UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ........ to ........
Commission file number 0-19198
FIRST DEARBORN INCOME PROPERTIES L.P. II
(Exact name of registrant as specified in its charter)
Delaware 36-3591517
(State of organization)(IRS Employer Identification No.)
154 West Hubbard Street, Suite 250, Chicago, IL 60610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 464-0100
Securities registered pursuant to Section 12(b) of the Act:
Names of each exchange
Title of each class on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP UNITS
(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 III of this Form
10-K or any amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by non-
affiliates of the registrant. Not applicable.
<PAGE>
PART 1
Item 1. Business
The registrant, First Dearborn Income Properties L.P. II (the
"Partnership"), is a limited partnership formed in May 1988 under the
Revised Uniform Limited Partnership Act of the State of Delaware to
invest in income producing commercial and residential real estate
consisting principally of existing shopping centers and office buildings,
as well as apartment complexes, parking garages and lots and warehouse
and industrial buildings. On February 1, 1989, the Partnership commenced
an offering of $10,000,000 (subject to increase by an additional
$5,000,000) of its limited partnership interests (the "Units") at $500
per Unit, pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933 (File No. 33-23048). A total of 10,000 Units was
sold. The holders of 3,345 Units were admitted to the Partnership in
1989, holders of 4,444 Units were admitted to the Partnership in 1990,
and holders of 2,211 Units were admitted in 1991. Of the 2,211 Units
purchased in 1991, 1,669 Units were purchased by an affiliate of the
General Partners pursuant to its Agreement to Purchase Units. The
offering terminated on January 31, 1991 (extended from its originally
scheduled termination date of January 31, 1990). Since admission to the
Partnership, no holder of Units (hereinafter, a "Limited Partner") has
made any additional capital contributions. The Limited Partners of the
Partnership share in the benefits of ownership of the Partnership's real
property investments in proportion to the number of Units held.
Net of offering costs, Limited Partners have contributed a total of
$4,058,963 to the Partnership. The Partnership is engaged solely in the
business of real estate investment. It is the Partnerships objective to
realize cash flow from operations and appreciation in the value of the
real estate. 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 December 31, 1995. The
Partnership has acquired, through these ventures, interests in two
shopping centers and a mixed use apartment/retail building. No
investments have been made since 1991 and no properties have been sold.
As of December 31, 1995, the Partnership had made the real property
investments set forth in the following table:
<TABLE>
<CAPTION>
Name, Type of Property Date of Type of
and Location Size Purchase Ownership
<S> <C> <C> <C>
Evanston Galleria 36,068 S.F. 11/1/89 23.87% interest in a
Retail/Apartments and partnership that has
Evanston, Illinois 55 apartments fee ownership of land
and improvements
Country Isles 106,000 S.F. 7/21/91 21.00% interest in a
Shopping Center partnership that has
Ft. Lauderdale, Florida fee ownership of land
and improvements
Sycamore Mall 240,206 S.F. 10/26/90 53.40% interest in a
Shopping Center partnership that has
Iowa City, Iowa fee ownership of land
and improvements (a)
</TABLE>
(a) Reference is made to Note 3 of Notes to Consolidated Financial
Statements filed with this annual report for the current outstanding
principal balance and a description of the long-term mortgage
indebtedness secured by the Partnership's real property investments.
Note: "S.F." represents the amount of rentable square feet of
retail area in each of the properties.
Sycamore Mall represents the most significant investment made by the
Partnership. A total of $2,275,000 has been invested by the Partnership
which represents 62% of the Partnership's real estate investments. Since
acquiring the Sycamore Mall investment in 1990, the Partnership has
received cash distributions of $1,205,463 from Sycamore Mall Associates.
Country Isles represents an investment of $775,000 or 21% of the
Partnership's real estate investments. Since acquiring the Country Isles
investment in 1991, the Partnership has received distributions of
$158,344. Evanston Galleria accounts for $602,066 or 17% of the
Partnership's real estate investments. Since acquiring the Evanston
Galleria investment in 1989, the Partnership has received distributions
of $50,133.
<PAGE>
During the past five years, operations at Sycamore Mall and Country
Isles Shopping Center have been stable with occupancy in the range of 95%-
99%. During 1991, occupancy at Evanston Galleria declined from 96% at
March 31, 1991 to 80% at December 31, 1991. This decline resulted
principally from the closing of certain retail tenants which were
experiencing financial problems. The weak economy and the inability of
the Partnership to access sufficient capital hampered its ability to
retenant the vacant space. This decline in occupancy had an adverse
affect on the cash flow and rendered the Partnership unable to satisfy
certain obligations relating to the property. During the fourth quarter
1992, the remainder of the retail space was leased and occupancy
increased to 96%. During 1995, the Evanston Galleria again, experienced
a problem with retail tenants. There is currently 13,635 square feet of
retail space of which the tenants are in default of their leases for non
payment of rent. Occupancy at December 31, 1995 has fallen to 84% when
excluding leases that are in default. Management has taken legal action
to collect amounts due under the lease and it is expected that partial
payments will eventually be obtained. However, management does not have
an estimate of the amount or timing of any such collection. Releasing
efforts are in process and negotiations are currently taking place with
prospective tenants. It appears that the space will be released prior to
June 1, 1996, but there can be no assurance that new leases will be
entered into. If this vacant space is not released prior to June 1,
1996, the ability of the Evanston Galleria to meet its obligations could
be effected.
Rental rates for the three properties have not risen appreciably
over the past five years. The real estate market in general has suffered
from overbuilding in the 1980's which has increased the competition for
the Partnership's properties. This resulted in a decrease in rental
rates from 1990 to 1994. The decrease in market rental rates has not
significantly impacted the Partnership's properties since they were
primarily occupied under long term leases which did not result in
decreased rental income for most of the space. Since 1994, the market
rental rates have leveled off and appear to be rising.
The Partnership's real property investments are subject to
competition from similar types of properties in the vicinities in which
they are located. Approximate occupancy levels for the Partnership's
properties are set forth on a quarterly basis in the table set forth in
Item 2 below to which reference is hereby made. The Partnership has no
real property investments located outside the United States.
Only one of the three Partnership's investments is consolidated for
financial reporting purposes. Industry segment information is presented
below in order to illustrate applicable information about each of the
three properties individually and does not relate to financial
information presented about the Partnership in Item 6 and Item 8.
<TABLE>
<CAPTION>
Sycamore Mall,
Iowa City, Iowa 1995 1994 1993
<S> <C> <C> <C>
Total revenue 1,957,849 1,784,232 1,767,166
Operating profit 267,781 205,065 231,961
Total assets 8,589,852 8,672,723 8,987,738
Mortgage indebtedness 4,870,823 4,951,845 5,016,096
<CAPTION>
Country Isles Shopping Center
Ft. Lauderdale, Florida 1995 1994 1993
<S> <C> <C> <C>
Total revenue 1,579,850 1,533,851 1,451,335
Operating profit (loss) (15,887) 37,207 (96,666)
Total assets 4,006,457 4,335,218 4,634,856
Mortgage indebtedness 6,784,728 6,841,847 6,893,681
<CAPTION>
Evanston Galleria
Evanston, Illinois 1995 1994 1993
<S> <C> <C> <C>
Total revenue 1,479,827 1,409,868 1,414,183
Operating loss (403,475) (318,155) (273,485)
Total assets 9,449,391 9,692,380 10,088,151
Mortgage indebtedness 8,512,228 8,584,277 8,650,147
</TABLE>
<PAGE>
The Partnership has no employees and is largely dependent on the
General Partners and their affiliates for services. A description of the
terms of transactions between the Partnership and affiliates of the
General Partners is set forth in Item 11 below to which reference is
hereby made.
Evanston Galleria Limited Partnership
On October 31, 1989, the Partnership acquired an interest in
Evanston Galleria Limited Partnership (the "Galleria Partnership") which
owns a 100% beneficial interest in the Evanston Galleria, a mixed-use
residential and retail property located in Evanston, Illinois. The
property, located on a .79 acre site, contains 36,068 square feet of
rentable retail space and 55 loft apartments. The Partnership's
acquisition of its interest was effected through its acquisition of an
18.30% general partnership interest in the Galleria Partnership from
First Dearborn Evanston Associates Limited Partnership ("Evanston
Associates"), an affiliate of the General Partners. Evanston Associates
originally agreed to purchase a 76.67% interest in the Galleria
Partnership by agreeing to contribute an aggregate $2,313,125 to the
Galleria Partnership. The Partnership acquired a portion of the 76.67%
general partnership interest on the same terms by contributing $552,066
for its 18.30% general partnership interest. The seller retained a
23.33% limited partnership interest.
The Partnership and Evanston Associates, as general partners of the
Galleria Partnership, have certain preferences from operating cash flow
and distributions from sales or refinancing. Profits are generally
allocated in accordance with cash distributions (including preferences)
and then in accordance with the respective partner's interest. Losses
are allocated first to partners with positive capital account balances
and then in accordance with the respective partner's interest.
