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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_______________
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
X SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
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For the fiscal year ended December 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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Commission file number: 0-15796
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CORPORATE REALTY INCOME FUND I, L.P.
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(Exact name of registrant as specified in its charter)
Delaware 13-3311993
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
406 East 85th Street, NY, NY 10028
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 794-3292
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
- ------------------- -------------------------
which registered
None Not Applicable
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Securities registered pursuant to Section 12(g) of the Act:
Depositary Units of Limited Partnership Interest
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(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 require-
ments for the past 90 days. Yes X No
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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
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Documents Incorporated by Reference in Part IV of this Form 10-K
- ----------------------------------------------------------------
None.
CORPORATE REALTY INCOME FUND I, L. P.
Annual Report on Form 10-K
December 31, 1995
Table of Contents
Page
PART I . . . . . . . . . . . . . .
1
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . 10
Item 4. Submission of Matters to a Vote of Security-
Holders. . . . . . . . . . . . . . . . . . . . . . . 10
PART II. . . . . . . . . . . . . 11
Item 5. Market for Registrant's Securities and Related
Security-Holder Matters. . . . . . . . . . . . . . 11
Item 6. Selected Financial Data. . . . . . . . . . . . . . 12
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . 13
Item 8. Financial Statements and Supplementary Data. . . . 15
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . 15
PART III. . . . . . . . . . . . . 16
Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . . . 16
Item 11. Executive Compensation . . . . . . . . . . . . . . 17
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . 18
Item 13. Certain Relationships and Related Transactions . . 18
PART IV. . . . . . . . . . . . . 20
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K. . . . . . . . . . . . . . . . 20
PART I
Item 1. Business.
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General
Corporate Realty Income Fund I, L.P. ("Registrant") is a
Delaware limited partnership organized on November 25, 1985
pursuant to the Delaware Revised Uniform Limited Partnership Act.
The general partners of Registrant are 1345 Realty Corporation, a
Delaware corporation (the "Corporate General Partner"), and Robert
F. Gossett, Jr. (the "Individual General Partner") (collectively,
the "General Partners"). The limited partners of Registrant are
hereinafter collectively referred to as the "Limited Partners."
Registrant's business consists of owning and leasing to others
the six properties described in Item 2 below. Registrant intends
to leverage such properties and use the financing proceeds to
acquire additional commercial properties, as described below.
On March 26, 1986, Registrant commenced an offering (the
"Offering") of $80,000,000 of depositary units of limited
partnership interest (the "Units"). Registrant terminated the
Offering in September 1987, having issued 3,200,000 Units
($80,000,000) and received net proceeds from the Offering (after
deduction for organization and offering expenses of $5,948,103)
aggregating $74,051,897. Since the Offering, Registrant has
invested aggregate funds in excess of $80,000,000 (including
$10,000,000 of financing proceeds) in acquiring and improving its
six properties.
Rental revenue from the following tenants at Registrant's
properties each accounted for more than 10% of Registrant's total
rental revenue for each of the years ended December 31, 1993, 1994
and 1995:
a. For 1993, International Business Machines Corporation
("IBM") as tenant for the Directory Building (formerly, the IBM
Building) (23%); The Austin Company ("Austin") as a tenant in the
Austin Place Building (11%); James River Corporation of Nevada,
Inc. ("James River") as a tenant in the James River Warehouse
(formerly the Crown Zellerbach Warehouse) (13%); and Mesa Operating
Limited Partnership ("Mesa") as assignee of Tenneco Oil Company
("Tenneco"), the tenant under the original lease for the Marathon
Oil Building (formerly the Tenneco Building) (14%). In addition,
Registrant received a payment of $46,004 and a distribution of
securities having a value of $2,800,596 at the date of issuance
from National Gypsum Company ("Gypsum") pursuant to Gypsum's
bankruptcy reorganization plan. The value of this distribution
aggregated approximately 23% of Registrant's total rental revenues.
See also Item 2 - "Properties" and Item 7 - "Management's
Discussion and Analysis of Financial Condition and Results of
Operations."
b. For 1994, Austin as a tenant in the Austin Place Building
(19%); James River as a tenant in the James River Warehouse (20%);
and Mesa, the tenant under the original lease to Tenneco for the
Marathon Oil Building (24%). In addition, in 1994, Registrant
received cash in the aggregate amount of $3,657,374 from the
redemption of Gypsum senior notes and the sale of 75,000 shares of
Gypsum common stock. Registrant realized gain on Gypsum securities
in the amount of $930,750, which amount, if included in rental
revenue, would have approximated 11% of total rental revenue.
c. For 1995, GTE Directories Corporation ("GTE") as tenant for
the Directory Building (16%); Austin as a tenant in the Austin
Place Building (16%); James River as tenant in the James River
Warehouse (16%); and Mesa, the tenant under the original lease to
Tenneco for the Marathon Oil Building (20%).
