UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
June 30, 1995
For the period ended ____________________________________________________
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to ___________________
0-15538
Commission File Number: _________________________________________________
First Capital Income Properties, Ltd. - Series XI
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(Exact name of registrant as specified in its charter)
Florida 36-3364279
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Riverside Plaza, Suite 950, Chicago, Illinois 60606-2607
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(Address of principal executive offices) (Zip Code)
(312) 207-0020
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(Registrant's telephone number, including area code)
Not applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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
--- ---
DOCUMENTS INCORPORATED BY REFERENCE:
The First Amended and Restated Certificate and Agreement of Limited Partnership
filed as Exhibit A to the Partnership's Prospectus dated September 12, 1985,
included in the Partnership's Registration Statement on Form S-11, is
incorporated herein by reference in Part I of this report.
BALANCE SHEETS
(All dollars rounded to nearest 00s)
June 30,
1995 December 31,
(Unaudited) 1994
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ASSETS
Investment in commercial rental properties:
Land $10,948,500 $10,948,500
Buildings and improvements 59,015,200 57,991,600
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69,963,700 68,940,100
Accumulated depreciation and amortization (17,413,000) (16,292,000)
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Total investment properties, net of accumulated
depreciation and amortization 52,550,700 52,648,100
Cash and cash equivalents 1,281,800 1,612,600
Restricted certificate of deposit and escrow
deposits 79,700 187,300
Rents receivable 544,600 571,500
Other assets (net of accumulated amortization on
loan acquisition costs of $891,400 and $855,600,
respectively) 262,200 532,100
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$54,719,000 $55,551,600
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loans payable $40,573,400 $40,369,100
Front-End Fees loan payable to Affiliate 8,295,200 8,295,200
Accounts payable and accrued expenses 1,193,500 1,470,000
Due to Affiliates 126,900 112,700
Security deposits 208,100 195,100
Other liabilities 68,400 68,200
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50,465,500 50,510,300
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Partners' (deficit) capital:
General Partner (296,800) (288,900)
Limited Partners (57,621 Units authorized, issued
and outstanding) 4,550,300 5,330,200
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4,253,500 5,041,300
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$54,719,000 $55,551,600
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STATEMENTS OF PARTNERS' CAPITAL
For the six months ended June 30, 1995
and the year ended December 31, 1994
(Unaudited)
(All dollars rounded to nearest 00s)
General Limited
Partner Partners Total
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Partners' (deficit) capital,
January 1, 1994 $(183,100) $ 15,804,900 $ 15,621,800
Net (loss) for the year ended
December 31, 1994 (105,800) (10,474,700) (10,580,500)
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Partners' (deficit) capital,
December 31, 1994 (288,900) 5,330,200 5,041,300
Net (loss) for the six months ended
June 30, 1995 (7,900) (779,900) (787,800)
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Partners' (deficit) capital,
June 30, 1995 $(296,800) $ 4,550,300 $ 4,253,500
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The accompanying notes are an integral part of the financial statements.