The limited partners ("Guarantors") of the Galleria Partnership had
provided the Partnership and Evanston Associates with a guaranty of
minimum rentals on certain retail space, maximum debt service levels and
maximum real estate tax expenses in the Galleria Partnership. The
property has failed to perform as expected and the Galleria Partnership
has called upon the Guarantors to satisfy their obligations under the
guaranties. The Guarantors have failed to fulfill their obligations to
the Partnership, and the General Partners have taken actions to protect
the rights of the Partnership, including receipt of an assignment in
favor of the Partnership of the Guarantors' limited partnership interests
in the Galleria Partnership of 5.57% and the receipt of security
interests in certain other limited partnership interests owned by the
Guarantors. Amounts owed pursuant to such guaranties which are secured by
the limited partners' partnership interests will be recorded upon
receipt.
The property is managed by an affiliate of the Managing General
Partner. The management fee due to the Managing General Partner is
subordinated to the Partnership and Evanston Associates receiving the
Preferred Return (as defined). No management fee was paid in 1995, 1994
or 1993.
In connection with the loan modification to the first mortgage on
the Evanston Galleria, which closed in February of 1993 and was effective
August 1, 1992, the Galleria Partnership received an infusion of
additional capital and obtained modifications of the terms of its loans.
$202,000 of additional capital was contributed to the Galleria
Partnership by Evanston Associates, of which the Partnership's share was
$50,000, in exchange for a preferred equity position. The preferred
equity holders shall receive an annual preferred return from cash
distributions in an amount equal to the lesser of: a) prime rate plus 2%,
or b) 10% per annum. For financial reporting purposes, the Partnership
has a 23.87% interest in the Galleria Partnership.
Evanston Galleria is located in downtown Evanston, Illinois, a short
distance from Northwestern University. Demand for the apartments has
been strong over the past five years with occupancy averaging 97%.
Apartment rents have been rising approximately 3% per year. The ground
floor retail space has been 100% occupied for the past five years, except
for the instances where existing tenants defaulted and the period during
which the replacement tenants were being put in place. Demand for the
vacant space has generally not been a problem. There has been a
recurring problem with tenants which have defaulted on their lease
obligations. One retail tenant, with a lease for 11,500 square feet, at
Evanston Galleria filed a petition for bankruptcy on January 11, 1994.
The tenant stopped paying rent and vacated the premises during the third
quarter of 1995. During the fourth quarter of 1995, a second tenant
representing 2,135 square feet defaulted under the terms of its lease and
vacated the space. Management has taken legal action against the
defaulted tenants, but currently has no estimate of the amount, if any,
or timing of collection of amounts due from these tenants. The property
is located in an established downtown area, and there is little vacant
land upon which additional retail space or apartments could be developed,
in the immediate area. Management is currently negotiating with
prospective tenants and it is expected that the currently vacant retail
space will be released prior to June 1, 1996. However there can be no
assurances that these prospective lease will be consummated.
The property is subject to a first mortgage which matures May 1, 1996.
The Galleria Partnership is currently negotiating for an extension of the
first mortgage loan, however, there can be no assurance that such an
extension will be consummated.
<PAGE>
Sycamore Mall Associates
On October 26, 1990, the Partnership contributed $2,275,000 to
acquire a 53.40% general partnership interest in Sycamore Mall
Associates, a general partnership formed to acquire the Sycamore Mall
Shopping Center in Iowa City, Iowa. The property, situated on an
approximate 21.2 acre site, includes a main building containing 213,206
square feet and an out parcel building containing 27,000 square feet. A
14,000 square foot parcel which contains a 4,590 square foot building is
under a ground lease to McDonald's. Sycamore Mall Associates acquired
the property on October 26, 1990 for a purchase price of $9,400,000,
subject to a purchase money note of $5,140,000 bearing interest at 10%
payable interest only until maturity on October 26, 1995. On August 8,
1991, Sycamore Mall Associates obtained a first mortgage in the amount of
$5,140,000 which bore interest at a rate of 9.625% payable in monthly
installments of principal and interest of $45,355 commencing October 1,
1991 for 60 months until September 30, 1996. The proceeds of this first
mortgage were used to repay the original purchase money note. In October
1995, the first mortgage loan was modified. The terms of the
modification reduced the interest rate to 8.125%, reduced the monthly
payments of principal and interest to $44,375 and extended the maturity
to March 1, 2002.
First Dearborn Income Properties L.P., a public limited partnership
affiliated with the General Partners of the Partnership, and First
Dearborn Sycamore Associates Limited Partnership ("FDSALP"), a privately
offered limited partnership also affiliated with the General Partners,
are the joint venture partners in Sycamore Mall Associates and
contributed a total of $1,075,000 and $910,000 for 25.24% and 21.36% of
the general partner interests, respectively. The terms of the Sycamore
Mall Associates partnership agreement provide that cash flow, sale or
refinancing proceeds and profit and loss will be distributed or
allocated in proportion to the partner's ownership interests.
The property is managed by an affiliate of the General Partners and
an affiliate of the seller under a five year management agreement that
provides for a fee equal to 5% of the effective gross income, of which 1%
is paid to an affiliate of the General Partners. During 1995, 1994 and
1993 the property incurred management fees of $97,270, $88,306 and
$87,325, respectively.
Sycamore Mall is located in Iowa City, Iowa. There has been
discussion of a new regional shopping center being planned in the area.
There are no definite announcements of construction, however, if such a
center was developed at the proposed location, such a development would
create additional competition for Sycamore Mall. As a precautionary
measure, Sycamore Mall Associates has reduced distributions to its
partners in order to maintain its working capital reserves. It is
believed that the additional working capital may be necessary if
additional retail space, that would compete with Sycamore Mall, is
constructed. The Partnership has no definite plans for improvements to
the property at this time. Distributions to the Partners in 1995 were
$190,325 as compared to $245,974 in 1994.
Country Isles
On July 12, 1991 the Partnership acquired from an unaffiliated
seller, a 21% interest in Country Isles Associates, an Illinois general
partnership owning Country Isles Shopping Center. The Partnership paid
$775,000 for its 21% interest in the joint venture. The remaining
interest in the joint venture is held by the Seller. The partners of
Country Isles Associates are the Partnership and Arvida/JMB Partners.
Arvida/JMB Partners, which owns a 79% interest in Country Isles
Associates, is the managing general partner. All profits, losses and
cash distributions of Country Isles Associates are allocated between its
partners in accordance with their percentage interests, described above,
except that, in the case of the Partnership, a special preferential
distribution of cash is to be made to the Partnership to compensate it
for certain rental discounts granted by the Seller in connection with the
lease of the property.
The Country Isles Shopping Center, located in the Weston community
of Fort Lauderdale, Florida, is an approximately 106,000 square foot
retail shopping center containing approximately 71,000 square feet which
opened in 1986 and an additional expansion of approximately 35,000 square
feet which opened in 1989. The shopping center is 99% occupied as of
December 31, 1995. The Country Isles Shopping Center is managed by an
affiliate of the Seller.
There is over 4.0 million square feet of competing retail space
availale within a 15 minute drive of the Country Isles property. Within
4 miles of the property there are two additional shopping centers under
construction which will add an additional 116,000 square feet of retail
space to the competitive market. Country Isles is located in a rapidly
growing area and management anticipates that the additional competition
will not have an adverse impact on the operations of the property.
<PAGE>
Country Isles Shopping Center is encumbered by a first mortgage with
an original amount of $7,000,000. The mortgage which has an outstanding
balance of $6,784,728, as of December 31, 1995, bears interest at the
rate of 9.75% per annum and provides for monthly payments of principal
and interest in the amount of $60,141. A final installment in the amount
of the entire unpaid principal balance, together with interest accrued
thereon is due on July 1, 1996. The Partnership is currently in
negotiations regarding an extension of this loan. This loan is further
secured by a guaranty of Country Isles Associates, which is without
recourse to the partners of Country Isles Associates.
Through March of 1992, Country Isles Shopping Center was managed by
Arvida Management, Limited Partnership, a Delaware limited partnership
which is affiliated with Arvida/JMB Partners. In March of 1992, JMB
Property Management, also an affiliate of Arvida/JMB Partners, became the
manager. Both the previous and current Management Agreements provide
that the Manager will rent and manage the project for a term of five
years, and thereafter for yearly periods, unless otherwise terminated by
the parties in accordance with the agreement. Country Isles Associates
shall pay the Manager a management fee in an amount equal to 4% of the
monthly operating revenues from the operation of the property.
Notwithstanding the foregoing, until such time as the management agent
notifies owner of its election to receive the management fee discussed
immediately above, Country Isles Associates shall pay the Manager, in
lieu of the management fee, an amount equal to 15% of amounts paid by
tenants at the project on account of reimbursement of operating expenses,
excluding taxes and insurance. During 1995, 1994 and 1993, the property
incurred management fees of $62,912, $63,623 and $58,080, respectively.
In December of 1992 and 1993, a $150,000 loan was made to the Partnership
by Arvida/JMB Partners which was repaid in January of 1993 and 1994,
respectively.
Item 2. Properties
The Partnership owns through joint venture partnerships the
properties referred to in Item 1. The three properties that the
Partnership has an interest in are described below:
Sycamore Mall Associates
The property is a retail shopping center located in Iowa City, Iowa, and
is situated on an approximate 21.2 acre site. It includes a main
building containing 213,206 square feet and an out parcel building
containing 27,000 square feet. A 14,000 square foot parcel which
contains a 4,590 square foot building is under a ground lease. The
property is owned fee simple by a partnership of which the Partnership is
a partner. It is subject to a first mortgage in the amount of $4,870,823
which bears interest at a rate of 8.125% payable in monthly installments
of principal and interest of $44,375 until March 1, 2002, when the
balance comes due.
