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 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________ to _________
Commission file number 33-11418
DBSI/TRI EQUITY INCOME FUND A Real Estate Limited Partnership
State of Organization: Idaho Employer ID #: 82-0410175
1070 N. Curtis Rd., Suite 270, Boise, Idaho 83706
Telephone number: (208) 322-5858
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
N/A N/A
Securities registered pursuant to section 12(g) of the Act:
Limited Partnership Interests
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 (Section 229.405 of this chapter) 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 ]
CROSS REFERENCE TO
DOCUMENTS INCORPORATED BY REFERENCE
Document Incorporated Part of Form 10-K
Form S-11, Post Effective Part I, Item 1
Amendment #9, File No. 33-11418,
Pgs. 29-33, 62-64, 69-73, 124-154
Form S-11, Post Effective Part I, Item 2
Amendment #9, File No. 33-11418,
Pgs. 7a(1) - 7a(5)
Form S-11, Post Effective Part III, Items 10 (c)
Amendment #9, File No. 33-11418, and (e)
Pgs. 29-32.
Form S-11, Post Effective Part IV, Items 14 (3)
Amendment #9, File No. 33-11418, and (4)
Pgs. 124-154.
PART I
Item 1. Business.
The registrant is a Partnership which was formed for the express
purpose of investing in income-producing multi-family residential
real properties in the Northwestern United States. The Partnership
filed a Form S-11 registration statement which was declared effective
by the SEC on September 1, 1987. The primary objectives of the
Partnership are to: (1) preserve and protect the limited partners'
capital; (2) provide cash distributions to limited partners and (3)
obtain long-term appreciation through increases in the value of the
Partnership's real estate assets.
The general partner of the registrant is DBSI Housing Inc., an
Idaho corporation (incorporated in February 1980). On December 31,
1992 DBSI Housing Inc. acquired the general partner interests of
Tomlinson Realty Investment II. Tomlinson Realty Investment II
continues to hold one half of their original general partner profits
interest as a limited partner. The registrant is a limited partner-
ship which was formed as of November 15, 1986 (filed with the Idaho
Secretary of State on January 5, 1987), under the Idaho Uniform
Limited Partnership Act and will continue until December 31, 2036,
unless sooner dissolved, in accordance with the Partnership Agreement.
See documents incorporated by reference and attached hereto. (Form
S-11, Post Effective Amendment #9, File No. 33-11418, Pgs. 29-33,
62-64, 69-73, 124-154).
Item 2. Properties.
See documents incorporated by reference. (Form S-11, Post Effective
Amendment #9, File No. 33-11418, Pgs. 7a(1) - 7a(5).
Item 3. Legal Proceedings.
There were no material pending legal proceedings against the
registrant during 1995.
Item 4. Submission of Matters to a Vote of Security Holders.
During 1995 there were no votes of security holders, through
solicitation of proxies or otherwise.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
There is no established public trading market for the Limited
Partnership Interests of the registrant.
As of August 31, 1989 the registrant closed the offering of interests
and received the proceeds from subscriptions for 4,711.657 interests.
Distributions to Limited Partners during the years ended December 31,
1995, 1994 and 1993 totaled $325,912, $325,912, and $325,914.
Item 6. Selected Financial Data.
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1991 1992 1993 1994 1995
________ _______ ________ ________ ________
Total and other rental income $ 881,292 $ 865,333 $ 884,235 $ 902,544 $ 859,947
Total interest income $ 28,728 $ 9,912 $ 5,606 $ 2,015 $ 16,656
Income from sales of rental property $ 73,000
Net income $ 138,855 $ 131,711 $ 114,688 $ 75,341 $ 67,454
Cash and cash equivalents $ 239,483 $ 132,989 $ 100,513 $ 41,956 $ 18,941
Rental property $5,322,881 $5,340,541 $5,364,272 $5,400,353 $4,182,164
Total assets $5,320,868 $5,092,285 $4,820,724 $4,542,322 $4,869,007
Long term debt $2,003,029 $1,994,931 $1,985,963 $1,976,032 $1,965,033
Syndication costs $ 710,693 $ 710,693 $ 710,693 $ 710,693 $ 710,693
Partners' capital (deficit) $3,239,548 $3,045,347 $2,778,683 $2,503,585 $2,245,127
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Partnership generated funds primarily from the operation of rental
properties and to a lesser extent from interest on savings and certificates of
deposit.
Funds are used for rental property operating expenses, distributions to
partners, debt service, fixed asset replacements, capital improvements,
management and professional fees. The Partnership does not anticipate
acquiring any additional properties or refinancing any existing properties.
The Partnership sold Vista Cornell Apartments in October 1995 and Oak Square
Apartments in February 1996. The general partners believe that the Partnership
will have the liquidity and capital resources to meet all of its known
obligations and commitments.
