FIRST DEARBORN INCOME PROPERTIES L.P.
154 West Hubbard Street, Suite 250
Chicago, IL 60610
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
For the fiscal year ended December 31, 2001
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 0-16820
FIRST DEARBORN INCOME PROPERTIES L.P.
(Exact name of registrant as specified in its charter)
Delaware 36-3473943
(State of organization) (IRS Employer Identification No.)
154 West Hubbard Street, Suite 250, Chicago, IL 60610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 464-0100
Securities registered pursuant to Section 12(b) of the Act:
Names of each exchange
Title of each class on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP UNITS
(Title of Class)
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 ____ No X
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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]
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. Not applicable.
PART 1
Item 1. Business
The registrant, First Dearborn Income Properties L.P. (the
"Partnership"), is a limited partnership formed in October 1986 under the
Revised Uniform Limited Partnership Act of the State of Delaware to invest
in income producing commercial real estate consisting principally of existing
shopping centers and office buildings. On February 25, 1987, the
Partnership commenced an offering of $10,000,000 of its limited partnership
interests (the "Units") (subject to increase by an additional $5,000,000 of
Units) pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933 (File No. 33-10244). A total of 20,468.5 Units was
sold to the public in the offering at $500 per Unit. The holders of 10,991.5
Units were admitted to the Partnership in 1987 and the holders of 9,477
Units were admitted to the Partnership in 1988. The offering terminated on
November 15, 1988 (extended from its originally scheduled termination date
of February 25, 1988). Since admission to the Partnership, no holder of
Units (hereinafter, a "Limited Partner") has made any additional capital
contributions. The Limited Partners of the Partnership share in the benefits
of ownership of the Partnership's real property investments in proportion to
the number of Units held.
Net of offering costs, Limited Partners have contributed a total of
$8,800,461 to the Partnership. The Partnership is engaged solely in the
business of real estate investment. It is the Partnership's objective to
realize cash flow from operations and appreciation in the value of the real
estate. The Partnership has entered into three joint venture agreements with
partnerships sponsored by affiliates of the General Partners. Pursuant to
such agreements, the Partnership has made capital contributions aggregating
$7,685,642 through December 31, 2001. The Partnership has acquired,
through these ventures, interests in two shopping centers and an office
building. No investments have been made since 1990. On March 13, 2000,
the Sycamore Mall property was deeded to the lender in lieu of threatened
foreclosure. As of December 31, 2001, the Partnership had made the real
property investments set forth in the following table:
Name,Type of Property Date of Type of
and Location Size Purchase Ownership
Indian River Plaza 147,111 S.F. 11/30/86 99.9% interest
Shopping Center in a
Vero Beach, Florida partnership
that has fee
ownership of
land and
improvements(a)
Downers Grove Building 56,449 S.F. 02/01/88 66.7% interest
Office Building in a partnership
Downers Grove, Illinois that has fee
ownership of
land and
improvements(a)
Sycamore Mall 240,206 S.F. 10/26/90 25.2% interest
Shopping Center disposition in a partnership
Iowa City, Iowa March 2000 that had fee
ownership of land
and improvements
(a) Reference is made to Note 3 of Notes to Consolidated
Financial Statements filed with this annual report for the current
outstanding principal balance and a description of the long-term
mortgage indebtedness secured by the Partnership's real property investments.
Note: "S.F." represents the amount of rentable square feet area in
each of the properties.
During the past five years, operations at two of the Partnership's three
properties have provided sufficient cash flow to meet the obligations of the
Partnership. Since the fourth quarter of 1998, the Sycamore Mall property
had experienced significant vacancy. A larger shopping mall opened in the
market area and has made it difficult to find tenants for the property. As
a result of the inability to find new tenants, the property was unable to meet
its financial obligations and beginning in October of 1999, payments to the
lender were halted. This resulted in a default of the loan terms and in March
2000, the property was deeded to the lender in lieu of threatened foreclosure.
Indian River Plaza represents the most significant investment made by the
Partnership. A total of $4,710,642 has been invested by the Partnership which
represents 61% of the Partnership's real estate investments. Since acquiring
the Indian River Plaza investment in 1986, the Partnership has received cash
distributions of $1,446,028 from Indian River Plaza. The Downers Grove
building represents an investment of $1,900,000 or 25% of the Partnership's
real estate investments. Since acquiring the Downers Grove investment in 1988,
the Partnership has received distributions of $1,757,143. Sycamore Mall
accounted for $1,075,000 or 14% of the Partnership's real estate investments.
Since acquiring the Sycamore Mall investment in 1990, the Partnership had
received distributions of $853,007. In March 2000, title to the Sycamore Mall
property was transferred to the lender in consideration of the entire mortgage
balance including accrued interest.
The major tenants at Indian River Plaza are K Mart and Publix, which occupy
approximately 56% and 25%, respectively, of the property's net leaseable area.
As of December 31, 2001, the property has an occupancy level of 99%. The first
mortgage debt was refinanced in 1997, and it is anticipated that the Vero Beach
property will be able to produce enough cash flow to meet its obligations.
The Downers Grove Building is a single tenant building with a lease to a
subsidiary of Amoco Oil, which expires in 2004. The original tenant at Downers
Grove vacated in 1994, however, it was replaced immediately. It is anticipated
that the Downers Grove property will be able to produce enough cash flow to
meet its obligations.
The Partnership's real property investments are subject to competition from
similar types of properties in the vicinities in which they are located.
Approximate occupancy levels for the Partnership's properties are set forth on
a quarterly basis in the table set forth in Item 2 below to which reference is
hereby made. The Partnership has no real property investments located outside
the United States.
Only two of the three Partnership's investments are consolidated for financial
reporting purposes. Information is presented below in order to illustrate
applicable information about each of the three properties individually and does
not relate to financial information presented about the Partnership in Item 6
and Item 8.
Indian River Plaza,
Vero Beach, Florida 2001 2000 1999
Total revenue $ 838,340 789,623 806,117
Operating profit(loss) (42,454) (213,575) (106,975)
Total assets 5,220,566 5,281,025 5,528,643
Mortgage indebtedness4,137,736 4,257,475 4,362,528
Downers Grove Building
Downers Grove, Illinois 2001 2000 1999
Total revenue 474,174 487,430 495,545
Operating profit(loss) (57,676) (75,416) (88,053)
Total assets 5,684,236 6,120,689 6,572,749
Mortgage indebtedness2,972,356 3,282,367 3,542,821
Sycamore Mall,
Iowa City, Iowa 2001 2000 1999
Total revenue - - 1,185,202
Operating profit(loss) - - (2,136,404)
Total assets - - 4,266,654
Mortgage indebtedness - - 4,258,224
The Partnership has no employees and is largely dependent on the General
Partners and their affiliates for services. A description of the terms of
transactions between the Partnership and affiliates of the General Partners
is set forth in Item 11 below to which reference is hereby made.
Vero Beach Associates
On November 30, 1986, the Partnership purchased an interest in Indian River
Plaza, a 147,111 gross leaseable square foot shopping center on U.S. Highway
1 in Vero Beach, Florida. The Partnership's ownership of Indian River Plaza
was effected through its 1% partnership interest in Vero Beach Associates (the
"Operating Partnership") which holds fee title to the property. An affiliate
of the Managing General Partner purchased the remaining 99% interest in the
Operating Partnership. In May 1987, upon the sale of a sufficient number of
Units, the Partnership made an additional capital contribution to increase its
interest in the Operating Partnership. At December 31, 2001, the Partnership
had made capital contributions aggregating $4,710,642 to the Operating
Partnership. The Partnership's interest in the cash distributions and
allocations for Federal income tax purposes of all losses of the Operating
Partnership and of profits of the Operating Partnership from the sale or
refinancing of the property is 99.9%, and its interest in the allocation
of profits from operations of the Operating Partnership for Federal income
tax purposes is 98%. The Partnership has consolidated the assets and
operations of the Vero Beach Associates as of and for the years ended
December 31, 2001, 2000 and 1999.
The real estate market in general and the Vero Beach market more
specifically have experienced an oversupply of retail shopping centers which
have resulted in a soft market for rental rate increases. The shopping
center is located on U.S. Highway 1 in Vero Beach, Florida. There is a large
retail center adjacent to Indian River Plaza and there are several other
shopping centers in the immediate area. The area is a major retail location
and there is significant competition for tenants. Therefore, the amount of
cash flow generated from the property is less than originally anticipated.
As a result, the value of property has not appreciated as had originally
been anticipated. However, the property has continued to operate at levels
which have allowed it to meet its financial obligations.
Downers Grove Building Partnership
The Partnership has contributed a total of $1,900,000 to, and owns a
66-2/3% interest in, Downers Grove Building Partnership (the "Building
Partnership"). The remaining 33-1/3% interest in the Building Partnership
is held by a non-affiliate of the General Partners. The Building Partnership
owns a 56,449 square foot two-story office and laboratory building (the
"Downers Grove Building"). The Partnership has consolidated the assets and
operations of the Building Partnership as of and for the years ended December
31, 2001, 2000 and 1999.