The major tenants are Sears and Von Maur which occupy approximately 34%
and 17%, respectively, of the net rentable area. Occupancy at Sycamore
Mall has remained in the 94% - 99% range during the last five years. The
Sears lease expires in 2002 and the annual rent is approximately
$109,000. The Von Maur lease expires in 2009 and the annual rent is
approximately $210,000. Average total rents received per square foot at
the property during the last three years are $8.14 in 1995, $7.42 in
1994, $7.34 in 1993.
There are currently no plans for any significant improvements to the
property. However, there has been discussion in the area of a new
regional shopping center being planned. There are no definite
announcements of construction, however the proposed location would create
additional competition for Sycamore Mall. Management is closely
monitoring the situation. Until a definite announcement is made and
anchor tenants announced by the new mall, it is not possible to determine
a plan of action.
<PAGE>
The following table illustrates the scheduled lease expirations for
Sycamore Mall, over the next ten years:
<TABLE>
<CAPTION>
# of % of total
leases expiring square feet annual rent annual rent
<S> <C> <C> <C> <C>
1996 9 7,259 45,450 4.2%
1997 9 37,989 180,031 16.8%
1998 7 19,911 245,073 22.8%
1999 6 21,200 127,739 11.8%
2000 1 2,800 33,600 3.1%
2001 - - - -
2002 4 89,428 210,449 19.6%
2003 - - - -
2004 1 3,464 45,032 4.2%
2005 - - - -
</TABLE>
Management believes that the Sycamore Mall property has adequate
insurance coverage.
Country Isles
The Country Isles Shopping Center, located in the Weston community of
Fort Lauderdale, Florida, is an approximately 106,000 square foot retail
shopping center containing approximately 71,000 square feet which opened
in 1986 and an additional expansion of approximately 35,000 square feet
which opened in 1989. Country Isles Shopping Center is encumbered by a
first mortgage in the amount of $6,784,728. The mortgage loan bears
interest at the rate of 9.75% per annum and provides for monthly payments
of principal and interest in the amount of $60,141 with a final
installment in the amount of the entire unpaid principal balance,
together with interest accrued thereon due on July 1, 1996. This loan is
secured by a first mortgage on the shopping center and is further secured
by a guaranty of Country Isles Associates, which is without recourse to
the partners of Country Isles Associates. Country Isles Associates is
currently negotiating for an extension of the first mortgage loan,
however, there can be no assurance that such an extension will be
consummated.
The major tenants are Publix Supermarkets, Inc. and Eckerd Drugs which
ocupy 37% and 10%, respectively, of the leaseable area. Occupancy at
Country Isles has remained in the 94% - 99% range during the last five
years. The Publix Supermarkets lease expires in 2006 and the annual rent
is approximately $60,000. The Eckerd lease expires in 2006 and the
annual rent is approximately $28,000. Average total rent received per
square foot at the property during the last three years were $14.90 in
1995, $14.47 in 1994, $13.97 in 1993.
The following table illustrates the scheduled lease expirations for
Country Isles, over the next ten years:
<TABLE>
<CAPTION>
# of % of total
leases expiring square feet annual rent annual rent
<S> <C> <C> <C> <C>
1996 8 12,728 235,733 29.2%
1997 6 7,790 136,069 16.9%
1998 3 4,162 79,732 9.9%
1999 4 8,126 150,737 18.6%
2000 7 15,991 252,145 31.3%
2001 2 1,881 31,467 3.9%
2002 - - - -
2003 1 2,690 44,385 5.5%
2004 - - - -
2005 - - - -
</TABLE>
Management believes that the Country Isles property has adequate
insurance coverage.
<PAGE>
Evanston Galleria Limited Partnership
Evanston Galleria is a mixed-use residential and retail property
located in Evanston, Illinois. The property, located on a 0.79 acre
site, contains 36,068 square feet of rentable retail space and 55 loft
apartments containing a total of 45,190 square feet of rentable area.
The apartments are leased on a one or two year lease term. The retail
space is leased on 3 to 5 year leases.
The property is owned fee simple by a partnership of which the
Partnership is a partner. It is subject to a first mortgage in the
amount of $8,337,228 which bears interest at a rate of 9.0% payable in
monthly installments of principal and interest of $68,830 until May 1,
1996, when the balance comes due. The Galleria Partnership is currently
negotiating for an extension of the first mortgage loan, however, there
can be no assurance that such an extension will be consummated.
Evanston Galleria has no single tenant which accounts for more then 10%
of the rentable area. Occupancy in the apartments at Evanston Galleria
has remained in the 94% - 100% range during the last five years. The
retail space has had a problem with tenant defaults, which has pushed
overall occupancy to as low as 80% in 1991 and as of December 31, 1995,
occupancy is 84%. Average total rents received per square foot at the
property during the last three years were $18.21 in 1995, $17.35 in 1994,
$17.40 in 1993.
The following table illustrates the scheduled lease expirations relating
to the retail space, for Evanston Galleria, over the next ten years:
<TABLE>
<CAPTION>
# of % of total
leases expiring square feet annual rent annual rent
<S> <C> <C> <C> <C>
1996 - - - -
1997 3 9,725 203,172 15.0%
1998 3 7,199 163,294 12.1%
1999 - - - -
2000 2 14,662 199,077 14.7%
2001 1 2,135 33,093 2.4%
2002 - - - -
2003 - - - -
2004 - - - -
2005 - - - -
</TABLE>
The residential leases have terms typically expiring in one year. During
1996 residential leases representing $619,419 of annual rent will expire.
During 1997, residential leases representing $38,760 of annual rent will
expire. One retail tenant, with a lease for 11,500 square feet, at
Evanston Galleria filed a petition for bankruptcy on January 11, 1994.
The tenant stopped paying rent and vacated the premises during the third
quarter of 1995. During the fourth quarter of 1995, a second tenant
representing 2,135 square feet defaulted under the terms of its lease and
vacated the space. Management has taken legal action action against the
defaulted tenants, but currently has no estimate of the amount, if any,
or timing of collection of amounts due from these tenants. Management is
currently negotiating with prospective replacement tenants.
Management believes that the Evanston Galleria property has adequate
insurance coverage.
<PAGE>
The following is a list of approximate occupancy levels by quarter for
the Partnership's investment properties:
<TABLE>
<CAPTION>
1994 1995
at at at at at at at at
03/31 06/30 09/30 12/31 03/31 06/30 09/30 12/31
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Evanston Galleria
Evanston,
Illinois 97% 95% 100% 97% 98% 99% 86% 84%
Country Isles
Ft. Lauderdale,
Florida 100% 100% 100% 99% 99% 98% 98% 99%
Sycamore Mall
Iowa City,
Iowa 96% 99% 97% 97% 99% 98% 97% 97%
</TABLE>
Item 3. Legal Proceedings
The Partnership is not aware of any material pending legal
proceedings to which it or its properties are subject.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
As of December 31, 1995, there were 479 Limited Partners holding
10,000 Units. There is no public market for Units and it is not
anticipated that a public market for Units will develop. Pursuant to the
terms of the Limited Partnership Agreement of the Partnership (the
"Partnership Agreement"), there are restrictions on the ability of the
Limited Partners to transfer their Units. In all cases, the General
Partners must consent to the substitution of a Limited Partner.
Distributions to Limited Partners, through December 31, 1995, have
totaled $1,018,750 since the Partnership's formation. This is
approximately $101.87 of cash distributions per Unit. Each Unit
originally sold for $500 and the offering was closed on January 31, 1991.
Reference is made to Item 6 herein for a summary of annual cash
distributions, per Unit, made to the Limited Partners.
<PAGE>
<TABLE>
Item 6. Selected Financial Data
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
December 31, 1995, 1994, 1993, 1992 and 1991
(not covered by Independent Auditors' Report)
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Total revenues 1,965,788 1,786,895 1,769,190 1,756,885 1,853,732
Operating income 201,314 125,828 148,568 39,878 145,393
Partnership's share of operations of
unconsolidated ventures (99,645) (68,131) (88,701) (146,453) (114,863)
Venture partners' share of consolidated
venture's operations (124,786) (96,382) (108,094) (89,242) (117,331)
Net loss (23,117) (38,685) (48,227) (195,817) (86,801)
Net loss per Unit (a) (2.29) (3.83) (4.77) (19.39) (8.76)
Total assets 9,515,465 9,696,537 10,086,308 10,418,309 11,237,005
Long-term debt 4,728,865 4,881,129 4,951,845 5,032,099 5,074,474
Cash distributions
per Unit (a) 12.38 16.49 14.91 21.62 25.92
</TABLE>
The above selected financial data should be read in
conjunction with the Consolidated Financial Statements and the related
notes appearing elsewhere in this annual report.
(a) The net income (loss) per Unit and the cash distributions per
Unit presented for 1995, 1994, 1993, 1992, and 1991 are based on the
weighted average number of Units outstanding during 1995, 1994, 1993,
1992, and 1991 which was calculated to be 10,000, 10,000, 10,000, 10,000
and 9,812 respectively.
