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, 1999
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 Partnership's 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, 1999. 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. The
Country Isles property was sold in December 1997. As of December 31, 1999,
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
Sold December 1997
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)
<FN>
(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.
</TABLE>
<PAGE>
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 $1,423,351 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 had received distributions of $1,536,718, including distributions
from the sale of the property. 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.
During the past five years, operations at two of the Partnership's
properties have provided sufficient cash flow to meet the obligations of the
Partnership. Since the fourth quarter of 1998, the Sycamore Mall property has
experienced significant vacancy. A larger shopping mall opened in the market
area and has made it difficult to find tenants for the property. As a result
of the inability to find new tenants, the property was unable to meet its
financial obligations and beginning in October of 1999, payments to the lender
were halted. This resulted in a default of the loan terms and in March 2000,
the property was deeded to the lender in lieu of threatened foreclosure.
During 1996, Randall's, a tenant at Sycamore Mall, vacated its leased
premises of 19,800 square feet. As a result of the Randall's vacancy,
occupancy at Sycamore Mall fell to approximately 86% during the second quarter
of 1996. However, Randall's continued to pay rent through December, 1996.
Sears, Roebuck and Co. was a tenant under a lease which had an original
termination date of March 31, 1992. Prior to that termination, a ten-year
extension was agreed to which provided Sears an option to terminate the lease
at any time after March 31, 1997 by giving landlord a one year written notice.
Sears gave such notice on September 17, 1997 and terminated its lease on
September 1, 1998. The Partnership has, so far, been unsuccessful in its
efforts to find new tenants for the property. Sycamore Mall is located in
Iowa City, Iowa. A new 1,000,000 square foot regional mall has opened in the
area, which created additional competition for Sycamore Mall. As of December
31, 1999, the property was 44% occupied, and has needed to provide concessions
to the remaining tenants in order to keep them from vacating. As a result of
the inability to find new tenants, the property was unable to meet its
financial obligations and beginning in October of 1999, payments to the lender
were halted. This resulted in a default of the loan terms and in March 2000,
the property was deeded to the lender in lieu of threatened foreclosure.
Occupancy in the apartments at Evanston Galleria has remained in the 94%
- - 100% range during the last five years. As of December 31, 1998 overall
occupancy was 97%. One retail tenant vacated in October, 1999 bringing
occupancy to 92% as of December 31, 1999. Management is currently negotiating
for a replacement tenant for that vacant space.
As of October 1, 1997, the Evanston Galleria property was considered to
be held for sale. In accordance with SFAS 121, no depreciation expense
relative to the property was recorded by the Partnership from October 1, 1997
through December 31, 1999. The net book value of the Evanston Galleria
property at December 31, 1999 and 1998 was $8,444,107 and $8,422,717,
respectively, and net income (loss) from operations for the years ended
December 31, 1999, 1998 and 1997, net of the Venture Partners share were
$14,271, ($35,661) and ($90,086) respectively.
On February 16, 1999, a contract was entered into for the sale of the
Evanston Galleria. The purchase price, net of closing costs and prorations,
would have been sufficient to repay all liabilities of the Evanston Galleria
Limited Partnership. However, this sale did not occur. On February 22, 2000,
a contract was signed for the sale of the Evanston Galleria. Closing is
expected to occur on May 22, 2000. However, this closing is contingent upon
the signing of a new lease for the vacant retail space. The sale price is
sufficient to repay all of the obligations and potentially provide
approximately $100,000 of distributable cash to the partners of Evanston
Galleria.
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.
<PAGE>
Only one of the three Partnership's investments is consolidated for
financial reporting purposes. 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 1999 1998 1997
<S> <C> <C> <C>
Total revenue 1,185,202 1,515,937 1,828,997
Operating profit (loss) (2,136,404) (1,010,483) 222,766
Total assets 4,266,654 6,484,454 8,113,686
Mortgage indebtedness 4,258,224 4,408,025 4,574,933
<CAPTION>
Country Isles Shopping Center (sold December 1997)
Ft. Lauderdale, Florida 1999 1998 1997
<S> <C> <C> <C>
Total revenue - - 1,708,274
Operating profit - - 385,746
Gain on sale of investment property - - 9,116,946
Total assets - - 165,311
Mortgage indebtedness - - -
<CAPTION>
Evanston Galleria
Evanston, Illinois 1999 1998 1997
<S> <C> <C> <C>
Total revenue 1,534,021 1,384,467 1,346,682
Operating income (loss) 59,787 (149,393) (377,401)
Total assets 8,935,466 8,719,746 8,686,165
Mortgage indebtedness 8,486,740 8,486,740 8,486,740
</TABLE>
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 0.79 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>
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 General Partners. During
1999, 1998 and 1997, management fees totaling $42,521, $41,681 and $41,550,
respectively, were paid to an affiliate of the General Partners.
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 98%. Apartment rents
have been rising approximately 3% per year. The ground floor retail space had
been 100% occupied during the past five years, except for several instances
where tenants defaulted. Management has settled its legal actions against
the previously defaulted tenants. As of December 31, 1998 occupancy was 97%.
During 1999, one of the retail tenants vacated the premises lowering occupancy
to 92%. Negotiations are currently underway for a replacement tenant.
The property is subject to a first mortgage which originally matured May
1, 1996. Effective May 1, 1996, a modification of the first mortgage was
entered into which, among other modifications, extended the maturity of the
loan until May 1, 1998. Commencing on May 1, 1996, monthly payments were
adjusted to $57,143, which represents interest only payments at an annual rate
of 8.25%, based on the outstanding principal balance of the loan as of May 1,
1996. Notwithstanding the pay rate of 8.25%, interest on the loan continues
to accrue and compound monthly on the unpaid principal balance at the annual
rate of 9.00%. The interest differential, as defined, will be paid only from
proceeds resulting from a sale or refinancing of the property or from any
remaining funds in the cash flow escrow. The unpaid interest together with
the unpaid principal balance of the loan was due and payable May, 1 1998.
Subsequent amendments were entered into, basically extending the maturity date.
The maturity date of the first mortgage loan is February 1, 2001. All net cash
flow from the property, in excess of the payments due for interest, shall be
deposited into a cash flow escrow account. If cash flow in any month is
insufficient to pay amounts due under the loan, then the amounts may be
withdrawn from the cash flow escrow account.
On February 16, 1999, a contract was entered into for the sale of the Evanston
Galleria. The purchase price, net of closing costs and prorations, would have
been sufficient to repay all liabilities of the Evanston Galleria Limited
Partnership. However, this sale did not occur. On February 22, 2000, a
contract was signed for the sale of the Evanston Galleria. Closing is expected
to occur on May 22, 2000. However, this closing is contingent upon the signing
of a new lease for the vacant retail space. The sale price is sufficient to
repay all of the obligations and potentially provide approximately $100,000 of
distributable cash to the partners of Evanston Galleria.
<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% with interest only payable 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. In October 1999,
monthly payments to the lender were halted and the lender declared the loan
in default. In March 2000, the property was deeded to the lender in lieu of
threatened foreclosure.
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 1999, 1998 and 1997 the property
incurred management fees of $62,639, $84,679 and $93,053, respectively.
During 1996, Randall's vacated its leased premises of 19,800 square feet.
