U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
For the transition period from to
Commission file number 0-21455.
Decade Companies Income Properties - A Limited Partnership
(Exact name of small business issuer as specified in its charter)
State of Wisconsin 39-1518732
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
250 Patrick Blvd., Suite 140 Brookfield, Wisconsin 53045-5864
(Address of principal executive offices)
(262) 792-9200
(Issuer's telephone number)
Not Applicable
Former name, former address and former fiscal year, if changed
since last report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by
court. Yes No .
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: .
Transitional Small Business Disclosure Format (check one): Yes
No X .
Decade Companies Income Properties - A Limited Partnership
Form 10-QSB
INDEX
March 31, 2002
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (unaudited)
Balance Sheet - March 31, 2002. 3
Statements of Operations for the three
months ended March 31, 2002 and 2001 4
Statements of Partners' Capital
for the three months ended March 31, 2002
and the year ended December 31, 2001. 5
Statements of Cash Flows for the three months
ended March 31, 2002 and 2001. 6
Notes to Financial Statements. 7
Item 2. Management's Discussion and Analysis or Plan
of Operations 7 - 19
PART II. OTHER INFORMATION
Item 5. Other Information. 18-19
Item 6. Exhibits and Reports on Form 8-K. 19-20
SIGNATURES 20
Exhibit 11 - Statement re: Computation of
Per Interest Earnings 20
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEET
March 31, 2002
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,915,485
Exchange escrow fund 6,681,536
Escrow deposits 500
Prepaid expenses and other assets 162,024
Total Current Assets 9,759,545
INVESTMENT PROPERTIES, AT COST: 21,765,750
Less: accumulated depreciation ( 6,956,802)
Net Investment Property 14,808,948
OTHER ASSETS:
Utility deposits 40,903
Debt issue costs, net of accumulated
amortization 308,220
Total Other Assets 349,123
Total Assets $24,917,616
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and
accrued taxes $ 202,236
Unearned rent collections 56,001
Tenant security deposits 76,698
Distributions payable 166,770
Accrued interest payable 17,490
Payable to affiliates 1,511,382
Mortgage notes payable 18,702,899
Total Liabilities 20,733,476
PARTNERS' CAPITAL:
General Partner Capital (14,847)
Limited Partners
(authorized--18,000 Interests;
outstanding--13,267.51 Interests) 4,198,987
Total Partners' Capital 4,184,140
Total Liabilities and
Partners' Capital $24,917,616
See Notes to Unaudited Financial Statements.
STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended March 31
2002 2001
Operating revenue:
Rental income $1,309,814 $ 1,721,560
Operating expenses:
Operating 830,420 755,325
Real estate taxes 147,322 190,497
Interest expense 406,521 492,402
Depreciation 175,954 255,000
Amortization of debt issue costs 103,423 28,326
Total operating expenses 1,663,640 1,721,550
Net (loss) from investment property (353,826) 10
Other income (expenses):
Gain on sale of property 8,579,120 ---
Interest income 28,940 41,487
Partnership management (72,804) (69,057)
Net other income (expenses) 8,535,256 (27,570)
NET INCOME (LOSS) $ 8,181,430 $ (27,560)
Net income (loss) attributable to
General Partner (1%) $ 81,814 (276)
Net income (loss) attributable to
Limited Partners (99%) 8,099,616 (27,284)
$ 8,181,430 $ (27,560)
Net income (loss) per Limited
Partner Interest $ 604.57 $ (2.04)
See Notes to Financial Statements
STATEMENTS OF PARTNERS' CAPITAL
(Unaudited as to the Three Months Ended March 31, 2002)
Limited General Limited
Partnership Partner Partners'
Interests Capital Capital Total
Balances at 12/31/00 13,400.27 $(95,827) (2,957,885)
$(3,053,712)
Distributions to Partners --- -- (669,922)
(669,922)
Net income for the period --- 166 16,454
16,620
Redemption of Interests (3.00) -- (1,800)
(1,800)
Balance at 12/31/01 13,397.27 ($95,661)
$(3,613,153) $(3,708,814)
Distributions to Partners --- (1,000) (165,770)
(166,770)
Net income for the period --- 81,814 8,099,616
8,181,430
Redemption of Interests (135.76) --- (81,456)
(81,456)
Tender Offer expenses --- (40,250)
(40,250)
Balance at 3/31/02 13,261.51 $(14,847) $ 4,198,987
$ 4,184,140
See Notes to Unaudited Financial Statements.