2
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended June 30, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
1995 1994
---------------------------------------------------------------------------
Income:
Rental $2,671,100 $2,808,300
Interest 16,600 10,200
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2,687,700 2,818,500
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Expenses:
Interest:
Affiliate 169,400 136,700
Nonaffiliates 934,700 905,200
Depreciation and amortization 581,300 675,500
Property operating:
Affiliates 149,700 142,100
Nonaffiliates 488,000 528,400
Real estate taxes 336,400 333,200
Insurance--Affiliate 20,700 48,600
Repairs and maintenance 315,900 365,000
General and administrative:
Affiliates 7,100 9,200
Nonaffiliates 60,600 49,200
Loss on sale of property 101,500
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3,063,800 3,294,600
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Net (loss) $ (376,100) $ (476,100)
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Net (loss) allocated to General Partner $ (3,800) $ (4,800)
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Net (loss) allocated to Limited Partners $ (372,300) $ (471,300)
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Net (loss) allocated to Limited Partners per Unit
(57,621 Units authorized, issued and outstanding) $ (6.46) $ (8.18)
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STATEMENTS OF INCOME AND EXPENSES
For the six months ended June 30, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
1995 1994
---------------------------------------------------------------------------
Income:
Rental $5,286,500 $5,655,600
Interest 30,100 18,900
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5,316,600 5,674,500
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Expenses:
Interest:
Affiliate 337,100 256,700
Nonaffiliates 1,862,600 1,787,100
Depreciation and amortization 1,156,800 1,341,400
Property operating:
Affiliates 285,600 286,100
Nonaffiliates 1,042,700 1,195,200
Real estate taxes 620,000 712,500
Insurance--Affiliate 57,600 79,000
Repairs and maintenance 618,300 753,300
General and administrative:
Affiliates 15,100 16,900
Nonaffiliates 108,600 107,700
Loss on sale of property 101,500
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6,104,400 6,637,400
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Net (loss) $ (787,800) $ (962,900)
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Net (loss) allocated to General Partner $ (7,900) $ (9,600)
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Net (loss) allocated to Limited Partners $ (779,900) $ (953,300)
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Net (loss) allocated to Limited Partners per Unit
(57,621 Units authorized, issued and outstanding) $ (13.53) $ (16.54)
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STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s)
1995 1994
-----------------------------------------------------------------------------
Cash flows from operating activities:
Net (loss) $ (787,800) $ (962,900)
Adjustments to reconcile net (loss) to net cash
provided by operating activities:
Depreciation and amortization 1,156,800 1,341,400
Loss on sale of property 101,500
Changes in assets and liabilities:
Decrease in rents receivable 26,900 36,900
Decrease in other assets 267,000 342,800
(Decrease) in accounts payable and accrued
expenses (276,500) (349,800)
Increase (decrease) in due to Affiliates 14,200 (107,400)
Increase (decrease) in other liabilities 200 (33,500)
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Net cash provided by operating activities 400,800 369,000
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Cash flows from investing activities:
Proceeds from sales of commercial rental property 4,106,100
Payments for capital and tenant improvements (1,023,600) (567,200)
Maturity of (investment in) restricted certificate
of deposit 75,000 (75,000)
Decrease in restricted escrow deposit 32,600
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Net cash (used for) provided by investing
activities (916,000) 3,463,900
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Cash flows from financing activities:
Proceeds of mortgage loan payable 800,000
Principal payments on mortgage loans payable (595,700) (3,865,600)
Payment of loan extension fees (32,900)
Increase (decrease) in security deposits 13,000 (22,600)
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Net cash provided by (used for) financing
activities 184,400 (3,888,200)
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Net (decrease) in cash and cash equivalents (330,800) (55,300)
Cash and cash equivalents at the beginning of the
period 1,612,600 1,453,300
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Cash and cash equivalents at the end of the period $ 1,281,800 $ 1,398,000
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Supplemental information:
Interest paid to Affiliate during the period $ 329,500 $ 292,100
-----------------------------------------------------------------------------
Interest paid to nonaffiliates during the period $ 1,863,000 $ 1,855,500
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The accompanying notes are an integral part of the financial statements.
3
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
June 30, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement on Form S-11, filed with the
Securities and Exchange Commission. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is incorporated herein by reference.
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles. Under this method of accounting, revenues are
recorded when earned and expenses are recorded when incurred.
The financial information included in these financial statements is unaudited;
however, in management's opinion, all adjustments (consisting of only normal,
recurring accruals) necessary for a fair presentation of the results of
operations for the periods included have been made. Results of operations for
the quarter and six months ended June 30, 1995, are not necessarily indicative
of the operating results for the year ending December 31, 1995.
Certain reclassifications have been made to the previously reported 1994
statements in order to provide comparability with the 1995 statements. These
reclassifications have no effect on net income, net (loss) or Partners'
capital.
