UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15748
CIGNA INCOME REALTY-I LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 06-1149695
(State of Organization) (I.R.S. Employer Identification
No.)
900 Cottage Grove Road, South Building
Bloomfield, Connecticut 06002
(Address of principal executive offices)
Telephone Number: (203) 726-6000
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
Part I - Financial Information
CIGNA INCOME REALTY-I LIMITED PARTNERSHIP
(a Delaware limited partnership)
and Consolidated Venture
Consolidated Balance Sheets
June 30, December 31,
1995 1994
Assets (Unaudited) (Audited)
Property and improvements, at cost:
Land and improvements $ 9,507,533 $ 9,492,296
Buildings 27,310,597 27,310,597
Tenant improvements 5,236,078 5,168,282
Furniture and fixtures 820,904 820,904
42,875,112 42,792,079
Less accumulated depreciation 12,391,262 11,635,309
Net property and improvements 30,483,850 31,156,770
Cash and cash equivalents 3,197,663 3,404,809
Accounts receivable (net of allowance of $3,025
in 1995 and $725 in 1994) 307,095 375,506
Prepaid expenses and other assets 30,433 20,614
Deferred charges, net 549,731 611,084
Total $ 34,568,772 $ 35,568,783
Liabilities and Partners' Capital
Liabilities:
Accounts payable (including $38,201 in 1995
and $20,526 in 1994 due to affiliates) $ 349,646 $ 211,187
Tenant security deposits 107,396 108,426
Unearned income 12,838 14,252
Deferred acquisition fees due to affiliates 2,500,000 2,500,000
Total liabilities 2,969,880 2,833,865
Venture partner's equity in joint venture 2,605,556 3,043,024
Partners' capital:
General Partner:
Capital contributions 1,000 1,000
Cumulative net income 34,554 25,640
35,554 26,640
Limited partners (200,000 Units):
Capital contributions, net of
offering costs 45,463,209 45,463,209
Cumulative net income 3,420,917 2,538,389
Cumulative cash distributions (19,926,344) (18,336,344)
28,957,782 29,665,254
Total partners' capital 28,993,336 29,691,894
Total $ 34,568,772 $ 35,568,783
The Notes to Consolidated Financial Statements are an integral part of
these statements.
CIGNA INCOME REALTY-I LIMITED PARTNERSHIP
(a Delaware limited partnership)
and Consolidated Venture
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Income:
Base rental income $1,173,687 $1,089,747 $2,324,451 $2,150,979
Other income 227,966 194,697 457,335 337,419
Interest income 39,635 27,491 81,975 50,022
1,441,288 1,311,935 2,863,761 2,538,420
Expenses:
Property operating expenses 374,382 376,105 806,201 793,380
General and administrative 98,168 108,154 186,133 217,664
Fees and reimbursements to
affiliates 38,847 44,154 79,150 78,318
Depreciation and amortization 411,721 408,103 816,703 810,978
923,118 936,516 1,888,187 1,900,340
Income inclusive of venture
partner's share of venture
operations 518,170 375,419 975,574 638,080
Venture partner's share of venture
net income 41,994 29,839 84,132 34,786
Net income $ 476,176 $345,580 $ 891,442 $ 603,294
Net income:
General Partner $ 4,761 $ 3,456 $ 8,914 $ 6,033
Limited partners 471,415 342,124 882,528 597,261
$ 476,176 $345,580 $ 891,442 $ 603,294
Net income per Unit $ 2.35 $ 1.71 $ 4.41 $ 2.99
Cash distribution per Unit $ 3.45 $ 3.12 $ 7.95 $ 6.12
The Notes to Consolidated Financial Statements are an integral part of
these statements.
CIGNA INCOME REALTY-I LIMITED PARTNERSHIP
(a Delaware limited partnership)
and Consolidated Venture
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
Cash flows from operating activities:
Net income $ 891,442 $ 603,294
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred rent credits 9,774 9,210
Depreciation and amortization 816,703 810,978
Venture partner's share of venture's operations 84,132 34,786
Accounts receivable 68,411 66,664
Accounts payable 140,489 181,646
Other, net (12,263) (7,243)
Net cash provided by operating activities 1,998,688 1,699,335
Cash flows from investing activities:
Distribution to joint venture partner (521,600) --
Purchases of property and improvements (83,033) (202,693)
Payment of leasing commissions (9,171) (47,813)
Net cash used in investing activities (613,804) (250,506)
Cash flows from financing activities:
Cash distribution to limited partners (1,592,030) (1,225,552)
Net increase (decrease) in cash and cash equivalents (207,146) 223,277
Cash and cash equivalents, beginning of year 3,404,809 3,049,518
Cash and cash equivalents, end of period $ 3,197,663 $ 3,272,795
The Notes to Consolidated Financial Statements are an integral part of
these statements.
CIGNA INCOME REALTY-I LIMITED PARTNERSHIP
(a Delaware limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements
(Unaudited)
Readers of this quarterly report should refer to CIGNA INCOME
REALTY-I LIMITED PARTNERSHIP'S ("the Partnership") audited financial
statements for the year ended December 31, 1994 which are included in the
Partnership's 1994 Annual Report, as certain footnote disclosures which
would substantially duplicate those contained in such audited financial
statements have been omitted from this report.