The cash and cash equivalents position of the Partnership at December 31, 1995
represented approximately $19,000 available for Partnership operations.
Additionally, approximately $30,000 is in bank accounts reserved for tax,
insurance and replacements. There were no external sources of liquidity and
there are no outstanding capital commitments. The average rate of interest
earned on cash deposits was 3.2%.
Cash Flow and Operations
For the years ended December 31, 1995, 1994, and 1993 the projects generated
$142,207, $276,095, and $293,110, respectively of cash flows from operating
activities per the Statements of Cash Flows. Of the total current period cash
flow from operating activities, net cash flow of $125,551 came from the
operations of the apartment projects and cash flow of $16,656 came from
interest income earned on cash or equivalent investments. The 1995 rental
operations generated cash receipts of $859,947, incurred operating expenses of
$431,136 and interest expense of $202,726. Emerald Court Apartments, the only
property with a mortgage, has relatively lower cash flow from operating
activities than the unencumbered properties.
The following adjustments should be made to the cash flow in order to arrive at
an amount comparable to the first year pro forma funds from operations as shown
in the supplement to the prospectus for Emerald Court and Oak Square. First,
transitory changes in noncash operating assets and liabilities of approximately
$5,900 should be added, increasing cash flow to the actual funds which are being
generated from operations on an ongoing basis. Additionally, cash flow should
be reduced for principal payments of approximately $11,000 and for normal
operations fixed asset purchases of approximately $23,200. After the above
adjustments, the two properties combined annualized funds from operations for
1995 were approximately 36% of the first year pro forma amount.
Interest income decreased from $9,912 in 1992 to $5,606 in 1993 and decreased
from $5,606 in 1993 to $2,015 in 1994 largely because the average rate of return
on cash decreased in 1993 and 1994. Interest income increased from $2,015 to
$16,656 in 1995 because of the interest payments on the note for Vista Cornell.
In 1995 total rental operations income of $859,947 represented a 4% decrease
from the 1994 level and a 2% increase from 1993. Real estate operating
expenses decreased from $387,415 in 1992 to $382,447 in 1993, a 1.2% decrease
and increased to $431,136 in 1994, a 12.7% increase and to $494,326 in 1995, a
12% annual increase. The largest expense increases came from on-site
management costs and from utilities at Emerald Court. Therefore net income
decreased over the same period because of proportionately higher increases in
expenses than in rental income.
On October 19,1995, the Partnership closed the sale of Vista Cornell Apartments
to an unrelated buyer for $1,700,000. The buyer gave a note secured by the
property for $1,460,000 and paid $240,000 cash for the balance. The Partnership
paid costs of sale of approximately $55,000 (including commissions to unrelated
real estate brokers of $50,000), and received net cash proceeds of approximately
$185,000. The buyer's installment note requires payments of approximately
$11,750 per month including interest of 9% on the unpaid balance. The note may
be prepaid at any time and is due in full on October 19, 1999. The cash flow
generated from the interest on the note should exceed the annualized year to
date cash flow of the Vista Cornell Apartments by approximately 28% or an
increase of $29,000.
Had this sale occurred on January 1, 1995 the rental income of the partnership
would have decreased by approximately $203,000, interest would have increased by
approximately $117,000, and net income would have increased by approximately
$65,000 for the year ended December 31, 1995.
On February 21, 1996, the Partnership sold the Oak Square Apartments to
unrelated individual parties, titled through the Western American Exchange
Corporation. The buyers paid $970,000 cash for the property. The Partnership
netted approximately $932,900 from the sale after commissions to unrelated
parties of $29,100, closing costs of approximately $4,000 and a credit for
capital improvements of $4,000. Funds from closing also covered security
deposits of approximately $6,200 and prorations of tax and rent of approximately
$5,000. The Partnership purchased the property in January 1988 for $550,000 and
at the time of sale it had fixed asset carrying costs of approximately $467,600
($619,200 cost basis less accumulated depreciation of $151,600). The Partner-
ship realized a gain of approximately $465,300 on the sale ($932,900 net
proceeds less adjusted basis of $467,600).
Distributions of $325,912 to limited partners were made in 1995, with $142,207
from current cash flow from operations. Partnership net income after
depreciation (on a GAAP basis) for the year ended December 31, 1995 was
$67,454; therefore, on a GAAP basis, cash distributions in excess of that amount
were a return of capital. Cash provided from operations since inception
(November 15, 1986) totaled $1,935,474. Through December 31, 1995 cumulative
distributions to partners equalled $2,361,039. Cumulative distributions at
December 31, 1995 exceeded cash provided from operations since inception by
$425,565. These excess cash distributions came from Partnership reserves. The
Partnership's intent is to match distributions with long-term, ongoing cash flow
from operations. Cash flow is anticipated to improve during 1996 to more
closely match the level of distributions.