STATEMENTS OF CASH FLOWS - (UNAUDITED)
For The Three Months Ended March 31,
2002 2001
CASH PROVIDED BY OPERATIONS $ 157,922 $
405,095
INVESTING ACTIVITIES:
Proceeds from sale of property 6,662,575
---
Deposits to exchange escrow (6,681,536)
Additions to investment property (63,690)
(72,229)
NET CASH USED IN INVESTING ACTIVITIES (82,651)
(72,229)
FINANCING ACTIVITIES:
Redemption of interests (81,456)
---
Principal payments on mortgage notes (94,183)
(105,607)
Distributions paid to limited partners (167,466)
(167,504)
NET CASH USED IN FINANCING ACTIVITIES (343,105)
(273,111)
INCREASE (DECREASE) IN CASH & CASH
EQUIVALENTS (267,834)
59,755
CASH & CASH EQUIVALENTS AT THE BEGINNING
OF PERIOD 3,183,319
4,251,384
CASH & CASH EQUIVALENTS
AT THE END OF PERIOD $ 2,915,485
$4,311,139
Supplementary disclosure of cash flow information:
Interest paid $ 387,560 $
484,987
Income taxes paid 0
0
See Notes to Unaudited Financial Statements
Note A--Basis of Presentation
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-QSB and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 2002
are not necessarily indicative of the results that may be
expected for the year ended December 31, 2002. For further
information, refer to the financial statements and footnotes
thereto included in the Partnership's annual report on Form
10-KSB for the year ended December 31, 2001.
Note B - Sale of The Meadows II Apartments
On January 31, 2002, the Partnership sold The Meadows II
Apartments for $15,956,436, subject to customary closing costs,
adjustments, prorations, fees, and commissions. At closing, the
proceeds from the sale were used to pay off the first mortgage
loan of approximately $8,802,000. The net proceeds of
approximately $6,663,000 were placed into an exchange escrow with
a bank acting as the qualified intermediary. The Partnership
structured this transaction to qualify to be a like-kind exchange
under Section 1031 of the Internal Revenue Code, whereby the net
proceeds were paid to a Qualified Intermediary and may be used
for the acquisition of a replacement property if the Partnership
determines to acquire such property.
Note C - Redemption of Interests - Tender Offer
During the quarter, the Partnership redeemed 135.76 Interests for
$81,456. Subsequently, the Partnership and Jeffrey Keierleber,
an affiliate of the General Partner, commenced an Offer to
Purchase up to 7,700 Interests for cash consideration of $895 per
Interest. The Offer expired on May 10, 2002. Approximately
5,809 Interests were tendered, of which the Partnership purchased
and retired 3,000 Interests using $2,685,000 of cash reserves.
As a result of the Offer, Mr. Keierleber owns 6,018.57 Interests
(58.7% of the Interests outstanding).
Note D - Subsequent Event - Proxy Solicitation
On May 4, 2002 the Partnership solicited a Proxy Statement to all
Limited Partners of the Partnership. An amendment to the limited
partnership agreement was proposed. The amendment would grant
the Partnership the right to purchase limited Partnership
Interests on terms and conditions no less favorable than those
offered by third parties in exchange for Interests, including a
right of first refusal over any Interests subject to a third
party tender offer. On May 14, 2002, the Amendment was adopted.
Item 2. Management's Discussion and Analysis or Plan of
Operation.
Forward-Looking Information
Forward-looking statements in this report, including without
limitation, statements relating to Decade Companies Income
Properties (the "Partnership") plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Investors are cautioned that such
forwarded-looking statements involve risks and uncertainties
including without limitation the following: (i) the Partnership's
plans, strategies, objectives, expectations and intentions are
subject to change at any time at the discretion of the General
Partner; (ii) the Partnership's plans and results of operations
will be affected by the Partnership's ability to manage its
growth; and (iii) other risks and uncertainties indicated from
time to time in the Partnership's filings with the Securities and
Exchange Commission.