The Downers Grove Building has been 100% occupied for more than the last
five years. The current tenant is a subsidiary of Amoco Oil, and is obligated
under the lease until 2004. The Downers Grove Building was originally leased
to Reichhold Chemicals, Inc. ("Reichhold"), on a 15 year triple net lease,
which provided for bi-annual escalations of 8%, and expiration on February 2,
2002. In November 1994, Reichhold vacated the Downers Grove Building. In
connection with the termination of its lease, two annuity contracts were
purchased by Reichhold in the amount of $2,500,000. The annuity contracts
were subsequently assigned to the Building Partnership to collateralize
payment of the lease termination fee. The annuity contracts provided for
payments beginning December 1, 1994, through November 1, 2001. The total
principal payments received from the annuities in 2001 aggregated $218,502.
During 2001 and 2000, the Building Partnership recognized $6,598 and $20,480,
respectively, of interest income relating to the annuity contracts. The total
amount of the annuity contracts was determined based on negotiations with
Reichhold and the lender on the property. Reichhold had been committed under
a lease which lasted through 2002, with a provision to terminate the lease
early upon payment of a lease termination penalty. Reichhold wanted to
terminate the lease and the parties had agreed to allow Reichhold to terminate
the lease in exchange for a total payment of $2,500,000. However, the funds
were utilized to purchase the annuity contracts. These annuities provide a
steady stream of cash flow to supplement the rental income.
Income was recognized from the payment of rent by the current tenant, and
interest earned on the balance of the annuity. Total payments from the
annuity in 2001 and 2000 totaled $225,100 and $245,563 respectively, of which
$6,598 and $20,480 represented interest income in the respective years while
the remainder was treated as payment of rents receivable.
Scheduled monthly payments due under the lease are $42,423 through
November 2001 and $56,551 from December 2001 through November 2004.
The Downers Grove Building is managed by an unaffiliated entity under
an agreement which will continue in effect from year to year, unless and until
terminated, for a management fee of $13,000 per year.
The Downers Grove Building is located in the western suburbs of Chicago.
The west suburban office market contains over 15 million square feet of office
space which competes with the property. The market had experienced vacancy
rates of over 20% for most of the late 1980's and early 1990's. Market rental
rates have been rising over the last several years. The vacancy rate in the
area is under 10%. Since the Downers Grove Building has been occupied under
long-term leases, the improving market has not affected the current lease
income.
Sycamore Mall Associates
On October 26, 1990, the Partnership contributed $1,075,000 to acquire a
25.24% general partnership interest in Sycamore Mall Associates, a general
partnership formed to acquire the Sycamore Mall Shopping Center in Iowa City,
Iowa. The property, situated on an approximate 21.2 acre site, includes a
main building containing 213,206 square feet and an out parcel building
containing 27,000 square feet. A 14,000 square foot parcel which contains a
4,590 square foot building is under a ground lease. Sycamore Mall Associates
acquired the property on October 26, 1990 for a purchase price of $9,400,000.
In October 1999, monthly payments to the lender were halted and the lender
declared the loan in default. In March 2000, the property was deeded to the
lender in lieu of threatened foreclosure.
First Dearborn Income Properties L.P. II, a public limited partnership
affiliated with the General Partners of the Partnership, and First Dearborn
Sycamore Associates Limited Partnership ("FDSALP"), a privately offered
limited partnership also affiliated with the General Partners, are the
joint venture partners in Sycamore Mall Associates and contributed a total
of $2,275,000 and $910,000 for 53.40% and 21.36% of the general partner
interests,respectively.
The Partnership had been unsuccessful in its efforts to find new tenants
for the property. Sycamore Mall is located in Iowa City, Iowa. A new
1,000,000 square foot regional mall has opened, which created additional
competition for Sycamore Mall. Management efforts to find replacement
tenants had been unsuccessful. In response to the uncertainty relative to
Sycamore Mall Associates ability to recover the net carrying value of
Sycamore Mall through future operations and sale, Sycamore Mall Associates,
as a matter of prudent accounting practices and for financial reporting
purposes, recorded a provision for value impairment in 1998 in the amount of
$1,100,000, of which the Partnership's share was $278,000. In 1999, an
additional provision for value impairment was recorded in the amount of
$1,890,000, of which the Partnership's share was $477,650. In October 1999,
the property was unable to meet its obligations for payment under the terms
of the first mortgage. The lender declared the loan in default and began
foreclosure proceedings. In March 2000, title to the property was
transferred to the lender in consideration of the entire mortgage balance
including accrued interest.
Affiliated Transactions
A description of the terms of transactions between the Partnership and
affiliates of the General Partners is set forth in Item 11 below to which
reference is hereby made.
Item 2. Properties
The Partnership owns, through joint venture partnerships, the properties
referred to in Item 1. The three properties that the Partnership has, or
has had, an interest in are described below:
Indian River Plaza
On November 30, 1986, the Partnership purchased an interest in Indian River
Plaza, a 147,111 gross leaseable square foot shopping center on U.S. Highway
1 in Vero Beach, Florida. The Partnership's ownership of Indian River Plaza
was effected through its 1% partnership interest in Vero Beach Associates
(the "Operating Partnership") which holds fee title to the property. An
affiliate of the Managing General Partner purchased the remaining 99%
interest in the Operating Partnership. In May 1987, upon the sale of a
sufficient number of Units, the Partnership made an additional capital
contribution to increase its interest in the Operating Partnership. The
Partnership's interest in the cash distributions and allocations for Federal
income tax purposes of all losses of the Operating Partnership and of
profits of the Operating Partnership from the sale or refinancing of the
property is 99.9%, and its interest in the allocation of profits from
operations of the Operating Partnership for Federal income tax purposes
is 98%. At December 31, 2001, the Partnership had made capital contributions
aggregating $4,710,642 to the Operating Partnership.
The property is subject to a first mortgage with an original amount of
$4,185,000, bearing interest at 8.31%, amortized over 30 years payable in
monthly installments of principal and interest of $31,617, until maturity
on November 11, 2027 when the remaining principal balance is payable; secured
by the real and personal property of Indian River Plaza. In addition to
the first mortgage, the property is also encumbered by a second mortgage
with an original principal amount of $365,000, bearing interest at a
floating rate which is 5% above the LIBOR rate. This loan which was
payable in monthly installments of principal and interest, was paid off on
November 11, 2002.
The major tenants at Indian River Plaza are K Mart and Publix, which occupy
approximately 56% and 25%, respectively, of the property's net leaseable area.
Occupancy at Indian River Plaza had remained in the 96% - 100% range for over
the past five years. The K Mart lease expires in 2004 and the annual rent is
approximately $220,000. In January 2002, K-Mart Corporation filed for Chapter
11 bankruptcy protection. K-Mart has continued to pay rent on the premises but
there is no way to determine the future of this lease at this time. The Publix
lease was to expire in 1999 and the annual rent was approximately $125,000. A
5 year extension of the lease was entered into which provides for a new
termination date of September 30, 2004 at an annual rental of approximately
$127,624. In January 2002, Publix gave notice that it intends to vacate the
store before the end of the lease term but that it intends to honor the lease
\payment terms through the lease termination date. In February 2003, Publix
vacated the store. Average total rent received per square foot at the property
during the last three years were $6.16 in 2001, $5.31 in 2000 and $5.48 in 1999.
K- Mart disputed the calculation of amounts due for tenant charges, under the
lease. The total amount disputed from K-Mart was $123,952 as of December 31,
1999. The Partnership has begun legal proceedings to collect the amounts due.
As of December 31, 1999, the Partnership had reserved $123,952 of the amount
due from K-Mart. This amount has been charged to operating expenses. During
2000, the dispute was settled in favor of K-Mart. As of December 31, 2000
the Partnership discharged the receivable and the reserve.
The following table illustrates the scheduled lease expirations for Indian
River Plaza, over the next ten years:
# of leases % of total
expiring square feet annual rent annual rent
2002 4 21,560 $ 80,932 13%
2003 3 5,440 $ 79,845 13%
2004 4 121,047 $ 444,818 71%
2005 1 3,200 $ 22,656 4%
2006 - - - -
2007 - - - -
2008 - - - -
2009 - - - -
2010 - - - -
2011 - - - -
Management believes that the Indian River Plaza property has adequate
insurance coverage.
Downers Grove Building
The Partnership has contributed a total of $1,900,000 to, and owns a 66-2/3%
interest in, Downers Grove Building Partnership (the "Building Partnership").
The remaining 33-1/3% interest in the Building Partnership is held by a
non affiliate of the General Partners. The Building Partnership owns a
56,449 square foot two-story office and laboratory building (the "Downers
Grove Building"). The Partnership has consolidated the assets and operations
of the Building Partnership as of and for the years ended December 31, 2001,
2000 and 1999.
The property is owned fee simple by the Building Partnership. It is subject
to a first mortgage in the amount of $3,823,915, bearing interest at 9.125%,
payable in monthly installments of principal and interest of $55,170 from
March 1, 1996 through August 1, 1998; and principal and interest of $49,731
from September 1, 1998 until August 1, 2005 when the remaining principal
balance is due; secured by the real and personal property of the Downers
Grove Building.
The Downers Grove Building is a single tenant building. The property has been
100% occupied for over five years. The current tenant is a subsidiary of
Amoco Oil, and is obligated under the triple net lease until 2004. Scheduled
monthly payments due under the lease are $42,423 through November 2001 and
$56,551 from December 2001 through November 2004.
Management believes that the Downers Grove property has adequate insurance
coverage.