Per $1,000 investment (on the basis of a $1,000 investment made at the
inception of the escrow and offering) quarterly distributions have been made in
the following amounts: escrow period - $83; October 1988 through February
1990 - $18; April 1990 through February 1991 - $19; and May 1991 through October
1995 - $18.
Item 8. The following documents are filed on the pages listed below, as part
of Part II, Item 8, of this Report.
Document Page
1. Financial Statements and Accountants' Report:
Independent Auditors' Report F-1
Financial Statements:
Balance Sheets as of December 31, 1995 and December 31, 1994 F-2
Statements of Operations for the years ended December 31, 1995,
December 31, 1994 and December 31, 1993 F-3
Statements of Partners' Capital for the years ended December 31,
1995, December 31, 1994 and December 31, 1993 F-3
Statements of Cash Flows for the years ended December 31,
1995, December 31, 1994 and December 31, 1993 F-4
2. Notes to the Financial Statements (Notes 1-8) F-5 thru F-9
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.
(a) Identification of directors.
The following individuals are not directors of the registrant
but are directors or partners of the general partners of the
registrant. Consequently the following information concerning
their roles as directors or partners in those other entities is
being submitted.
DBSI Housing Inc.:
Director - Douglas L. Swenson Age - 47
Term of office - February 1980 to present
Other positions - President of DBSI Housing Inc.
Founded DBSI in 1979.
Director - John D. Foster Age - 55
Term of office - March 1992 to present
Other positions - Executive Vice President, Operations
Time with firm - 1989 to present
Director - Charles E. Hassard Age - 48
Term of office - March 1992 to present
Other positions - Executive Vice President, Finance
Time with firm - 1984 to present
Director - John Mayeron Age - 41
Term of office - March 1992 to present
Other positions - Executive Vice President, Marketing
Time with firm - 1990 to present
Director - Farrell Bennett Age - 57
Term of office - March 1992 to present
Other positions - Vice President, Marketing
Time with firm - 1984 to present
Director - Walt Mott Age - 46
Term of office - March 1992 to present
Other positions - Vice President, Asset Management
Time with firm - 1991 to present
(b) Identification of executive officers.
The registrant has one general partner that directs and controls
the operations of the Partnership. The officers of that general
partner performs functions and tasks for the registrant
similar to those of executives. Those individuals are Douglas
L. Swenson, John D. Foster, and Charles E. Hassard and the ages
and other information concerning them are included in Item 10(a)
above.
(c) Identification of certain significant employees
The current principal officers of the Company and the business
experience of each in the last five years are as follows:
Douglas L. Swenson, age 47, is President of the Company and also
the founder and current President of the other DBSI companies.
Prior to founding the DBSI group of companies, he practiced for
three and one-half years as a Certified Public Accountant in
Boise, Idaho, with Touche Ross & Co., an international
accounting firm, specializing in taxation. In this capacity, he
had extensive experience in the analysis of real estate
investments including their syndication into limited
partnerships. Prior to joining Touche Ross & Co., he was a
practicing Certified Public Accountant with Peat, Marwick,
Mitchell and Co. in Houston, Texas, beginning in 1972. Mr.
Swenson is a Certified Public Accountant, a real estate
licensee, and a direct placement securities principal in various
states and with the National Association of Securities Dealers.
He holds a Master of Accountancy degree from Brigham Young
University.
John D. Foster, age 55, is Executive Vice President, Operations
of the Company and DBSI Housing Inc. Prior to joining the DBSI
group of companies in 1989, he was managing partnerships and
third-party properties for Paul B. Larsen & Associates in
Boise, Idaho. He spent seven years with Boise Cascade
Corporation as Manager of the Timberland Resources Planning,
responsible for optimizing the financial return on a six-million
acre timberland base. He has management experience with other
Fortune 500 companies and while on active duty with the Navy was
responsible for management of all buildings, piers, and grounds
of the U.S. Naval Station, San Diego, California. He holds a
Bachelor of Science degree from Oklahoma State University and a
Master of Business Administration degree from the University of
Tulsa.
Charles E. Hassard, age 48, is Executive Vice President, Finance
of the Company and DBSI Housing Inc. Prior to joining the DBSI
group of companies in 1984, he was a Certified Public Accountant
for seven years with Touche Ross & Co. in San Francisco,
California, and Boise, Idaho, specializing in taxation. In his
position, he had extensive experience in analyzing real estate
investments and syndications. Mr. Hassard is a Certified Public
Accountant licensed in California and Idaho. He holds a Master
of Accountancy degree from Brigham Young University.