Information contained in this Quarterly Report on Form 10-QSB
contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, which can be
identified by the use of forward-looking terminology such as
"may," "will," "believe," "expect, "anticipate," "estimate" or
"continue" or the negative thereof or other variations thereon or
comparable terminology. There are a number of important factors
with respect to such forward looking statements, including
certain risks and uncertainties, that could cause actual results,
performance, or achievements of the Partnership to differ
materially from anticipated future results, performance or
achievements expressed or implied by such forward-looking
statements. Such factors, which could adversely effect the
Partnership's ability to obtain these results, include, but are
not limited to, the following: (i) occupancy levels and market
rents may be adversely affected by local economic and market
conditions, which are beyond the Partnership's control; (ii) debt
financing could adversely affect the Partnership's performance,
(iii) scheduled debt payments could adversely affect the
Partnership's financial condition, (iv) financial covenants could
adversely affect the Partnership's financial condition, (v) the
Partnership's degree of leverage could limit its ability to
obtain additional financing, (vi) control and influence by
significant limited partners could be exercised in a manner
adverse to other limited partners, (vii) environmental problems
are possible and can be costly, (viii) the Partnership's
performance and Limited Partnership Interest value are subject to
risks associated with the real estate industry, (ix) the
Partnership may be unable to renew leases or relet space as
leases expire, (x) new real estate acquisitions may fail to
perform as expected, (xi) competition for real estate
acquisitions may result in increased prices for properties, (xii)
because real estate investments are illiquid, the Partnership may
not be able to sell properties when appropriate, (xiii) changing
laws could affect the Partnership's business, (xiv) provisions in
the Limited Partnership Agreement could inhibit changes in
control, (xv) the Partnership depends on key personnel; and (xvi)
other factors described elsewhere in this Quarterly Report on
Form 10-QSB.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date
hereof. The Partnership undertakes no obligation to publicly
release any revisions to these forward-looking statements, which
may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
There are certain events that could cause the reported financial
information to not be indicative of future operating results or
future financial condition, as follows:
The sale of The Meadows II Apartments in January 2002 will
impact future operations by eliminating the net operating
income previously generated by the property. The retirement
of the mortgage debt upon the sale of The Meadows II
eliminates the debt service burden associated with it. The
net sale proceeds held in escrow will increase the amount of
portfolio earnings generated by the investment of such cash
reserves until they are used for another purpose.
There are certain matters that might impact future operations but
that have not had an impact in the past, as follows:
The redemption in May 2002 of 3,000 Interests in the tender
offer required the use of cash reserves in the amount of
$2,685,000 plus estimated tender offer expenses of $115,000.
As a result cash reserves will be reduced by $2.8 million.
However, cash needed to pay future cash distributions to
Limited Partners will be reduced because there will be 3,000
fewer Limited Partner Interests outstanding. The
Partnership intends, but is not required, to continue to
make cash distributions to the Limited Partners.
The sale of The Meadows II Apartments is a significant event in
the life of the Partnership. This marks the third sale of
property since the inception of the Partnership. In February
1990, Laguna Vista Apartments in Largo, Florida was exchanged for
Town Place Apartments in Clearwater, Florida. In August 1993,
Woodbridge Apartments in Winter Park, Florida, was sold in a
deferred exchange for Pelican Sound Apartments in St. Petersburg,
Florida. The technique of exchanging one property for another
allowed the Partnership to dispose of property without incurring
any immediate tax liability. This allowed the Partnership to
keep the earning power of the deferred tax dollars working for it
in another real estate investment. The intent of these
transactions was to obtain greater appreciation in the real
estate investments (and thus, the Limited Partner Interests) over
time.
