is responsible for the cost of the cleanup.
1
INDEPENDENT AUDITORS' REPORT
ON ACCOMPANYING SCHEDULES
Members of the Partnership
U.S. Realty Income Partners, L.P.
Our audit was conducted for the purpose of forming an opinion on
the basic financial statements of taken as a whole. Schedule V -
Property and Improvements and Schedule VI - Accumulated
Depreciation of Property and Improvements are presented for
purposes of additional analysis and are not a required part of
the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the basic financial
statements taken as a whole.
January 26, 1999
Murfreesboro, Tennessee
U.S. Realty Income Partners, L.P.
(A Limited Partnership)
SCHEDULE V - PROPERTY AND IMPROVEMENTS
Balance at Balance,
Beginning Additions at end
Classification of Period At Cost Retirements of Period
1993 5,306,592 2,400 - 5,308,992
1994 5,308,992 935 - 5,309,927
1995 5,309,927 - - 5,309,927
1996 5,309,927 - - 5,309,927
1997 5,309,927 - - 5,309,927
1998 5,309,927 - - 5,309,927
14
U.S. Realty Income Partners, L.P.
(A Limited Partnership)
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY AND IMPROVEMENTS
Additions
Balance at Charged to Balance,
Beginning Costs and at end
Classification of Period Expenses Retirements of Period
1993 647,667 155,340 - 803,007
1994 803,007 155,427 - 958,434
1995 958,434 155,430 - 1,113,864
1996 1,113,864 155,430 - 1,269,294
1997 1,269,294 155,381 - 1,424,675
1998 1,424,675 155,431 - 1,580,106
Depreciation is provided for by the required tax method of depreciating
commercial real estate; i.e. MACRS. The Partnership believes this provides
for a depreciation provision similar to standard book depreciation methods.
15
