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 September 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
September 30, December 31,
1995 1994
Assets (Unaudited) (Audited)
Property and improvements, at cost:
Land and improvements $9,513,201 $9,492,296
Buildings 27,323,577 27,310,597
Tenant improvements 5,246,772 5,168,282
Furniture and fixtures 820,904 820,904
42,904,454 42,792,079
Less accumulated depreciation 12,773,802 11,635,309
Net property and improvements 30,130,652 31,156,770
Cash and cash equivalents 3,451,807 3,404,809
Accounts receivable (net of allowance of $7,567 in 1995
and $725 in 1994) 295,347 375,506
Prepaid expenses and other assets 8,606 20,614
Deferred charges, net 514,930 611,084
Total $34,401,342 $35,568,783
Liabilities and Partners' Capital
Liabilities:
Accounts payable (including $68,665 in 1995
and $20,526 in 1994 due to affiliates) $480,549 $211,187
Tenant security deposits 109,504 108,426
Unearned income 17,972 14,252
Deferred acquisition fees due to affiliates 2,500,000 2,500,000
Total liabilities 3,108,025 2,833,865
Venture partner's equity in joint venture 2,644,566 3,043,024
Partners' capital:
General Partner:
Capital contributions 1,000 1,000
Cumulative net income 38,609 25,640
39,609 26,640
Limited partners (200,000 Units):
Capital contributions, net of
offering costs 45,463,209 45,463,209
Cumulative net income 3,822,277 2,538,389
Cumulative cash distributions (20,676,344) (18,336,344)
28,609,142 29,665,254
Total partners' capital 28,648,751 29,691,894
Total $34,401,342 $35,568,783
<FN>
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 Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Income:
Base rental income $1,155,735 $1,106,716 $3,480,186 $3,257,695
Other income 226,796 278,449 684,131 615,868
Interest income 43,523 34,003 125,498 84,025
1,426,054 1,419,168 4,289,815 3,957,588
Expenses:
Property operating expenses 423,170 421,225 1,229,371 1,214,605
General and administrative 96,950 108,409 283,083 326,073
Fees and reimbursements to
affiliates 49,132 40,743 128,282 119,061
Depreciation and amortization 412,377 444,252 1,229,080 1,255,230
981,629 1,014,629 2,869,816 2,914,969
Income inclusive of venture
partner's share of venture
operations 444,425 404,539 1,419,999 1,042,619
Venture partner's share of venture
net income 39,010 27,270 123,142 62,056
Net income $405,415 $377,269 $1,296,857 $ 980,563
Net income:
General Partner $4,055 $3,773 $12,969 $ 9,806
Limited partners 401,360 373,496 1,283,888 970,757
$405,415 $377,269 $1,296,857 $ 980,563
Net income per Unit $2.01 $ 1.86 $6.42 $4.85
Cash distribution per Unit $3.75 $ 3.12 $11.70 $ 9.24
<FN>
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 Nine Months Ended September 30, 1995 and 1994
(Unaudited)
1995 1994
Cash flows from operating activities:
Net income $1,296,857 $ 980,563
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred rent credits 14,738 25,955
Depreciation and amortization 1,229,080 1,255,230
Venture partner's share of venture's
operations 123,142 62,056
Accounts receivable 80,159 92,067
Accounts payable 271,392 292,880
Other, net 16,806 15,094
Net cash provided by operating
activities 3,032,174 2,723,845
Cash flows from investing activities:
Distribution to joint venture partner (521,600) --
Purchases of property and improvements (112,375) (243,639)
Payment of leasing commissions (9,171) (72,954)
Net cash used in investing activities (643,146) (316,593)
Cash flows from financing activities:
Cash distribution to limited partners (2,342,030) (1,849,552)
Net increase in cash and cash equivalents 46,998 557,700
Cash and cash equivalents, beginning of year 3,404,809 3,049,518
Cash and cash equivalents, end of period $3,451,807 $3,607,218
Supplemental disclosure of non-cash information:
Accrued purchase of property and improvements $ -- $ 96,984
<FN>
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 Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Total income of venture $478,526 $433,584 $1,452,241 $1,204,226
Net income of venture 149,575 104,563 472,168 237,945
Total assets and liabilities for the Westford Office Venture:
September 30, December 31,
1995 1994
Total assets $11,158,622 $12,671,892
Total liabilities 763,882 749,320
The Venture paid a distribution to the venturers of $2,000,000 in 1995,
of which the Partnership's share was $1,478,400.
