UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995
Commission file Number 0-19198
FIRST DEARBORN INCOME PROPERTIES L.P. II
(Exact name of registrant as specified in its charter.)
Delaware 36-3591517
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
154 West Hubbard, Suite 250 Chicago, IL 60610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 464-0100
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 the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical date:
Units Outstanding as of September 30, 1995: 10,000
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
BALANCE SHEETS
September 30, 1995 and December 31, 1994
(Unaudited)
ASSETS
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) 311,869 208,840
Rents and other receivables 234,093 271,870
Due from affiliates 4,749 4,709
Prepaid expense - 24,900
Total current assets 550,711 510,319
Investment property, at cost (note 1):
Land 1,201,880 1,201,880
Building 8,301,851 8,279,626
9,503,731 9,481,506
Less accumulated depreciation (1,358,534) (1,160,208)
8,145,197 8,321,298
Investment in unconsolidated venture,
at equity (note 2) 754,000 829,297
Deferred leasing and loan costs 68,776 35,623
Total assets 9,518,684 9,969,537
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Balance Sheets
September 30, 1995 and December 31, 1994
(Unaudited)
Liabilities and Partners' Capital Accounts
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses 268,685 312,818
Due to affiliates (note 3) 8,758 14,273
Accrued interest 39,298 39,718
Current portion of long-term debt 72,000 70,716
Total current liabilities 388,741 437,525
Long-term debt 4,827,448 4,881,129
Venture partners' equity in
consolidated venture (note 2) 1,603,762 1,596,012
Tenant security deposits 5,833 6,158
Total long-term liabilities 6,437,043 6,483,299
Total liabilities 6,825,784 6,920,824
Partners' capital accounts (deficits) (note 1):
General partners:
Capital contributions 1,000 1,000
Cumulative net losses (3,690) (3,893)
(2,690) (2,893)
Limited partners:
Capital contributions 4,058,963 4,058,963
Cumulative net income (losses) (365,318) (385,419)
Cumulative cash distributions (998,055) (894,938)
2,695,590 2,778,606
Total partners' capital accounts 2,692,900 2,775,713
Commitments and contingencies (note 2)
Total Liabilities and Partners' Capital 9,518,684 9,696,537
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Consolidated Statement of Operations
Three months ended September 30, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
Revenues:
Rental income 342,707 314,971
Tenant charges 140,140 128,408
Interest income 1,481 1,523
Total revenues 484,328 444,902
Expenses:
Property operating expenses 203,075 177,053
Interest 118,038 119,685
Depreciation 63,798 54,850
Amortization 5,281 5,280
General and administrative expenses 7,412 13,423
Total expenses 397,604 370,291
Operating income (loss) 86,724 74,611
Partnership's share of operations
of unconsolidated ventures (6,295) (18,184)
Venture partner's share of consolidated
venture's operations (43,843) (39,309)
Net income 36,586 17,118
Net income per limited partnership unit 3.62 1.69
Cash distribution per limited partnership unit 2.07 4.12
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Consolidated Statement of Operations
Nine months ended September 30, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
Revenues:
Rental income 984,953 955,856
Tenant charges 427,313 384,785
Interest income 7,173 3,765
Total revenues 1,419,439 1,344,406
Expenses:
Property operating expenses 593,560 587,820
Interest 355,383 360,211
Depreciation 204,361 199,690
Amortization 15,842 24,631
General and administrative expenses 64,995 71,100
Total expenses 1,234,141 1,243,452
Operating income (loss) 185,298 100,954
Partnership's share of operations
of unconsolidated ventures (52,090) (78,894)
Venture partner's share of consolidated
venture's operations (note 1) (112,905) (80,522)
Net income (loss) 20,303 (58,462)
Net income (loss) per
limited partnership unit (note 1) $ 2.01 (5.79)
Cash distribution per
limited partnership unit $ 10.31 12.36
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Consolidated Statements of Cash Flows
Nine months ended September 30, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) 20,303 (58,462)
Items not requiring (providing)
cash or cash equivalents:
Depreciation 204,361 199,690
Amortization 15,842 24,631
Partnership's share of operations of
unconsolidated ventures 75,297 101,899
Venture partners' share of
consolidated venture's operations 7,750 (68,905)
Changes in:
Rents and other receivables 37,777 6,482
Prepaid expenses 24,900 (9,056)
Accounts payable and accrued expenses (44,553) (51,436)
Due to affiliates (5,555) (1,383)
Tenant deposits (325) (550)
Net cash provided by (used in)
operating activities 335,797 142,900
Additions to building and deferred costs: (77,254) (12,996)
Cash flows from financing activities:
Distributions to limited partners (103,117) (123,600)
Principal payments on long-term debt (52,397) (47,606)
Net cash used in financing activities (155,514) (171,206)
Net increase (decrease)
in cash and cash equivalents 103,029 (41,302)
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements
September 30, 1995 and 1994
(Unaudited)
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1994,
which are included in the Partnership's 1994 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained
in such audited financial statements have been omitted from this report.