Sycamore Mall Associates
The property is a retail shopping center located in Iowa City, Iowa, and is
situated on an approximate 21.2 acre site. It includes a main building
containing 213,206 square feet and an out parcel building containing 27,000
square feet. A 14,000 square foot parcel which contains a 4,590 square foot
building is under a ground lease. As a result of the inability to find
new tenants, the property was unable to meet its financial obligations and
beginning in October of 1999, payments to the lender were halted. This
resulted in a default of the loan terms and on March 13, 2000, title to the
land buildings and improvements as well as the other assets and liabilities
of the property was transferred to =the lender in consideration of a
discharge of the mortgage loan. In 1999, Sycamore Mall Associates recorded
a total provision for value impairment of $2,990,000, of which $1,100,000
was recorded in 1998 and $1,890,000 was recorded in 1999.
In March 2000, title to the Sycamore Mall property was transferred to the
lender in consideration of the entire mortgage balance including accrued
interest.
Occupancy
The following is a list of approximate occupancy levels by quarter for
the Partnership's investment properties:
at at at at at at at at
2000 2000 2000 2000 2001 2001 2001 2001
03/31 06/30 09/30 12/31 03/31 06/30 09/30 12/31
Indian River Plaza
Vero Beach,
Florida 98% 98% 98% 98% 99% 99% 99% 99%
Downers Grove Building
Downers Grove,
Illinois 100% 100% 100% 100% 100% 100% 100% 100%
Item 3. Legal Proceedings
The Partnership is not aware of any material pending legal proceedings to
which it or its properties are subject.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
As of December 31, 2001, there were 1,288 Limited Partners holding
20,468.5 Units. There is no public market for Units and it is not anticipated
that a public market for Units will develop. Pursuant to the terms of the
Limited Partnership Agreement of the Partnership (the "Partnership
Agreement"), there are restrictions on the ability of the Limited Partners
to transfer their Units. In all cases, the General Partners must consent to
the substitution of a Limited Partner.
Distributions to Limited Partners, through December 31, 2001, have
totaled $3,358,904 since the Partnership's formation. This is approximately
$164.10 of cash distributions per Unit. Each Unit originally sold for $500
and the offering was closed on November 15, 1988. Reference is made to Item
6 herein for a summary of annual cash distributions, per Unit, made to the
Limited Partners.
Item 6. Selected Financial Data
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
December 31, 2001, 2000, 1999, 1998 and 1997
(000's) except per share info
(not covered by Independent Auditors' Report)
2001 2000 1999 1998 1997
Total revenues $ 1,377 1,285 1,310 1,254 1,306
Operating loss $ (126) (385) (283) (473) (746)
Partnership's share of operations of
unconsolidated venture - 11 (539) (255) 56
Venture partners' share of
consolidated ventures' operations 19 25 29 52 19
Net loss $ (107) (349) (793) (676) (671)
Net loss per Unit (a) $ (5.17) (16.89) (38.34) (32.68) (32.44)
Total assets $ 11,540 12,063 12,688 13,960 15,169
Long-term debt $ 6,649 7,113 7,518 7,929 8,250
Cash distributions per
Unit (a) $ 0.00 0.00 0.00 6.59 7.48
The above selected financial data should be read in conjunction
with the Consolidated Financial Statements and the related notes appearing
elsewhere in this annual report.
(a) The net loss per Unit and cash distributions per Unit are based on
the number of Units outstanding at the end of each period (20,468.5.)
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources:
On February 25, 1987 the Partnership commenced a public offering of
$10,000,000 of Units (subject to increase to $15,000,000 of Units) pursuant
to a Registration Statement on Form S-11 under the Securities Act of 1933,
with the offering terminating November 15, 1988. A total of 20,468.5 Units
were issued to the public in the offering, resulting in gross proceeds of
$10,234,250 and net proceeds of $8,800,461 after the deduction of offering
costs. No additional Units are to be offered.
At December 31, 2001, the Partnership had cash and cash equivalents of
$542,651 as compared to $284,184 as of December 31, 2000. The increase in
cash and cash equivalents is primarily a result of the prepayment of rent by
tenants and the build out of escrow reserves at the Vero Beach property.
Distributions to limited partners have been suspended since 1999.
Currently the Vero Beach property is subject to a first mortgage with
an original amount of $4,185,000, bearing interest at 8.31%, amortized over
30 years payable in monthly installments of principal and interest of
$31,617, until maturity on February 11, 2027 when the remaining principal
balance is payable; secured by the real and personal property of Indian
River Plaza. In addition to the first mortgage, the property is also
encumbered by a second mortgage with an original principal amount of
$365,000, bearing interest at a floating rate which is 5% above the LIBOR
rate. This loan which was payable in monthly installments of principal
and interest, was paid off at November 11, 2002.
In November 1994, Reichhold vacated the Downers Grove Building. In
connection with the termination of its lease, two annuity contracts were
purchased by Reichhold in the amount of $2,500,000. The annuity contracts
were subsequently assigned to the Building Partnership to collateralize
payment of the lease termination fee. The annuity contracts provided for
payments beginning December 1, 1994 through November 1, 2001. The total
principal payments received from the annuities in 2001 totaled $218,502
and were included in rents and other receivables as of December 31, 2000.
During 2001 and 2000, the Building Partnership =recognized $6,598 and
$20,480, respectively, of interest income relating to the annuity contracts.
As the Partnership intends to distribute all "net cash receipts" and
"sales proceeds" in accordance with the terms of the Partnership Agreement,
and does not intend to reinvest any such proceeds, the Partnership is
intended to be self-liquidating in nature. The Partnership's future source
of liquidity and distributable capital is expected to come from cash
generated by the Partnership's investment properties and from the sale
and refinancing of such properties. To the extent a property does not
generate adequate cash flow to meet its working capital requirements,
the Partnership may (i) withdraw funds from the working capital reserve
it maintains, (ii) fund such shortfall from excess cash generated by other
properties owned by it, or (iii) pursue outside financing sources.
However, the Partnership may decide not to, or may not be able to, commit
additional funds to certain of its investment properties. Nonetheless,
it is anticipated that the current and future capital resources of the
Partnership will be adequate to fund currently anticipated short and
long-term requirements of its investment portfolio taken as a whole.
There are certain risks and uncertainties associated with the
Partnership's investments made through joint ventures, including the
possibility that the Partnership's joint venture partners in an
investment might become unable or unwilling to fulfill their financial
or other obligations, or that such joint venture partners may have
economic or business interests or goals that are inconsistent with those
of the Partnership.
In response to the U.S. economy in general and the problems being
experienced at the Vero Beach property in particular, the Partnership
is taking steps to preserve its working capital. Therefore, the
Partnership carefully scrutinizes possible discretionary expenditures,
particularly as such expenditures relate to the amount of working capital
reserves the Partnership has available. By conserving working capital,
the Partnership expects to be in a better position to meet future needs
of its properties without having to rely on external financing sources.
Results of Operations:
The results of operations for the years ended December 31, 2001,
December 31, 2000 and December 31, 1999 reflect the consolidated operations
of the Partnership and its consolidated ventures, Vero Beach Associates
(the "Vero Partnership") and Downers Grove Building Partnership (the
"Building Partnership") and its equity investment in Sycamore Mall
Associates (the "Sycamore Partnership"). The results of operations of
the Vero Partnership reflect the operations of the Indian River Plaza
Shopping Center. The results of operations of the Building Partnership
reflect the operations of the Downers Grove Building. The equity investment
in the Sycamore Partnership reflects the Partnership's share of the
operations of the Sycamore Mall Shopping Center.
Changes from 1999 to 2000:
In 2000, the Partnership had a net loss of $349,248 as compared to a
net loss of $792,764 in 1999. In 1999 the Partnership recognized an impairment
loss of from its investment in Sycamore Mall of $477,650. In 2000 the
Partnership disposed of its interest in Sycamore Mall.
The Partnership's interest income decreased $6,715 (18%) from $37,598
in 1999 to $30,883 in 2000. The decrease is primarily attributable to the
decrease in interest earned on the annuity contracts relating to the Downers
Grove property. As the annuity contracts have been paid down, the interest
income has been reduced on the reduced principal amounts remaining.
Property operating expenses increased $95,681 (31%) to $402,413 in 2000
from $306,732 in 1999, primarily due to increases in expenses at the Vero
Beach property. Bad debt expenses in 2000 at Vero Beach totaled $51,457.
This relates to receivables which were deemed to be uncollectable.
Interest expense decreased $29,948 (4%) from $712,155 in 1999 to $682,207
in 2000. The decrease is a result of the reduction in mortgage indebtedness
in the amount of $365,507 which occurred throughout the year.
General and administrative expense decreased $2,943 (3%) from $95,381
in 1999 to $92,438 in 2000. This decrease resulted from a decrease in
overhead expenses charged from an affiliate of the General Partner.
The Partnership's share of operations of unconsolidated venture
resulted in a gain of $10,873 in 2000 compared to a loss of $539,228 in
1999. The improvement is attributable to a provision for value impairment
which was recorded at Sycamore Mall in 1999. The Sycamore Mall property
was deeded to the lender in 2000 in lieu of threatened foreclosure.
Changes from 2000 to 2001:
In 2001, the Partnership had a loss of $106,928 as compared to a net
loss of $349,248 in 2000. This significant improvement is attributable
to improved performance at the Vero Beach property and a reduction in
administrative costs of the Partnership.
The $18,790 increase in rental income and the $24,945 increase in
tenant charges for the year ended December 31, 2001 as compared to the
year ended December 31, 2000 primarily resulted from an increase in
percentage rent at Vero Beach and an improvement in the amount of costs
recovered at Vero Beach.