Occupancy fell to 86%, however, Randall's continued to pay rent through
December, 1996, so that there was no adverse financial impact in 1996. Sears,
Roebuck and Co. was a tenant under a lease which had an original termination
date of March 31, 1992. Prior to that termination, a ten-year extension was
agreed to which provided Sears an option to terminate the lease at any time
after March 31, 1997 by giving landlord a one year written notice. Sears gave
such notice on September 17, 1997, and terminated its lease on September 1,
1998. The Sears lease comprised 82,605 square feet which is 34% of the
leaseable area of the shopping center.
The Partnership has been unsuccessful in its efforts to find new tenants
for the property. Sycamore Mall is located in Iowa City, Iowa. A new
1,000,000 square foot regional mall has opened, which created additional
competition for Sycamore Mall. As of December 31, 1999, the property was 44%
occupied, and it has needed to provide concessions to the remaining tenants in
order to keep them from vacating. Management's efforts to find replacement
tenants has generally been unsuccessful. In response to the uncertainty
relative to Sycamore Mall Associates ability to recover the net carrying value
of Sycamore Mall through future operations and sale, Sycamore Mall Associates,
as a matter of prudent accounting practices and for financial reporting
purposes, recorded a provision for value impairment in 1998 in the amount of
$1,100,000. In 1999, an additional provision for value impairment was recorded
in the amount of $1,890,000. In October 1999, the property was unable to
meet its obligations for payment under the terms of the first mortgage. The
lender declared the loan in default and began foreclosure proceedings. In
March 2000, title to the property was transferred to the lender in
consideration of the entire mortgage balance including accrued interest.
There were no distributions to the partners in 1999. Distributions to the
partners in 1998 were $420,000 as compared to $295,000 in 1997.
<PAGE>
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 were
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 was 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 Fort Lauderdale, Florida,
was 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
Country Isles Shopping Center was managed by an affiliate of the Seller.
On December 17, 1997, Country Isles Associates, sold the Country Isles
Shopping Center in Fort Lauderdale, Florida, to Principal Mutual Life Insurance
Company ("Buyer"). The total purchase price received by Country Isles was
$13.2 million, which price was determined through arm's length negotiations
with Buyer. Of this total purchase price, approximately $7.9 million was used
to repay amounts owed to the lender holding the mortgage on the shopping center
and approximately $595,000 was used for customary additional selling expenses
and prorations. The net proceeds to Country Isles after these deductions were
approximately $4.7 million. Of these proceeds, the Partnership received
approximately $991,000 for its 21% interest.
Item 2. Properties
The Partnership owns through joint venture partnerships the properties
referred to in Item 1. The three properties in which the Partnership has
held 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 $4,408,024, 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.
As of December 31, 1999, the property was 44% occupied, and has needed to
provide concessions to the remaining tenants in order to keep them from
vacating. As a result of the inability to find new tenants, the property was
unable to meet its financial obligations and beginning in October of 1999,
payments to the lender were halted. This resulted in a default of the loan
terms and on March 13, 2000, title to the land buildings and improvements as
well as the other assets and liabilities of the property was transferred to
the lender in consideration of a discharge of the mortgage loan. As of
December 31, 1999, Sycamore Mall Associates recorded a provision for value
impairment of $2,990,000, of which $1,100,000 was recorded in 1998 and
$1,890,000 was recorded in 1999. 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 $6.98 in 1999, $6.98 in
1998, and $7.65 in 1997.
There are currently no plans for any significant improvements to the property.
However, a new regional mall has opened in the area. The location of the new
created additional competition for Sycamore Mall.
<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>
2000 8 13,372 105,996 17%
2001 3 6,100 95,200 15%
2002 5 21,321 148,989 24%
2003 1 1,203 12,002 2%
2004 - - - -
2005 1 - - -
2006 - - - -
2007 - - - -
2008 - - - -
2009 1 42,424 160,000 25%
</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, was 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.
On April 25, 1996, Country Isles Associates completed the refinancing of
Country Isles Plaza in Ft. Lauderdale, Florida. The new mortgage provided
funding of $8,100,000, the proceeds of which were used to repay the outstanding
balance of $6,807,669 on the previous mortgage, pay the costs of completing
the new loan (approximately $174,000), and provide for property tax escrow and
working capital. Out of the remaining proceeds, the Partnership received a
distribution of $210,650 from Country Isles Associates. The Partnership made
a special distribution to the Limited Partners. As a result of the
refinancing, the interest rate was reduced from 9.75% to 7.00%, the monthly
payments decreased from $60,141 to $57,250. The mortgage was due to mature
on May 1, 2001.
On December 17, 1997, Country Isles Associates, sold the Country Isles
Shopping Center in Fort Lauderdale, Florida, to Principal Mutual Life Insurance
Company ("Buyer"). The total purchase price received by Country Isles was
$13.2 million, which price was determined through arm's length negotiations
with Buyer. Of this total purchase price, approximately $7.9 million was used
to repay amounts owed to the lender holding the mortgage on the shopping center
and approximately $595,000 was used for customary additional selling expenses
and prorations. The net proceeds to Country Isles after these deductions were
approximately $4.7 million. Of these proceeds, the Partnership received
approximately $991,000 for its 21% interest.
<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 retail space is generally
leased with 5 to 10 year leases.
The property is owned fee simple by a partnership of which the Partnership is
a partner. The property is subject to a first mortgage which matured May 1,
1996. Effective May 1, 1996, a modification of the first mortgage was entered
into which, among other modifications, extended the maturity of the loan until
May 1, 1998. Commencing on May 1, 1996, monthly payments were adjusted to
$57,143, which represents interest only payments at an annual rate of 8.25%,
based on the outstanding principal balance of the loan as of May 1, 1996.
Notwithstanding the pay rate of 8.25%, interest on the loan continues to
accrue and compound monthly on the unpaid principal balance at the annual rate
of 9.00%. The interest differential, as defined, will be paid only from
proceeds resulting from a sale or refinancing of the property or from any
remaining funds in the cash flow escrow. The unpaid interest together with
the unpaid principal balance of the loan was due and payable May 1, 1998. The
first mortgage loan maturity had been extended to August 1, 1999. Effective
August 1, 1999, the maturity has been extended to February 1, 2001. All net
cash flow from the property, in excess of the payments due for interest, shall
be deposited into a cash flow escrow account. If cash flow in any month is
insufficient to pay amounts due under the loan, then the amounts may be
withdrawn from the cash flow escrow account.
On February 16, 1999, a contract was entered into for the sale of the
Evanston Galleria. The purchase price, net of closing costs and prorations,
would have been sufficient to repay all liabilities of the Evanston Galleria
Limited Partnership. However, this sale did not occur. On February 22, 2000,
a contract was signed for the sale of the Evanston Galleria. Closing is
expected to occur on May 22, 2000. However, this closing is contingent upon
the signing of a new lease for the vacant retail space. The sale price is
sufficient to repay all of the obligations and potentially provide
approximately $100,000 of distributable cash to the partners of Evanston
Galleria.
The residential leases have terms typically expiring in one year. During 2000
residential leases representing $768,534 of annual rent will expire.
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
<C> <S> <S> <S> <S>
2000 1 3,362 94,136 18%
2001 1 2,135 37,246 7%
2002 2 12,066 112,481 21%
2003 2 4,606 87,624 16%
2004 - - - -
2005 - - - -
2006 - - - -
2007 1 3,920 100,688 19%
2008 - - - -
2009 - - - -
</TABLE>
As of October 1, 1997, the Evanston Galleria property was considered to be held
for sale. In accordance with SFAS 121, no depreciation expense relative to the
property was recorded by the Partnership from October 1, 1997 through December
31, 1999. The net book value of the Evanston Galleria property at December 31,
1999 and 1998 was $8,444,107 and $8,422,717, respectively, and net income
(loss) from operations for the years ended December 31, 1999, 1998 and 1997,
net of the Venture Partners share were $14,271, ($35,661) and ($90,086),
respectively.