There are several directions that the Partnership could take
after the sale of The Meadows II Apartments. The General Partner
identified and considered the following options:
Begin a partial liquidation of the Partnership, whereby the
net proceeds from the sale of The Meadows II now held in the
exchange escrow would be distributed pro rata to all Limited
Partners, and then continue to own and operate the remaining
two Florida properties, Pelican Sound and Town Place. This
option is more likely than not unappealing because the cash
flow from operating just two apartment complexes (rather
than three) would negatively impact the support of the
overhead associated with operating a public partnership
subject to SEC filings. A reduction in cash distributions
to partners could also occur as a result of such reduced
cash flows. However, a final determination of whether or
not to pursue this option is contingent on whether or not a
suitable replacement property is acquired on or before July
30, 2002.
Begin a complete liquidation of the Partnership, whereby the
net proceeds from the sale of The Meadows II now held in the
exchange escrow would be distributed pro rata to all Limited
Partners, and then the Partnership would sell the remaining
two properties in Florida, distribute the net proceeds to
the Partners, and wind-up and terminate the Partnership.
The General Partner will likely reject this option as it
believes that continued ownership by the Partnership of its
properties is in the long-term best interests of the Limited
Partners. In order for the Partnership to better meet its
investment objectives, the General Partner believes that a
sale of the remaining two properties at this time and a
distribution of the proceeds to the Partners would most
likely reduce the opportunity that the Partnership would be
able to maximize its investment objectives. While there can
be no assurance that the Partnership's properties will
appreciate in value from their present level, the General
Partner, based on its experience in the real estate
industry, believes that the current value of the
Partnership's properties is more likely than not to increase
in the future. There can, of course, be no assurance that
such appreciation will occur, or if it does occur, that it
will result in any specific level of return to the Partners.
However, a final determination of whether or not to pursue
this option is contingent on, among other things, whether or
not a suitable replacement property is acquired on or before
July 30, 2002.
Use the net proceeds from the sale of The Meadows II to pay
down the outstanding mortgage debt on the other two
properties to reduce the debt service burden, and thus allow
those properties to increase their cash flow. This option
was rejected as the Partners would be required to pay tax on
the gain associated with the sale of The Meadows II
Apartments, but would receive no cash distributions with
which to pay the tax associated with the sale of The Meadows
II.
Reinvest the net sale proceeds into another qualified real
estate investment. The sale of The Meadows II Apartments
was structured as a deferred exchange with the net sales
proceeds of approximately $6.66 million placed into an
exchange escrow. The exchange transaction must be
completed within 180 days from the closing date of the sale
of The Meadows Apartments (July 30, 2002). The Partnership
is currently attempting to finalize the purchase of a
suitable replacement property.
The Partnership Agreement provides for termination at December
31, 2005.
Results of Operations
Operating revenue from rental income was $1,251,503 in the
quarter ended March 31, 2002, compared to $1,721,560 for the same
period in 2001, a decrease of 27.3%. Rental income was provided
by the three sites for the comparative three month period as set
forth below:
Percent
Three Months Ended Increase Increase
3/31/02 3/31/01 (Decrease)(Decrease)
Pelican Sound $ 723,000 $ 725,000 $ (2,000) (0.4%)
Meadows II 184,000 564,000 (380,000) (67.4%)
Town Place 403,000 432,000 (29,000) (6.7%)
Total $1,310,000 $1,721,000 $ (411,000) (23.9%)
The $411,000 decrease in operating revenue consisted of decreases
at all three properties. The $380,000 decrease at The Meadows II
was attributed to the sale of the property on January 31, 2002
and represents only one month of revenue. The $2,000 decrease at
Pelican Sound was a result of a 2% increase in gross potential
rent, offset by a 2% decrease in occupancy (from 92% to 90%).
The $29,000 decrease at Town Place was attributed to a 3%
increase in gross potential rent, offset by a 7% decrease in
average occupancy (from 89% to 82%). The General Partner
believes that the decline in occupancy at both Pelican Sound and
Town Place was a direct result of the increase in asking rents
and anticipates improved occupancy and improved collections
during the second quarter of 2002.