The Partnership's interest income decreased from $30,883 in
2000 to $14,448 in 2001. The decrease is primarily attributable to the
decrease in interest earned on the annuity contracts relating to the
Downers Grove property. As the annuity contracts have been paid down,
the interest income has been reduced on the reduced principal amounts
remaining.
Property operating expenses decreased $83,641 (21%) to $318,772 in
2001 from $402,413 in 2000, primarily as a result of a costs incurred at
the Vero Beach property in the prior year. Significant costs were
incurred in 2000, relative to the litigation with K-Mart.
Interest expense decreased $43,939 (6%) from $682,207 in 2000 to
$638,268 in 2001. The decrease is a result of the reduction in mortgage
indebtedness in the amount of $427,166 which occurred throughout the year.
General and administrative expense decreased $40,207 (43%) from
$92,438 in 2000 to $52,231 in 2001. This decrease resulted from delays
which were encountered in completing the year end audit and financial
statements for the year end December 31, 2000. Much of the work was not
completed until 2002.
The Partnership's share of income from unconsolidated venture was
zero in 2001 as compared to income of $10,873 in the year ended December
31, 2000. This relates to the disposition of Sycamore Mall during 2000.
Inflation:
The Partnership has completed its fourteenth full year of operations.
During the last thirteen years the annual inflation rate has ranged from
2.0% to 5.4% with an average of 3.5%. The effect which inflation has had
on income from operations has been minimal. Inflation in future periods
may increase rental income levels (from leases to new tenants or renewals
of existing leases) in accordance with normal market conditions. Such
increases in rental income should offset most of the adverse impact that
inflation has on property operating expenses with little effect on operating
income. Continued inflation may also tend to cause capital appreciation
of the Partnership's investment properties over a period of time as rental
rates and replacement costs of properties continue to increase.
Item 7a. Quantitative and Qualitative Disclosures about Market Rate
The Partnership has identified interest rate changes as a potential
market risk. However, as a majority of the Partnership's long-term debt
bears interest at a fixed rate, the Partnership does not believe that
it is exposed to market risk relative to interest rate changes.
Item 8. Financial Statements and Supplementary Data
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
INDEX
Page (s)
Independent Auditors' Report 11
Consolidated Balance Sheets, December 31, 2001 and 2000 12-13
Consolidated Statements of Operations, years ended
December 31, 2001, 2000 and 1999 14
Consolidated Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 2001, 2000 and 1999 15
Consolidated Statements of Cash Flows,
years ended December 31, 2001, 2000 and 1999 16
Notes to Consolidated Financial Statements 17-25
Schedule
Consolidated Real Estate and Accumulated Depreciation III
Schedules not filed:
All schedules other than those indicated in the index have been
omitted as the required information is inapplicable or the
information is presented in the financial statements or the
related notes.
Independent Auditors' Report
The Partners
First Dearborn Income Properties L.P.:
We have audited the accompanying consolidated balance sheet of First
Dearborn Income Properties L.P. (a limited partnership) and consolidated
ventures as of December 31, 2001 and December 31, 2000, and the related
consolidated statements of operations, Partners' capital accounts
(deficits) and cash flows for the year then ended. In connection with
our audit of the consolidated financial statements, we also have audited
the financial statement schedule as listed in the accompanying index.
These consolidated financial statements and the financial statement
schedule are the responsibility of the General Partners of the Partnership.
Our responsibility is to express an opinion on these consolidated
financial statements and financial statement schedule based on our audit.
The consolidated statements of operations, Partners Capital accounts
(deficits) and cash flows for the years ended December 31,1999 of
First Dearborn Income Properties L.P. and consolidated ventures,
were audited by other auditors whose report dated April 14, 2000,
expressed an unqualified opinion on those statements.
We conducted our audit in accordance with U. S. 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 the General Partners
of the Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
First Dearborn Income Properties L.P. and consolidated ventures as of
December 31, 2001 and December 31, 2000 and the results of their operations
and their cash flows for the years then ended, in conformity with U. S.
generally accepted accounting principles. Also in our opinion, the
related financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
Altschuler, Melvoin and Glasser LLP
Deerfield, Illinois
February 18, 2003
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Consolidated Balance Sheets
December 31, 2001 and 2000
Assets
2001 2000
Current assets:
Cash and cash equivalents $ 542,651 284,184
Rents and other receivables 334,240 410,155
Due from affiliates 10,435 19,071
Prepaid expenses 26,023 12,091
Total current assets 913,349 725,501
Investment properties:
Land 2,233,114 2,233,114
Buildings and improvements 15,507,631 15,503,056
17,740,745 17,736,170
Less accumulated depreciation (7,717,963)(7,239,264)
Total properties held for investment net of
accumulated depreciation 10,022,782 10,496,906
Deferred rents receivable 426,333 648,768
Deferred loan costs 177,039 191,785
Total assets $ 11,539,503 12,062,960
See accompanying notes to Consolidated Financial Statements.
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Consolidated Balance Sheets - Continued
December 31, 2001 and 2000
Liabilities and Partners' Capital Accounts (Deficits)
2001 2000
Current liabilities:
Accounts payable and accrued expenses $ 244,110 162,514
Due to affiliates 352,988 400,302
Accrued interest 42,447 44,035
Unearned revenue 91,923 71,647
Current portion of long-term debt 461,130 426,444
Total current liabilities 1,192,598 1,104,942
Long-term liabilities:
Long-term debt 6,648,962 7,113,398
Venture partners'equity in
consolidated ventures 1,028,577 1,065,575
Deposits 19,010 21,761
Total long-term liabilities 7,696,549 8,200,734
Total liabilities 8,889,147 9,305,676
Partners' capital accounts (deficits):
General partners - cumulative net loss (27,986) (26,917)
Total general partner capital (deficit) (27,986) (26,917)
Limited partners (20,468.5 units):
Capital contributions 8,800,461 8,800,461
Cumulative net loss (2,763,215)(2,657,356)
Cumulative cash distributions (3,358,904)(3,358,904)
Total limited partner capital 2,678,342 2,784,201
Total partners' capital accounts 2,650,356 2,757,284
Total liabilities and partners' capital $ 11,539,503 12,062,960
See accompanying notes to Consolidated Financial Statements.
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Consolidated Statements of Operations
Years ended December 31, 2001, 2000, and 1999
2001 2000 1999
Revenues:
Rental income $ 1,143,935 1,125,145 1,179,430
Tenant charges 154,139 129,194 93,163
Other income 64,000 - -
Interest income 14,448 30,883 37,598
Total revenues 1,376,522 1,285,222 1,310,191
Expenses:
Property operating expenses 318,772 402,413 306,732
Interest 638,268 682,207 712,155
Depreciation 478,699 478,891 464,046
Amortization 14,746 14,746 14,746
General and administrative expenses 52,231 92,438 95,381
Total expenses 1,502,716 1,670,695 1,593,060
Operating loss (126,194) (385,473) (282,869)
Partnership's share of operations
of unconsolidated venture - 10,873 (539,228)
Venture partners' share of consolidated
ventures' operations 19,266 25,352 29,322
Net loss (106,928) (349,248) (792,764)
Net loss per limited partnership unit $ (5.17) (16.89) (38.34)
Cash distribution per limited partnership unit$ 0.00 0.00 0.00
See accompanying notes to Consolidated Financial Statements.
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Consolidated Statements of Partners' Capital Accounts (Deficits)
Years ended December 31, 2001, 2000 and 1999
General Partners.Limited Partners (20,468.5 Units).
Contributions,
net of Cash
offering Net income distrib-
Total costs (loss) utions Total
Balance(deficit) at
December 31, 1998 (15,497) 8,800,461 (1,526,764)(3,358,904) 3,914,793
Net loss (7,928) - (784,836) - (784,836)
Cash distributions - - - - -
Balance(deficit) at
December 31, 1999 (23,425) 8,800,461 (2,311,600) (3,358,904)3,129,957
Net loss (3,492) - (345,756) - (345,756)
Cash distributions - - - - -
Balance(deficit) at
December 31, 2000 (26,917) 8,800,461 (2,657,356) (3,358,904)2,784,201
Net loss (1,069) - (105,859) - (105,859)
Cash distributions - - - - -
Balance(deficit) at
December 31, 2001$(27,986) 8,800,461 (2,763,215) (3,358,904)2,678,342
See accompanying notes to Consolidated Financial Statements.
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Consolidated Statements of Cash Flows
Years ended December 31, 2001, 2000 and 1999
2001 2000 1999
Cash flows from operating activities:
Net loss $ (106,928) (349,248) (792,764)
Items not requiring cash or cash equivalents:
Depreciation 478,699 478,891 464,046
Amortization 14,746 14,746 14,746
Partnership's share of operations of
unconsolidated venture,
net of distributions - (9,828) 539,228
Venture partners' share of consolidated
ventures' operations (19,266) (25,352) (29,322)
Changes in:
Rents and other receivables 75,915 10,807 (49,332)
Due from affiliates 8,636 (1,878) (10,259)
Prepaid expense (13,932) (3,637) 313
Deferred rents receivable 222,435 285,206 277,862
Accounts payable and
accrued expenses 81,596 37,406 (103,344)
Due to affiliates (47,314) 24,316 69,343
Accrued interest (1,588) 4,496 (9,677)
Unearned revenue 20,276 71,647 -
Deposits (2,751) 2,992 1,002
Net cash provided by operating
activities 710,524 540,564 371,842
Cash flows from investing activities:
Disposition (additions) to
investment properties (4,575) (95,818) (32,138)
Cash flows from financing activities:
Payment of deferred loan costs - - (125)
Venture partners' distributions from
consolidated ventures (17,732) (25,740) (30,334)
Principal payments on long-term debt (429,750) (365,507) (377,060)
Net cash used in financing activities (447,482) (391,247) (407,519)
Net increase (decrease) in cash and
cash equivalents 258,467 53,499 (67,815)
Cash and cash equivalents at
beginning of year 284,184 230,685 298,500
Cash and cash equivalent at end of year$542,651 284,184 230,685
Supplemental disclosure of cash flow information-
cash paid for mortgage and
other interest $621,977 677,711 721,832
See accompanying notes to Consolidated Financial Statements.