Management believes that the Evanston Galleria property has adequate
insurance coverage.
<PAGE>
Occupancy Summary
The following is a list of approximate occupancy levels by quarter for the
Partnership's investment properties:
<TABLE>
<CAPTION>
1998 1999
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 95% 94% 94% 97% 92% 97% 98% 92%
Sycamore Mall
Iowa City,
Iowa 85% 79% 84% 47% 47% 44% 44% 44%
</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, 1999, there were 532 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, 1999, have totaled
$2,217,298 since the Partnership's formation. This is approximately $221.73
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>
Item 6. Selected Financial Data
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
December 31, 1999, 1998, 1997, 1996 and 1995
(not covered by Independent Auditors' Report)
<CAPTION>
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Total revenues 1,220,964 1,596,719 1,847,296 1,955,397 1,965,788
Operating income (loss) (2,175,835) (997,364) 173,953 303,285 201,314
Partnership's share of
operations of
unconsolidated ventures 14,271 (35,661) (9,079) (45,145) (99,645)
Partnership's share of
gain on sale of
investment property of
unconsolidated venture - - 698,447 - -
Venture partners' share
of consolidated
venture's operations 807,336 470,886 (103,809) (177,269) (124,786)
Net income (loss) (1,354,228) (562,139) 759,512 80,871 (23,117)
Net income (loss)
per Unit (a) (134.07) (55.65) 75.19 8.01 (2.29)
Total assets 5,032,142 7,371,971 9,541,824 9,144,952 9,515,465
Long-term debt 4,408,024 4,227,032 4,408,018 4,574,933 4,728,865
Cash distributions
per Unit (a) 2.06 80.24 8.25 29.30 12.38
<FN>
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 cash distributions per Unit are
based on the number of Units outstanding at the end of each period (10,000).
</TABLE>
<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, 1999, the Partnership had cash and cash equivalents of
$819,519 as compared to $968,437 as of December 31, 1998. The decrease in
cash and cash equivalents results primarily from the lack of cash flow from the
Sycamore Mall property. No Distributions were made to the Limited Partners
in 1999. On March 13, 2000, title to the Sycamore Mall property was
transferred to the lender in exchange for the outstanding liabilities and
accrued interest.
As of December 31, 1999, the Partnership has no material commitments for
capital expenditures. The Partnership does not anticipate any need for
external sources of liquidity. As of October 1, 1997, the Evanston Galleria
property was considered to be held for sale. In accordance with SFAS 121, no
depreciation expense relative to the property was recorded by the Partnership
from October 1, 1997 through December 31, 1999. The net book value of the
Evanston Galleria property at December 31, 1999 and 1998 was $8,444,107 and
$8,422,717, respectively, and net income (loss) from operations for the years
ended December 31, 1999, 1998 and 1997, net of the Venture Partners share were
$14,271, ($35,661) and ($90,086), respectively.
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 as more fully
described in Note 2 (b) to the Notes to Consolidated Financial Statements
included in Item 8.
In response to the U.S. economy in general and the problems being experienced
at the Sycamore Mall property in particular, the Partnership is taking steps
to preserve its working capital. Therefore, the Partnership carefully
scrutinizes the appropriateness of any possible discretionary expenditures,
particularly as such expenditures relate to the amount of working capital
reserves the Partnership has available. By conserving working capital, the
Partnership expect to be in a better position to meet future needs of its
properties without having to rely on external financing sources.
<PAGE>
Results of Operations:
The results of operations for the years ended December 31, 1999 and December
31, 1998, reflect the consolidated operations of the Partnership and Sycamore
Mall Associates (the "Sycamore Partnership") and the Partnership's equity
investments in Evanston Galleria Limited Partnership (the "Galleria
Partnership"). The results of operations for the years ended December 31,
1997 reflect the consolidated operations of the Partnership and Sycamore Mall
Associates (the "Sycamore Partnership") and the Partnership's equity
investments in 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 1997 to 1998:
The Partnership's net income in 1998 decreased $1,321,651 to ($562,139) in 1998
from $759,512 in 1997. This decrease resulted primarily from the Partnership's
recognition of its share of the loss of value impairment from Sycamore Mall
Associates of approximately $583,000 and the gain on the sale of the Country
Isles property in December 1997. The Partnership's share of the gain was
$698,447. The loss allocated from Evanston Galleria was $90,086 in 1997 as
compared to $35,661 in 1998. The improvement in operating results from the
Evanston Galleria resulted from increased occupancy in the commercial spaces
at Evanston Galleria. In response to the uncertainty relative to Sycamore Mall
Associates ability to recover the net carrying value of Sycamore Mall through
future operations and sale, Sycamore Mall Associates, as a matter of prudent
accounting practices and for financial reporting purposes, recorded a provision
for value impairment in 1998 in the amount of $1,100,000.
The Partnership's rental income decreased $153,213 (12%), from $1,293,749 in
1997 to $1,140,536 in 1998. Revenue from tenant charges decreased $172,219
(32%) from $530,597 in 1997 to $358,378 in 1998. This decrease is due to a
decrease in occupancy at Sycamore Mall, and a decrease in property tax expense.
Interest income increased $22,094 (96%) from $22,950 in 1997 to $45,044 in
1998. The increase results from the increase in cash reserves which have been
held and invested by the Partnership.
Property operating expenses decreased to $682,200 for the year ended December
31, 1998 from $912,456 for the year ended December 31, 1997. This $230,256
(25%) decrease results primarily from a decrease of property taxes at Sycamore
Mall.
Interest expense decreased $13,068 (3%) from $377,530 in 1997 to $364,462 in
1998. The reduction results from the repayment of mortgage indebtedness
throughout the year.
The Partnership's share of operations of unconsolidated venture resulted in a
loss of $35,661 in 1998 compared to $9,079 in 1997. This decrease is
attributable to the elimination of income which had previously been allocated
from Country Isles.
General and administrative expenses increased $76,109 (96%) from $79,647 in
1997 to $155,756 in 1998. The increase results from the increase in
professional and legal fees.
Changes from 1998 to 1999:
The Partnership's net loss in 1999 increased $792,089 from $562,139 in 1998 to
$1,354,228 in 1999. The increased loss relates primarily to a $1,890,000
provision for asset impairment recorded at the Sycamore Mall property in 1999.
In 1998, a provision for asset impairment in the amount of $1,100,000 was
recorded.
<PAGE>
The Partnership's rental income decreased $307,422 (27%) from $1,140,536
in 1998 to $833,114 in 1999. The decrease in revenue from tenant charges
results from an increase in vacancy at Sycamore Mall.
Revenue from tenant charges decreased $7,527 (2%) from $358,378 in 1998
to $350,851 in 1999. The decrease in revenue from tenant charges results from
an increase in the average vacancy at Sycamore Mall, partly offset by an
increase in operating expenses which were eligible for recovery.
Interest income decreased $8,045 (18%) from $45,044 in 1998 to $36,999 in
1999. The decrease results from the decrease in cash reserves which have been
held and invested by the Partnership.