The financial statements include the Partnership's 50% interest in three joint
ventures with Affiliated partnerships. Two of the 50% joint ventures were
formed for the purpose of each acquiring a 100% interest in real property and
one of the 50% joint ventures was formed for the purpose of acquiring a
preferred majority interest in real property. In addition, the financial
statements include the Partnership's 50% interest in three joint ventures with
Affiliated partnerships, one of which was formed for the purpose of acquiring a
100% interest in a real property (subsequently sold on June 29, 1994) and two
of which were formed for the purpose of each acquiring a preferred majority
interest in real property (subsequently sold on June 29, 1994 and December 29,
1994, respectively). These joint ventures are, or were, operated under the
common control of the General Partner. Accordingly, the Partnership's pro rata
share of the ventures' revenues, expenses, assets, liabilities and capital is
included in the financial statements.
The financial statements also include the Partnership's 70% undivided interest
in a joint venture with an unaffiliated third party. The joint venture owns a
100% interest in the Burlington Office Center I, II and III ("Burlington").
This joint venture is operated under the control of the General Partner. The
Partnership has included 100% of the venture's revenues, expenses, assets,
liabilities and capital in the financial statements. Cash flow from operations
(as defined by general partnership agreement) is allocated first, in the amount
necessary to provide the Partnership with a cumulative non-compounded return on
its net invested capital balance of the joint venture equal to 8.75% per annum,
increasing 0.25% each year, up to a maximum of 11% per annum (the return for
1995 is 10.5%); second, to the venture partner in the amount necessary to
provide a noncumulative non-compounded return on its net invested capital
balance of the joint venture equal to the percentage return allocable to the
Partnership for that year and third, the remaining balance, if any, is
allocated 70% to the Partnership and 30% to the venture partner. For the
quarter and six months ended June 30, 1995, 100% of cash flow (as defined by
the general partnership agreement) was allocated to the Partnership. Net
operating profits are allocated first, to the Partnership until the cumulative
amount allocated equals the cumulative distributions of the joint venture;
second, to the venture partner until the cumulative amount allocated equals his
cumulative distributions of the joint venture, and the balance, if any, 70% to
the Partnership and 30% to the venture partner. For the quarter and six months
ended June 30, 1995, the Partnership was allocated 100% of net operating
profits.
Cash equivalents are considered all highly liquid investments purchased with a
maturity of three months or less.
Reference is made to the Partnership's annual report for the year ended
December 31, 1994, for a description of other accounting policies and
additional details of the Partnership's financial condition, results of
operations, changes in Partners' capital and changes in cash balances for the
year then ended. The details provided in the notes thereto have not changed
except as a result of normal transactions in the interim.
2. RELATED PARTY TRANSACTIONS:
In accordance with the Partnership Agreement, Net Profits and Net Losses
(exclusive of Net Profits and Net Losses from the sale or disposition of a
Partnership property) shall be allocated 1% to the General Partner and 99% to
the Limited Partners. For the quarter and six months ended June 30, 1995, the
General Partner was allocated a Net Loss from operations of approximately
$3,800 and $7,900, respectively.
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter and six months ended June 30, 1995 were as follows:
Paid
-------------------
Quarter Six Months Payable
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Interest expense on Front-End Fees loan (Note 3) $171,800 $329,500 $ 55,700
Property management and leasing fees 130,000 244,000 65,300
Reimbursement of property insurance premiums, at
cost 52,900 52,900 None
Reimbursement of expenses, at cost:
(1) Accounting 3,300 9,200 5,000
(2) Investor communication 1,300 3,400 900
(3) Legal 29,900 42,000 None
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$389,200 $681,000 $126,900
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ANTEC, in the business of designing, engineering, manufacturing and
distributing cable television products, which is 53% owned by Itel Corporation,
an Affiliate of the General Partner, is obligated to the Partnership under a
lease of office space at Prentice Plaza. During the quarter and six months
ended June 30, 1995 ANTEC paid approximately $89,200 and $204,200,
respectively, in rent. The Partnership has a 50% joint venture interest in
these rents. The rents paid by ANTEC are comparable to those paid by other
tenants at Prentice Plaza.