<PAGE>
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources:
On February 1, 1989, the Partnership commenced a public offering of
$10,000,000 of units of Limited Partnership interest (the "Units")
(subject to increase by an additional $5,000,000 of Units) pursuant to a
Registration Statement on Form S-11 under the Securities Act of 1933.
The Partnership terminated the offering of units on January 31, 1991,
having issued 10,000 Units, resulting in gross proceeds of $5,000,000 and
net proceeds to the Partnership (after deducting offering costs and
selling discounts related to the purchase of Units by the General
Partners and their affiliates) of $4,058,963.
At December 31, 1995, the Partnership had cash and cash equivalents
of $353,531 as compared to $208,840 as of December 31, 1994. The
increase in cash and cash equivalents results from $638,030 of net cash
provided from operating activities of which $57,292 was used for
improvements to the Sycamore Mall property, $70,505 was incurred in
relation to the refinancing of Sycamore Mall, $160,708 was distributed to
Venture Partners in Sycamore Mall, $123,812 was distributed to the
Limited Partners in the Partnership and $81,022 was used to reduce the
principal on mortgage indebtedness at Sycamore Mall. The Partnership has
had its current liabilities increase by $83,000 from the prior year,
primarily due to an increased property tax liability at Sycamore Mall.
Cash flow from operations is dependent on occupancy at the Partnership's
properties and upon the payment of rent by the properties' tenants. Cash
Flow from operations has been sufficient to meet the Partnerships'
obligations in the past, however, past performance is not necessarily
indicative of future performance.
During 1995, the maturity of the mortgage loan at the Sycamore Mall
was extended from September 1, 1996 to March 1, 2002. The mortgage loans
on the two unconsolidated subsidiaries, Evanston Galleria and Country
Isles, are scheduled to mature in 1996. Negotiations are underway to
extend each of these loans. The Partnership anticipates that these
negotiations will be successful, however, there can be no assurance that
such extensions will be consummated. If these loan extensions are not
successful, the ventures will not have sufficient capital to pay the
balances due upon maturity. Additional sources of outside capital or
financing would be necessary in order to avoid a default on these
mortgage loans at their respective maturity dates.
As of December 31, 1995, the Partnership has no material commitments
for capital expenditures. The Partnership does not anticipate any need
for external sources of liquidity, unless the mortgage loans are not
extended.
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
come from cash generated by the Partnership's investment properties and
from the sale and refinancing of such properties. To the extent a
property does not generate adequate cash flow to meet its working capital
requirements, the Partnership may (i) withdraw funds from the working
capital reserve it maintains, (ii) fund such shortfall from excess cash
generated by other properties owned or (iii) pursue outside financing
sources. However, the Partnership may decide not to, or may not be able
to, commit additional funds to certain of its investment properties.
Nonetheless, it is anticipated that the current and future capital
resources of the Partnership will be adequate to fund currently
anticipated short and long-term requirements of its investment portfolio
taken as a whole.
There are certain risks and uncertainties associated with the
Partnership's investments made through joint ventures including the
possibility that the Partnership's joint venture partners in an
investment might become unable or unwilling to fulfill their financial or
other obligations, or that such joint venture partners may have economic
or business interests or goals that are inconsistent with those of the
Partnership. To date, the Partnership has not experienced any
significant detrimental impact from these uncertainties and risks, except
at Evanston Galleria. See Note 2 (b) to the Notes to Consolidated
Financial Statements included in Item 8, for further discussion.
<PAGE>
In response to the weakness in the real estate industry, the
Partnership is taking steps to preserve its working capital. Therefore,
the Partnership carefully scrutinizes the appropriateness of any possible
discretionary expenditures, particularly as the discretionary
expenditures relate to the amount of working capital reserves the
Partnership has available. By conserving working capital, the Partnership
expects to be in a better position to meet future needs of its properties
without having to rely on external financing sources. During 1995,
Sycamore Mall Associates reduced its distributions to its partners and
the Partnership reduced its distributions to the Limited Partners by
$41,071 from 1994.
Results of Operations:
The results of operations for the years ended December 31, 1995,
December 31, 1994 and December 31, 1993 reflect the consolidated
operations of the Partnership and Sycamore Mall Associates (the "Sycamore
Partnership") and its equity investments in Evanston Galleria Limited
Partnership (the "Galleria Partnership") and Country Isles Associates
("Country Isles"). The results of operations of the Sycamore
Partnership reflect the operations of the Sycamore Mall Shopping Center.
The equity investment in the Galleria Partnership reflects the
Partnership's share of the operations of the Evanston Galleria. The
equity investment in Country Isles reflects the Partnership's share of
the operations of the Country Isles Plaza Shopping Center.
Changes from 1994 to 1995:
The Partnership's net loss in 1995 decreased $15,568 from $38,685 in
1994 to $23,117 in 1995. This decrease in the loss resulted primarily
from an improvement in operating income of $62,716 at Sycamore Mall which
was partially offset by larger losses being allocated from Evanston
Galleria and Country Isles. The loss allocated from Evanston Galleria
was $96,309 in 1995 as compared to $75,944 in 1994. The decrease in
operating results from the Evanston Galleria resulted from the default
of lease payments by two retail tenants. See Item 1 above for a
discussion of this situation. The loss allocated from Country Isles in
1995 was $3,336 as compared to a gain of $7,813 in 1994. Operations at
Country Isles were stable from the prior year except for a non-recurring
increase in repairs and maintenance expenses, which accounted for the
decrease in operating results
The Partnership's rental income increased $55,840 or about 4% from
$1,288,604 in 1994 to $1,344,444 in 1995. Percentage rents at Sycamore
Mall increased $13,026 from the prior year. The balance of the increase
is due to Sycamore Mall maintaining an overall higher rate of occupancy
in 1995 as compared to 1994.
Revenue from tenant charges increased $118,135 (24%) from $493,705
in 1994 to $611,840 in 1995. This increase is due to the increase in
operating expenses at Sycamore Mall. The tenant charges represent the
tenants' reimbursement of certain property operating expenses.
Interest income increased $5,008 (111%) from $4,496 in 1994 to
$9,504 in 1995. The increase results from the increase in cash reserves
which have been held and invested by the Partnership. Since the
Partnership intends to build additional cash reserves during 1996, it is
anticipated that interest income will increase in 1996 as compared to
1995.
Property operating expenses increased to $913,541 for the year ended
December 31, 1995 from $794,157 for the year ended December 31, 1994.
This $119,384 (15%) increase results primarily from an increase of
$140,358 in property taxes which was offset by decrease in decorating and
maintenance expenses. The Partnership does not expect this increase in
property taxes to have a detrimental effect on the net operating income
of the property since property taxes are reimbursed by the tenants.
Decorating and maintenance expenses are not expected to rise. Certain
decorating and maintenance expenditures, which were incurred in 1994,
were not of a continuing nature.
Interest expense decreased $24,948 (5%) from $479,499 in 1994 to
$454,551 in 1995. Approximately $15,000 of the decrease resulted from
the reduction in the interest rate on the mortgage loan at Sycamore Mall.
The remaining $8,000 in reduction results from the repayment of $81,022
of mortgage indebtedness throughout the year. Interest expense in 1996
is expected to decrease to approximately $393,000 as a result of the
reduction in the interest rate during 1995 and continued repayment of the
mortgage indebtedness.
Amortization expense increased $6,744 (23%) from $29,912 during the
year ended December 31, 1994 to $36,656 during the year ended December
31, 1995. This increase is primarily due to the amortization of the
capitalized financing costs relating to the refinanced loan which was not
scheduled to mature until September 1996. Amortization in 1996, and
subsequent years, relating to the capitalized refinancing costs should
total approximately $11,000 per year.
<PAGE>
Changes from 1993 to 1994:
The Partnership's net loss in 1994 decreased $9,542 from $48,227 in
1993 to $38,685 in 1994. This decrease resulted primarily from an
improvement in operations at all three properties. The Partnership's
total revenues increased $17,705 (1%) from $1,769,190 in 1993 to
$1,786,895 in 1994. Rental income decreased $10,090 due to a decrease in
percentage rent income at Sycamore Mall. Income from tenant charges at
Sycamore Mall increased $28,104 as a result of an increase in property
operating expenses which are reimbursable by the tenants. The loss
allocated from unconsolidated ventures was $68,131 in 1994, an
improvement of $20,570 from 1993.
Property operating expenses increased 8% to $794,157 for the year
ended December 31, 1994 from $738,132 for the year ended December 31,
1993. This resulted from an increase in decorating and maintenance
expenses at Sycamore Mall.
Interest expense decreased $5,922 (1%) from $485,421 in 1993 to
$479,499 in 1994. The reduction resulted from the repayment of mortgage
indebtedness throughout the year.
General and administrative expenses decreased by approximately
$9,725 (12%) from $84,391 in 1993 to $74,666 in 1994. This resulted from
decreases in accounting fees, administrative overhead and legal fees.
Inflation:
The Partnership has completed its seventh full year of operations.
During the seven years the annual inflation rate has ranged from 3.01% to
5.40% with an average of 4.21%. The effect which inflation has had on
income from operations is minimal primarily due to the weak real estate
market.