In July 1995, Registrant's Unitholders approved a proposal to
arrange for secured borrowings and use such financing proceeds to
fund the acquisition and improvement of additional commercial
buildings. By using the equity in its properties to finance the
purchase of additional properties, Registrant will further
diversify its assets and seek to increase its net income and
distributions to Unitholders, to the extent the revenues from such
properties exceed operating and financing costs related to such
properties. The General Partners seek multi-tenant commercial
properties which, with improvements, might achieve higher occupancy
and rental rates, thereby increasing Registrant's net income and
distributions to Unitholders and the net value of its portfolio of
properties. Although the General Partners are investigating
properties for acquisition, such inquiries are necessarily
preliminary until Registrant has obtained financing.
The General Partners have engaged in discussions with various
lenders concerning potential terms of secured borrowings to finance
the acquisition and improvement of additional properties. However,
because Registrant has yet to obtain a commitment for any such
financing, the actual terms of any borrowings may differ from the
General Partners' expectations.
Such financing is expected to be secured by all or most of
Registrant's properties, including its existing properties. The
indebtedness will be non-recourse, meaning that the lender's
recourse will be limited to the properties; neither Registrant nor
its Partners and Unitholders will be liable for any deficiency
between the value of the properties and the outstanding
indebtedness.
The financing may be initially structured as a secured
revolving line of credit, against which Registrant could draw funds
as and when additional properties are acquired and/or improved.
Alternatively, Registrant may obtain a commitment for fixed term
financing which permits partial drawdowns. Registrant intends to
replace its existing, secured revolving line of credit and any
interim acquisition financing with a fixed rate mortgage loan.
Such loan would likely require monthly payments of principal and
interest until maturity, at which time a substantial balloon
payment of remaining principal would likely be due. The General
Partners expect that any such loan would feature a short to medium
term of approximately three to seven years. In addition to
interest, any financing obtained by Registrant will likely require
payment of financing fees and reimbursement of appraisal,
architect, and legal fees.
The General Partners expect to approximate Registrant's
original intention of a loan to value ratio of 50%. Accordingly,
it is expected that Registrant's total borrowings will approximate
50% of the sum of (i) the appraised values of its original six
properties plus (ii) the purchase price of additional properties
acquired by Registrant. Registrant is not limited by its
Partnership Agreement as to borrowing for any individual property;
the aggregate borrowings on all properties may not exceed an amount
equal to the sum of (x) 60% of the aggregate purchase price of all
properties which are not refinanced plus (y) 80% of the aggregate
value of all refinanced properties.
Such leveraging will enable Registrant to acquire additional
properties, but will increase the risk of loss on leveraged
properties. To be profitable, Registrant's properties must
generate cash flow in amounts sufficient to not only cover
operating expenses but also to pay all financing costs.
Registrant's objectives in making its investments continue to
be to (i) preserve and protect Registrant's capital; (ii) provide
long term capital appreciation, generating long term capital gains
for federal income tax purposes upon sale of the properties; (iii)
build up equity through the reduction of mortgage loans encumbering
the properties; and (iv) provide cash distributions from operations
which may be partially tax-sheltered. There is no assurance that
these objectives will be achieved.
Secured Revolving Line of Credit
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The GE Medical Systems Office Building, the Directory
Building, the Austin Place Building, and the James River Warehouse
are subject to the lien of a secured, revolving line of credit (the
"Loan") in the maximum principal amount of $7,800,000 obtained by
Registrant from PNC Bank, N.A. (formerly, Pittsburgh National Bank;
the "Lender"). The Loan is evidenced and secured by a Deed of
Trust Note, an Open-End Mortgage and Security Agreement, and
modified Deed of Trust and Security Agreements, Assignments of
Leases and Rents, Hazardous Materials Certificate and Indemnity
Agreement, and Negative Pledge Agreement.