3. FRONT-END FEES LOAN PAYABLE TO AFFILIATE:
The Partnership originally borrowed from an Affiliate of the General Partner an
amount needed for the payment of securities sales commissions, Offering and
Organizational Expenses and other Front-End Fees, other than Acquisition Fees.
Repayment of the principal amount of the Front-End Fees loan is subordinated to
repayment to the Unit Holders of 100% of their Original Capital Contribution
from Sale or Refinancing Proceeds (as defined in the Partnership Agreement).
Interest on the outstanding balance of this loan is due and payable monthly at
a rate no greater than the cost of funds obtained by the Affiliate from
unaffiliated lenders.
As of June 30, 1995, the Partnership had drawn approximately $8,295,200 under
the Front-End Fees loan agreement. The interest rate paid on the Front-End Fees
loan is subject to change in accordance with the loan agreement. The weighted
average interest rate for the quarter and six months ended June 30, 1995 was
approximately 8.17% and 8.13%, respectively. As of June 30, 1995, the interest
rate was 8.0625%.
Pursuant to a modification of this loan agreement, the Partnership has the
option to defer payment of interest on this loan, for a 48-month period
beginning January 1, 1993. In addition, any interest payments paid by the
Partnership from January 1, 1993 through December 31, 1996 may be borrowed from
the Affiliate of the General Partner. All deferred and subsequently borrowed
amounts (including accrued interest thereon) shall be due and payable on
January 1, 1997, and shall not be subordinated to repayment to the Unit Holders
as discussed above. As of June 30, 1995, the Partnership has not exercised its
option to defer the payment of interest on this loan.
4. RESTRICTED ESCROW DEPOSIT:
Restricted escrow deposit at June 30, 1995 represented an amount being held by
the mortgage holder of the Regency Park Shopping Center in a non-interest
bearing escrow account. This amount is refundable to the Partnership upon this
property meeting certain operating requirements as stipulated by the mortgage
note.
4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the Partnership's annual report for the year ended
December 31, 1994, for a discussion of the Partnership's business.
OPERATIONS
The table below is a recap of certain operating results of each of the
Partnership's properties for the quarters and six months ended June 30, 1995
and 1994. The discussion following the table should be read in conjunction with
the Financial Statements and Notes thereto appearing in this report.
Comparative Operating Results (a)
For the Quarters For the Six Months
Ended Ended
6/30/95 6/30/94 6/30/95 6/30/94
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MARQUETTE MALL AND OFFICE
BUILDING
Rental revenues $ 1,079,500 $1,069,500 $2,014,200 $2,061,500
-------------------------------------------------------------------------
Property net income
(loss) $ 29,000 $ 15,500 $ (12,600) $ (16,000)
-------------------------------------------------------------------------
Average occupancy 82% 80% 82% 81%
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BURLINGTON OFFICE CENTER I, II
AND III
Rental revenues $ 707,700 $ 741,800 $1,465,200 $1,547,300
-------------------------------------------------------------------------
Property net income $ 34,600 $ 3,500 $ 65,900 $ 36,600
-------------------------------------------------------------------------
Average occupancy 78% 86% 80% 85%
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SENTRY PARK WEST OFFICE CAMPUS
Rental revenues $ 344,600 $ 279,100 $ 663,700 $ 540,600
-------------------------------------------------------------------------
Property net (loss) $ (78,400) $ (85,300) $ (196,600) $ (207,600)
-------------------------------------------------------------------------
Average occupancy 86% 76% 86% 71%
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REGENCY PARK SHOPPING CENTER
Rental revenues $ 296,900 $ 259,000 $ 593,100 $ 523,200
-------------------------------------------------------------------------
Property net (loss) $ (37,500) $ (72,000) $ (75,300) $ (147,500)
-------------------------------------------------------------------------
Average occupancy 88% 78% 88% 78%
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PRENTICE PLAZA