Inflation in future periods may increase rental income levels (from
leases to new tenants or renewals of existing leases) in accordance with
normal market conditions. Such increases in rental income should offset
most of the adverse impact that inflation has on property operating
expenses with little effect on operating income. Continued inflation may
also tend to cause capital appreciation of the Partnership's investment
properties over a period of time as rental rates and replacement costs of
properties continue to increase.
Asset Impairment:
Under the Partnership's current impairment policy, provisions for
value impairment are recorded with respect to investment properties
pursuant to the basic principles of Statement of Financial Accounting
Standards No. 121 ("SFAS 121") "Accounting for the Impairment of Long-
Lived Assets and for Long Lived Assets to be Disposed Of". Therefore,
the Partnership does not anticipate any effect on its consolidated
financial statements upon full adoption of SFAS 121 as required in the
first quarter of 1996.
Certain investment properties are pledged as security for the long-
term debt, for which there is no recourse to the Partnership, as
described in Note 3 of the Notes to Consolidated Financial Statements.
<PAGE>
Item 8. Financial Statements and Supplementary Data
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
INDEX
Page (s)
Independent Auditors' Report 15
Consolidated Balance Sheets, December 31, 1995 and 1994 16- 17
Consolidated Statements of Operations,
Years ended December 31, 1995, 1994 and 1993 18
Consolidated Statements of Partners' Capital Accounts (Deficits),
Years ended December 31, 1995, 1994 and 1993 19
Consolidated Statements of Cash Flows,
Years ended December 31, 1995, 1994 and 1993 20
Notes to Consolidated Financial Statements 21 - 28
Schedule
Consolidated Real Estate and Accumulated Depreciation III
Schedules not filed:
All schedules other than those indicated in the index have been omitted
as the required information is inapplicable or the information is
presented in the financial statements or the related notes.
<PAGE>
Independent Auditors' Report
The Partners
First Dearborn Income Properties L.P. II
We have audited the consolidated financial statements of First Dearborn
Income Properties L.P. II (a limited partnership) and consolidated
ventures as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and the financial statement schedule
are the responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of First
Dearborn Income Properties L.P. II and consolidated ventures as of
December 31, 1995 and 1994 and the results of their operations and their
cash flows for each of the years in the year-year period ended December
31, 1995, in conformity with generally accepted accounting principles.
Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the
information set forth therein.
KPMG Peat Marwick LLP
Chicago, Illinois
March 8, 1996
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Consolidated Balance Sheets
December 31, 1995 and 1994
Assets
<CAPTION>
1995 1994
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) 353,531 208,840
Rents and other receivables 289,393 271,870
Due from affiliates 6,999 4,709
Prepaid expense 21,556 24,900
Total current assets 671,479 510,319
Investment property, at cost (note 2):
Land 1,201,880 1,201,880
Buildings and improvements 8,336,918 8,279,626
9,538,798 9,481,506
Less accumulated depreciation (1,445,126) (1,160,208)
8,093,672 8,321,298
Investment in unconsolidated ventures,
at equity (notes 2 and 7) 680,842 829,297
Deferred leasing and loan costs 69,472 35,623
Total assets 9,515,465 9,696,537
<FN>
See accompanying notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Consolidated Balance Sheets - Continued
December 31, 1995 and 1994
Liabilities and Partners' Capital Accounts (Deficits)
<CAPTION>
1995 1994
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses 406,140 312,818
Due to affiliates (note 6) 10,315 14,273
Accrued interest 32,980 39,718
Current portion of long-term debt (note 3) 141,958 70,716
Total current liabilities 591,393 437,525
Long-term liabilities:
Long-term debt (note 3) 4,728,865 4,881,129
Venture partners' equity in
consolidated venture (note 2) 1,560,090 1,596,012
Tenant security deposits 6,333 6,158
Total long-term liabilities 6,295,288 6,483,299
Total liabilities 6,886,681 6,920,824
Partners' capital accounts (deficits) (notes 1 and 4):
General partners:
Capital contributions 1,000 1,000
Cumulative net losses (4,124) (3,893)
Total general partners' capital (deficits) (3,124) (2,893)
Limited partners:
Capital contributions 4,058,963 4,058,963
Cumulative net losses (408,302) (385,419)
Cumulative cash distributions (1,018,750) (894,938)
Total limited partners' capital 2,631,908 2,778,606
Total partners' capital accounts 2,628,784 2,775,713
Commitments and contingencies (notes 2 and 6)
Total liabilities and partners' capital 9,515,465 9,696,537
<FN>
See accompanying notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Consolidated Statements of Operations
Years ended December 31, 1995, 1994, and 1993
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Revenues:
Rental income 1,344,444 1,288,604 1,298,694
Tenant charges 611,840 493,705 465,601
Interest income 9,504 4,496 4,895
Total revenues 1,965,788 1,786,895 1,769,190
Expenses:
Property operating expenses 913,541 794,157 738,132
Interest 454,551 479,499 485,421
Depreciation 284,918 282,833 281,008
Amortization 36,656 29,912 31,670
General and administrative expenses 74,808 74,666 84,391
Total expenses 1,764,474 1,661,067 1,620,622
Operating income 201,314 125,828 148,568
Partnership's share of operations
of unconsolidated ventures (99,645) (68,131) (88,701)
Venture partners' share of consolidated
venture's operations (note 1) (124,786) (96,382) (108,094)
Net loss (23,117) (38,685) (48,227)
Net loss per limited partnership unit (2.29) (3.83) (4.77)
<FN>
See accompanying notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Consolidated Statements of Partners' Capital Accounts (Deficits)
Years ended December 31, 1995, 1994 and 1993
<CAPTION>
General Partners Limited Partners (10,000 Units)
Contributions, Cash
Net net of Net distrib-
Contributions loss Total offering costs loss utions Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance (deficit)
at December 31, 1992 1,000 (3,024) (2,024) 4,058,963 (299,376) (580,956) 3,178,631
Net loss - (482) (482) - (47,745) - 47,745)
Cash distributions - - - - - (149,099) (149,099)
Balance (deficit)
at December 31, 1993 1,000 (3,506) (2,506) 4,058,963 (347,121) (730,055) 2,981,787
Net loss - (387) (387) - (38,298) - (38,298)
Cash distributions - - - - - (164,883) (164,883)
Balance (deficit)
at December 31, 1994 1,000 (3,893) (2,893) 4,058,963 (385,419) (894,938) 2,778,606
Net loss - (231) (231) - (22,886) - (22,886)
Cash distributions - - - - - (123,812) (123,812)
Balance (deficit)
at December 31, 1995 1,000 (4,124) (3,124) 4,058,963 (408,305) (1,018,750) 2,631,908
<FN>
See accompanying notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss (23,117) (38,685) (48,227)
Items not requiring cash or cash equivalents:
Depreciation 284,918 282,833 281,008
Amortization 36,656 29,912 31,670
Partnership's share of operations of
unconsolidated ventures,
net of distributions 148,455 91,259 116,944
Venture partners' share of
consolidated venture's operations 124,786 96,382 108,094
Changes in:
Rents and other receivables (17,523) (44,049) (31,860)
Due from affiliates (2,290) - -
Prepaid expense 3,344 (632) (1,116)
Accounts payable and accrued expenses 93,322 5,029 (14,282)
Due to affiliates (3,958) (8,471) (2,652)
Accrued interest (6,738) (515) (469)
Tenant security deposits 175 275 -
Net cash provided by operating activities 638,030 413,338 439,110
Cash flows for investing activities:
Additions to investment property (57,292) (11,738) (85,236)
Payment of deferred expenses (70,505) - -
Partnership's contributions
to unconsolidated ventures - (50,000)
Net cash used in investing activities (127,797) (11,738) (135,236)
Cash flows for financing activities:
Venture partners' distributions from
consolidated venture (160,708) (214,652) (154,988)
Distributions to limited partners (123,812) (164,883) (149,099)
Principal payments on long-term debt (81,022) (64,251) (70,378)
Net cash used in financing activities (365,542) (443,786) (374,465)
Net increase (decrease) in cash
and cash equivalents 144,691 (42,186) (70,591)
Cash and cash equivalents
at beginning of year 208,840 251,026 321,617
Cash and cash equivalents at end of year 353,531 208,840 251,026
Supplemental disclosure of cash flow information:
Cash paid for mortgage
and other interest 461,289 480,014 485,890
<FN>
See accompanying notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements
December 31, 1994, 1993 and 1992
(1) Organization and Basis of Accounting
The Partnership was formed under the Delaware Revised Uniform
Limited Partnership Act by the recording of a Certificate of Limited
Partnership as of May 19, 1988. Initial capital contributions were
$1,000 by the General Partners and $1,000 by the Initial Limited Partner.
The Initial Limited Partner (an affiliate of the Managing General
Partner) withdrew as a Limited Partner upon the admission of the first
additional Limited Partners on October 16, 1989 when the initial closing
of the offering was consummated. The Agreement of Limited Partnership
authorized the issuance of up to 20,000 additional Units (subject to
increase by an additional 10,000 Units) at $500 per Unit. A total of
7,789 Units was subscribed for and issued between February 1, 1989 and
December 31, 1990. An additional 2,211 Units were issued during 1991 of
which 1,669 Units were purchased by an affiliate of the General Partners
pursuant to its Agreement to Purchase Units. The offering terminated on
January 31, 1991 at which time an aggregate 10,000 Units had been sold.
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 Isles
Associates.