The Loan is secured by a first mortgage lien on, and an
assignment of leases and rents from, the aforementioned four
properties. As further security for the Loan, Registrant may not,
without the Lender's consent, sell or transfer, or create or permit
any lien or encumbrance on, Registrant's other two properties (a
negative pledge agreement). The proceeds of any such sale,
transfer, mortgage, or other encumbrance of one or more of such
other properties have also been assigned to the Lender as
additional security for the Loan.
Registrant has also agreed to indemnify and hold harmless the
Lender and its employees, agents, officers, and directors from and
against any and all claims, liability, costs, and expenses arising
out of the presence and/or clean-up of hazardous materials on or
affecting the properties which secure the Loan.
The Loan was originally made as a first mortgage loan in the
principal amount of $7,800,000 on March 31, 1992. Effective upon
its maturity on March 31, 1995, the Loan was extended to March 31,
1996 and converted to the present secured, revolving line of
credit. This extension and conversion was made upon payment of a
fee in the amount of $29,250 and expenses. The Loan bears interest
at a rate per annum equal to one-half percent (0.5%) above the
prime rate announced from time to time by the Lender; the current
rate of interest on the Loan is 8.75% per annum. Any installment
not received by the Lender within 15 days after the due date would
include a late charge equal to four percent (4%) of the amount of
such installment. In the event of a default, any outstanding
amounts will bear interest at a rate equal to two percent (2%)
above the interest rate otherwise applicable to the Loan.
Registrant may prepay the Loan, in whole or in part, at any time,
without premium or penalty.
In March 1996, the Lender informed Registrant that it had
agreed to renew the credit line for a period of six months, to
September 30, 1996, and to increase the maximum principal amount by
two million dollars, to $9,800,000. Such extension is conditioned
upon payment of the Lender's loan fee ($24,500) and expenses.
Upon extension, the Loan will continue to bear interest at a
variable rate equal to one-half percent (0.5%) above the Lender's
prime rate on the outstanding balance under the revolving line of
credit (initially $7,800,000) and require monthly payments of
interest only on the first day of each calendar month until
maturity. The additional credit is intended to fund Registrant's
loan and acquisition costs pending its obtaining acquisition
funding, as described above. The secured revolving line of credit
also features the following additional requirements: (1)
Registrant's earnings before interest, taxes, depreciation, and
amortization must equal or exceed four times total debt service;
and (2) if any good faith deposits made by Registrant in
connection with proposed property acquisitions are returned to
Registrant, such amounts must be applied to repayment of the Loan.
If the Loan is not replaced by acquisition financing and is
not further extended, the Loan will be due and payable in full at
maturity. In such event, Registrant would need to obtain
replacement financing or sell one or more of its properties to
repay the Loan. See Item 7 - "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Liquidity and
Capital Resources."
Competition
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Two properties owned by Registrant are fully leased to single
tenants on a net lease or substantially equivalent basis (the James
River Warehouse and the Directory Building) and do not face
competition from other properties during the terms of their leases.
The Austin Place Building and the Flatiron Building are also
currently fully leased. However, upon termination of these and any
other leases, and for any additional properties acquired by
Registrant, Registrant will compete with other properties for
tenants. Depending upon market conditions and occupancy rates at
the time and place of any vacancies in Registrant's properties,
there is currently and there may be, in the future, intense
competition in obtaining tenants to fill such vacancies.
Furthermore, such competition has resulted and may result, because
of reduced rental rates and required concessions to tenants, in
decreases in the rental revenue received by Registrant and capital
outlays necessary to fund tenant improvements. See Item 2 -
"Properties" for a discussion of market conditions in the areas in
which Registrant currently competes for tenants.
Employees
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Registrant currently employs six persons. The business of
Registrant is managed by the General Partners. See Item 10 -
"Directors and Executive Officers of the Registrant" and Item 13 -
"Certain Relationships and Related Transactions."
Item 2. Properties.
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GE Medical Systems Office Building
- ----------------------------------
On July 10, 1986, Registrant acquired the GE Medical Systems
Office Building, located in Monterey Park, California, for
approximately $4,182,000, inclusive of acquisition fees.
Registrant owns fee title to the GE Building and its 90,000 square
feet of underlying land, subject to the lien of the Loan (See Item
1. - "Business-Secured, Revolving Line of Credit"). The property
was built in 1985 and contains 20,250 net rentable square feet, of
which approximately 60% is office space and the remainder is
warehouse space. The building was net leased to the General
Electric Company ("GE") for an initial term which expired on
October 21, 1995. GE renewed the lease with respect to 10,600
square feet for a five year period, until October 31, 2000. Annual
net rent is $95,400 ($9.00 per square foot as compared to
approximately $19.50 under the initial lease); GE also reimburses
Registrant for its proportionate share of operating expenses.