Rental revenues $ 242,400 $ 268,800 $ 548,700 $ 540,900
-------------------------------------------------------------------------
Property net (loss) $ (88,500) $ (55,600) $ (109,100) $ (126,100)
-------------------------------------------------------------------------
Average occupancy 97% 91% 97% 92%
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PARK CENTRAL OFFICE PARK I, II
AND III (B)
Rental revenues $ 161,500 $ 359,800
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Property net income
(loss) $ 4,900 $ (3,900)
-------------------------------------------------------------------------
Average occupancy 72% 72%
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SENTRY PARK EAST OFFICE CAMPUS
(C)
Rental revenues $ 28,700 $ 82,300
-------------------------------------------------------------------------
Property net (loss) $ (8,800) $ (14,300)
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Average occupancy 59% 47%
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(a) Excludes certain income and expense items which are either not directly
related to individual property operating results such as interest income
and general and administrative expenses or are related to properties
previously owed by the Partnership.
(b) On June 29, 1994, the joint ventures which owned Park Central Office Park
I, II and III ("Park Central"), in which the Partnership had a 50%
interest, sold Park Central. The property net income (loss) excludes the
loss on sale reported by the Partnership of approximately $4,654,100 as
$4,550,000 was recorded in 1992 and 1993 as provisions for value impairment
and the remaining $101,500 is included in the operating section of the
Statements of Income and Expenses for the quarter and six months ended June
30, 1994.
(c) On April 22, 1994, the joint venture which owned Sentry Park East Office
Campus ("Sentry East"), in which the Partnership has a 50% interest, sold
one of the remaining three office buildings situated in this office campus.
The property net (loss) excludes the loss on sale reported by the
Partnership of approximately $280,700 as the loss on sale was previously
recorded as part of the provision for value impairment in 1992. In
addition, on December 29, 1994, the joint venture which owned Sentry East
sold the remaining two office buildings situated in this office campus.
Net (loss) for the Partnership for the quarter and six months ended June 30,
1995 decreased by approximately $100,000 and $175,100, respectively, when
compared to the quarter and six months ended June 30, 1994. The comparison of
operating results between the periods is complicated by the sales of Park
Central and Sentry East. The sales of these properties accounted for the
significant decreases in rental income, property operating expenses, interest
expense, repairs and maintenance expenses, real estate taxes and insurance. Net
(loss), exclusive of the results of Park Central and Sentry East, increased
approximately $5,200 or 1% for the quarter ended June 30, 1995 when compared to
the quarter ended June 30, 1994. Net (loss), exclusive of the results of Park
Central and Sentry East for the six months ended June 30, 1995 decreased
approximately $57,500 or 7%, when compared to the six months ended June 30,
1994. The decrease in net (loss) for the six months ended June 30, 1995 was
primarily due to: 1) decreases in depreciation and amortization expense; 2)
decreases in real estate tax expense; 3) increases in rental revenues; 4)
decreases in repairs and maintenance expense; 5) decreases in insurance expense
and 6) an increase in interest income earned on short-term investments of
approximately $8,700 or 111% and $14,900 or 97%, respectively, due to an
increase in the funds available for investment and higher average yields earned
on these investments. Partially offsetting the decrease in net (loss) was an
increase in interest expense. In addition to these factors, increases in
property operating expenses as well as general and administrative expenses of
approximately $9,300 or 16% primarily due to an increase in printing and
mailing expenses, contributed to the slight increase in the quarterly net
(loss).
For purposes of the following comparative discussion, the operating results of
Park Central and Sentry East have been excluded.