(1) Basis of Accounting
For the three and nine month periods ended September 30, 1995 and
September 30, 1994, the accompanying consolidated financial statements
include the accounts of the Partnership and its consolidated venture
Sycamore Mall Associates (the "Venture"). The effect of all transactions
between the Partnership and the Venture has been eliminated.
The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's interest
in Evanston Galleria Limited Partnership and Country Isle Associates for the
three and nine month periods ended September 30, 1995 and September 30, 1994.
The Partnership records are maintained on the accrual basis of accounting
as adjusted for Federal income tax reporting purposes. The accompanying
consolidated financial statements have been prepared from such records after
making appropriate adjustments, where applicable, to present the Partnership's
accounts in accordance with generally accepted accounting principles (GAAP).
Such adjustments are not recorded on the records of the Partnership. The
net effect of these adjustments for the nine month periods ended September
30, 1995 and 1994 is summarized as follows:
<TABLE>
<CAPTION>
1995 1995 1994 1994
GAAP Tax GAAP Tax
Basis Basis Basis Basis
<S> <C> <C> <C> <C>
Net income (loss) 20,303 36,500 (58,462) (28,500)
Net income (loss) per
limited partnership unit 2.01 3.61 (5.79) (2.82)
</TABLE>
The net loss per limited partnership unit presented is based on the
weighted limited partnership units outstanding at the end of each period
(10,000).
Partnership distributions from unconsolidated ventures are considered
cash flow from operating activities to the extent of the Partnership's
cumulative share of net operating earnings before depreciation and non-cash
items. In addition, the Partnership records amounts held in U.S. Government
obligations, commercial paper and certificates of deposit at cost which
approximates market. For the purposes of these statements, the Partnership's
policy is to consider all such investments, with an original maturity of
three months or less, ($94,902 and $104,382 at September 30, 1995 and
December 31, 1994, respectively) as cash equivalents.
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Ventures
Notes to Consolidated Financial Statements - Continued
Deferred offering costs were charged to the partners' capital accounts
upon consummation of the offering. Deferred loan costs are amortized
over the terms of the related agreements using the straight-line method.
Depreciation on the investment properties acquired has been provided
over the estimated useful lives of 5 to 30 years using the straight-line
method.
No provision for Federal income taxes has been made as any liability
for such taxes would be that of the partners rather than the Partnership.
(2) Venture Agreements
The Partnership has entered into three joint venture agreements with
partnerships sponsored by affiliates of the General Partners. Pursuant to
such agreements, the Partnership has made capital contributions aggregating
$3,652,066 through September 30, 1995. The Partnership has acquired,
through these ventures, interests in a mixed use retail/residential
property and two shopping centers.
(3) Transactions with Affiliates
Fees, commissions and other expenses required to be paid by the
Partnership to affiliates of the General Partners for the nine months
ended September 30, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994 9/30/95
<S> <C> <C> <C>
Reimbursement (at cost) for
administrative services 15,000 15,000 8,758
15,000 15,000 8,758
</TABLE>
(4) Unconsolidated Ventures - Summary Information
Summary income statement information for Evanston Galleria Limited
Partnership and Country Isle Associates for the nine months ended
September 30, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Total revenue 2,149,134 2,138,500
Operating income (loss) (235,000) (337,400)
Partnership's share of income (loss) (55,597) (78,894)
</TABLE>
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
(5) Adjustments
In the opinion of the Managing General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying consolidated financial
statements as of September 30, 1995 and 1994.
(6) Subsequent Event
In October 1995, the Partnership completed an extension and amendment
of the mortgage indebtedness at Sycamore Mall. The loan is in the amount
of $4,899,448 and accrues interest at the annual rate of 8.125%, a reduction
from 9.925%. The loan provides for 76 monthly payments in the amount of
$44,375. The loan will mature in March 2002 and a final balloon payment of
$3,790,900 would be due at that time.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Resulting of Operations
Liquidity and Capital Resources
At September 30, 1995, the Partnership had cash and cash equivalents
of $311,869 which will be utilized for working capital requirements and for
future distributions to Partners. This is more than the $208,840 balance at
December 31, 1994. The increase is primarily due to improved operations
at Sycamore Mall and a reduction in distributions to limited partners.