1. Basis of Accounting
a) Basis of Presentation: The accompanying financial statements were
prepared in accordance with generally accepted accounting
principles. It is the opinion of management that the financial
statements presented reflect all the adjustments necessary for a
fair presentation of the financial condition and results of
operations. Certain amounts in the 1994 financial statements have
been reclassified to conform with the 1995 presentation.
b) Cash and Cash Equivalents: Short-term investments with a maturity
of three months or less at the time of purchase are reported as
cash equivalents.
2. Consolidated Joint Venture - Summary Information
The Partnership owns a 73.92% interest in the Westford Office
Venture which owns the Westford Corporate Center in Westford,
Massachusetts. The remaining equity interest in the venture is held by
Connecticut General Equity Properties-I Limited Partnership, an affiliated
limited partnership.
Operations information for the Westford Office Venture:
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Total income of venture $ 467,367 $417,603 $ 961,299 $ 763,776
Net income of venture 161,021 114,412 322,593 133,382
Total assets and liabilities for the Westford Office Venture:
June 30, December 31,
1995 1994
Total assets $ 10,994,887 $ 12,671,892
Total liabilities 749,723 749,320
The Venture paid a distribution to the venturers of $2,000,000 in
1995, of which the Partnership's share was $1,478,400.
3. Deferred Charges
Deferred charges consist of the following:
June 30, December 31,
1995 1994
Deferred leasing commissions $1,047,666 $1,038,495
Accumulated amortization (545,622) (484,872)
502,044 553,623
Deferred rent credits 47,687 57,461
$ 549,731 $ 611,084
4. Transactions with Affiliates
An affiliate of the General Partner provided investment property
acquisition services to the Partnership for fees of $2,500,000 which will
be payable from adjusted cash from operations after priority distributions
to the Partners or, if necessary, from sales proceeds.
Other fees and expenses incurred by the Partnership related to the
General Partner or its affiliates are as follows:
Three Months Ended Six Months Ended Unpaid at
June 30, June 30, June 30,
1995 1994 1995 1994 1995
Property management fees(a)(b) $29,243 $25,565 $59,015 $51,442 $20,135
Reimbursement (at costs)
for out-of-pocket expenses 9,604 18,589 20,135 26,876 18,066
$38,847 $44,154 $79,150 $78,318 $38,201
[FN]
(a) Included in property management fees is $7,475 and $6,104 for the
three months ended June 30, 1995 and 1994 respectively, and
$14,825 and $11,395 for the six months ended June 30, 1995 and
1994, respectively, attributable to the venture partner's share of
the Westford Office Venture.
[FN]
(b) Does not include property management fees earned by independent
property management companies of $48,428 and $43,714 for the three
months ended June 30, 1995 and 1994, respectively, and $98,910 and
$89,471 for the six months ended June 30, 1995 and 1994,
respectively. Certain property management services have been
contracted by an affiliate of the General Partner on behalf of the
Partnership and are paid directly by the Partnership to the third
party companies.
5. Subsequent Events
On August 15, 1995, the Partnership paid a distribution of $750,000
to the limited partners.
CIGNA INCOME REALTY-I LIMITED PARTNERSHIP
(a Delaware limited partnership)
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At June 30, 1995, the Partnership's cash and cash equivalents and
the Partnership's share of cash and cash equivalents from the Westford Office
Venture totalled $2,675,792 and $385,767, respectively. Cash and
cash equivalents will be used to fund liabilities, partnership reserves and
distributions. Capital improvements and leasing commissions are expected
to be funded by cash from operations as required. The Partnership paid
distributions of $690,000 or $3.45 per Unit for the first quarter of 1995
on May 15, 1995 and $750,000 or $3.75 per Unit for the second quarter of
1995 on August 15, 1995. The distributions approximated each quarter's
adjusted cash from operations including adjustments to reserves. The
Partnership's operations for the remainder of the year should support
continued distributions and changes in reserves for liabilities or leasing risk.
Piedmont Plaza Shopping Center produced adjusted cash from
operations for the second quarter of $191,000 after $9,000 of capital
improvements. For the remainder of year, the Partnership has approximately
$35,000 planned for capital expenditures. No significant leasing activity
is planned for the year as the property is 95% occupied with no lease
expirations during 1995. Now that occupancy and net operating income have
stabilized, the property has been listed for sale in an attempt to capitalize
on the increase in the property's value obtained over the last
two years and the perceived strength in the Orlando markets.
At Westford Corporate Center, adjusted cash from operations for the
second quarter was $317,000 ($234,000 attributable to the Partnership's
interest) with no tenant improvements or leasing commissions for the
quarter. The property remains 100% occupied. Capital expenditures for the
year have been planned at approximately $140,000.
Adjusted cash from operations at Woodlands Tech for the second
quarter was $101,000. Second quarter capital expenditures and leasing
commissions totalled $60,000, with approximately $69,000 planned for the
remainder of the year. At June 30, 1995, the property was 96% occupied.