Rental revenues increased approximately $53,000 or 2% and $71,400 or 1%,
respectively, for the quarter and six months ended June 30, 1995 when compared
the same quarterly and six month period in 1994. Factors which contributed to
the increases in rental revenues were increases in base rents at Sentry Park
West Office Campus ("Sentry West"), Regency Park Shopping Center ("Regency
Park"), Prentice Plaza and Marquette Mall and Office Building ("Marquette")
primarily due to the increases in average occupancy rates. In addition, an
increase in percentage rents at Marquette contributed to the increase in rental
revenues. Partially offsetting the increases in rental revenues were decreases
in: 1) tenant expense reimbursements at Marquette and Burlington as a result of
certain 1994 tenant expense reimbursements received in 1995 being lower than
had been previously estimated; 2) base rents at Burlington due to decreases in
average occupancy rates and 3) tenant expense reimbursements at Prentice Plaza
due to the issuance of a partial refund to tenants in 1995 of previously billed
1994 expense reimbursements.
Depreciation and amortization expense decreased approximately $46,200 or 7% and
$87,500 or 7%, respectively, for the quarterly and six month periods under
comparison primarily as a result of the provisions for value impairment
recorded at Marquette and Burlington as of December 31, 1994.
Real estate tax expenses decreased approximately $20,000 or 6% and $77,100 or
11%, respectively, during the periods under comparison. The primary factors
which contributed to these decreases were a lower projected tax rate at
Marquette and a lower expense at Burlington as the result of the General
Partner's successful protest in 1993 which has resulted in reduced billings in
subsequent periods.
Repair and maintenance expenses decreased approximately $5,600 or 2% and
$40,400 or 6%, respectively, during the periods under comparison. The decreases
were primarily due to expenditures made in 1994 at Marquette and Burlington to
enhance the appearance of these properties.
Insurance expense decreased approximately $16,200 or 44% and $15,000 or 21%,
respectively, during the quarter and six months ended June 30, 1995, when
compared to the prior year periods. The decreases were primarily due to lower
group rates on the Partnership's combined insurance coverage as a result of a
minimal amount of claims made over the past several years, which provided a
good loss experience relative to the Partnership's properties.
Interest expense increased approximately $113,700 or 11% and $251,500 or 13%,
respectively, during the quarter and six months ended June 30, 1995 when
compared to the quarter and six months ended June 30, 1994. The increases were
primarily due to an increase in the principal balance on the junior mortgage
loan collateralized by Marquette as well as increases in the variable interest
rates on the mortgage loans collateralized by Marquette, Sentry West and the
Partnership's Front-End Fees loan.
To increase and or maintain occupancy levels at the Partnership's properties,
the General Partner, through its Affiliated asset and property management
groups, continues to take the following actions: 1) implementation of marketing
programs, including hiring of third-party leasing agents or providing on-site
leasing personnel, advertising, direct mail campaigns and development of
building brochures; 2) early lease renewal of existing tenants and addressing
any
5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- CONTINUED
expansion needs these tenants may have; 3) promotion of local broker events and
networking with local brokers; 4) networking with national level retailers; 5)
cold-calling other businesses and tenants in the market area; and 6) providing
rental concessions or competitively pricing rental rates depending on market
conditions.
LIQUIDITY AND CAPITAL RESOURCES
One of the Partnership's objectives is to dispose of its properties when market
conditions allow for the achievement of the maximum possible sales price. In
the interim, the Partnership continues to manage and maintain it properties.
Cash Flow (as defined by the Partnership Agreement) is generally not equal to
Partnership net income or cash flows as defined by generally accepted
accounting principals ("GAAP"), since certain items are treated differently
under the Partnership Agreement than under GAAP. Management believes that to
facilitate a clear understanding of the Partnership's operations, an analysis
of Cash Flow (as defined by the Partnership Agreement) should be examined in
conjunction with an analysis of net income or cash flows as defined by GAAP.