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 for the
Partnership. The net effect of these is as follows:
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
1995 1995 1994 1994
GAAP Tax GAAP Tax
Basis Basis Basis Basis
<S> <C> <C> <C> <C>
Total assets 9,515,465 3,828,110 9,696,537 3,980,244
Partners' capital accounts (deficits):
General partners (3,124) (2,863) (2,893) (1,999)
Limited partners 2,631,908 3,642,365 2,778,606 3,904,980
Net income (loss):
General partners (231) (864) (387) (515)
Limited partners (22,886) (23,481) (38,298) (12,150)
Net loss per limited partnership unit (2.29) (2.35) (3.83) (1.22)
</TABLE>
The net loss per limited partnership unit presented for 1995, 1994
and 1993 is based on the limited partnership units outstanding at the end
of each period (10,000).
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
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
($94,912 and $104,382 at December 31, 1995 and 1994, respectively), as
cash equivalents.
Deferred offering costs were charged to the partners' capital
accounts upon consummation of the offering. Deferred organization costs
were amortized over a 60-month period using the straight-line method.
Deferred loan costs are amortized over the terms of the related
agreements using the straight-line method. Leasing commissions are
amortized over the terms of the related tenant leases 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.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
(2) Venture Agreements
(a) General
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 December 31, 1995. The Partnership has
acquired, through these ventures, interests in a mixed use
retail/residential property and two shopping centers.
(b) Evanston Galleria Limited Partnership
On October 31, 1989, the Partnership acquired an interest in
Evanston Galleria Limited Partnership (the "Galleria Partnership") which
owns a 100% beneficial interest in the Evanston Galleria, a mixed-use
residential and retail property located in Evanston, Illinois. The
property, located on a .79 acre site, contains 36,068 square feet of
rentable retail space and 55 loft apartments. The Partnership's
acquisition of its interest was effected through its acquisition of an
18.30% general partnership interest in the Galleria Partnership from
First Dearborn Evanston Associates Limited Partnership ("Evanston
Associates"), an affiliate of the General Partners. Evanston Associates
originally agreed to purchase a 76.67% interest in the Galleria
Partnership by agreeing to contribute an aggregate $2,313,125 to the
Galleria Partnership. The Partnership acquired a portion of the 76.67%
general partnership interest on the same terms by contributing $552,066
for its 18.30% general partnership interest. The seller retained a
23.33% limited partnership interest.
The Partnership and Evanston Associates, as general partners of the
Galleria Partnership, have certain preferences from operating cash flow
and distributions from sales or refinancing. Profits are generally
allocated in accordance with cash distributions (including preferences)
and then in accordance with the respective partner's interest. Losses
are allocated first to partners with positive capital account balances
and then in accordance with the respective partner's interest.
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
The limited partners ("Guarantors") of the Galleria Partnership had
provided the Partnership and Evanston Associates with a guaranty of
minimum rentals on certain retail space, maximum debt service levels and
maximum real estate tax expenses in the Galleria Partnership. The
property has failed to perform as expected and the Galleria Partnership
has called upon the Guarantors to satisfy their obligations under the
guaranties. The Guarantors have failed to fulfill their obligations to
the Partnership, and the General Partners have taken actions to protect
the rights of the Partnership, including receipt of an assignment in
favor of the Partnership of the Guarantors' limited partnership interests
in the Galleria Partnership of 5.57% and the receipt of security
interests in certain other limited partnership interests owned by the
Guarantors. Amounts owned pursuant to such guaranties which are secured
by the limited partners' partnership interests will be recorded upon
receipt.
The property is managed by an affiliate of the Managing General
Partner. The fee is subordinated to the Partnership and Evanston
Associates receiving the Preferred Return (as defined). No management
fee was paid in 1995, 1994 or 1993.
During 1991, occupancy at Evanston Galleria declined from 96% at
March 31, 1991 to 80% at December 31, 1991. This decline resulted
principally from the closing of certain retail tenants which were
experiencing financial problems. The weak economy and the inability of
the Partnership to access sufficient capital hampered its ability to
retenant the vacant space. This decline in occupancy had an adverse
affect on the cash flow and rendered the Partnership unable to satisfy
certain obligations relating to the property. During the fourth quarter
1992, the remainder of the retail space was leased and occupancy
increased to 96%.
In connection with the loan modification to the first mortgage,
which closed in February of 1993 and was effective August 1, 1992, the
Galleria Partnership received an infusion of additional capital and
obtained modifications of the terms of its loans. These modifications
are summarized as follows:
Capital infusion:
- $202,000 of additional capital was contributed to the Galleria
Partnership by Evanston Associates, of which the Partnership's share was
$50,000, in exchange for a preferred equity position. The preferred
equity holders shall receive an annual preferred return from cash
distributions in an amount equal to the lesser of: a) prime rate plus 2%,
or b) 10% per annum. For financial reporting purposes, the Partnership
has a 23.87% interest in the Galleria Partnership.
The first mortgage loan was modified as follows:
- Interest which was unpaid from the period March 1, 1992 through
July 30, 1992 in the amount of $342,171 was added to the loan
principal.
- The interest rate was reduced from 10% to 9%.
- Amortization of the loan amount will be based on a 30-year term
from August of 1992.
- The Galleria Partnership must accumulate a $50,000 reserve
account before making any distributions to partners.
- The Guarantors extended their guaranty to May 1, 1996.
No gain or loss was recognized in 1992 by the Galleria Partnership in
conjunction with the modification.
The second mortgage loan was modified as follows:
- The principal amount of the loan was reduced from $250,000 to
$175,000.
- Unpaid interest of approximately $17,000 was forgiven.
- Repayment of this loan was subordinated to the preferred equity
holders.
A nominal gain was recognized in 1992 by the Galleria Partnership as a
result of the modification of the second mortgage loan.
The first mortgage loan matures on May 1, 1996. The Galleria Partnership
is currently negotiating for an extension of the first mortgage loan,
however, there can be no assurance that such an extension will be
consummated.
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
(c) Sycamore Mall Associates
On October 26, 1990, the Partnership contributed $2,275,000 to
acquire a 53.40% general partnership interest in Sycamore Mall
Associates, a general partnership formed to acquire the Sycamore Mall
Shopping Center in Iowa City, Iowa. The property, situated on an
approximate 21.2 acre site, includes a main building containing 213,206
square feet and an out parcel building containing 27,000 square feet. A
14,000 square foot parcel which contains a 4,590 square foot building is
under a ground lease. Sycamore Mall Associates acquired the property on
October 26, 1990 for a purchase price of $9,400,000, subject to a
purchase money note of $5,140,000 bearing interest at 10% payable
interest only until maturity on October 26, 1995. On August 8, 1991,
Sycamore Mall Associates obtained a first mortgage in the amount of
$5,140,000 which bore interest at a rate of 9.625% payable in monthly
installments of principal and interest of $45,355 commencing October 1,
1991 for 60 months until September 30, 1996. The proceeds of this first
mortgage were used to repay the original purchase money note. In October
1995, the first mortgage loan was modified. The terms of the
modification reduced the interest rate to 8.125%, reduced the monthly
payments of principal and interest to $44,375 and extended the maturity
to March 1, 2002.
First Dearborn Income Properties L.P., a public limited partnership
affiliated with the General Partners of the Partnership, and First
Dearborn Sycamore Associates Limited Partnership ("FDSALP"), a privately
offered limited partnership also affiliated with the General Partners,
are the joint venture partners in Sycamore Mall Associates and
contributed a total of $1,075,000 and $910,000 for 25.24% and 21.36% of
the general partner interests, respectively.
The terms of the Sycamore Mall Associates partnership agreement
provide that cash flow, sale or refinancing proceeds and profit and loss
will be distributed or allocated in proportion to the partner's ownership
interests.
The property is managed by an affiliate of the General Partners and
an affiliate of the seller under a five year management agreement that
provides for a fee equal to 5% of the effective gross income, of which 1%
is paid to an affiliate of the General Partners. During 1995, 1994 and
1993 the property incurred management fees of $97,270, $88,306 and
$87,325, respectively.
(d) Country Isles
The Country Isles Shopping Center, located in the Weston community of
Fort Lauderdale, Florida, is an approximately 106,000 square foot retail
shopping center containing approximately 71,000 square feet which opened
in 1986 and an additional expansion of approximately 35,000 square feet
which opened in 1989. The shopping center is 99% occupied as of December
31, 1995. The Country Isles Shopping Center is managed by an affiliate
of the seller.
Country Isles Shopping Center is encumbered by a first mortgage with
an original amount of $7,000,000. The mortgage which has an outstanding
balance of $6,784,728, as of December 31, 1995, bears interest at the
rate of 9.75% per annum and provides for monthly payments of principal
and interest in the amount of $60,141. A final installment in the amount
of the entire unpaid principal balance, together with interest accrued
thereon is due on July 1, 1996. The Partnership is currently in
negotiations regarding an extension of this loan, however, there can be
no assurance that such an extension will be consummated. This loan is
further secured by a guaranty of Country Isles Associates, which is
without recourse to the partners of Country Isles Associates.