John Mayeron, age 41, is Executive Vice President, Marketing of
the Company and DBSI Housing Inc. With over ten years of
experience in the securities industry, his most recent position
was with Kavanaugh Securities before joining DBSI in 1990. Mr.
Mayeron holds a Bachelor's degree from the University of Oregon
in Marketing, International Business and Political Science. He
is a member of Phi Beta Kappa and Beta Gamma Sigma.
Farrell J. Bennett, age 57, is Vice President, Marketing of the
Company and DBSI Housing Inc. Prior to joining the DBSI group
of companies in 1984, he was owner-broker of American Realty
Corporation in Boise, Idaho, since 1967. In that position, he
analyzed and marketed numerous residential and commercial
properties. Mr. Bennett holds the CRB designation, is a
licensed real estate broker and a licensed direct placement
securities representative. His formal education was at the
University of Utah.
Walt Mott, age 46, is Vice President, Asset Management of the
Company and DBSI Housing Inc. Prior to joining the DBSI group
of companies in 1991, he was with Boise Cascade Corporation for
14 years where he served as Manager of Timberland Resources
Planning. In this capacity, Mr. Mott was responsible for the
financial analysis of nearly $400,000,000 in timberlands. He
has a background in land sales and acquisitions, as well as
experience in finance and accounting. He holds an A.A.S. degree
in Computer Science from County College of Morris, a Bachelor's
degree from the University of Idaho, a Master's degree
emphasizing finance and price theory from the University of
Idaho, and a Bachelor's degree in accounting from Boise State
University.
(d) Family relationships.
There are no family relationships between any director,
executive officer or person so nominated.
(e) Business experience.
(1) Background. The business experience of the directors and
partners of the general partners and other significant
employees are discussed in Item 10(a) above.
(f) Involvement in certain legal proceedings.
There are no events listed in Regulation Section 229.401(f) that
would be material to an evaluation of the ability or integrity
of the people listed above.
(g) Promoters and control persons.
There are no items to report in Regulation Section 229.401(g)
Item 11. Executive Compensation.
There was no cash, bonus or deferred compensation paid to any
executive officers by the registrant during the fiscal year of
this report.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
This item is not applicable to the registrant during the fiscal
year of this report.
Item 13. Certain Relationships and Related Transactions.
See footnote 5 to the financial statements, December 31, 1995
(page F-7).
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
There have been no reports on form 8-K which were filed in the
last quarter of the period covered by this report.
The following documents are filed as part of this report:
Exhibits required by Item 601:
Page of
Form 10-K
(1) Financial Statements:
Independent Auditors' Report F-1
Balance Sheets as of December 31, 1995
and December 31, 1994 F-2
Statements of Operations for the years ended
December 31, 1995, December 31, 1994, and
December 31, 1993 F-3
Statements of Partners' Capital for the years
ended December 31, 1995, December 31, 1994, and
December 31, 1993 F-3
Statements of Cash Flows for the years ended
December 31, 1995, December 31, 1994, and
December 31, 1993 F-4
Notes to the Financial Statements F-5 to F-9
(2) Schedules:
All schedules are omitted because they are not required or
because the required information is included in the financial
statements or notes thereto.
(3) Articles of Incorporation and by-laws (Partnership
Agreement) - pages 124-154 of the aforementioned Form
S-11 Post-Effective Amendment #9 (File No. 33-11418)
which is incorporated herein by reference.
(4) Instruments defining the rights of security holders,
including indentures - pages 124-154 of the
aforementioned Form S-11 Post-Effective Amendment #9
(File No. 33-11418) which is incorporated herein by
reference.
(9) Voting trust agreement N/A
(10) Material contracts N/A
(11) Statement re computation of per share earnings N/A
(12) Statements re computation of ratios N/A
(13) Annual report to security holders. Form 10-Q
or quarterly report to security holders N/A
(16) Letter re change in certifying accountant N/A
(18) Letter re change in accounting principles N/A
(19) Previously unfiled documents N/A
(21) Subsidiaries of the registrant N/A
(22) Published report regarding matter submitted to
vote of security holders N/A
(23) Consents of experts and counsel N/A
(24) Power of attorney N/A
(28) Information from reports furnished to state
insurance regulatory authorities N/A
(99) Additional exhibits None
Pursuant to the requirements of Section 13 or 15(d) 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.