Property operating expenses increased to $773,420 for the year ended
December 31, 1999 from $682,200 for the year ended December 31, 1998. This
$91,220 (13%) increase results primarily from an increase in property tax
expenses at Sycamore Mall.
Interest expense decreased $13,861 (4%) from $364,462 in 1998 to $350,601
in 1999. The reduction results from the repayment of $149,801 of mortgage
indebtedness throughout the year.
General and administrative expense decreased $24,846 (16%) from $155,756
during the year ended December 31, 1998 to $130,910 during the year ended
December 31, 1999. This decrease resulted from a decrease in legal and
professional fees.
Inflation:
The Partnership has completed its eleventh full year of operations.
During the eleven 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.
Year 2000:
The General Partner has determined that it did not expect that the
consequences of the Partnership's year 2000 issues would have a material effect
on the Partnership's business, results of operations or financial condition.
No material effects were encountered.
Item 7a. Quantitative and Qualitative Disclosures about Market Rate:
The Partnership has identified interest rate changes as a potential market
risk. However, as a majority of the Partnership`s long-term debt bears
interest at a fixed rate, the Partnership does not believe that it is exposed
to market risk relative to interest rate changes.
<PAGE>
Item 8. Financial Statements and Supplementary Data
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
INDEX
<TABLE>
<S> <C>
Page (s)
Independent Auditors' Report 16
Consolidated Balance Sheets, December 31, 1999 and 1998 17 - 18
Consolidated Statements of Operations,
years ended December 31, 1999, 1998 and 1997 19
Consolidated Statements of Partners'
Capital Accounts (Deficits), years ended
December 31, 1999, 1998 and 1997 20
Consolidated Statements of Cash Flows,
years ended December 31, 1999, 1998 and 1997 21
Notes to Consolidated Financial Statements 22 - 29
Consolidated Real Estate and Accumulated Depreciation Schedule III 30
</TABLE>
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.
Evanston Galleria, L.P.
(a limited partnership)
INDEX
<TABLE>
<S> <C>
Independent Auditors' Report 31
Balance Sheets, December 31, 1999 and 1998 32 - 33
Statements of Operations, years ended
December 31, 1999, 1998 and 1997 34
Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 1999, 1998 and 1997 35
Statements of Cash Flows,
years ended December 31, 1999, 1998 and 1997 36
Notes to Financial Statements 37 - 39
Real Estate and Accumulated Depreciation Schedule III 40
</TABLE>
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 venture 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 venture as of December 31, 1999 and
1998 and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1999, 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.
As discussed in Note 2 to the Financial Statements, subsequent to year end the
Partnership deeded its consolidated investment property to the lender in lieu
of foreclosure.
KPMG LLP
Chicago, Illinois
April 14, 2000
<PAGE>
<TABLE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Consolidated Balance Sheets
December 31, 1999 and 1998
Assets
<CAPTION>
1999 1998
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) 819,519 968,437
Rents and other receivables 135,404 168,676
Due from affiliates 36,365 13,147
Prepaid expense 16,568 21,279
Total current assets 1,007,856 1,171,539
Investment property:
Land 1,201,880 1,201,880
Buildings and improvements 5,349,122 7,273,400
6,551,002 8,475,280
Less accumulated depreciation (2,557,353) (2,315,063)
3,993,649 6,160,217
Deferred leasing and loan costs 30,637 40,215
Total assets 5,032,142 7,371,971
<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, 1999 and 1998
Liabilities and Partners' Capital Accounts (Deficits)
<CAPTION>
1999 1998
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses 227,769 297,921
Accrued interest 86,495 29,846
Other current liabilities 19,910 -
Current portion of long-term debt (note 3) 4,258,224 180,993
Total current liabilities 4,592,398 508,760
Long-term liabilities:
Long-term debt (note 3) - 4,227,032
Venture partners' equity in
consolidated venture (note 2) - 807,336
Distributions and loses in excess of
investment in unconsolidated
ventures, at equity (notes 2 and 7) 80,059 94,330
Tenant security deposits 5,433 5,433
Total long-term liabilities 85,492 5,134,131
Total liabilities 4,677,890 5,642,891
Partners' capital accounts (deficits):
General partners:
Capital contributions 1,000 1,000
Cumulative net income (losses) (14,883) (1,341)
Total general partners' capital (deficits) (13,883) (341)
Limited partners (10,000 units):
Capital contributions 4,058,963 4,058,963
Cumulative net income (losses) (1,473,530) (132,844)
Cumulative cash distributions (2,217,298) (2,196,698)
Total limited partners' capital 368,135 1,729,421
Total partners' capital accounts 354,252 1,729,080
Commitments and contingencies (notes 2 and 6)
Total liabilities and partners' capital 5,032,142 7,371,971
<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, 1999, 1998, and 1997
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Revenues:
Rental income 833,114 1,140,536 1,293,749
Tenant charges 350,851 358,378 530,597
Interest income 36,999 45,044 22,950
Miscellaneous income - 52,761 -
Total revenues 1,220,964 1,596,719 1,847,296
Expenses:
Property operating expenses 773,420 682,200 912,456
Interest 350,601 364,462 377,530
Depreciation 242,290 282,087 293,925
Amortization 9,578 9,578 9,785
Provision for value impairment 1,890,000 1,100,000 -
General and administrative expenses 130,910 155,756 79,647
Total expenses 3,396,799 2,594,083 1,673,343
Operating income (loss) (2,175,835) (997,364) 173,953
Partnership's share of operations
of unconsolidated ventures 14,271 (35,661) (9,079)
Partnership's share of gain on
sale of investment property
of unconsolidated venture - - 698,447
Venture partners' share of consolidated
venture's operations (note 1) 807,336 470,886 (103,809)
Net income (loss) (1,354,228) (562,139) 759,512
Net income (loss) per
limited partnership unit (note 1) (134.07) (55.65) 75.19
<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, 1999, 1998 and 1997
<CAPTION>
General Partners . Limited Partners (10,000 Units) .