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
Through March of 1992, Country Isles Shopping Center was managed by
Arvida Management, Limited Partnership, a Delaware limited partnership
which is affiliated with Arvida/JMB Partners. In March of 1992, JMB
Property Management, also an affiliate of Arvida/JMB Partners, became the
manager. Both the previous and current Management Agreements provide
that the Manager will rent and manage the project for a term of five
years, and thereafter for yearly periods, unless otherwise terminated by
the parties in accordance with the agreement. Country Isles Associates
shall pay the Manager a management fee in an amount equal to 4% of the
monthly operating revenues from the operation of the property.
Notwithstanding the foregoing, until such time as the management agent
notifies owner of its election to receive the management fee discussed
immediately above, Country Isles Associates shall pay the Manager, in
lieu of the management fee, an amount equal to 15% of amounts paid by
tenants at the project on account of reimbursement of operating expenses,
excluding taxes and insurance. During 1995, 1994 and 1993, the property
incurred management fees of $62,912, $63,623 and $58,080, respectively.
In December of 1992 and 1993, a $150,000 loan was made to the Partnership
by Arvida/JMB Partners which was repaid in January of 1993 and 1994,
respectively.
(3) Long-Term Debt
Long-term debt consists of the following at December 31, 1995 and
1994:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
$4,899,448 mortgage note, bearing interest
at 8.125%, payable in monthly installments of
principal and interest of $44,375 until maturity on
March 1, 2002 when the remaining principal balance
of $3,780,785 is payable; secured by the real and
personal property of Sycamore Mall Shopping Center. 4,870,823 -
$5,140,000 mortgage note, bearing interest
at 9.625%, payable in monthly installments of
principal and interest of $45,355 until maturity on
September 30, 1996 when the remaining principal balance
of $4,830,075 is payable; secured by the real and
personal property of Sycamore Mall Shopping Center. - 4,951,845
Less current portion of long-term debt 141,958 70,716
Total long-term debt 4,728,865 4,881,129
</TABLE>
Five year maturities of long-term debt are as follows:
1996 $141,958
1997 153,932
1998 166,915
1999 180,993
2000 179,290
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
(4) Partnership Agreement
Pursuant to the terms of the Partnership Agreement, net profits or
losses of the Partnership for Federal income tax purposes from operations
generally will be allocated 99% to the Limited Partners and 1% to the
General Partners. Net profits for Federal income tax purposes from the
sale or refinancing of properties will be allocated as follows: (i)
first, to the Partners who have a deficit capital account balance in an
amount equal to their deficit balance; (ii) second, to the Limited
Partners in an amount equal to their contributed capital plus a
stipulated return thereon; and (iii) thereafter, 90% to the Limited
Partners and 10% to the General Partners. Net losses from the sale or
refinancing of properties will be allocated as follows: (i) first, to
the Partners who have a positive capital account balance in an amount
equal to their positive balance; and (ii) thereafter, 99% to the Limited
Partners and 1% to the General Partners.
Operating Cash Flow, as defined in the Partnership Agreement, prior
to the date the public offering terminated was distributed 100% to the
Limited Partners. Operating Cash Flow subsequent to termination of the
public offering will be distributed during the first five years, 99% to
the Limited Partners and 1% to the General Partners and, thereafter, 90%
to the Limited Partners and 10% to the General Partners subject to
certain limitations. Sale or refinancing proceeds will be distributed
100% to the Limited Partners until the Limited Partners have received
their contributed capital plus a stipulated return thereon. Any
remaining sale or refinancing proceeds will then be distributed 90% to
the Limited Partners and 10% to the General Partners.
For financial reporting purposes, net profits or losses from
operations are allocated 99% to the Limited Partners and 1% to the
General Partners. The General Partners are not required to make any
capital contributions except under certain limited circumstances upon
dissolution and termination of the Partnership.
(5) Leases
The Partnership has determined that all leases relating to the
properties are properly classified as operating leases; therefore, rental
income is reported when earned and the cost of the property, excluding
the cost of the land, is depreciated over the estimated useful life of
the property. Leases with tenants range in term from one to thirty years
and provide for fixed minimum rent and partial to full reimbursement of
operating costs. In addition, many of the leases provide for additional
rent based upon percentages of tenants' sales volume.
Minimum lease payments, including amounts representing executory
costs (e.g. taxes, maintenance, insurance) and any related profit, to be
received in the future under the operating leases are as follows:
1996 $ 1,065,113
1997 1,003,282
1998 724,276
1999 596,052
2000 498,798
Thereafter 2,402,658
$6,290,179
Percentage rents (based on tenants' sales volume) included in rental
income were $171,305, $158,279 and $170,937 for the years ended December
31, 1995, 1994 and 1993, respectively.
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
(6) Transactions with Affiliates
Affiliates of the General Partners are entitled to receive from the
Partnership acquisition fees, equal to 9% of the gross proceeds from the
offering of Units, in connection with the evaluation, investigation,
negotiation, selection and purchase of the Partnership's investment
properties. The Managing General Partner and its affiliates are entitled
to reimbursement for salaries and direct expenses of officers and
employees of the Managing General Partner and its affiliates relating to
the administration of the Partnership.
Fees, commissions and other expenses required to be paid by the
Partnership to affiliates of the General Partners for the years ended
December 31, 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
Unpaid at
1995 1994 1993 Dec. 31, 1995
<S> <C> <C> <C> <C>
Reimbursement (at cost)
for out of pocket expenses 2,375 2,536 3,843 0
Reimbursement (at cost)
for administrative services 14,224 14,227 22,333 10,288
16,599 16,763 26,176 10,288
</TABLE>
(7) Investment in Unconsolidated Ventures
Summary combined financial information for Evanston Galleria Limited
Partnership and Country Isle Associates as of December 31, 1995 and 1994
is as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Current assets 393,116 482,797
Current liabilities (15,962,345) (932,227)
Working capital (15,569,229) (449,430)
Deferred expenses 104,155 157,856
Ventures partners' equity 3,362,339 3,033,882
Investment property, net 12,958,577 13,383,945
Long-term debt (175,000) (15,296,956)
Partnership's capital 680,842 829,297
Represented by:
Invested capital 1,548,815 1,548,815
Cumulative cash distributions (204,761) (155,951)
Cumulative loss (663,212) (563,567)
680,842 829,297
Total revenues 3,059,677 2,943,721
Total expenses 3,479,039 3,224,669
Net loss (419,362) (280,948)
</TABLE>
The total revenues, expenses and net loss for the above ventures for the
year ended December 31, 1993 were $2,865,518, $3,235,669 and $370,151,
respectively.
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
(8) Fair Value of Financial Instruments
The Partnership believes the carrying amount of its financial
instruments included in cash and cash equivalents, rents and other
receivables and accounts payable and accrued expenses approximates fair
value because of the relatively short maturity of these instruments. In
addition, the estimated fair value of the long-term debt is not
significantly different from the carrying value in the accompanying
consolidated financial statements.
(9) Subsequent Event
In March 1996, the Partnership paid cash distributions of $20,594 to
the Limited Partners.
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
December 31, 1995
Schedule III
Consolidated Real Estate and Accumulated Depreciation
<CAPTION>
(a)
Initial Cost to Partnership Additions Gross amount of asset at period end
Building & Building & Building & Accumulated Date of Date Depreciable
Encumbrance Land Improvements Improvements Land Improvements Total Depreciation Construction Acquired Lives
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shopping Center 1969
Iowa City,
Iowa 4,870,823 1,201,880 7,910,902 426,016 1,201,880 8,336,918 9,538,798 1,445,126 1972 10/26/90 5-30 yrs
</TABLE>
(a) The initial cost represents the original purchase price of the properties.
(b) The aggregate cost of the above real estate at December 31, 1995 for
Federal income tax purposes is $9,538,798.
<TABLE>
<CAPTION
1995 1994 1993
<S> <C> <C> <C>
(c) Reconciliation of real estate owned
Balance at
beginning of period 9,481,506 9,469,768 9,384,532
Additions 57,292 11,738 85,236
Balance at
end of period 9,538,798 9,481,506 9,469,768
(d) Reconciliation of accumulated depreciation
Balance at
beginning of period 1,160,208 877,375 596,367
Depreciation expense 284,918 282,833 281,008
Balance at
end of period 1,445,126 1,160,208 877,375
</TABLE>
<PAGE>
Item 9. Changes In and Disagreements with Accountants
on Accounting and Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partners of the Partnership are:
FDIP, Inc., an Illinois corporation, Managing General Partner; and
FDIP Associates, an Illinois general partnership, Associate General
Partner.
FDIP, Inc., the Managing General Partner, is a corporation formed
under the laws of the State of Illinois. Its issued and outstanding
shares are owned by Messrs. Bruce H. Block and Robert S. Ross. The
officers of the Managing General Partner are Robert S. Ross, President,
and Bruce H. Block, Vice President and Secretary. Messrs. Block and
Ross are its sole directors.
FDIP Associates, the Associate General Partner, was formed under
the laws of the State of Illinois and has a nominal net worth. Its
constituent partners are First Dearborn Partners, an Illinois general
partnership formed in January, 1984, whose constituent partners are
Messrs. Block and Ross, and Hampshire Syndications, Inc., a New
Hampshire corporation. Hampshire Syndications, Inc. is wholly owned by
Hampshire Funding, Inc., a New Hampshire corporation, which is a wholly-
owned subsidiary of Chubb Life Insurance Company of America. The
officers and directors of Hampshire Syndications, Inc. are Ronald
Angarella, President and Director, Charles C. Cornelio, Vice President,
Counsel, Secretary and Director, Frederick H. Condon, Vice President
and Director, John A. Weston, Treasurer.