The average monthly gross potential rent per unit at the
Apartments for the first quarter of 2002, and the comparative
period in 2001, is set forth below:
Number Three Months Ended
of Units 3/31/02 3/31/01
Pelican Sound 379 $693 $677
The Meadows II 316 $664 $636
Town Place 240 $678 $660
All Rental Units 935 $684 $659
"Gross potential rent" represents the asking rent established by
the Partnership for a vacant apartment plus the rent in effect for
occupied apartments.
The average occupancy level at the Apartments for the first quarter
ended March 31, 2002 and the comparable period in 2001, is set
forth below:
Three Months Ended
3/31/02 3/31/01
Pelican Sound 89.6% 91.8%
The Meadows II 90.1% 93.5%
Town Place 81.7% 88.9%
All Rental Units 87.0% 91.6%
The range of occupancy levels at the Apartments for the first
quarter period ended March 31, 2002 and the comparable period in
2001, is set forth below:
Three Months Ended
3/31/02 3/31/01
Pelican Sound 88.8-90.0% 91.7-92.1%
The Meadows II (prior to sale) 90.1% 92.6-94.6%
Town Place 80.0-84.1% 87.3-89.7%
All Rental Units 86.5-87.8% 90.8-92.1%
Total rental expenses before depreciation and debt service in the
three month period ended March 31, 2002 increased by $32,000, from
$946,000 to $978,000, compared to the same period of 2001. The
increase was comprised of a decrease at The Meadows II of $44,000,
and increases at Town Place of $50,000 and at Pelican Sound of
$26,000.
A summary of operating expenses before depreciation and debt
service by apartment site follows:
For the Three Months Ended
Increase Increase
(Decrease) (Decrease)
3/31/02 3/31/01 Amount Percent
Pelican Sound $403,000 $377,000 $ 26,000 6.9%
Meadows II 290,000 334,000 (44,000) (13.2%)
Town Place 285,000 235,000 50,000 21.3%
Total $978,000 $946,000 $ 32,000 3.4%
The $44,000 decrease in operating expenses at The Meadows II was
impacted by the wind-up expenses related to the sale of the
property on January 31, 2002.
The $50,000 increase in operating expenses at Town Place was
primarily attributable to an increase in exterior building
maintenance expenses of $8,000, an increase in interior painting
expenses of $7,000, an increase in property taxes of $1,000, an
increase in landscaping and grounds expense of $4,000, an increase
in maintenance expenses of $4,000, an increase in insurance expense
of $13,000, an increase in utilities expense of $1,000, an increase
in property management expenses (attributable to higher rent
collections) of $1,000, and an increase of other items of $11,000.
The $26,000 increase in operating expenses at Pelican Sound was
primarily attributable to an increase in insurance of $20,000, an
increase in utilities of $4,000, an increase in on-site personnel
of $5,000, and a decrease in outside contractor expenses of $3,000.
As a result of the foregoing, net income from rental property
operations before debt service, depreciation and amortization, was
approximately $332,000 for the first quarter of 2002, compared to
$776,000 for the comparative period, a decrease of approximately
$444,000. The net decrease was comprised of decreases at The
Meadows II of $336,000, at Town Place of $79,000, and at Pelican
Sound of $29,000.
A summary of net operating income before depreciation,
amortization, and debt service, by site including the percent of
total for each site for three month periods ended as follows:
Increase Increase
3/31/02 3/31/01 (Decrease)(Decrease)
Amount Percent Amount Percent Amount Percent
Pelican Sound $320,000 96% $349,000 45% $ (29,000) (8.3%)
Meadows II (106,000) (32%) 230,000 30% (336,000) (146.1%)
Town Place 118,000 36% 197,000 25% (79,000) (40.1%)
Total $332,000 100% $776,000 100% $(444,000) (57.2%)
Interest expense for the first quarter of 2002 decreased $86,000
from the comparative period primarily as a result of a lower amount
of outstanding debt between the two comparative periods. This was
primarily due to the sale of The Meadows II Apartments and the
payoff of the related debt.
The net income before debt service from real estate activities is
reduced by deductions for depreciation and amortization which do
not affect cash flow. Depreciation and amortization decreased
$4,000 for the first quarter of 2002 compared to 2001.