DBSI/TRI EQUITY INCOME FUND
A Real Estate Limited Partnership
by ___________________ Date__________
Charles E. Hassard, Executive Vice President, Finance
of DBSI Housing Inc., general partner of
DBSI/TRI EQUITY INCOME FUND
A Real Estate Limited Partnership
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.
by ____________________ Date__________
Douglas L. Swenson, President and
a Member of the Board of Directors
of DBSI Housing Inc., general partner
of DBSI/TRI EQUITY INCOME FUND
A Real Estate Limited Partnership
by ____________________ Date__________
Charles E. Hassard, Executive Vice President, Finance
and a Member of the Board of Directors
of DBSI Housing Inc., general partner
of DBSI/TRI EQUITY INCOME FUND
A Real Estate Limited Partnership
by ____________________ Date__________
John D. Foster, Executive Vice President, Operations
and a Member of the Board of Directors
of DBSI Housing Inc., general partner
of DBSI/TRI EQUITY INCOME FUND
A Real Estate Limited Partnership
by ____________________ Date__________
Farrell J. Bennett, Vice President, Marketing
and a Member of the Board of Directors
of DBSI Housing Inc., general partner
of DBSI/TRI EQUITY INCOME FUND
A Real Estate Limited Partnership
Douglas L. Swenson, John D. Foster, Charles E. Hassard and Farrell J.
Bennett constitute a majority in interest of the Board of Directors of DBSI
Housing Inc. who is a general partner of the registrant.
INDEPENDENT AUDITORS' REPORT
To the Partners of
DBSI/TRI Equity Income Fund
A Real Estate Limited Partnership:
We have audited the accompanying balance sheets of DBSI/TRI Equity Income Fund
A Real Estate Limited Partnership as of December 31, 1995 and 1994 and the
related statements of earnings, partners' capital and cash flows for each of
the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements 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
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of DBSI/TRI Equity Income Fund A Real Estate
Limited Partnership as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boise, Idaho
March 18, 1996
DBSI/TRI EQUITY INCOME FUND
A REAL ESTATE LIMITED PARTNERSHIP
(an Idaho limited partnership)
BALANCE SHEETS
ASSETS December 31, 1995 December 31, 1994
_________________ _________________
Rental property (Notes 2 and 3):
Land $ 357,500 $ 567,500
Buildings and improvements 3,628,433 4,557,725
Furniture and fixtures 196,231 275,128
________________ _________________
4,182,164 5,400,353
Less accumulated depreciation (889,387) (1,005,747)
________________ _________________
3,292,777 4,394,606
Cash and cash equivalents 18,941 41,956
Accounts receivable 372
Prepaid expenses 2,464
Reserves 30,482 39,693
Tenant security deposits 28,098 25,496
Intangible costs (net) (Note 6) 38,337 38,107
Note receivable (Note 3) 1,460,000
_______________ _________________
Total assets $4,869,007 $4,542,322
LIABILITIES AND CAPITAL
Accounts payable $14,097 $23,732
Interest payable 18,525 16,879
Property taxes payable 1,715 5,964
Note payable affiliate (Note 5) 35,500
Deferred gain on sale of rental property (Note 3) 575,090
Mortgage payable (Note 4) 1,965,033 1,976,032
Tenant security deposits payable 13,920 16,130
_____________ ______________
Total liabilities 2,623,880 2,038,737
_____________ ______________
Partners' capital (Note 7) 2,245,127 2,503,585
______________ ______________
Total liabilities and capital $4,869,007 $4,542,322
<FN>
The Accompanying Notes are an Integral Part of these Financial Statements
DBSI/TRI EQUITY INCOME FUND
A REAL ESTATE LIMITED PARTNERSHIP
(an Idaho limited partnership)
STATEMENTS OF EARNINGS
Year Ended Year Ended Year Ended
REVENUES December 31, 1995 December 31, 1994 December 31, 1993
_________________ _________________ _________________
Tenant rent $ 828,388 $ 859,311 $ 846,795
Interest income 16,656 2,015 5,606
Other income 31,559 43,233 37,440
Gain on sale of rental property (Note 3) 73,000
____________ ____________ ____________
949,603 904,559 889,841
EXPENSES
Interest 211,386 203,718 203,990
Depreciation 152,241 169,071 166,932
Property tax and insurance 88,760 90,221 87,594
Utilities 103,895 102,488 99,987
Maintenance and repairs 138,318 94,233 88,105
Administrative 81,325 54,358 44,141
Management fees (Note 5) 37,350 44,021 34,085
On-site manager (Note 5) 58,404 61,061 39,564
Amortization 10,470 10,047 10,755
___________ ___________ ___________
882,149 829,218 775,153
___________ ___________ ___________
Net income $ 67,454 $75,341 $114,688
STATEMENTS OF PARTNERS' CAPITAL
Year Ended Year Ended Year Ended
December 31, 1995 December 31, 1994 December 31, 1993
_________________ _________________ _________________
Beginning capital (Note 7) $2,503,585 $2,778,683 $3,045,347
Distributions (325,912) (350,439) (381,352)
Net income 67,454 75,341 114,688
____________ ____________ ____________
Ending capital $2,245,127 $2,503,585 $2,778,683
<FN>
The Accompanying Notes are an Integral Part of these Financial Statements
DBSI/TRI EQUITY INCOME FUND