Registrant anticipates reimbursing GE approximately $116,000 for
tenant improvements in 1996. Registrant is seeking a tenant for
the vacant portion (47.7%) of the property.
Market conditions in the Monterey Park area have declined from
those prevailing at the time GE executed its initial lease for the
building. The vacancy rate for commercial properties in such area
approximates 19% to 25% for office buildings and 10% to 17% for
industrial space. The GE Building is situated next to a 200,000
square foot Public Storage facility which, like the GE Building,
consists of a front office with warehouse space in the rear. Such
facility is currently 94% occupied; rents approximate $8.50 per
square foot. Rents for mixed office/warehouse space in this area
generally approximate $8 to $9 per square foot. Registrant can
expect to fund tenant improvements and leasing commissions in
connection with leasing any vacant space in the GE Building. Such
expenditures are expected to be funded out of working capital. See
Item 7 - "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources."
The Directory Building (formerly, the IBM Building)
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On October 27, 1986, Registrant acquired the Directory
Building, located in Las Colinas, Texas, for a purchase price of
approximately $24,580,375, inclusive of acquisition fees.
Registrant owns fee title to the Directory Building and its 6.67
acres of underlying land, subject to the lien of the Loan. The
Directory Building was built in 1982 and contains approximately
152,100 net rentable square feet (reduced from 154,300 square feet
during IBM's tenancy).
The building is 100% leased to GTE pursuant to a lease dated
as of April 20, 1994, as subsequently amended by amendments dated
as of July 29, 1994 and as of February 22, 1995. GTE occupied the
building in stages, as follows: 132,780 square feet (approximately
87%) in 1994; and the remaining 19,341 square feet during 1995.
The initial term of the lease expires on September 30, 2000,
subject to a five-year renewal option at a rate equal to 95% of the
then market rate.
The amended lease requires approximate monthly rent of
$158,459 through August 31, 1996; $164,798 from September 1, 1996
through August 31, 1997; and $171,136 from September 1, 1997
through September 30, 2000. GTE must also pay additional rent
equal to excess electric charges and operating expenses over base
levels.
In connection with the GTE lease, Registrant has expended
approximately $2,628,000, including approximately $329,000 in 1995,
for tenant improvements.
The Las Colinas office market includes approximately
16,750,000 leasable square feet, of which approximately 97% was
leased as of December 31, 1995. Rental rates for such properties
ranged from approximately $10 to $21 per square foot.
Austin Place Building
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On December 30, 1986, Registrant acquired the Austin Place
Building, a two-wing office building located in South Plainfield,
New Jersey, for a purchase price of approximately $16,473,000,
inclusive of acquisition fees. Registrant owns fee title to the
Austin Place Building and its underlying five acres of land,
subject to the lien of the Loan. The property was built in 1986
and contains approximately 105,000 net rentable square feet for use
as a multi-tenant facility (reduced from 108,000 square feet as a
single tenant facility). On October 30, 1990, Gypsum, which had
leased 62,300 square feet at the building (which Gypsum was
obligated to build out at its cost), filed for protection under
Chapter 11 of the U.S. Bankruptcy Code; the lease was subsequently
rejected in the bankruptcy proceeding.
As of March 15, 1996, Registrant has rented all of the space
previously leased to Gypsum, at an average current rent of
approximately $17.20 per square foot. Such leases expire on June
30, 1997 (approximately 4,100 square feet), February 1998
(approximately 17,300 square feet), December 2000 (approximately
17,900 square feet), and May 31, 2007 (approximately 21,650 square
feet). The market for the South Plainfield area contains
approximately 820,000 square feet of office space of which
approximately 39% is vacant. South Plainfield is included in the
Route 287 submarket (approximately 6,880,000 square feet of which
36% is vacant), the Somerset County area (approximately 10,220,000
square feet, of which 22% is vacant), and the Central New Jersey
Profit Center (approximately 45,840,000 square feet, of which 20%
is vacant). Average rents for office space in such area range from
approximately $13.50 to $17.50 per square foot. Registrant has
expended approximately $2,195,000, including $174,000 in 1995, for
tenant improvements on the space originally leased to Gypsum.
Registrant anticipates expending approximately $17,000 for such
tenant improvements in 1996.