Net Contributions, Net Cash
income net of income distrib-
Contributions (loss) Total offering costs (loss) utions Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance (deficit)
at December 31, 1996 1,000 (3,315) (2,315) 4,058,963 (328,243) (1,311,795) 2,418,925
Net income - 7,595 7,595 - 751,917 - 751,917
Cash distributions - - - - - (82,503) (82,503)
Balance (deficit)
at December 31, 1997 1,000 4,280 5,280 4,058,963 423,674 (1,394,298) 3,088,339
Net loss - (5,621) (5,621) - (556,518) - (556,518)
Cash distributions - - - - - (802,400) (802,400)
Balance (deficit)
at December 31, 1998 1,000 (1,341) (341) 4,058,963 (132,844) (2,196,698) 1,729,421
Net loss - (13,542) (13,542) - (1,340,686) - (1,340,686)
Cash distributions - - - - - (20,600) (20,600)
Balance (deficit)
at December 31, 1999 1,000 (14,883) (13,883) 4,058,963 (1,473,530) (2,217,298) 368,135
<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, 1999, 1998 and 1997
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) (1,354,228) (562,139) 759,512
Items not requiring cash or
cash equivalents:
Depreciation 242,290 282,087 293,925
Amortization 9,578 9,578 9,785
Provision for value impairment 1,890,000 1,100,000 -
Partnership's share of operations
of unconsolidated ventures (14,271) 35,661 104,686
Partnership's share of gain on sale
of investment property of
unconsolidated venture - - (698,447)
Venture partners' share of
consolidated venture's operations (807,336) (470,886) 103,809
Changes in:
Rents and other receivables 33,272 148,639 (12,271)
Due from affiliates (23,218) 975 (9,186)
Prepaid expense 4,711 (2,157) 12,380
Deferred leasing and loan costs - (305) -
Accounts payable and accrued expenses (70,152) (30,711) (84,348)
Due to affiliates - - (7,160)
Accrued interest 56,649 (1,130) (1,042)
Other current liabilities 19,910 - -
Tenant security deposits - - (6)
Net cash provided by (used in)
operating activities (12,795) 509,612 471,637
Cash flows from investing activities:
Additions to investment property (34,278) (1,301) (21,643)
Distribution from sale of
investment property of
unconsolidated venture - - 991,341
Net cash provided by (used in)
investing activities (34,278) (1,301) 969,698
Cash flows from financing activities:
Venture partners' distributions
from consolidated venture - (230,009) (137,458)
Distributions to limited partners (20,600) (802,400) (82,503)
Principal payments on long-term debt (149,801) (166,908) (153,932)
Net cash used in financing activities (170,401) (1,199,317) (373,893)
Net increase in cash
and cash equivalents (148,918) (691,006) 1,067,442
Cash and cash equivalents
at beginning of year 968,437 1,659,443 592,001
Cash and cash equivalents
at end of year 819,519 968,437 1,659,443
Supplemental disclosure
of cash flow information:
Cash paid for mortgage
and other interest 293,952 365,592 378,572
<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, 1999, 1998 and 1997
(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, for the years ended December 31,
1999, 1998 and 1997, and in Country Isles Associates, for the years ended
December 31, 1997.
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)
1999 1999 1998 1998
GAAP Tax GAAP Tax
Basis Basis Basis Basis
<S> <C> <C> <C> <C>
Total assets 4,952,083 3,144,671 7,277,641 3,377,803
Partners' capital:
General partners (13,883) (10,277) (341) (8,782)
Limited partners 368,135 3,175,548 1,729,421 3,323,584
Net income (loss):
General partners (13,542) (1,495) (5,621) (758)
Limited partners (1,340,686) (148,036) (556,518) (75,005)
Net income per
limited partnership unit (134.07) (14.80) (55.65) (7.50)
<FN>
The net income (loss) per limited partnership unit presented is based on
the limited partnership units outstanding at the end of each period (10,000).
All distributions to partners through December 31, 1999 have been considered to
be a return of capital.
</TABLE>
<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 income. 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 ($779,877 and $788,980 at December 31, 1999
and 1998, respectively), as cash equivalents.
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 the General Partner to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The Partnership adopted 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", on January 1, 1996. SFAS 121 requires
that the Partnership record an impairment loss on its property held for
investment whenever the property's carrying value cannot be fully recovered
through estimated undiscounted cash flows from its operations and sale. The
amount of the impairment loss to be recognized would be the difference between
the property's carrying value and the property's estimated fair value. In
addition, SFAS 121 provides that a property may not be depreciated while being
held for sale. As of October 1, 1997, the Evanston Galleria property was
considered to be held for sale. In accordance with SFAS 121, no depreciation
expense relative to the property was recorded by the Partnership from October
1, 1997 through December 31, 1999. The net book value of the Evanston Galleria
property at December 31, 1999 and 1998 was $8,444,107 and $8,422,717,
respectively, and net income (loss) from operations for the years ended
December 31, 1999, 1998 and 1997, net of the Venture Partners share were
$14,271, ($35,661) and ($90,086) respectively. As of December 31, 1999, the
Sycamore Mall property was considered to be held for disposal. In response
to the uncertainty relative to the Sycamore property, as a matter of prudent
accounting practices and for financial reporting purposes, the Partnership
recorded a provision for value impairment in 1999 and 1998 in the amount of
$1,890,000 and $1,100,000, respectively. The net book value of the Sycamore
Mall property at December 31, 1999 and 1998 was $3,993,649 and $6,160,217.
The Partnership has adopted SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." The Partnership defines each of its
property investments as an individual operating segment and has determined
such property investments exhibit substantially identical economic
characteristics and meet the other criteria specified by SFAS No. 131 which
permits the property investments to be aggregated into one reportable segment.
The Partnership assesses and measures operating results based on net operating
income (rental income less property operating expenses). With the exception of
interest expense, professional services and general and administrative
expenses, substantially all other components of net earnings (loss) of the
Partnership relate to property investments. With the exception of cash and
cash equivalents, substantially all other assets of the Partnership relate to
property investments.
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
(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, 1999. 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.
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 General Partners. During
1999, 1998 and 1997, management fees totaling $42,521, $41,681 and $41,550,
respectively, were paid to an affiliate of the General Partners.
The property is subject to a first mortgage which matured May 1, 1996.
Effective May 1, 1996, a modification of the first mortgage was entered into
which, among other modifications, extended the maturity of the loan until May
1, 1998. Commencing on May 1, 1996, monthly payments were adjusted to $57,143,
which represents interest only payments at an annual rate of 8.25%, based on
the outstanding principal balance of the loan as of May 1, 1996.
Notwithstanding the pay rate of 8.25%, interest on the loan continues to
accrue and compound monthly on the unpaid principal balance at the annual rate
of 9.00%. The interest differential, as defined, will be paid only from
proceeds resulting from a sale or refinancing of the property or from any
remaining funds in the cash flow escrow. The unpaid interest together with
the unpaid principal balance of the loan was due and payable May 1 1998. The
first mortgage loan maturity had been extended to August 1, 1999. Effective
August 1, 1999, the maturity has been extended to February 1, 2001. All net
cash flow from the property, in excess of the payments due for interest, shall
be deposited into a cash flow escrow account. If cash flow in any month is
insufficient to pay amounts due under the loan, then the amounts may be
withdrawn from the cash flow escrow account.
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
On February 16, 1999, a contract was entered into for the sale of the Evanston
Galleria. The purchase price, net of closing costs and prorations, would have
been sufficient to repay all liabilities of the Evanston Galleria Limited
Partnership. However, this sale did not occur. On February 22, 2000, a
contract was signed for the sale of the Evanston Galleria. Closing is expected
to occur on May 22, 2000. However, this closing is contingent upon the signing
of a new lease for the vacant retail space. The sale price is sufficient to
repay all of the obligations and potentially provide approximately $100,000 of
distributable cash to the partners of Evanston Galleria.
(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. As a result of the inability to find new tenants, the
property was unable to meet its financial obligations and beginning in October
of 1999, payments to the lender were halted. This resulted in a default of the
loan terms and on March 13, 2000, title to the land, buildings and improvements
as well as the other assets and liabilities of the property were transferred
to the lender in consideration of a discharge of the mortgage loan.
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 partners' ownership interests.
During 1999, the Partnership recognized all losses in excess of its investment
in the Partnership account balance.
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 1999, 1998 and 1997 the property
incurred management fees of $62,639, $84,679 and $93,053, 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 Country Isles Shopping Center was managed by an affiliate of the seller.
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
On April 25, 1996, Country Isles Associates completed the refinancing of
Country Isles Plaza in Ft. Lauderdale, Florida. The new mortgage provided
funding of $8,100,000, the proceeds of which were used to repay the outstanding
balance of $6,807,669 on the previous mortgage, pay the costs of completing
the new loan (approximately $174,000), and provide for property tax escrow and
working capital. Out of the remaining proceeds, the Partnership received a
distribution of $210,650 from Country Isles Associates. The Partnership made
a special distribution to the Limited Partners.