A REAL ESTATE LIMITED PARTNERSHIP
(an Idaho limited partnership)
STATEMENTS OF CASH FLOWS
CASH FLOWS FROM Year Ended Year Ended Year Ended
OPERATING ACTIVITIES December 31, 1995 December 31, 1994December 31, 1993
_________________ _________________ _________________
Net income $ 67,454 $ 75,341 $114,688
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 162,711 179,118 177,687
Gain on sale of rental property (73,000)
Changes in operating
assets and liabilities:
Accounts receivable (372) 143
Prepaid expenses 2,464 15,214 (3,243)
Tenant security deposits (2,602) (205) (236)
Accounts payable (9,635) 4,407 2,921
Interest payable 1,646 (84) (77)
Property taxes payable (4,249) 3,766 2,198
Security deposits payable (2,210) (1,462) (971)
_________ _________ _________
Net cash provided by operating activities 142,207 276,095 293,110
CASH FLOWS FROM
INVESTING ACTIVITIES
Proceeds from sale of rental property 185,287
Rental property purchases (47,609) (36,081) (23,731)
Decrease in reserves 9,211 61,799 88,465
_________ _________ _________
Net cash provided by investing activities 146,889 25,718 64,734
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from note payable to affiliate 35,500
Increase in intangible costs (10,700)
Principal payments on loans (10,999) (9,931) (8,968)
Distributions to partners (325,912) (350,439) (381,352)
___________ _________ ____________
Net cash used in
financing activities (312,111) (360,370) (390,320)
___________ __________ ____________
Net decrease in cash
and cash equivalents (23,015) (58,557) (32,476)
Cash and cash equivalents at
beginning of period 41,956 100,513 132,989
__________ __________ ____________
Cash and cash equivalents at end of period $18,941 $41,956 $100,513
The $1,460,000 note received as a result of the sale of Vista Cornell Apartments is a non cash transaction
and is not included above.
<FN>
The Accompanying Notes are an Integral Part of these Financial Statements
DBSI/TRI EQUITY INCOME FUND
A REAL ESTATE LIMITED PARTNERSHIP
(an Idaho limited partnership)
NOTES TO FINANCIAL STATEMENTS
For the Years Ended December 31, 1995, 1994, and 1993
NOTE 1. SUMMARY OF PARTNERSHIP ORGANIZATION AND SIGNIFICANT ACCOUNTING
POLICIES
Partnership Organization.
DBSI/TRI Equity Income Fund A Real Estate Limited Partnership, was formed on
November 15, 1986 with general partners DBSI Housing Inc., an Idaho corporation,
and Tomlinson Realty Investment II, an Idaho general partnership. On December
31, 1992 DBSI Housing Inc. acquired the general partner interest of Tomlinson
Realty Investment II. Tomlinson Realty Investment II continues to hold one half
of their original general partner profits interest as a limited partner. The
Partnership was in the development stage through December 31, 1987 and in the
offering stage through August 31, 1989. The business purpose of the Partnership
is to acquire and operate leveraged multi-family housing projects primarily in
the Northwestern United States. The partnership agreement provides that the
Partnership will be dissolved no later than December 31, 2036, unless sooner
terminated as provided in the agreement.
The Partnership acquired three properties during the offering period: Vista
Cornell Apartments, an existing 46-unit project; Oak Square Apartments, an
existing 22-unit project, both located in the Portland, Oregon metropolitan
area; and Emerald Court Apartments, a new 68-unit apartment project located in
the Seattle metropolitan area. The Partnership sold Vista Cornell Apartments
on October 19, 1995, and Oak Square Apartments on February 21, 1996.
Operating profits and losses exclusive of losses from the sale or disposition
of Partnership properties, and cash distributions, are allocated 98% to limited
partners and 2% to general partners. After the limited partners have received
distributions equal to a 7% annual return on their capital contributions the
general partners receive additional distributions equal to 5% of total
distributions. Proceeds from sale or refinancing are to be distributed 100%
to the limited partners until they have received cumulative distributions equal
to their capital contributions plus an amount equal to 10% per annum, then 85%
to the limited partners and 15% to the general partners.
Significant Accounting Policies.
The balance sheets include only those assets, liabilities, and partners'
capital which relate to the business of the Partnership and do not include
any assets, liabilities, revenues or expenses attributable to the partners'
activities. No partners receive salaries from the Partnership for services.
No provision has been made for federal and state income taxes since these taxes
are the personal responsibility of the partners.
Rental property is recorded at cost. Depreciation is computed by the Modified
Accelerated Cost Recovery System (MACRS) or straight-line method over the
estimated useful lives of the assets as follows: buildings and structural
improvements - 15 to 32 years; furniture and fixtures - 5 to 12 years.