CIGNA INCOME REALTY-I LIMITED PARTNERSHIP
(a Delaware limited partnership)
and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
(Unaudited)
3. Deferred Charges
Deferred charges consist of the following:
September 30, December 31,
1995 1994
Deferred leasing commissions $1,047,666 $1,038,495
Accumulated amortization (575,459) (484,872)
472,207 553,623
Deferred rent credits 42,723 57,461
$514,930 $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 Nine Months Ended Unpaid at
September 30, September 30, September 30,
1995 1994 1995 1994 1995
Property management fees(a)(b) $29,406 $30,283 $88,421 $81,725 $34,664
Reimbursement (at costs)
for out-of-pocket expenses 19,726 10,460 39,861 37,336 34,001
$49,132 $40,743 $128,282 $119,061 $68,665
(a) Included in property management fees is $7,227 and $7,452 for the
three months ended September 30, 1995 and 1994 respectively, and
$22,052 and $18,847 for the nine months ended September 30, 1995
and 1994, respectively, attributable to the venture partner's share
of the Westford Office Venture.
(b) Does not include property management fees earned by independent
property management companies of $50,102 and $50,542 for the three
months ended September 30, 1995 and 1994, respectively, and
$149,012 and $140,013 for the nine months ended September 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 November 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 September 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 $2,629,308 and $607,991, 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 and third quarter of 1995 on November 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 third quarter of $181,000 after $15,000 of capital
improvements. For the remainder of the year, the Partnership has approximately
$19,000 planned for capital expenditures contingent upon leasing activity.
Minimal leasing activity is planned as the property is 95% occupied with no
lease expirations during 1995. During the quarter, the Partnership
marketed Piedmont for sale in an attempt to capitalize on the property's
increase in value since the addition of Builders Square as the anchor
tenant, as well as the lease guarantee from the anchor's corporate parent
company, K-Mart. In addition, the Orlando area is currently perceived by
many investors to be a desirable market. The marketing effort produced
some offers, one of which the Partnership selected to pursue. After a due
diligence period, the potential purchaser declined to continue with the
purchase. Many retailers are currently experiencing financial difficulties
and although K-Mart appears to be in no immediate jeopardy, investors are
currently very cautious toward retail in general. The Partnership plans to
revisit the other offers received and, if necessary, continue to market the
property for sale. Based on the recent activity, it appears a sale in 1995
of Piedmont Plaza is unlikely.
At Westford Corporate Center, adjusted cash from operations for the
third quarter was $297,000 ($219,500 attributable to the Partnership's
interest) with no tenant improvements or leasing commissions and $5,000 of
capital expenditures. The property remains 100% occupied. During the
fourth quarter Intel's lease for 16,469 square feet is scheduled to expire
and one of the other existing tenants, Cascade Communications, is expected
to assume the space. Negotiations are currently underway for a triple net
lease with no tenant improvements. Although the rent proposed on Cascade's
expansion would be at market with no cost to the Partnership for tenant
improvements or leasing commissions, rental revenue is likely be less than
what is currently received from Intel.
Adjusted cash from operations at Woodlands Tech for the third
quarter was $122,000. Third quarter capital expenditures and leasing
commissions totalled $9,000, with approximately $36,000 planned for the
remainder of the year dependent on leasing. At September 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. There was no leasing
activity during the third quarter, although a lease may be executed during
the fourth quarter on the 3,854 square feet of vacant space. In 1996,
leases representing 45% of total space are scheduled to expire. A tenant
with 10,069 square feet, representing 23% of the 1996 leasing exposure,
has communicated its decision not to renew because of space expansion needs
which the property cannot accommodate. Depending on renewal activity,
leasing costs for 1996 could be a substantial portion of the property's
annual cash flow.
For the third quarter of 1995, Overlook had maintained average
occupancy of 95%. Adjusted cash from operations for the third quarter
totalled approximately $244,000 including minimal capital improvements.