On December 17, 1997, Country Isles Associates sold the Country Isles
Shopping Center in Fort Lauderdale, Florida, to Principal Mutual Life Insurance
Company ("Buyer"). The total purchase price received by Country Isles was
$13.2 million, which price was determined through arm's length negotiations
with Buyer. Of this total purchase price, approximately $7.9 million was used
to repay amounts owed to the lender holding the mortgage on the shopping center
and approximately $595,000 was used for customary additional selling expenses
and prorations. The net proceeds to Country Isles after these deductions were
approximately $4.7 million. Of these proceeds, the Partnership received
approximately $991,000 for its 21% interest.
Country Isles Shopping Center was managed by JMB Property Management, an
affiliate of Arvida/JMB Partners, the Seller. The Management Agreement
provided that the Manager rent and manage the project for an initial term of
five years, and thereafter for yearly periods, unless otherwise terminated by
the parties in accordance with the management agreement. Country Isles
Associates paid 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 was to pay the Manager, in lieu of the management fee, an
amount equal to 15% of amounts paid by tenants at the property on account of
reimbursement of operating expenses, excluding taxes and insurance. During
1997, the property incurred management fees of $68,600.
(3) Long-Term Debt
Long-term debt consists of the following at December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
<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. As of December
31, 1999, the loan was in default due to non
payment of monthly installments and the loan
was called for immediate payment. 4,258,224 4,408,025
Less current portion of long-term debt 4,258,224 180,993
Total long-term debt - 4,227,032
</TABLE>
<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 (see note 3) under the operating leases are as follows:
<TABLE>
<S> <C>
2000 452,258
2001 361,591
2002 285,843
2003 187,002
2004 178,000
Thereafter 744,003
2,208,697
</TABLE>
Percentage rents (based on tenants' sales volume) included in rental
income were $194,960, $204,819 and $192,100 for the years ended December 31,
1999, 1998 and 1997, 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, 1999, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Unpaid at
1999 1998 1997 Dec. 31, 1999
<S> <C> <C> <C> <C>
Reimbursement (at cost)
for out of pocket expenses 35 35 1,168 35
Reimbursement (at cost)
for administrative services - 975 1,364 -
35 1,010 2,532 35
</TABLE>
(7) Investment in Unconsolidated Ventures
Summary combined financial information for Evanston Galleria Limited
Partnership, for 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Current assets 465,324 265,025
Current liabilities (885,339) (9,222,523)
Working capital (420,015) (8,957,498)
Deferred expenses 26,035 32,004
Ventures partners' equity 483,283 483,283
Investment property, net 8,444,107 8,422,717
Long-term liabilities (8,625,152) (132,036)
Partnership's capital (91,743) (151,530)
Represented by:
Invested capital 1,548,815 1,548,815
Cumulative cash distributions (1,588,495) (1,588,495)
Cumulative loss (52,063) (111,850)
(91,743) (151,530)
Total revenues 1,534,031 1,384,467
Total expenses 1,474,234 1,533,860
Net income (loss) 59,787 (149,393)
</TABLE>
The total revenues, expenses and net loss for the above venture for the year
ended December 31, 1997 were $1,346,682, $1,724,083 and $377,401, respectively.
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
(8) Subsequent Event
As a result of the inability of the Sycamore Mall Property to find new tenants,
the property was unable to meet its financial obligations. Beginning in
October of 1999, payments to the lender were halted. This resulted in a
default of the loan terms and on March 13, 2000, title to the land, buildings
and improvements as well as the other assets and liabilities of the property
was transferred to the lender in consideration of a discharge of the mortgage
loan. This may result in a taxable loss of approximately $2,900,000. There
will be no distributable cash as a result of this transaction.
<PAGE>
FIRST DEARBORN INCOME PROPERTIES L.P. II
(a limited partnership)
and Consolidated Venture
December 31, 1999
Schedule III
Consolidated Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>
(a) (b)
Initial Cost Additions Gross amount of asset at period end
Building & Building & Building & Accumulated Date
Encumbrance Land Improvements Improvements Land Improvements Total Depreciation Constructed
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shopping Center 1969
Iowa City, IA 4,258,224 1,201,880 6,810,902 428,220 1,201,880 5,349,122 6,551,002 2,557,353 1972
<FN>
(a) The initial cost represents the original purchase price of the property
reduced by any provision for value impairment.
(b) The aggregate cost of the above real estate at December 31, 1999 for
Federal income tax purposes is $9,575,280.
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
(c) Reconciliation of real estate owned
Balance at beginning of period 8,475,280 9,573,979 9,552,336
Reserve for value impairment (1,890,000) (1,100,000) -
Additions (deletions) (34,278) 1,301 21,643
Balance at end of period 6,551,002 8,475,280 9,573,979
(d) Reconciliation of
accumulated depreciation
Balance at beginning of period 2,315,063 2,032,976 1,739,051
Depreciation expense 242,290 282,087 293,925
Balance at end of period 2,557,353 2,315,063 2,032,976
</TABLE>
<PAGE>
Independent Auditors' Report
The Partners
Evanston Galleria L.P.
We have audited the financial statements of Evanston Galleria L.P. (a limited
partnership) as listed in the accompanying index. In connection with our audits
of the financial statements, we also have audited the financial statement
schedule as listed in the accompanying index. These 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
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 financial statements referred to above present fairly, in
all material respects, the financial position of Evanston Galleria L.P. as of
December 31, 1999 and 1998 and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1999, in
conformity with generally accepted accounting principles. Also in our opinion,
the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
KPMG LLP
Chicago, Illinois
April 14, 2000
<PAGE>
<TABLE>
Evanston Galleria, L.P.
(a limited partnership)
Balance Sheets
December 31, 1999 and 1998
Assets
<CAPTION>
1999 1998
<S> <C> <C>
Current assets:
Cash and cash equivalents 462,006 260,440
Rents and other receivables 3,318 4,585
Total current assets 465,324 265,025
Investment property held for sale:
Land 1,121,354 1,121,354
Buildings and improvements 10,672,196 10,650,806
11,793,550 11,772,160
Less accumulated depreciation (3,349,443) (3,349,443)
8,444,107 8,422,717
Deferred leasing and loan costs 26,035 32,004
Total assets 8,935,466 8,719,746
<FN>
See accompanying notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Evanston Galleria, L.P.
(a limited partnership)
Consolidated Balance Sheets - Continued
December 31, 1999 and 1998
Liabilities and Partners' Capital Accounts (Deficits)
<CAPTION>
1999 1998
<S> <C> <C>
Current liabilities:
Current portion of long-term debt - 8,486,740
Accounts payable and accrued expenses 522,156 447,198
Due to affiliates 22,500 22,545
Accrued interest 340,683 266,040
Total current liabilities 885,339 9,222,523
Long term debt 8,486,740 -
Long-term liabilities - tenant security deposits 138,413 132,036
Total liabilities 9,510,492 9,354,559
Partners' capital accounts (deficits):
General partners' capital (238,708) (284,545)
Limited partners' capital (336,318) (350,268)
Total partners' capital accounts (575,026) (634,813)
Commitments and contingencies
Total liabilities and partners' capital 8,935,466 8,719,746
<FN>
See accompanying notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Evanston Galleria, L.P.