The Partnership has reduced distributions to limited partners in order
to build up cash reserves. An announcement has been made that a new regional
mall is being planned which would compete with Sycamore Mall. Therefore, the
Partnership is accumulating extra cash reserves in anticipation of potential
retenating and/or capital improvements.
At Evanston Galleria, a tenant which occupies 14% of the property has
defaulted and declared bankruptcy. Efforts are now underway to replace this
tenant. However, continued vacancy of this space could significantly affect
the finacial status of this property.
As the Partnership intends to distribute all "net cash receipts" and
"sales proceeds" in accordance with the terms of the Partnership Agreement,
and does not intend to reinvest any such proceeds, the Partnership is
intended to be self-liquidating in nature. The Partnership's future source
of liquidity and distributions is expected to be through cash generated by
the Partnership's investment properties and from the sale and refinancing
of such properties. To the extent that additional payments are required under
a purchase agreement or a property does not generate an adequate cash flow
to meet its requirements, the Partnership may withdraw funds from the working
capital reserve which it maintains.
<PAGE>
Results of Operations
For the three and nine month periods ended September 30, 1995 and
September 30, 1994 the accompanying consolidated financial statements
include the accounts of the Partnership and its consolidated venture -
Sycamore Mall Associates. The effect of all transactions between the
Partnership and the Venture has been eliminated.
The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's interest
in Evanston Galleria Limited Partnership and Country Isle Associates.
Accounts payable and accrued expenses have decreased $44,133 to $268,685
as of September 30, 1995 from $312,818 at December 31, 1994. This decrease
relates primarily to the timing of the payment of property taxes at
Sycamore Mall.
The $27,736 increase in rental income for the three month period ended
September 30, 1995, and the $29,097 increase for the nine month period ended
September 30, 1995, as compared to the three and nine month periods ended
September 30, 1994 is primarily attributed to higher occupancy at
Sycamore Mall.
The $11,732 increase in tenant charges for the three months ended
September 30, 1995 and the $42,528 increase for the nine month period ended
September 30, 1995, as compared to the three and six month periods ended
September 30, 1994 is primarily attributable to higher occupancy at
Sycamore Mall.
The $26,022 increase in property operating expenses for the three months
ended September 30, 1995 as compared to the three months ended September
30, 1994 is primarily attributable to parking lot repairs at Sycamore Mall.
The $6,011 decrease in general and administrative expenses for the
three month periods ended September 30, 1995 as compared to the three
month period ended September 30, 1994 is primarily attibutable to a
decrease in professional fees.
<PAGE>
<TABLE>
OCCUPANCY
The following is a list of approximate occupancy levels by quarter
for the Partnership's investment properties:
<CAPTION>
at at at at at at at
3/31/94 6/30/94 9/30/94 12/31/94 3/31/95 6/30/95 09/30/95
<S> <C> <C> <C> <C> <C> <C> <C>
Evanston Galleria
Evanston, IL 97% 95% 100% 97% 98% 99% 86%
Country Isles
Ft. Lauderdale, FL 100% 100% 100% 99% 99% 98% 98%
Sycamore Mall
Iowa City, Iowa 96% 99% 97% 97% 99% 98% 97%
</TABLE>
<PAGE>
Part II - OTHER INFORMATION
Items 1, 2, 3, 4, and 5 of Part II are omitted because of the absence of
conditions under which they are required.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
None
b) Reports on Form 8-K
No reports on Form 8-K were filed for the period covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Partnership has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
FIRST DEARBORN INCOME PROPERTIES L.P. II
(Registrant)
BY: FDIP, Inc.
(Managing General Partner)
November 14, 1995 BY: Robert S. Ross
Robert S. Ross
President
(Principal Executive Officer)
November 14, 1995 BY: Bruce H. Block
Bruce H. Block
Vice President
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jul-01-1995
<PERIOD-END> Sep-30-1995
<PERIOD-TYPE> 3-MOS
<CASH> 311,869
<SECURITIES> 0
<RECEIVABLES> 234,093
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 550,711
<PP&E> 9,503,731
<DEPRECIATION> 1,358,534
<TOTAL-ASSETS> 9,518,684
<CURRENT-LIABILITIES> 388,741
<BONDS> 4,827,448
0
0
<COMMON> 0
<OTHER-SE> 2,692,900
<TOTAL-LIABILITY-AND-EQUITY> 9,518,684
<SALES> 482,847
<TOTAL-REVENUES> 484,328
<CGS> 0
<TOTAL-COSTS> 203,075
<OTHER-EXPENSES> 76,491
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 118,038
<INCOME-PRETAX> 36,586
<INCOME-TAX> 0
<INCOME-CONTINUING> 36,586
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,586
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