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999
(1) Organization and Basis of Accounting
The Partnership was formed under the Delaware Revised Uniform Limited
Partnership Act by the recording of a Certificate of Limited Partnership as
of October 1, 1986. The Initial Limited Partner (an affiliate of the
Managing General Partner) contributed $1,000 and withdrew as a Limited
Partner upon the admission of the first additional Limited Partners on May
21, 1987 when the initial closing of the offering was consummated.
The Agreement of Limited Partnership authorized the issuance of up to
20,000 additional Units (subject to increase by an additional 10,000 Units)
at $500 per Unit. A total of 20,468.5 Units were subscribed for and issued
between February 25, 1987 and November 15, 1988. The offering terminated
on November 15, 1988.
For the years ended December 31, 2001, 2000 and 1999, the accompanying
Consolidated Financial Statements include the accounts of the Partnership
and its Consolidated Ventures - Vero Beach Associates and Downers Grove
Building Partnership. For the years ended December 31, 2000 and 1999,
the accompanying Consolidated Financial Statements includes its equity
investment in Sycamore Mall Associates. The Partnerships policy is to
consolidate the operations of ventures in which it controls more than 50%
of the equity interest. The equity method is used to account for ventures
in which it controls 50% or less of the equity interest. The effect of all
transactions between the Partnership and the Consolidated Ventures has
been eliminated.
The Partnership records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying Consolidated Financial Statements have been prepared from such
records after making appropriate adjustments, where applicable, to present
the Partnership's accounts in accordance with generally accepted accounting
principles (GAAP). Such adjustments are not recorded on the books of the
Partnership. The net effect of these is as follows:
(unaudited) (unaudited) (unaudited)
2001 2001 2000 2000 1999 1999
GAAP Tax GAAP Tax GAAP Tax
Basis Basis Basis Basis Basis Basis
Total assets $ 11,539,503 2,920,758 12,062,960 2,992,051
Partners' capital accounts (deficits):
General partners (27,986) (49,270) (26,917) (47,587)
Limited partners 2,678,342 2,615,351 2,784,201 2,703,372
Net loss:
General partners (1,069) (897) (3,492) (11,401) (7,927) (3,801)
Limited partners (105,859) (88,807) (345,756)(1,128,704)(784,836)(376,252)
Net loss per
limited partnership
unit $ (5.17) (4.34) (16.89) (55.14) (38.34) (18.38)
The net loss per limited partnership unit presented is based on the
limited partnership units outstanding at the end of each period (20,468.5).
All distributions to partners through December 31, 2001 have been considered
to be a return of capital.
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Notes to Consolidated Financial Statements - Continued
The Partnership's distributions from its unconsolidated venture are
considered cash flow from operating activities to the extent of the
Partnership's cumulative share of net income. In addition, the Partnership
records amounts held in U.S. Government obligations, commercial paper and
certificates of deposit at cost which approximates market. For the purposes
of these statements, the Partnership's policy is to consider all such
investments, with an original maturity of three months or less ($0 at
December 31, 2001 and 2000), as cash equivalents.
Deferred offering costs were charged to the partners' capital accounts
upon consummation of the offering. Deferred loan costs are amortized over
the terms of the related agreements using the straight-line method.
Depreciation on the investment properties acquired has been provided over
the estimated useful lives of 5 to 30 years using the straight-line method.
Although certain leases of the Partnership provide for tenant occupancy
during periods for which no rent was due and/or increases in minimum lease
payments over the term of the lease, the Partnership accrues rental income
for the full period of occupancy on a straight-line basis.
No provision for Federal income taxes has been made as any liability
for such taxes would be that of the partners rather than the Partnership.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the General Partners 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 Partnership adopted Statement of Financial Accounting Standards No.
121 ("SFAS 121") "Accounting for the Impairment of Long-Lived Assets and for
Long Lived Assets to be Disposed Of", on January 1, 1996. SFAS 121 requires
that the Partnership record an impairment loss on its property held for
investment whenever the property's carrying value cannot be fully recovered
through estimated undiscounted cash flows from its operations and sale. The
amount of the impairment loss to be recognized would be the difference
between the property's carrying value and the property's estimated fair
value. In addition, SFAS 121 provides that a property may not be depreciated
while being held for sale. In response to the uncertainty relative to Sycamore
Mall Associates ability to recover the net carrying value of Sycamore Mall
through future operations and sale, Sycamore Mall Associates, as a matter
of prudent accounting practices and for financial reporting purposes, recorded
a provision for value impairment in 1998 in the amount of $1,100,000, of which
the Partnership's share was $278,000. During 1999, an additional $1,890,000
provision for value impairment was recorded at the Sycamore Mall property, of
which the Partnerships share was $477,655. On March 13, 2000, the Sycamore
Mall property was deeded to the Mortgage lender in lieu of foreclosure. See
discussion in Note 7.
In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 143, "Accounting for Obligations Associated with the Retirement
of Long-Lived Assets" (SFAS 143"). SFAS 143 establishes accounting standards
for the recognition and measurement of an asset retirement obligation and its
associated cost. It also provides accounting guidance for legal obligations
associated with the retirement of tangible long-lived assets. SFAS 143 is
effective in fiscal years beginning after June 15, 2002, with early adoption
permitted. The Partnership plans to adopt SFAS 143 effective January 1, 2003.
The Partnership has not determined the effect of adopting, on the Partnership's
results of operations or financial position.
In October 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"). SFAS 144 establishes a single accounting model for
the impairment or disposal of long-lived assets, including discontinued
operations. SFAS 144 superseded Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long
Lived Assets to be Disposed Of", and APB Opinion No. 30, "Reporting the
Results of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions." The provisions of SFAS 144 are effective in fiscal years
beginning after December 15, 2001 with early adoption encouraged, and in
general are to be applied prospectively. The Partnership adopted SFAS
effective January 1,2001 and the adoption did not have a material impact on
its consolidated operations and financial position.
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Notes to Consolidated Financial Statements - Continued
The Partnership has adopted SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." The Partnership defines each of its
property investments as an individual operating segment and has determined such
property investments exhibit substantially identical economic characteristics
and meet the other criteria specified by SFAS No. 131 which permits the
property investments to be aggregated into one reportable segment. The
Partnership assesses and measures operating results based on net operating
income (rental income less property operating expenses). With the exception
of interest expense, professional services and general and administrative
expenses, substantially all other components of net earnings (loss) of the
Partnership relate to property investments. With the exception of cash and
cash equivalents, substantially all other assets of the Partnership relate
to property investments.
(2) Venture Agreements
(a) General
The Partnership has entered into three joint venture agreements with
partnerships sponsored by affiliates of the General Partners. Pursuant to
such agreements, the Partnership has made capital contributions aggregating
$7,685,642 through December 31, 2001. The Partnership has acquired, through
these ventures, interests in two shopping centers and an office building.
(b) Vero Beach Associates
On November 30, 1986, the Partnership purchased an interest in Indian
River Plaza, a 147,111 gross leaseable square foot shopping center on U.S.
Highway 1 in Vero Beach, Florida. The Partnership's ownership of Indian
River Plaza was effected through its 1% partnership interest in Vero Beach
Associates (the "Operating Partnership") which holds fee title to the
property. An affiliate of the Managing General Partner purchased the
remaining 99% interest in the Operating Partnership. In May 1987, upon
the sale of a sufficient number of Units, the Partnership made an
additional capital contribution to increase its interest in the Operating
Partnership. The Partnership's interest in the cash distributions and
allocations for Federal income tax purposes of all losses of the Operating
Partnership and of profits of the Operating Partnership from the sale or
refinancing of the property is 99.9%, and its interest in the allocation
of profits from operations of the Operating Partnership for Federal income
tax purposes is 98%. At December 31, 2001, the Partnership had made
capital contributions aggregating $4,710,642 to the Operating Partnership.
Currently Indian River Plaza is subject to a first mortgage with an
original amount of $4,185,000, bearing interest at 8.31%, amortized over 30
years payable in monthly installments of principal and interest of $31,617,
until maturity on November 11, 2027 when the remaining principal balance is
payable; secured by the real and personal property of Indian River Plaza.
In addition to the first mortgage, the property is also encumbered by a
second mortgage with an original principal amount of $365,000, bearing
interest at a floating rate which is 5% above the LIBOR rate. This loan
which was payable in monthly installments of principal and interest, was
paid off at November 11, 2002.
The property is managed by an affiliate of the seller under a management
agreement that provides for a fee equal to 3% of operating income, payable
on a monthly basis. Management fees deferred pursuant to a previous
management agreement aggregate $105,952 at December 31, 2001 and 2000.