Messrs. Block and Ross are not affiliated with Chubb Securities
Corporation, except that each is affiliated with the Associate General
Partner.
The persons listed below occupy key management position with the
General Partners:
Mr. Bruce H. Block, age 58, has been a principal in numerous
real estate ventures which own, have an interest in, or have owned
various types of property that have included apartment and office
buildings, shopping centers and vacant land. Mr. Block is an
Illinois licensed attorney, a certified public accountant and a
licensed real estate broker in the State of Illinois. Mr. Block
practiced corporate and real estate law in Chicago for over 20 years
and is a shareholder in the Chicago law firm of Ross & Block, P.C.
Mr. Robert S. Ross, age 58, has been a principal in many real
estate ventures which own, have an interest in, or have owned various
types of property including apartment and office buildings, shopping
centers and vacant land. Mr. Ross is an Illinois licensed attorney, a
licensed real estate broker in the State of Illinois and is an
affiliate member of Real Estate Securities and Syndication Institute.
He also practiced general and real estate law in the Chicago area for
over 22 years and is a shareholder in the Chicago law firm of Ross &
Block P.C.
Mr. Ronald R. Angarella, age 38, currently serves as President,
Chairman and Director of Chubb Securities Corporation and Hampshire
Funding, Inc. and President and Director of Hampshire Syndications,
Inc. Mr. Angarella is also President and Director of Chubb America
Fund, Inc., Senior Vice President and Director of Chubb Investment
Funds, Inc., President and Trustee of Chubb Series Trust and Senior
Vice President, Sales of Chubb Life Insurance Company of America. Mr.
Angarella is a graduate of Providence College and Brown University.
<PAGE>
Mr. Charles C. Cornelio, age 36, is Vice President, General
Counsel and Secretary of Chubb Securities Corporation, Hampshire
Syndications, Inc. and Hampshire Funding, Inc. He is also Senior Vice
President and Chief Administrative Officer of Chubb Life Insurance
Company of America, Vice President and General Counsel of Chubb America
Fund, Inc. and Chubb Investment Funds, Inc. and Vice President, Counsel
and Assistant Secretary of Chubb Series Trust.
Mr. Frederick H. Condon, age 61, is a Director of Hampshire
Funding, Inc. and Chubb Securities Corporation. Mr. Condon also serves
as Senior Vice President, General Counsel and Secretary of Chubb Life
Insurance Company of America, Director, Senior Vice President, General
Counsel and Secretary of Colonial Life Insurance Company of America and
Chubb Sovereign Life Insurance Company and Director of Chubb America
Service Corp.
John Weston, age 36, Treasurer of Hampshire Funding, Inc., Chubb
Securities Corporation, Hampshire Syndications, Inc., Chubb Investment
Funds, Inc., Chubb America Fund, Inc., Chubb Series Trust and Chubb
Investment Advisory Corporation. Mr. Weston also serves as Assistant
Vice President of Chubb Life Insurance Company of America.
Item 11. Executive Compensation
The Partnership has no officers or directors and instead is
managed by FDIP, Inc., its Managing General Partner.
Officers and directors of the Managing General Partner receive no
direct remuneration in such capacities from the Partnership. In
addition, the Partnership is a registrant that qualifies as a small
business issuer as defined in Item 10(a)(1) of Regulation S-B.
Accordingly, certain of the disclosures typically required by Item
402 are not applicable to the Partnership and the information set
forth herein has been appropriately modified.
The Partnership is required to pay certain fees to the General Partners
or their affiliates and the General Partners are entitled to receive a
share of cash distributions, when and as cash distributions are made
to the Limited Partners, and a share of profits or losses as described
under the caption "Compensation Table" at pages 9-10 of the Prospectus,
a copy of which descriptions is filed herewith and is hereby
incorporated herein by reference. Reference is also made to Note 4 of
Notes to Consolidated Financial Statements filed with this annual
report for a description of such distributions and allocations.
Certain compensation has accrued to the General Partners and their
affiliates for services rendered on behalf of the Partnership.
Affiliates of the General Partners are entitled to receive from the
Partnership acquisition fees, equal to 9% of the gross proceeds from
the offering of Units, in connection with the evaluation,
investigation, negotiation, selection and purchase of the Partnership's
investment properties.
The Managing General Partner and its affiliates are entitled to
reimbursement for salaries and direct expenses of officers and
employees of the Managing General Partner and its affiliates relating
to the administration of the Partnership.
Fees, commissions and other expenses required to be paid by the
Partnership to affiliates of the General Partners for the years ended
December 31, 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
Unpaid at
1995 1994 1993 Dec. 31, 1995
<S> <C> <C> <C> <C>
Reimbursement (at cost)
for out of pocket expenses 2,375 2,536 3,843 0
Reimbursement (at cost)
for administrative services 14,224 14,227 22,333 10,288
16,599 16,763 26,176 10,288
</TABLE>
There are no compensatory plans or arrangements regarding
termination of employment or change of control.
<PAGE>
Item 12. Security ownership of certain Beneficial Owners and
Management
(a) No person or group is known by the Partnership to own
beneficially more than 5% of the outstanding Units of the Partnership.
(b) The following table sets forth information regarding the
beneficial ownership of Units as of December 31, 1995 by directors
and/or general partners of the General Partners, and by all officers,
directors and for general partners of the General Partners as a group:
<TABLE>
<CAPTION>
Amount and
Title Name and address of nature of Percent
Class Beneficial Owner Ownership of Class
<S> <C> <C> <C>
Limited Robert S. Ross 0 Units 0%
Partnership 154 W. Hubbard
Units Chicago, IL
Limited Chubb Life 1,689 Units (1) 16.9%
Partnership Insurance Company
Units One Granite Place,
Concord, NH 03301
Limited All officers 15 Units (1) less than 1%
Partnership directors, and
Units general partners
as a group
</TABLE>
(1) During January 1991, Chubb Life Insurance Company of America
(Chubb Life), an affiliate of Hampshire Syndication, Inc., acquired
1,669 Units under an agreement with the Partnership. During 1993,
Chubb Securities Corporation, a wholly owned subsidiary of Chubb Life
(CSC), acquired 20 Units pursuant to an arbitration order. Because CSC
is owned entirely by Chubb Life, the units owned by CSC have been
attributed in this table to Chubb Life.
Item 13. Certain Relationships and Related Transactions
There were no significant transactions or business relationships
with the Managing General Partner, affiliates, or other management
other than those described in Item 10 and 11 above, and Note 6 to the
Consolidated Financial Statements.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K
(a) (1)(2) See Index to Financial Statements and Financial
Statement Schedules on page 14.
(3) Exhibits
(3-A) The Prospectus of the Partnership dated February
1, 1989 as supplemented February 24, 1989, October 27, 1989, April 26,
1990, October 9, 1990 and December 24, 1990 filed pursuant to Rule
424(b) under the Securities Act of 1933 as amended (File No. 33-23048),
is hereby incorporated herein by reference.
(3-B) Amended Agreement of Limited Partnership set
forth as Exhibit A to the Prospectus, pursuant to Rule 424(b) under the
Securities Act of 1933 as amended (File No. 33-23048), is hereby
incorporated herein by reference.
(13) Annual Report to the limited partners consists
substantially of the financial statements contained in Item 8.
(b) No reports on Form 8-K were filed in the last quarter of 1995.
(c) An annual report for the fiscal year 1995 will be sent to the
Limited Partners subsequent to this filing and the Partnership will
furnish copies of such report to the Securities and Exchange Commission
at that time.
(d) Exhibits - See Item 14(a) - (3).
(e) Financial Statement Schedules. See Index to Financial
Statements and Financial Statement Schedules on page 14.
<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)
Date: March 29, 1996 BY: /s/ Robert S. Ross
Its: President
BY: FDIP Associates II
(Associate General Partner)
BY: First Dearborn Partners, a Partner
Date: March 29, 1996 BY: /s/ Bruce H. Block
a Partner
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
Signatures Title Date
/s/ Robert S. Ross President and Director March 29, 1996
Robert S. Ross of FDIP, Inc. (Principal
Executive Officer)
/s/ Bruce H. Block Secretary and Director March 29, 1996
Bruce H. Block of FDIP, Inc. (Principal
Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Dec-31-1995
<PERIOD-TYPE> YEAR
<CASH> 353,531
<SECURITIES> 0
<RECEIVABLES> 289,393
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 671,479
<PP&E> 9,583,798
<DEPRECIATION> 1,445,126
<TOTAL-ASSETS> 9,515,465
<CURRENT-LIABILITIES> 591,393
<BONDS> 4,728,865
0
0
<COMMON> 0
<OTHER-SE> 2,628,784
<TOTAL-LIABILITY-AND-EQUITY> 9,583,798
<SALES> 1,956,284
<TOTAL-REVENUES> 1,965,788
<CGS> 0
<TOTAL-COSTS> 913,541
<OTHER-EXPENSES> 396,382
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 454,551
<INCOME-PRETAX> (23,117)
<INCOME-TAX> 0
<INCOME-CONTINUING> (23,117)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,117)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