One of two leases scheduled to expire in 1995 was renewed during the first
quarter. In April, the remaining 1995 leasing exposure was cured by the
expansion of an existing tenant to replace the vacating tenant. In May
1995, two leases representing the remaining vacant space were executed. On
June 1, 1995, a tenant representing 3,854 square feet vacated early, paying
a $22,000 termination fee. In 1996, leases representing 45% of total space
are scheduled to expire.
For the second quarter of 1995, Overlook had maintained average
occupancy of 95%. Adjusted cash from operations for the second quarter
totalled approximately $252,000 including $10,000 of capital improvements.
The market in which Overlook operates continues to expand, allowing the
property to raise rates slightly on renewals. No significant changes are
expected in the remainder of the year.
Results of Operations
Base rental income increased approximately $84,000 and $174,000 for
the three and six months ended June 30, 1995, respectively, as compared
with the same periods of 1994. Slightly higher average occupancy at
Piedmont Plaza led to an increase in rental income of approximately $17,000
and $27,000 for the three and six months, respectively. At Westford
Corporate Center, rent from a tenant's expansions in April and September of
1994 contributed approximately $42,000 and $113,000 to the increase.
Rental income at Overlook Apartments increased approximately $17,000 and
$40,000 as a result of modest rental rate increases. Tenant turnover and
lower rates have resulted in an approximate $14,000 and $28,000 decrease in
rental income at Woodlands Tech. The decrease at Woodlands was offset by a
lease termination fee of approximately $22,000 received in the second
quarter of 1995.
Other income increased approximately $33,000 and $120,000 for the
three and six months ended June 30, 1995, respectively, as compared to the
same periods of 1994. Piedmont reported a $25,000 and $47,000 increase,
principally related to expense recoveries from the anchor tenant. A
tenant's expansion allowed Westford to increase "expense charge-back"
billings. The additional billings resulted in an approximate $15,000 and
$80,000 increase for the three and six months, respectively.
Interest income increased for the three and six months ended June
30, 1995, as compared to the same periods of 1994, due to an increase in
interest rates on short term investments.
Overall, property operating expenses decreased for the three and
increased for the six months ended June 30, 1995, as compared to the same
periods of 1994. Repairs and maintenance expense increased for the three
and six months at Piedmont Plaza as a result of an exterior painting
project, and at Overlook Apartments due to increased second quarter 1995
carpet replacement and a first quarter 1995 termite treatment. An overall
decrease in property operating expenses at Westford partially offset the
increases. Westford had an increase in cleaning and management fee
expenses for the three and six months as a result of the increase in
occupancy; however, substantially less was spent in the first quarter on
snowplowing and in the second quarter on HVAC repairs. In addition,
property taxes at Westford decreased as a result of a drop in the assessed
value and at the Woodlands due to 1993 and 1994 tax refunds received in the
second quarter of 1995 totalling approximately $13,000.
The decrease in general and administrative expenses for the three
and six months ended June 30, 1995, as compared with the previous year, was
primarily the result of a second quarter 1994 agreement with the anchor
tenant at Piedmont Plaza relating to the reimbursement of sales tax paid on
rental receipts. The receipts from the tenant are now netted against the
payments made by the property.
The joint venture operations improved for the three and six months
ended June 30, 1995, as compared with the same periods of 1994, due to a
tenant's expansions in the second and third quarters of 1994.
The slight increase in depreciation and amortization for the three
and six months ended June 30, 1995, as compared with the same periods of
1994, was the result of tenant improvements and leasing commissions from a
tenant's expansions at Westford. The increase was partially offset by
decreased depreciation as the useful lives of certain assets expired at
Piedmont Plaza.
CIGNA INCOME REALTY-I LIMITED PARTNERSHIP
(a Delaware limited partnership)
Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Occupancy
The following is a listing of approximate physical occupancy levels by
quarter for the Partnership's investment properties:
1994 1995
At 3/31 At 6/30 At 9/30 At 12/31 At 3/31 At 6/30
1. Woodlands Tech Center
St. Louis, Missouri 95% 100% 94% 94% 94% 96%
2. Westford Corporate Center
Westford, Massachusetts(a) 75% 85% 100% 100% 100% 100%
3. Piedmont Plaza Shopping Center
Apopka, Florida 92% 94% 93% 95% 95% 95%
4. Overlook Apartments
Scottsdale, Arizona 99% 97% 99% 98% 98% 93%
[FN]
(a) See the Notes to Consolidated Financial Statements for information
on the joint venture partnership through which the Partnership has
made this real property investment. The Partnership owns a 73.92%
interest in the joint venture which owns the property.
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedules.
(b) No Form 8-Ks were filed during the three months ended June 30,
1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CIGNA INCOME REALTY-I LIMITED PARTNERSHIP
By: CIGNA Realty Resources, Inc. - Tenth,
General Partner
Date: August 11, 1995 By: /s/ John D. Carey
John D. Carey, President and Controller
(Principal Executive Officer)
(Principal Accounting Officer)