(a limited partnership)
Consolidated Statements of Operations
Years ended December 31, 1999, 1998, and 1997
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Revenues:
Rental income 1,307,190 1,172,061 1,128,042
Tenant charges 187,953 208,305 214,944
Miscellaneous 34,585 - -
Interest income 4,293 4,101 3,696
Total revenues 1,534,021 1,384,467 1,346,682
Expenses:
Property operating expenses 698,445 683,336 665,808
Interest 765,554 827,892 703,216
Depreciation - - 259,498
Amortization 5,970 19,075 90,379
General and administrative expenses 4,265 3,557 5,182
Total expenses 1,474,234 1,533,860 1,724,083
Net income (loss) 59,787 (149,393) (377,401)
<FN>
See accompanying notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Evanston Galleria, L.P.
(a limited partnership)
Consolidated Statements of Partners' Capital Accounts (Deficits)
Years ended December 31, 1999, 1998 and 1997
<CAPTION>
General Partners Limited Partners Total
<S> <C> <C> <C>
Balance (deficit)
at December 31, 1996 119,348 (227,367) (108,019)
Net loss (289,353) (88,048) (377,401)
Balance (deficit)
at December 31, 1997 (170,005) (315,415) (485,420)
Net loss (114,540) (34,853) (149,393)
Balance (deficit)
at December 31, 1998 (284,545) (350,268) (634,813)
Net income 45,837 13,950 59,787
Balance (deficit)
at December 31, 1999 (238,708) (336,318) (575,026)
<FN>
See accompanying notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Evanston Galleria, L.P.
(a limited partnership)
Statements of Cash Flows
Years ended December 31, 1999, 1998 and 1997
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) 59,787 (149,393) (377,401)
Items not requiring cash
or cash equivalents:
Depreciation and amortization 5,969 19,075 349,877
Changes in:
Rents and other receivables 1,267 (1,621) 31,273
Accounts payable and accrued expenses 74,913 35,672 18,810
Accrued interest 74,643 142,176 14,246
Tenant security deposits 6,377 5,129 7,382
Net cash provided by operating activities 222,956 51,038 44,187
Cash flows from investing activities:
Additions to investment property (21,390) (13,810) -
Payment of leasing commissions - (8,222) (19,013)
Net cash used in investing activities (21,390) (22,032) (19,013)
Net increase in cash and cash equivalents 201,566 29,006 25,174
Cash and cash equivalents
at beginning of year 260,440 231,434 206,260
Cash and cash equivalents
at end of year 462,006 260,440 231,434
Supplemental disclosure
of cash flow information:
Cash paid for mortgage and other interest 690,911 685,716 688,970
<FN>
See accompanying notes to Financial Statements.
</TABLE>
<PAGE>
Evanston Galleria, L.P.
(a limited partnership)
Notes to Consolidated Financial Statements
(1) Organization and Basis of Accounting
The accompanying financial statements have been prepared for the purpose of
complying with Rule 3.09 of Regulation S-X of the Securities and Exchange
Commission. They include the accounts of the unconsolidated partnership,
Evanston Galleria L.P. (the "Partnership"), in which First Dearborn Properties
L.P. II and Evanston Associates, an affiliate of the General Partners of First
Dearborn Income Properties L.P. II are partners. The Partnership's acquisition
of its interest was effected through its acquisition of an 18.30% general
partnership interest in the 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 Partnership by agreeing to contribute an aggregate $2,313,125 to the
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
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 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 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 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 Partnership 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 records are maintained on the accrual basis of accounting as
adjusted for Federal income tax reporting purposes. The accompanying 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>
1999 1999 1998 1998
GAAP Tax GAAP Tax
basis basis basis basis
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Total assets 8,935,466 7,157,207 8,719,746 7,245,885
Partners' capital
accounts (deficits):
General partners (238,708) (1,856,402) (284,545) (1,651,427)
Limited partners (336,318) (372,377) (350,268) (322,260)
Net income (loss):
General partners 45,837 (204,972) (114,540) (324,295)
Limited partners 13,950 (50,121) (34,853) (79,299)
</TABLE>
<PAGE>
Evanston Galleria, L.P.
(a limited partnership)
Notes to Consolidated Financial Statements
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 buildings and improvements was provided over the estimated useful lives of
5 to 30 years using the straight-line method.
Maintenance and repair expenses are charged to operations as incurred.
Significant betterments and improvements are capitalized and were depreciated
over their estimated useful lives.
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 the General Partner to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
Partnership adopted 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", on January 1, 1996. SFAS 121 requires
that the Partnership record an impairment loss on its property held for
investment whenever the property's carrying value cannot be fully recovered
through estimated undiscounted cash flows from its operations and sale. The
amount of the impairment loss to be recognized would be the difference between
the property's carrying value and the property's estimated fair value. In
addition, SFAS 121 provides that a property may not be depreciated while being
held for sale. As of October 1, 1997, the Evanston Galleria property was
considered to be held for sale. In accordance with SFAS 121, no depreciation
expense relative to the property was recorded by the Partnership from October
1, 1997 through December 31, 1999.
On February 16, 1999, a contract was entered into for the sale of the Evanston
Galleria. The purchase price, net of closing costs and prorations, would have
been sufficient to repay all liabilities of the Partnership. However, this
sale did not occur. On February 22, 2000, a contract was signed for the sale
of the Evanston Galleria. Closing is expected to occur on May 22, 2000.
However, this closing is contingent upon the signing of a new lease for the
vacant retail space. The sale price is sufficient to repay all of the
obligations and potentially provide approximately $100,000 of distributable
cash to the partners.
The property is managed by an affiliate of the General Partners. During 1999,
1998 and 1997, management fees totaling $42,521, $41,681 and $41,550,
respectively, were paid to the affiliate.
(2) Long-Term Debt
The property was subject to a first mortgage which matured May 1, 1996.
Effective May 1, 1996, a modification of the first mortgage was entered into
which, among other modifications, extended the maturity of the loan until May
1, 1998. Commencing on May 1, 1996, monthly payments were adjusted to $57,143,
which represents interest only payments at an annual rate of 8.25%, based on
the outstanding principal balance of the loan as of May 1, 1996.
Notwithstanding the pay rate of 8.25%, interest on the loan continues to
accrue and compound monthly on the unpaid principal balance at the annual rate
of 9.00%. The interest differential, as defined, will be paid only from
proceeds resulting from a sale or refinancing of the property or from any
remaining funds in the cash flow escrow. The first mortgage maturity was
extended to August 1, 1999. The unpaid interest together with the unpaid
principal balance of the loan will be due and payable August 1, 1999.
Effective August 1, 1999, the maturity has been extended to February 1, 2001.
All net cash flow from the property, in excess of the payments due for
interest, shall be deposited into a cash flow escrow account. If cash flow
in any month is insufficient to pay amounts due under the loan, then the
amounts may be withdrawn from the cash flow escrow account. The first mortgage
is expected to be retired from the proceeds of the expected sale of the
property.
<PAGE>
Evanston Galleria, L.P.
(a limited partnership)
Notes to Consolidated Financial Statements
(3) Leases
At December 31, 1999 the Partnership's principal asset is a residential and
retail building. The Partnership has determined that all leases related to the
property 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 (see Note 1) under the operating leases are as follows:
<TABLE>
<S> <C>
2000 1,201,085
2001 306,525
2002 292,285
2003 162,588
2004 102,648
Thereafter 256,620
2,321,751
</TABLE>
<PAGE>
<TABLE>
Evanston Gallaria, L.P.