The following table includes a reconciliation of Cash Flow (as defined by the
Partnership Agreement) to cash flow provided by operating activities as
determined by GAAP, is not indicative of actual distributions to Partners and
should not be considered as an alternative to the results disclosed in the
Statements of Income and Expenses and the Statements of Cash Flows.
Comparative Cash Flow
Results
For the Six Months
Ended
6/30/95 6/30/94
-----------------------------------------------------------------------------
Amount of Cash Flow (as defined in the Partnership
Agreement) $ 72,700 $ 206,500
Items of reconciliation:
Principal payments on mortgage loans payable 296,300 273,500
Decrease in current assets 293,900 379,700
(Decrease) in current liabilities (262,100) (490,700)
-----------------------------------------------------------------------------
Net cash provided by operating activities $ 400,800 $ 369,000
-----------------------------------------------------------------------------
Net cash (used for) provided by investing activities $(916,000) $ 3,463,900
-----------------------------------------------------------------------------
Net cash provided by (used for) financing activities $ 184,400 $(3,888,200)
-----------------------------------------------------------------------------
The decrease in Cash Flow (as defined by the Partnership Agreement) of
approximately $133,800 for the six months ended June 30, 1995 when compared to
six months ended June 30, 1994 was primarily due to an increase in debt service
payments on the Partnership's variable rate mortgage loans and the Front-End
Fees loan partially offset by the decrease in the net (loss) for the reasons
previously discussed, exclusive of the decrease in depreciation and
amortization expense and the loss on the sale of Park Central.
The decrease in the Partnership's cash position as of June 30, 1995 when
compared to December 31, 1994 was primarily the result of payments for capital
and tenant improvements and principal payments on mortgage loans payable
exceeding the proceeds received on the junior mortgage loan collateralized by
Marquette, the net cash provided by operating activities as well as the
releases of the restricted certificate of deposit at Regency Park and the
escrow deposit at Marquette. The liquid assets of the Partnership as of June
30, 1995, were comprised of undistributed Sale and Refinancing Proceeds as well
as cash from operations retained for working capital purposes.
Net cash provided by operating activities continues to be the Partnership's
primary source of funds. Net cash provided by operating activities increased
approximately $31,800 for the six months ended June 30, 1995 when compared to
the six months ended June 30, 1994. This increase was primarily due to the
timing of the collection of tenant's rental payments.
Net cash (used for) provided by investing activities changed approximately
($4,379,900) for the six months ended June 30, 1995 when compared to the six
months ended June 30, 1994. This change was primarily due to the sale proceeds
received on the sales of Park Central and Sentry East in 1994 and an increase
in 1995 in the cash used for capital and tenant improvements, partially offset
by the releases in 1995 of the restricted certificate of deposit
collateralizing the letter of credit at Regency Park and the restricted escrow
deposit at Marquette.
The Partnership maintains working capital reserves to pay for capital
expenditures such as building and tenant improvements. During the six months
ended June 30, 1995, the Partnership spent $1,023,600 for building and tenant
improvements. Of this amount, $600,000 relates to the refurbishment and
modernization of one of the major department stores at Marquette which was
funded by proceeds received on the junior mortgage loan collateralized by
Marquette. In addition, the Partnership anticipates spending approximately
$620,000 during the remainder of 1995. Included in this remaining amount are
building and tenant improvements for: 1) Sentry West of approximately $200,000;
2) Marquette of approximately $140,000; 3) Burlington of approximately
$140,000; 4) Regency Park of approximately $90,000 and 5) Prentice Plaza of
approximately $50,000. The General Partner believes these improvements are
necessary in order to maintain the occupancy levels in very competitive
markets, as well as to maximize rental rates charged to new and renewing
tenants.
On June 24, 1994, the joint venture which owns Regency Park, in which the
Partnership has a 50% interest, invested $150,000 in a restricted certificate
of deposit which collateralized a letter of credit for a construction allowance
to a major new tenant which occupies 40,150 leasable square feet at Regency
Park. This amount, of which the Partnership's share was $75,000, was reimbursed
to the new tenant during the quarter ended March 31, 1995 as compliance with
the lease section pertaining to this construction allowance was completed. As
of April 1, 1995, this letter of credit has expired.