(c) Downers Grove Building Partnership
The Partnership has contributed a total of $1,900,000 to, and owns a
66-2/3% interest in, Downers Grove Building Partnership (the "Building
Partnership"). The remaining 33-1/3% interest in the Building Partnership
is held by a non-affiliate of the General Partners. The Building Partnership
owns a 56,449 square foot two-story office and laboratory building (the
"Downers Grove Building").
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Notes to Consolidated Financial Statements - Continued
The Downers Grove Building was originally leased to Reichhold Chemicals,
Inc. ("Reichhold"), on a 15 year triple net lease, which provided for bi-annual
escalations of 8%, and expiration on February 2, 2002. In November 1994,
Reichhold vacated the Downers Grove Building. In connection with the
termination of their lease, two annuity contracts were purchased by Reichhold
in the amount of $2,500,000. The annuity contracts were subsequently
assigned to the Building Partnership to collateralize payment of the lease
termination fee. The annuity contracts provide for payments beginning
December 1, 1994, through November 1, 2001. The total principal payments
received from the annuities in 2001, 2000 and 1999 were $218,502, $225,084
and $212,008 respectively. Prior to collecting these payments, the amounts
were included in rents and other receivables on the consolidated balance sheet.
During 2001, 2000 and 1999, the Building Partnership recognized $6,598,
$20,480 and $33,556, respectively, of interest income relating to the
annuity contracts.
In November 1994, the Downers Grove Building was leased to Vysis, Inc.
under a 10-year operating lease. The lease includes a rent abatement from
December, 1994 through October 1996. The initial monthy rental amount is
$37,701 and will increase to $56,551 by the end of the lease term. Vysis,
Inc. had the option to terminate this lease as of November 30, 2001 for a
payment of $600,000. It did not exercise this termination option. This
lease can be extended for up to 10 years.
The Downers Grove Building is managed by an unaffiliated entity under a
management agreement that will continue in effect from year to year, unless
and until terminated, for a management fee of $13,000 per year.
(d) Sycamore Mall Associates
On October 26, 1990, the Partnership contributed $1,075,000 to acquire a
25.24% general partnership interest in Sycamore Mall Associates, a general
partnership formed to acquire the Sycamore Mall Shopping Center in Iowa City,
Iowa. The property, situated on an approximate 21.2 acre site, includes a
main building containing 213,206 square feet and an out parcel building
containing 27,000 square feet. A 14,000 square foot parcel which contains
a 4,590 square foot building is under a ground lease. Sycamore Mall Associates
acquired the property on October 26, 1990 for a purchase price of $9,400,000,
subject to a purchase money note of $5,140,000 bearing interest at 10% payable
interest only until maturity on October 26, 1995. On August 8, 1991, Sycamore
Mall Associates obtained a first mortgage in the amount of $5,140,000 which
bore interest at a rate of 9.625% payable in monthly installments of principal
and interest of $45,355 commencing October 1, 1991 for 60 months until
September 30, 1996. The proceeds of this first mortgage were used to
repay the original purchase money note. In October 1995, the first mortgage
loan was modified. The terms of the modification reduced the interest rate
to 8.125%, reduced the monthly payments of principal and interest to $44,375
and extended the maturity to March 1, 2002. In October 1999, monthly
payments to the lender were halted and the lender declared the loan in
default. In March 2000, the property was deeded to the lender in lieu of
threatened foreclousure.
First Dearborn Income Properties L.P. II, a public limited partnership
affiliated with the General Partners of the Partnership, and First Dearborn
Sycamore Associates Limited Partnership ("FDSALP"), a privately offered
limited partnership also affiliated with the General Partners, are the joint
venture partners in Sycamore Mall Associates and contributed a total of
$2,275,000 and $910,000 for 53.40% and 21.36% of the general partner
interests, respectively.
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Notes to Consolidated Financial Statements - Continued
(3) Long-Term Debt
Long-term debt consists of the following
at December 31, 2001 and 2000:
2001 2000
$4,185,000 mortgage note, bearing interest
at 8.31%, amortized over 30 years payable
in monthly installments of principal and interest
of $31,617 until February 11, 2007. If the
remaining principal balance is not paid; the
interest rate will increase to the greater of
13.31% or the Treasury Rate, as defined, for
the remaining term of the loan, until maturity
on November 11, 2027. The loan is secured
by the real and personal property of Indian
River Plaza. 4,055,357 4,091,435
$365,000 floating rate note, bearing interest
at LIBOR plus 5%, payable in monthly
installments of principal and interest until
maturity on November 11, 2002. The loan
is secured by the real and personal property
of Indian River Plaza. 82,379 166,040
$4,586,044 mortgage note, bearing interest
at 9.125%, payable in monthly installments
of interest only of $34,873 from August 1,
1995 through February 1, 1996; principal
and interest of $55,170 from March 1, 1996
through August 1, 1998; and principal and
interest of $49,731 from September 1, 1998
until August 1, 2005 when the remaining
principal balance is due; secured by the real
and personal property of the Downers
Grove Building. 2,972,356 3,282,367
Total debt 7,110,092 7,539,842
Less current portion of long-term debt 461,130 426,444
Total long-term debt $6,648,962 7,113,398
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Notes to Consolidated Financial Statements - Continued
Five year maturities of long-term debt are as follows:
2002 461,130
2003 414,497
2004 452,643
2005 1,904,202
2006 54,804
(4) Partnership Agreement
Pursuant to the terms of the Partnership Agreement, net profits or losses
of the Partnership for Federal income tax purposes from operations generally
will be allocated 99% to the Limited Partners and 1% to the General Partners.
Net profits for Federal income tax purposes from the sale or refinancing of
properties will be allocated as follows: (i) first, to the Partners who
have a deficit capital account balance in an amount equal to their deficit
balance; (ii) second, to the Limited Partners in an amount equal to their
contributed capital plus a stipulated return thereon; and (iii) thereafter,
85% to the Limited Partners and 15% to the General Partners. Net losses from
the sale or refinancing of properties will be allocated as follows: (i) first,
to the Partners who have a positive capital account balance in an amount equal
to their positive balance; and (ii) thereafter, 99% to the Limited Partners
and 1% to the General Partners.
Operating Cash Flow, as defined in the Partnership Agreement, prior to the
date the public offering terminated, was distributed 100% to the Limited
Partners. Operating Cash Flow subsequent to termination of the public offering
will be distributed during the first five years, 99% to the Limited Partners
and 1% to the General Partners and, thereafter, 90% to the Limited Partners
and 10% to the General Partners subject to certain limitations. Sale or
refinancing proceeds will be distributed 100% to the Limited Partners until
the Limited Partners have received their contributed capital plus a stipulated
return thereon. Any remaining sale or refinancing proceeds will then be
distributed 85% to the Limited Partners and 15% to the General Partners.
For financial reporting purposes, net profits or losses from operations
are allocated 99% to the Limited Partners and 1% to the General Partners.
The General Partners are not required to make any capital contributions except
under certain limited circumstances upon dissolution and termination of the
Partnership.
(5) Leases
At December 31, 2001, the Partnership and its Consolidated Ventures'
principal assets are a shopping center and an office building. The
Partnership has determined that all leases relating to the properties are
properly classified as operating leases; therefore, rental income is
reported when earned and the cost of the property, excluding the cost of
the land, is depreciated over the estimated useful life of the property.
Leases with tenants range in term from one to ten years and provide for
fixed minimum rent and partial to full reimbursement of operating costs.
In addition, substantially all leases with shopping center tenants provide
for additional rent based upon percentages of tenants' sales volume.
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Notes to Consolidated Financial Statements - Continued
Cost and accumulated depreciation of the leased assets are summarized as
follows at December 31, 2001.
Shopping center:
Cost $ 9,592,447
Accumulated depreciation (4,548,684)
5,043,763
Office building:
Cost 8,148,298
Accumulated depreciation (3,169,279)
4,979,019
Total $10,022,782
Minimum lease payments, including amounts representing executory costs
(e.g. taxes, maintenance, insurance) and any related profit, to be received
in the future under the operating leases are as follows:
2002 1,084,432
2003 982,419
2004 733,698
2005 2,328
2006 -
Thereafter -
$ 2,802,877
Percentage rents (based on tenants' sales volume) included in rental
income were $21,685, $4,413and $64,410 for the years ended December 31,
2001, 2000 and 1999, respectively. In addition, the Partnership's
Consolidated Ventures recognize income on a straight-line basis over the
life of the related leases. Included in deferred rents receivable and
rents and other receivables at December 31, 2001 and 2000 is $648,768
and $715,685, respectively, which represents rental income due from
tenants in future periods.
(6) Transactions with Affiliates
In connection with the evaluation, investigation, negotiation,
selection and purchase of the Partnership's investment properties,
affiliates of the General Partners were entitled to receive acquisition
fees from the Partnership, equal to 4.85% of the gross proceeds from the
offering of Units. As of December 31, 2001, the aggregate amount of
acquisition fees earned by affiliates of the General Partners was $496,361,
all of which was paid.
Affiliates of the General Partners are entitled to an annual
non-accountable expense reimbursement, subordinated to the Limited Partners'
receipt of distributions of Operating Cash Flow equal to 6% per annum, in
connection with the management of the Partnership in an amount equal to the
greater of .25% of the gross proceeds of the offering or $25,000. Beginning
in 1999, the partnership stopped accruing for this expense. It is not
anticipated that 6% per annum yield will be obtained by the Limited Partners
and therefore it is not likely that this fee will be earned and payable.