The Partnership's net other income increased during the three month
period in 2002 by approximately $8,562,800. The $8,562,800
increase consisted of a decrease in interest income of $12,500 an
increase in partnership management expenses of $3,700, and an
increase on sale of property of $8,579,100.
As a result of the foregoing, the Partnership's net income for the
quarter ended March 31, 2002 was $8,181,400, compared to a net loss
of $27,600 in the same period of 2001.
Exclusive of depreciation and amortization, the Partnership's net
income for the quarters ended March 31, 2002 and 2001 was
$8,461,000 and $256,000, respectively.
Liquidity and Sources of Capital
At March 31, 2002 there was $2.91 million of cash and cash
equivalents and escrow deposits available to pay liabilities. The
proceeds from the sale of The Meadows II Apartments in the amount
of $6.6 million were placed in an exchange escrow account on
January 31, 2002.
During the first three months of 2002, cash and cash equivalents
decreased by $268,000 as shown herein on the Statements of Cash
Flows. Operating activities provided $158,000 during the quarter.
The cash flow and cash reserves were used to make cash
distributions to the limited partners of $167,000 (of which $29,000
(17%)) was considered to be portfolio income subject to income
taxes, to make principal payments on the outstanding mortgage notes
of $94,000, to redeem Limited Partnership Interests of $81,000, to
retain $20,000 of interest earned in the exchange escrow account,
and to purchase assets capitalized as part of the investment
properties in the amount of $64,000.
The General Partner believes that the Partnership has the ability
to generate adequate amounts of cash to meet the Partnership's
current needs for the foreseeable future.
Short-term obligations total $993,000, consisting of $619,000 of
current liabilities and $374,000 of mortgage principal liabilities.
The tender offer which expired on May 10, 2002, will require a cash
disbursement of $2.8 million to purchase and retire 3,000 Interests
and to pay the tender offer expenses estimated to be $115,000.
On a short-term basis, rental operations are expected to provide a
stream of cash flow to pay day-to-day operating expenses and to
fund quarterly cash distributions to partners. Investment property
operations generated a loss in the first quarter of 2002 of $75,000
(before depreciation and amortization of $279,000) compared to a
profit of $283,000 for the same period in 2001. We expect
occupancy rates to increase so that cash flow will be sufficient to
pay day-to-day operating expenses and to fund quarterly cash
distributions to the limited partners.
The Limited Partnership Agreement provides that the Partnership
will make distributions for each calendar quarter of cash flow less
amounts set aside for reserves. In January the Partnership paid to
the Limited Partners the December declaration of $167,500 ($12.50
per Interest) and declared for the twenty-second consecutive
quarter a similar amount payable for the first quarter of 2002
which was paid in April 2002. The distribution payable to the
General Partner of $1,000 was accrued and payment will be made
before year end. The Partnership intends, but is not required, to
continue to make cash distributions to the Limited Partners each
quarter in the same amount of 5.0% per annum on the original
capital investment of $1,000 per Interest. This intention will
require cash distributions to the limited partners of approximately
$573,000 in the next 12 months, which should be met from operations
and cash reserves. Through March 31, 2002 the Partnership declared
cash distributions of approximately $14.7 million (82% of original
capital) to the Limited Partners since inception. Cumulative cash
distributions range from $833 (83%) to $980 (98%) per $1,000
Interest purchased in the initial public offering by an original
holder, depending upon the date of purchasing the Interest.
The long-term mortgage obligations of the Partnership require
principal reductions (excluding balloon payments) of approximately
$1.3 million over the next five years. These obligations will most
likely be satisfied by cash generated from operations. The Town
Place loan is due in 2003 and will require a balloon payment of
approximately $6.0 million. The Pelican Sound note is due in 2006
and will require a balloon payment of approximately $11.4 million.
It is anticipated that both properties will be sold or refinanced
prior to the maturity dates.
The mortgage notes on Pelican Sound and Town Place bear interest at
7.50% and 8.25% respectively. The Partnership is exploring the
possibility of refinancing the mortgage loans during 2002 if lower
interest rates are available. Additional proceeds from the
refinancing in excess of the existing mortgage debt would provide
additional liquidity.