Expenditures for maintenance and repairs are charged to operating expenses as
incurred. The cost and accumulated depreciation of assets sold or otherwise
retired are removed from the accounts and gain or loss on disposition is
included in the results of operations. Loan fees are amortized over the
estimated life of the note (ten years) beginning in May, 1989.
Cash and cash equivalents include cash in banks (except for security deposits
and reserve bank accounts), bank certificates of deposit with original
maturities of ninety days or less, and reserve for return to owners. Reserves
consist of bank deposits maintained for replacements and repairs, property
taxes, insurance, and Partnership reserves.
The estimated fair value of cash and cash equivalents, accounts payable and
long-term debt approximates their carrying amounts.
The preparation of the Partnership's financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, requires management to review long-lived
assets for impairment whenever events or changes in circumstances indicate that
the carrying amount of the assets may not be recoverable. This statement will
be effective for the Partnership's fiscal year end December 31, 1996. The
Partnership's existing accounting policies are such that this pronouncement is
not expected to have a material effect on the Company's financial position or
results of operations.
NOTE 2. RENTAL PROPERTY
The following schedules detail the activity in rental property assets and
accumulated depreciation.
Beginning Ending
Rental Property Balance Additions Dispositions Balance
_______________________________________________________________________________________
Land $ 567,500 $ 567,500
Buildings and improvements 4,536,783 $ 20,942 4,557,725
Furniture and fixtures 259,989 15,139 275,128
__________________________________________________
Total year ended December 31, 1994 $ 5,364,272 $ 36,081 $5,400,353
Land $ 567,500 $ (210,000) $ 357,500
Buildings and improvements 4,557,725 $13,358 (942,650) 3,628,433
Furniture and fixtures 275,128 34,251 (113,148) 196,231
__________________________________________________
Total year ended December 31, 1995 $ 5,400,353 $ 47,609 $(1,265,798) $4,182,164
Beginning Ending
Accumulated Depreciation Balance Additions Dispositions Balance
_______________________________________________________________________________________
Buildings and improvements $ 719,138 $142,302 $ 861,440
Furniture and fixtures 117,538 26,769 144,307
__________________________________________________
Total year ended December 31, 1994 $ 836,676 $169,071 $1,005,747
Buildings and improvements $ 861,440 $131,588 $ (215,266) $ 777,762
Furniture and fixtures 144,307 20,655 (53,337) 111,625
__________________________________________________
Total year ended December 31, 1995 $1,005,747 $152,243 $ (268,603) $ 889,387
3. SALE OF RENTAL PROPERTIES & SUBSEQUENT EVENT
On October 19, 1995 the Partnership sold the Vista Cornell Apartments to an
unrelated party, Vista Cornell L.L.C. The buyer paid a total price of
$1,700,000 with $240,000 cash and a seller's note and deed of trust for
$1,460,000. The note bears 9% interest and requires monthly payments of
$11,747 until October 19, 1999 when the full balance of approximately $1,415,638
plus any unpaid accrued interest becomes due. The buyer may prepay at any
earlier date. The Partnership realized a net gain of approximately $648,000 on
the sale ($73,000 current and $575,000 deferred gain), based on the carrying
cost (after depreciation) of approximately $997,000 and costs of sale of
$55,000 including $50,000 in commissions to unrelated third parties and
approximately $5,000 in other closing costs. Funds from closing also covered
prorated costs and income of approximately $20,000. The Partnership
purchased the property in January 1988 for $1,050,000 and at time of sale it
had fixed asset carrying costs of approximately $1,266,000 less approximately
$269,000 of accumulated depreciation.
On February 21, 1996, the Partnership sold the Oak Square Apartments to
unrelated individual parties, titled through the Western American Exchange
Corporation. The buyers paid $970,000 cash for the property. The
Partnership netted approximately $932,900 from the sale after commissions to
unrelated parties of $29,100, closing costs of approximately $4,000 and a
credit for capital improvements of $4,000. Funds from closing also covered
security deposits of approximately $6,200 and prorations of tax and rent of
approximately $5,000. The Partnership purchased the property in January 1988
for $550,000 and at the time of sale it had fixed asset carrying costs of
approximately $467,600 ($619,200 cost basis less accumulated depreciation of
$151,600). The Partnership realized a gain of approximately $465,300 on the
sale ($932,900 net proceeds less adjusted basis of $467,600).