As of December 31, 2001, the partnership continued to carry a $305,257
payable, related to the accruals for this liability in years prior to 1999.
The Managing General Partner and its affiliates are entitled to
reimbursement for salaries and direct expenses of officers and employees
of the Managing General Partner and its affiliates relating to the
administration of the Partnership.
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Notes to Consolidated Financial Statements - Continued
Fees, commissions and other expenses required to be paid by the Partnership to
affiliates of the General Partners for the years ended December 31, 2001, 2000
and 1999 are as follows:
2001 2000 1999
Reimbursement (at cost)
for administrative services 17,187 9,787 5,343
$17,187 9,787 5,343
Due to affiliates consist of the following at December 31, 2001 and 2000:
2001 2000
Administrative Services 27,731 20,545
Management Fees 305,257 305,257
Reimbursement for finance fees - 74,500
Accounting fees 20,000 -
352,988 400,302
(7) Investment in Unconsolidated Venture
As a result of the inability of the Sycamore Mall Property to find new
tenants, the property was unable to meet its financial obligations. Beginning
in October of 1999, payments to the lender were halted. This resulted in a
default of the loan terms and on March 13, 2000, title to the land, buildings
and improvements as well as the other assets and liabilities of the property
were transferred to the lender in consideration of a discharge of the mortgage
loan. This resulted in a taxable loss of approximately $2,900,000. There will
be no distributable cash as a result of this transaction.
The total revenues, expenses and net loss for the above venture for the year
ended December 31, 1999 were $1,185,202, $3,321,606 and $2,136,404,
respectively.
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
Notes to Consolidated Financial Statements - Continued
(8) Financial Instruments
The carrying values and fair values of First Dearborn Income Properties L.P.'s
financial instruments at December 31 were derived as follows:
Cash and Cash Equivalents, Other Current Assets and Short-Term Debt: The
carrying amounts approximate fair value because of the short term maturity
of the instruments.
Noncurrent Receivables: The fair value of the noncurrent receivables is based
on anticipated cash flows and approximate carrying values.
Long-Term Debt: The fair value is based on interest rates that are currently
available to First Dearborn Income Properties, LP for issuance of debt with
similar terms and remaining maturities and approximates carrying values.
(9) Subsequent Events
In January 2002, K-Mart Corporation filed for Chapter 11 bankruptcy
protection. K-mart Corporation is a tenant of Vero Beach Associates with
a store that occupies 56% of the space at the shopping center. Presently,
K-Mart has been paying their rental payments timely. Management of Vero
Beach Associates has received no notices from K-Mart that they intend to
terminate the lease. However, this could change in the future.
In January 2002, Publix Super Market, Inc., a tenant which occupies 25%
of the space at the Vero Beach shopping center, gave notice to management
they they will be vacating their leased premises prior to the end of their
lease term, which expires on September 30, 2004. Publix Super Markets has
indicated that they will honor the lease payment terms of the lease. In
February 2003, the tenant vacated the store.
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
December 31, 2001
Schedule III
Consolidated Real Estate and Accumulated Depreciation
(a)
Initial Cost to Partnership Additions
Building & Building &
Encumbrance Land Improvements Improvements
Shopping Center
Vero Beach, FL 4,137,736 891,905 8,172,052 499,442
Office Building
Downers Grove, IL 2,972,356 1,312,161 6,728,640 107,497
Total $7,110,092 2,204,066 14,900,692 606,939
(b)
Gross amount of asset at period end
Building & Accumulated
Land Improvements Total Depreciation
Shopping Center
Vero Beach, FL 920,953 8,671,494 9,592,447 4,548,653
Office Building
Downers Grove, IL 1,312,161 6,836,137 8,148,298 3,169,310
Total 2,233,114 15,507,631 17,740,745 7,717,963
Date of Date Depreciable
Construction Acquired Lives
Shopping Center
Vero Beach, FL 1979 11/30/86 5-30 years
Office Building 1983
Downers Grove, IL 1987 2/1/88 5-30 years
FIRST DEARBORN INCOME PROPERTIES L.P.
(a limited partnership)
and Consolidated Ventures
December 31, 2001
Schedule III - continued
Consolidated Real Estate and Accumulated Depreciation
(a) The initial cost represents the original purchase price of the
properties reduced by any provision for value impairment.(b) The aggregate
cost of the above real estate at December 31, 2001 for Federal income tax
purposes is $16,643,203.
2001 2000 1999
(c) Reconciliation of real estate owned
Balance at beginning of period $ 17,736,170 17,640,705 17,608,567
Additions 4,575 95,465 32,138
Balance at end of period 17,740,745 17,736,170 17,640,705
(d) Reconciliation of accumulated depreciation
Balance at beginning of period 7,239,264 6,760,373 6,296,327
Depreciation expense 478,699 478,891 464,046
Balance at end of period $ 7,717,963 7,239,264 6,760,373
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
The General Partners of the Partnership are:
FDIP, Inc., an Illinois corporation, Managing General Partner; and FDIP
Associates, an Illinois general partnership, Associate General Partner.
FDIP, Inc., the Managing General Partner, is a corporation formed under
the laws of the State of Illinois. Its issued and outstanding shares are owned
by Messrs. Bruce H. Block and Robert S. Ross. The officers of the Managing
General Partner are Robert S. Ross, President, and Bruce H. Block, Vice
President and Secretary. Messrs. Block and Ross are its sole directors.
FDIP Associates, the Associate General Partner, was formed under the laws of
the State of Illinois and has a nominal net worth. Its constituent partners
are First Dearborn Partners, an Illinois Limited Liability Company, whose
members are Messrs. Block and Ross,and Hampshire Syndications, Inc., a New
Hampshire corporation. Hampshire Syndications, Inc. is wholly owned by
Jefferson-Pilot Investments, Inc., a North Carolina corporation, which is a
wholly-owned subsidiary of Jefferson-Pilot Corporation. The officers and
directors of Hampshire Syndications, Inc. are Ronald Angarella, President
and Director, Charles C. Cornelio, Vice President and Director, Sheri J.
Lease, Secretary, Dennis R. Glass, Executive Vice President and Director,
John C. Ingram, Executive Vice President and Director, John A. Weston,
Treasurer.
Messrs. Block and Ross are not affiliated with Jefferson Pilot Securities
Corporation, except that each is affiliated with the Associate General Partner.
The persons listed below occupy key management position with the General
Partners:
Mr. Bruce H. Block, age 64, has been a principal in numerous real estate
ventures which own, have an interest in, or have owned various types of
property that have included apartment and office buildings, shopping centers
and vacant land. Mr. Block is an Illinois licensed attorney, a certified
public accountant and a licensed real estate broker in the State of Illinois.
Mr. Block practiced corporate and real estate law in Chicago for over 20 years
and is a shareholder in the Chicago law firm of Ross & Block, P.C.
Mr. Robert S. Ross, age 64, has been a principal in many real estate ventures
which own, have an interest in, or have owned various types of property
including apartment and office buildings, shopping centers and vacant land.
Mr. Ross is an Illinois licensed attorney, a licensed real estate broker in
the State of Illinois and is an affiliate member of Real Estate Securities
and Syndication Institute. He also practiced general and real estate law in
the Chicago area for over 22 years and is a shareholder in the Chicago
law firm of Ross & Block P.C.
Mr. Ronald R. Angarella, age 44, has served as President and Director of
Hampshire Syndications, Inc. since October 23, 1995. His principal occupation
is President, Chairman and Director of Jefferson Pilot Securities Corporation
and Hampshire Funding, Inc. He also is Senior Vice President of Jefferson
Pilot Financial Insurance Company. In addition, he currently serves as an
officer and/or director of various affiliated entities. Mr. Angarella also
serves as President and Director of Jefferson Pilot Variable Fund, Inc.
Mr. Charles C. Cornelio, age 42, has served as Vice President of Hampshire
Syndications, Inc. since June 4, 1993, and Director since May 7, 1990. Mr.
Cornelio served as Secretary of Hampshire Syndications, Inc. from May 17, 1990,
until May 13, 1997. Mr. Cornelio is also Vice President, Secretary and
Director of Jefferson Pilot Securities Corporation. His principal occupation
is Senior Vice President of Jefferson Pilot Securities Corporation and
Executive Vice President of various insurance company subsidiaries. He also
serves as an officer and/or director of other various affiliated entities.
Mr. Cornelio also is General Counsel and Vice President of Jefferson Pilot
Variable Fund, Inc.
Shari J. Lease, age 47, has served as Secretary of Hampshire Syndications,
Inc. since May 13, 1997 and previously served as Assistant Secretary beginning
on May 9, 1994. Ms. Lease is also currently Secretary of Hampshire Funding,
Inc. and Assistant Secretary of Jefferson Pilot Securities Corporation.
Her principal occupation since April 1995 has been as Assistant Vice President
and Counsel of Jefferson Pilot Financial Insurance Company until her election
as Vice President and Counsel in February 1998. She also currently serves as
an officer of other various affiliated entities and is Secretary of Jefferson
Pilot Variable Fund, Inc.
John Weston, age 42, has served as Treasurer of Hampshire Syndications, Inc.
since July 19, 1991. He also currently serves as Treasurer of Jefferson Pilot
Securities Corporation, Hampshire Funding, Inc., Jefferson Pilot Variable Fund,
Inc. and Jefferson Pilot Advisory Corporation. His principal occupation since
April 1995, has been as Assistant Vice President of Jefferson Pilot Financial
Insurance Company until his election as Vice President in February 1999. Mr.