Restricted escrow deposits at December 31, 1994 included approximately $32,600,
which represented an amount being held by the holder of the junior mortgage
loan collateralized by Marquette. The amount in escrow was being funded to the
Partnership for certain tenant improvements at Marquette provided that the
Partnership matched these funds dollar for dollar. This escrow was released to
the Partnership in February 1995.
Net cash provided by (used for) financing activities changed approximately
$4,072,600 for the six months ended June 30, 1995 compared to the six months
ended June 30, 1994. This change was primarily due to the payoff in 1994 of the
mortgage loan collateralized by Park Central I and II from the sale proceeds of
Park Central, as previously discussed, $800,000 in proceeds received in 1995 on
the junior mortgage loan collateralized by Marquette and the increase in 1995
security deposits, partially offset by an increase in 1995 in principal
payments made on mortgage loans payable.
In 1993 the joint venture which owns Sentry West, in which the Partnership has
a 50% interest, entered into a letter agreement whereby the joint venture which
owns Sentry West obtained consent from the lender to terminate the lease
agreement with a tenant at Sentry West in order that this tenant may purchase
and occupy one of the five buildings at Sentry East. Pursuant to this
agreement, the joint venture was obligated to pay the lender 50% of the excess
net sale proceeds over $1,300,000 from the sales of the remaining four
buildings at Sentry East as principal paydowns. On December 29, 1994 the
remaining two buildings at Sentry East were sold and the joint venture paid the
lender approximately $598,700, of which the Partnership's share was
approximately $299,300, in January 1995 from the net proceeds received from the
sales of these two buildings.
The mortgage loan collateralized by Regency Park is scheduled to mature on
December 31, 1995. The General Partner has initiated discussions with the
current lender with the intent of extending and or modifying the current loan.
However, there can be no assurance that the General Partner will be successful
in these discussions.
The mortgage loan collateralized by Prentice Plaza is scheduled to mature on
December 31, 1995. The General Partner is currently attempting to refinance
this property in order to satisfy the total $4,125,000 principal balance
expected to be outstanding at the time of maturity. The General Partner
believes that refinancing the mortgage loan should be feasible, however, there
can be no assurance that such refinancings will be accomplished.
Because of the anticipated capital expenditures in 1995, the maturity of the
mortgage loans collateralizing Regency Park and Prentice Plaza on December 31,
1995 and the cash requirements during the next several years, the Partnership
will continue to supplement working capital reserves with all net cash from
operations earned by the Partnership. Accordingly, no distributions of Cash
Flow (as defined by the Partnership Agreement) will be made until these needs
are met. The General Partner continues to review various other cash sources
available to the Partnership, which include the possible refinancing or sale of
certain other real property interests. However, no assurance can be given as to
the timing or successful completion of any further transactions. The General
Partner believes that the amount of cash retained for future cash requirements,
additional proceeds to be received from any sales or dispositions of properties
or any mortgage loan modifications or extensions, as well as the option to
defer payment of interest and the borrowing back of previously paid interest on
the Front-End Fees loan (see Note 3 in Notes to Financial Statements), are
sufficient to cover the planned expenditures for 1995 and any other cash or
liquidity requirements that can be reasonably foreseen.
6
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits: Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the quarter 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.
FIRST CAPITAL INCOME PROPERTIES, LTD. - SERIES XI
BY: FIRST CAPITAL FINANCIAL CORPORATION
GENERAL PARTNER
Date: August 14, 1995 By: /s/ DOUGLAS CROCKER II
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DOUGLAS CROCKER II
President and Chief Executive Officer
Date: August 14, 1995 By: /s/ NORMAN M. FIELD
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NORMAN M. FIELD
Vice President - Finance and Treasurer