(a limited partnership)
December 31, 1999
Schedule III
Real Estate and Accumulated Depreciation
<CAPTION>
(a) (b)
Initial Cost Additions Gross amount of asset at period end
Building & Building & Building & Accumulated
Encumbrance Land Improvements Improvements Land Improvements Total Depreciation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Residential and
retail property
Evanston, IL 8,486,740 1,121,354 10,602,516 69,680 1,121,354 10,672,196 11,793,550 3,349,443
<FN>
(a) The initial cost represents the original purchase price of the property.
(b) The aggregate cost of the above real estate at December 31, 1999 for
Federal income tax purposes is $10,949,183.
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
(c) Reconciliation of real estate owned
Balance at beginning of period 11,772,160 11,758,351 11,758,351
Additions 21,390 13,809 -
Balance at end of period 11,793,550 11,772,160 11,758,351
(d) Reconciliation of accumulated
depreciation
Balance at beginning of period 3,349,443 3,349,443 3,089,945
Depreciation expense - - 259,498
Balance at end of period 3,349,443 3,349,443 3,349,443
</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 Jefferson-Pilot Investments, Inc., a
North Carolina corporation, which is a wholly-owned subsidiary of
Jefferson-Pilot Corporation. The officers and directors of Hampshire
Syndications, Inc. are Ronald Angarella, President and Director, Charles C.
Cornelio, Vice President and Director, Sheri J. Lease, Secretary, Dennis R.
Glass, Executive Vice President and Director, John C. Ingram, Executive Vice
President and Director, John A. Weston, Treasurer.
Messrs. Block and Ross are not affiliated with Jefferson Pilot 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 62, 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 62, 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 42, has served as President and Director of
Hampshire Syndications, Inc. since October 23, 1995. He also currently serves
as President, Chairman and Director of Jefferson Pilot Securities Corporation
and Hampshire Funding, Inc. His principal occupation is Senior Vice President
and Chief Marketing Officer of Jefferson Pilot Financial Insurance Company.
He also currently serves as an officer and/or director of various affiliated
entities. Mr. Angarella also serves as President and Director of Jefferson
Pilot Variable Fund, Inc.
<PAGE>
Mr. Charles C. Cornelio, age 40, has served as Vice President of Hampshire
Syndications, Inc. since June 4, 1993, and Director since May 7, 1990. Mr.
Cornelio served as Secretary of Hampshire Syndications, Inc. from May 17, 1990,
until May 13, 1997. Mr. Cornelio is also Vice President, Secretary and
Director of Jefferson Pilot Securities Corporation. His principal occupation
is Senior Vice President of Jefferson Pilot Corporation and Executive Vice
President of various insurance company subsidiaries. He also serves as an
officer and/or director of other various affiliated entities. Mr. Cornelio
also is General Counsel and Vice President of Jefferson Pilot Variable Fund,
Inc.
Shari J. Lease, age 45, has served as Secretary of Hampshire Syndications, Inc.
since May 13, 1997 and previously served as Assistant Secretary beginning on
May 9, 1994. Ms. Lease is also currently Secretary of Hampshire Funding, Inc.
and Assistant Secretary of Jefferson Pilot Securities Corporation. Her
principal occupation since April 1995 has been as Assistant Vice President and
Counsel of Jefferson Pilot Financial Insurance Company until her election as
Vice President and Counsel in February 1998. She also currently serves as an
officer of other various affiliated entities and is Secretary of Jefferson
Pilot Variable Fund, Inc.
John Weston, age 40, has served as Treasurer of Hampshire Syndications, Inc.
since July 19, 1991. He also currently serves as Treasurer of Jefferson Pilot
Securities Corporation, Hampshire Funding, Inc., Jefferson Pilot Variable Fund,
Inc. and Jefferson Pilot Advisory Corporation. His principal occupation since
April 1995, has been as Assistant Vice President of Jefferson Pilot Financial
Insurance Company until his election as Vice President in February 1999. Mr.
Weston also currently serves as an officer of other various affiliated entities.
Dennis R. Glass, age 50, was elected Executive Vice President and Director of
Hampshire Syndications, Inc. on May 13, 1997. Mr. Glass is also a Director of
Hampshire Funding, Inc. Since October 1993, his principal occupation has been
as Executive Vice President, Chief Financial Officer and Treasurer of Jefferson
Pilot Corporation. He also currently serves as an officer and/or director of
various entities affiliated with Jefferson Pilot Corporation. Prior to October
1993, Mr. Glass was associated with Protective Life Corporation and the Portman
Companies.
John C. Ingram, age 55, was elected Executive Vice President and Director of
Hampshire Syndications, Inc. on May 3, 1999. Mr. Ingram is also a Director of
Hampshire Funding, Inc. Since September 1999, Mr. Ingram's principal
occupation has been as Executive Vice President and Chief Investment Officer
of Jefferson Pilot Corporation. Prior to that date he served as Senior Vice
President and Manager-Security Dept. for more than ten years. Mr. Ingram is
also an officer and/or director of various entities affiliated with Jefferson
Pilot Corporation.
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.
<PAGE>
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, 1999, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Unpaid at
1999 1998 1997 Dec. 31, 1999
<S> <C> <C> <C> <C>
Reimbursement (at cost)
for out of pocket expenses 35 35 1,168 35
Reimbursement (at cost)
for administrative services - 975 1,364 -
35 1,010 2,532 35
</TABLE>
There are no compensatory plans or arrangements regarding termination of
employment or change of control.
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, 1999 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 Jefferson Pilot Financial 1,669 Units (1) 16.7%
Partnership Insurance Company
Units One Granite Place,
Concord, NH 03301
Limited Jefferson Pilot 20 Units (1) less than 1%
Partnership Securities Corporation
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
<FN>
(1) During January 1991, Jefferson Pilot Insurance Company of America
(JPF), an affiliate of Hampshire Syndication, Inc., acquired 1,669 Units under
an agreement with the Partnership. During 1993, Jefferson Pilot Securities
Corporation, an affiliate of JPF, acquired 20 Units pursuant to an arbitration
order.
</TABLE>
<PAGE>
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.
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 16.
(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.
(b) No reports on Form 8-K were filed in the last quarter of 1999.
(c) An annual report for the fiscal year 1998 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 16.
<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: May 5, 2000 BY: /s/ Robert S. Ross
Its: President
BY: FDIP Associates II
(Associate General Partner)
BY: First Dearborn Partners, a Partner
Date: May 5, 2000 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 May 5, 2000
Robert S. Ross of FDIP, Inc. (Principal
Executive Officer)
/s/ Bruce H. Block Secretary and Director May 5, 2000
Bruce H. Block of FDIP, Inc. (Principal
Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Dec-31-1999
<PERIOD-TYPE> 12-mos
<CASH> 819,519
<SECURITIES> 0
<RECEIVABLES> 135,404
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,007,856
<PP&E> 6,551,002
<DEPRECIATION> 2,557,353
<TOTAL-ASSETS> 5,032,142
<CURRENT-LIABILITIES> 4,592,398
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 354,252
<TOTAL-LIABILITY-AND-EQUITY> 5,032,142
<SALES> 1,183,965
<TOTAL-REVENUES> 1,220,964
<CGS> 0
<TOTAL-COSTS> 773,420
<OTHER-EXPENSES> 2,272,778
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 350,601
<INCOME-PRETAX> (1,354,228)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,354,228)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,354,228)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