Other than the payments described above, there are no long-term
material capital expenditures, obligations, or other demands or
commitments that might impair the liquidity of the Partnership.
Partners' Capital increased by $7,893,000 during the first three
months of 2002 due to the net income for the first quarter of
$8,181,000, less cash distributions declared payable to the
partners of $167,000, less the redemption of Interests of $81,000,
less accrued tender offer expenses of $40,000.
PART II.
OTHER INFORMATION
Items 1 -4. Not Applicable.
ITEM 5. OTHER INFORMATION
On April 8, 2002, the Partnership and Jeffrey Keierleber, an
affiliate of the General Partner, commenced an Offer to Purchase up
to 7,700 Interests for cash consideration of $895 per Interest.
The Offer expired on May 10, 2002. Approximately 5,809 Interests
were tendered, of which the Partnership purchased and retired 3,000
Interests using $2,685,000 of cash reserves. Mr. Keierleber
purchased approximately 2,809 Interests in the Offer using his own
cash funds. A total of 675 (60%) of the 1,129 Limited Partners
tendered their Interests in the Offer.
As a result of the Offer and the repurchase of Interests by the
Partnership, there are now 10,261.51 Interests outstanding held by
454 Limited Partners and Mr. Keierleber now owns 6,018.57 Interests
(58.7% of the outstanding Interests) and has the ability to approve
any amendments to the Partnership Agreement.
On May 4, 2002 the Partnership solicited a Proxy Statement to all
Limited Partners of the Partnership. An amendment to the
Partnership Agreement was proposed. The amendment would grant the
Partnership the right to purchase Limited Partnership Interests on
terms and conditions no less favorable than those offered by third
parties in exchange for Interests, including a right of first
refusal over any Interests subject to a third party tender offer.
On May 14, 2002, the Partnership received the affirmative consent
of a majority of the outstanding Interests and the Amendment was
adopted.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
The following exhibit is included herein:
(11) Statement re: computation of Earnings per Interest
The Partnership filed one report on Form 8-K during the quarter.
A Form 8-K dated January 31, 2002 was filed to report the sale of
The Meadows II Apartments and applicable exhibits, which are listed
below:
1. Option to Purchase between Partnership and Comprehensive
Management Services, Inc.
2. Letter Notice from Comprehensive Management Services,
Inc. exercising option to purchase.
3. Exchange Agreement Between Partnership and Qualified
Intermediary
4. Notice of assignment of Purchase and Sale Agreement with
respect to exchangor's like-kind with buyer
acknowledgment attached.
5. Letter of Direction with respect to exchangor's like-kind
exchange.
6. Bill of Sale between the Partnership and T.P. Meadows
Apartments, LLC.
7. Assignment of Leases and Security Deposits between the
Partnership and T.P. Meadows Apartments, LLC.
8. Assignment of Contracts between the Partnership and T.P.
Meadows Apartments, LLC.
That Form 8-K was amended on March 22, 2002 to include the required
pro forma financial information on the sale of The Meadows II
Apartments, as listed below:
1. Pro forma condensed balance sheet as of December 31,
2001.
2. Pro forma condensed statement of Income for the year
ended December 31, 2001.
3. Notes to pro forma financial information.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DECADE COMPANIES INCOME PROPERTIES -
A LIMITED PARTNERSHIP
(Registrant)
By: DECADE COMPANIES
(General Partner)
Date: May 14, 2002 By: /s/ Jeffrey Keierleber
Jeffrey Keierleber
General Partner and Principal
Financial and Accounting Officer
of Registrant
Exhibit 11 - Statement re: Computation of Per Interest Earnings
March 31, 2002
The following table sets forth the computation of earnings per
Interest:
Three Months Ended
3/31/02 3/31/01
Numerator
Net income (loss) attributable
to Limited Partners 99% $8,099,616 $ (27,284)
Denominator
Denominator for basic earnings
per Interest-weighted-average Interest 13,397.27 13,400.27
Net income (loss) per Interest 604.57 (2.04)