Weston also currently serves as an officer of other various affiliated entities.
Dennis R. Glass, age 52, was elected Executive Vice President and Director of
Hampshire Syndications, Inc. on May 13, 1997. Mr. Glass is also a Director of
Hampshire Funding, Inc. Since October 1993, his principal occupation has been
as Executive Vice President, Chief Financial Officer and Treasurer of
Jefferson-Pilot Corporation. He also currently serves as an officer and/or
director of various entities affiliated with Jefferson Pilot Corporation.
John C. Ingram, age 58, was elected Executive Vice President and Director of
Hampshire Syndications, Inc. on May 3, 1999. Mr. Ingram is also a Director of
Hampshire Funding, Inc. Since September 1999, Mr. Ingram's principal
occupation has been as Senior Vice President and Chief Investment Officer
of Jefferson Pilot Corporation and Executive Vice President and Chief
Investment Officer of its insurance company subsidiaries. Prior to that
date he served as Senior Vice President and Manager-Security Department
for more than ten years. Mr. Ingram is also an officer and/or director of
various entities affiliated with Jefferson-Pilot Corporation.
Item 11. Executive Compensation
The Partnership has no officers or directors and instead is managed by
FDIP, Inc., its Managing General Partner.
Officers and directors of the Managing General Partner receive no direct
remuneration in such capacities from the Partnership. In addition, the
Partnership is a registrant that qualifies as a small business issuer as
defined in Item 10(a)(1) of Regulation S-B. Accordingly, certain of the
disclosures typically required by Item 402 are not applicable to the
Partnership and the information set forth herein has been appropriately
modified.
The Partnership is required to pay certain fees to the General Partners
or their affiliates and the General Partners are entitled to receive a share
of cash distributions, when and as cash distributions are made to the Limited
Partners, and a share of profits or losses as described under the caption
"Compensation Table" at pages 9-10 of the Prospectus, a copy of which
descriptions is filed herewith and is hereby incorporated herein by reference.
Reference is also made to Note 4 of Notes to Consolidated Financial Statements
filed with this annual report for a description of such distributions and
allocations.
Certain compensation has accrued to the General Partners and their
affiliates for services rendered on behalf of the Partnership. In connection
with the evaluation, investigation, negotiation, selection and purchase of
the Partnership's investment properties, affiliates of the General Partners
were entitled to receive acquisition fees from the Partnership, equal to 4.85%
of the gross proceeds from the offering of Units. As of December 31, 1997,
the aggregate amount of acquisition fees earned by affiliates of the General
Partners was $496,361, all of which was paid.
Affiliates of the General Partners are entitled to an annual
non-accountable expense =reimbursement, subordinated to the Limited Partners'
receipt of distributions of Operating Cash Flow equal to 6% per annum, in
connection with the management of the Partnership in an amount equal to the
greater of .25% of the gross proceeds of the offering or $25,000.
The Managing General Partner and its affiliates are entitled to
reimbursement for salaries and direct expenses of officers and employees of
the Managing General Partner and its affiliates relating to the administration
of the Partnership. Beginning in 1999, the partnership stopped accruing for
this expense. It is not anticipated that 6% per annum yield will be obtained
by the Limited Partners and therefore it is not likely that this fee will
be earned and payable. As of December 31, 2001, the partnership continues
to carry a $305,527 payable, related to the accruals for this liability in
years prior to 1999. It is doubtful that this amount will be earned and paid.
Fees, commissions and other expenses required to be paid by the Partnership to
affiliates of the General Partners for the years ended December 31, 2001, 2000
and 1999 are as follows:
2001 2000 1999
Reimbursement (at cost)
for administrative services 17,187 9,787 5,343
$17.187 9,787 5,343
There are no compensatory plans or arrangements regarding termination of
employment or change of control.
Item 12. Security ownership of certain Beneficial Owners and Management
(a) No person or group is known by the Partnership to own beneficially
more than 5% of the outstanding Units of the Partnership.
(b) The following table sets forth information regarding the beneficial
ownership of Units as of December 31, 2001 by directors and/or general
partners of the General Partners, and by all officers, directors and for
general partners of the General Partners as a group:
Amount and
Title Name and address of nature of Percent
Class Beneficial Owner Ownership of Class
Limited Robert S. Ross 0 Units 0%
Partnership 154 W. Hubbard
Units Chicago, Illinois
Limited Bruce H. Block 4 Units less than 1%
Partnership 154 W. Hubbard
Units Chicago, Illinois
Limited Jefferson Pilot 380 Units(1) 1.9%
Partnership Securities Corporation
Units One Granite Place
Concord, NH
Limited All officers 399 Units (2) 1.9%
Partnership directors, and
Units general partners
as a group
(1) During 1993, Jefferson Pilot Securities Corporation, an affiliate of
Hampshire Syndications, Inc., acquired 280 Units pursuant to an agreement with
the Partnership. During 1998, Jefferson Pilot Securities Corporation acquired
\100 additional units. Hampshire Syndications, Inc. is a partner of the
Associate General Partner of the Partnership and because it is an affiliate of
Jefferson Pilot Securities Corporation, could be deemed to have a beneficial
interest in such Units. Accordingly, such Units are included in this table.
(2) Includes 15 units owned by the immediate family of one of the
officers of a general partner of the Associate General Partner.
Item 13. Certain Relationships and Related Transactions
There were no significant transactions or business relationships with
the Managing General Partner, affiliates, or other management other than those
described in Item 10 and 11 above, and Note 6 to the Consolidated Financial
Statements.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) (1)(2) See Index to Financial Statements and Financial
Statement Schedules on page 15.
(3) Exhibits
(3-A) The Prospectus of the Partnership dated February 25, 1987
as supplemented April 2, 1987, February 5, 1988, April 15, 1988 and May 6, 1988,
filed pursuant to Rule 424(b) under the Securities Act of 1933 as amended
(File No. 33-10244), is hereby incorporated herein by reference.
(3-B) Amended Agreement of Limited Partnership set forth as
Exhibit A to the Prospectus, pursuant to Rule 424(b) under the Securities
Act of 1933 as amended (File No. 33-10244), is hereby incorporated herein
by reference.
(3-C) Certification.
(3-D) Section 906 Certification.
(b) Reports on Form 8-K which were filed in the last quarter of 2001and
first quarter 2002:
a. December 14, 2001 - Amendment to 8-K disclosing change in auditors.
b. January 16, 2002 - Amendment to 8-K disclosing change in auditors.
c. January 29, 2002 - Disclosure of notice from tenant at Vero Beach shopping
center which will be vacating its leased space at the end of lease term.
d. February 2, 2002 - Amendment to 8-K disclosing change in auditors.
(c) An annual report for the fiscal year 2001 will be sent to the
Limited Partners subsequent to this filing and the Partnership will furnish
copies of such report to the Securities and Exchange Commission at that time.
(d) Exhibits - See Item 14(a) - (3).
(e) Financial Statement Schedules. See Index to Financial Statements
and Financial Statement Schedules on page 14.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnership has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST DEARBORN INCOME PROPERTIES L.P.
(Registrant)
BY: FDIP, Inc.
(Managing General Partner)
Date: August 11, 2004 BY: _______ Robert S. Ross
Its: President
BY: FDIP Associates
(Associate General Partner)
BY: First Dearborn Partners LLC, a Partner
Date: August 11, 2004 BY: ________ Robert S. Ross
a Partner
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.
Signatures Title Date
/s/ Robert S. Ross President and Director August 11, 2004
Robert S. Ross of FDIP, Inc. (Principal
Executive Officer)
/s/ Bruce H. Block Secretary and Director August 11, 2004
Bruce H. Block of FDIP, Inc. (Principal
Financial Officer)
Section 3 C
CERTIFICATION
I, Bruce Block, certify that:
1. I have reviewed this annual report on Form 10-K of First Dearborn Income
Properties L.P. (the "Company" or the "Registrant");
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and
other financial information included in this annual report, fairly present
in all material respects the financial condition, results of operations and
cash flows of the Company as of, and for, the periods presented in this
annual report;
4. The Company's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the Company and have:
a) Designed such disclosure controls and procedures to ensure that material
information relating to the Company, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the Company's disclosure controls and
procedures as of the date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The Company's other certifying officers and I have disclosed, based on our
most recent evaluation, to the Company's auditors and the Company's board of
directors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Company's ability to record,
process, summarize and report financial data and have identified for the
Company's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and
6. The Company's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: August 11, 2004
/s/ Bruce H. Block Secretary and Director
Bruce H. Block of FDIP, Inc. (Principal Financial Officer)
Section 3 D
Section 906 Certification
The following statement is provided by the undersigned to accompany the annual
report on Form 10-K for the quarter ended December 31, 2001 pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed pursuant
to any provisions of the Securities Exchange Act of 1934 or any other
securities law:
Each of the undersigned certifies that the foregoing Report on Form 10-K fully
complies with the requirements of Section 13 (a) of the Securities Exchange Act
of 1934 (15 U.S.C. 79m) and that the information contained in the Form 10-K
fairly presents, in all material respects, the financial condition and results
of operations of First Dearborn Income Properties, L.P.
By:
/s/ Robert S. Ross President and Director August 11,2004
Robert S. Ross of FDIP, Inc. (Principal
Executive Officer)
/s/ Bruce H. Block Secretary and Director August 11,2004
Bruce H. Block of FDIP, Inc. (Principal
Financial Officer)