4. MORTGAGE PAYABLE
Interest paid on debt for cash flow purposes during 1995, 1994, and 1993 was
$202,036, $203,103, and $204,937. A $2,020,000 loan from York Associates to
the Partnership was used for the purchase of Emerald Court Apartments in
May, 1989. The loan is secured by a deed of trust on the Emerald Court
Apartments. At December 31, 1995, the carrying value of Emerald Court
Apartments was $2,825,149 ($3,562,946 cost basis of land, buildings and
improvements, and furniture and fixtures net of $737,797 accumulated
depreciation). Principal and interest at 10.25% are payable on the note in
monthly installments of $17,753 through June, 1999. After that date, York
Associates holds a call option which, if exercised at that date, would require
a balloon payment of $1,916,363. The scheduled principal payments on the note
on Emerald Court for $1,965,033 are as follows:
Year 1996 1997 1998 1999 Total
__________________________________________________________________
Amount $12,181 $13,489 $14,938 $1,924,425 $1,965,033
5. RELATED PARTY TRANSACTIONS
The Partnership borrowed $35,500 on October 23, 1995 from an affiliate of the
General Partner. This loan bears interest at the General Partner's bank
borrowing rate of prime plus 1.5% (10% as of December 31, 1995). The loan
proceeds provide funds for short term operating cash flow needs of the Seattle
project and enables the Partnership to maintain the distribution rate during
the period of the lower operating cash flow. The loan will be repaid with
proceeds from the sale of Oak Square Apartments.
As described in the partnership agreement, affiliates of the general partners
receive compensation and fees with the management of the projects. Such fees
totaled $37,350, $44,021, $34,085 for 1995, 1994 and 1993 respectively.
In 1995, 1994, and 1993, these fees were paid to affiliates of the general
partner DBSI Housing Inc. DBSI Realty Corporation, an affiliate of the
general partner DBSI Housing Inc., was reimbursed for payroll costs for on-site
managers for $58,404 in 1995, $61,061 in 1994 and $39,564 in 1993.
Included in accounts payable are the following amounts due to related parties:
Related Party Description 1995 1994 1993
______________________________________________________________________________
DBSI Realty Corp., Property Management Fees $432 $3,107
(affiliate of DBSI Admin./Office Supplies $1,247 275 275
Housing Inc.)
6. INTANGIBLE COSTS
Intangible assets and accumulated amortization at December 31, 1995 consist of
the following:
Beginning Accumulated
Description Costs Additions Cost Amortization Net
________________________________________________________________________
1994 activity
Loan Fees $86,280 $86,280 ($48,173) $38,107
1995 activity
Loan Fees 86,280 $10,700 96,980 (58,643) 38,337
7. PARTNERS' CAPITAL
The following schedule details the capital activity between the limited and general partners:
Syndication and
Limited General Total Unallocated
Partners Partners Allocated Capital Total
_________________________________________________________________
Balance December 31, 1992 $3,779,534 ($23,494) $3,756,040 $(710,693) $3,045,347
Net Income 112,438 2,250 114,688 114,688
Distributions to Partners (325,914) (55,438) (381,352) (381,352)
_________________________________________________________________
Balance December 31, 1993 3,566,058 (76,682) 3,489,376 (710,693) 2,778,683
Net Income 73,799 1,542 75,341 75,341
Distributions to Partners (325,912) (24,527) (350,439) (350,439)
_________________________________________________________________
Balance December 31, 1994 3,313,945 (99,667) 3,214,278 (710,693) 2,503,585
Net Income 66,105 1,349 67,454) 67,454
Distributions to Partners (325,912) (325,912) (325,912)
_________________________________________________________________
Balance December 31, 1995 $3,054,138 ($98,318) $2,955,820 ($710,693) $2,245,127
8. NET INCOME (LOSS) FROM RENTAL PROPERTIES
The following schedule details separate rental property and partnership operations for the
year ended December 31, 1995.
_________________________________________________________________
Emerald Vista Oak
Revenues Court Apts Cornell Apts Square Apts Partnership Total
_________________________________________________________________
Tenant rent $485,914 $202,643 $139,603 $828,388
Interest income 132 8 89 $16,427 16,656
Other income 21,187 7,404 2,968 31,559
Income from sale of property 73,000 73,000
_________________________________________________________________
507,233 210,055 142,888 89,427 949,603
Expenses
Interest 202,726 8,660 211,386
Depreciation 112,761 20,192 19,288 152,241
Property tax and insurance 50,153 25,451 13,156 88,760
Utilities 54,889 33,984 15,022 103,895
Maintenance and repairs 77,290 43,446 17,582 138,318
Administration 50,872 10,604 6,123 13,726 81,325
Management fees 19,485 11,313 6,552 37,350
On-site manager 37,323 13,116 7,965 58,404
Amortization 10,470 10,470
_________________________________________________________________
605,499 158,106 85,688 32,856 882,149
_________________________________________________________________
Income (loss) ($98,266) $51,949 $57,200 $56,571 $67,454
<FN>
On October 19, 1995 the partnership sold the Vista Cornell Apartments, and on
February 21, 1996 the partnership sold Oak Square Apartments.