The market in which Overlook operates continues to expand with 6,916 multi-
family housing units in inventory and another 5,277 new units potentially
entering the market by the end of 1995. The North Scottsdale submarket has
been able to absorb the new units as they come on-line. In addition, new
home construction has been projected to continue as North Scottsdale has
been targeted as a desirable area for development. Although concessions
in the new inventory will continue to impact the market, some rental rate
growth persists as a result of the upscale nature of the new construction
and the creation of a corresponding high rental base for the area. No
significant changes in operations or results are expected for the remainder
of the year.
Results of Operations
Base rental income increased approximately $49,000 and $222,000 for
the three and nine months ended September 30, 1995, respectively, as
compared with the same periods of 1994. Slightly higher occupancy at
Piedmont Plaza led to an increase in rental income of approximately $9,000
and $36,000 for the three and nine months, respectively. At Westford
Corporate Center, rent from a tenant's expansions in April and September of
1994 contributed approximately $37,000 and $150,000 to the increase.
Rental income at Overlook Apartments increased approximately $11,000 and
$51,000 as a result of modest rental rate increases. Tenant turnover and
lower rates have resulted in an approximate $8,000 and $15,000 decrease in
rental income at Woodlands Tech.
Other income decreased for the three and increased for the nine
months ended September 30, 1995, as compared to the same periods of 1994.
Piedmont reported a $65,000 and $17,000 decrease for the three and nine
months, respectively. The three month decrease is the result of the
Partnership settling a dispute with the anchor tenant at Piedmont Plaza
during the third quarter 1994 in which additional expense recovery amounts
relating partially to 1992, 1993 and 1994 were collected. Offsetting the
decrease for the nine months was larger expense recoveries from the anchor
tenant in 1995 versus 1994. At Westford, a tenant's expansion increased
"expense charge-back" billings to the tenant by the property. The
additional billings resulted in an approximate $14,000 and $94,000 increase
for the three and nine months, respectively.
Interest income increased for the three and nine months ended
September 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 increased slightly for the
three and nine months ended September 30, 1995, as compared to the same
periods of 1994. Repairs and maintenance expense increased for the nine
months at Piedmont Plaza as a result of an exterior painting project and at
Overlook Apartments due to a greater number of carpet replacements as well
as an expanded pest control service. Westford had an increase for the
three and nine months in cleaning expense for common areas as more space is
now occupied and an increase for the nine months in management fees as a
result of an increase in collected revenues. However, substantially less
was spent in 1995 at Westford on snowplowing, due to the mild winter, and
on elevator repairs which more than offset the Westford increases. In
addition, property tax expense was lower at Woodlands Tech 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 nine months ended September 30, 1995, as compared with the previous
year, was primarily the result of a second quarter 1994 agreement with
Piedmont's anchor tenant for the reimbursement of sales tax expense
incurred by the Partnership for rental income. The reimbursement received
from the tenant is netted directly against the sales tax payment which has
been previously recorded as general and administrative.
The joint venture operations improved for the three and nine months
ended September 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 decrease in depreciation and amortization for the three and
nine months ended September 30, 1995, as compared with the same periods of
1994, was due to the expiration of useful lives of certain assets at
Woodlands Tech in 1995 and accelerated depreciation and amortization
associated with vacated tenants at Woodlands Tech in 1994. The decrease
was partially offset by additional depreciation from tenant improvements
and leasing commissions associated with a 1994 tenant expansion at
Westford.
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 At 9/30
1. Woodlands Tech Center
St. Louis, Missouri 95% 100% 94% 94% 94% 96% 96%
2. Westford Corporate Center
Westford, Massachusetts(a) 75% 85% 100% 100% 100% 100% 100%
3. Piedmont Plaza Shopping Center
Apopka, Florida 92% 94% 93% 95% 95% 95% 95%
4. Overlook Apartments
Scottsdale, Arizona 99% 97% 99% 98% 98% 93% 97%
(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
September 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: November 8, 1995 By: /s/ John D. Carey
John D. Carey, President and Controller
(Principal Executive Officer)
(Principal Accounting Officer)