Austin's lease is for 45,700 square feet and expires on
December 31, 2001. It requires monthly rent payments of $92,009
through December 31, 1996, and thereafter a monthly rent as
adjusted to reflect consumer price index changes. Austin's lease
also requires it to pay Registrant an amount equal to the operating
costs of its allocable share of the property. Austin has vacated
its space but has continued to make its lease payments in full.
Austin has approached Registrant to discuss terminating its lease;
because Austin's lease requires rent payments at a rate which
approximately doubles prevailing rates, Registrant would require a
substantial payment from Austin to terminate such lease. Any such
payment would be used to fund tenant improvements and offset lower
rents from any replacement leases.
Registrant received distribution of the following securities
issued by the new National Gypsum Company which emerged from
Gypsum's bankruptcy proceeding: 77,476 shares of common stock, $.01
par value (representing approximately 0.5% of such shares to be
issued); and $486,000 in principal amount of 10-year, 10% senior
notes. In 1994, Registrant received $486,000 plus accrued interest
upon the call of such senior notes and net proceeds of $3,171,375
from the sale of an aggregate of 75,000 shares of Gypsum common
stock at an average price of $42.36. In 1995, Registrant sold the
remaining 2,476 shares for $100,897 and received an additional
payment of $227,222 from Gypsum. Registrant has utilized such
proceeds of Gypsum securities issued to it to increase working
capital reserves and fund tenant improvements for its properties.
The James River Warehouse (formerly, the Crown Zellerbach
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Warehouse)
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On October 16, 1987, Registrant acquired the James River
Warehouse (formerly, the Crown Zellerbach Warehouse), located in
Ventura Industrial Park, Woodland, California, for a purchase price
of approximately $14,551,456, inclusive of acquisition fees.
Registrant owns fee title to the James River Warehouse and its 21
acres of underlying property, subject to the lien of the Loan. The
property contains approximately 570,000 net rentable square feet
(approximately 5,000 of which is suitable for office use), is used
for general warehousing, distribution, and office purposes, is net
leased to James River for an initial term which expires on January
31, 2002, and is subject to three five-year renewal options.
The amended lease requires approximate monthly rent of
$105,384 through January 31, 1999; $109,736 from February 1, 1999
through January 31, 2001; and $114,087 from February 1, 2001
through January 31, 2002. James River also must pay additional
monthly rent of $2,000 in consideration of Registrant's obligation
to repair the roof and maintain its structural integrity.
Flatiron Building (formerly, the Cadnetix Building)
- ----------------------------------------------------
On January 5, 1988, Registrant acquired the Flatiron Building,
located in Flatiron Industrial Park, Boulder, Colorado, for
approximately $9,003,085, inclusive of acquisition fees.
Registrant owns fee title to the Flatiron Building and its 5 acres
of underlying land, free and clear of any debt. The property
contains approximately 97,430 net rentable square feet for use as
a
multi-tenant facility (reduced from 102,000 square feet as a single
tenant facility).
As of March 15, 1996, Registrant has rented all available
space in the building to various tenants pursuant to leases
providing for an average current rent of approximately $8.55 per
square foot (exclusive of expenses). Such leases expire in 1997
(approximately 3,370 square feet) and in 1998 (approximately 94,060
square feet). Market conditions in the Boulder area remain
favorable for owners of commercial buildings. The market for the
Boulder area contains approximately 6.0 million square feet of
commercial space of which approximately 5% is vacant. Average
rents for office space in such area range from approximately $8.50
to $10.50 per square foot, exclusive of expenses. Registrant has
expended approximately $501,000, none of which was in 1995, for
tenant improvements for the Flatiron Building.
Marathon Oil Building (formerly, the Tenneco Building)
- ------------------------------------------------------
On March 21, 1988, Registrant acquired the Marathon Oil
Building (formerly, the Tenneco Building), an office building
located in Oklahoma City, Oklahoma, for approximately $10,736,200,
inclusive of acquisition fees. Registrant owns fee title to the
Marathon Oil Building with its 6.1 acres of underlying land, free
and clear of any debt. The property contains 90,925 net rentable
square feet on two floors, plus a 10,016 square foot basement. The
property was leased to Mesa, the assignee of Tenneco (the tenant
under the original lease); Mesa sublet the property to Marathon Oil
Company ("Marathon"). The lease expired in February 1996.
Marathon and its affiliate, Delhi Gas Pipeline Corporation
("Delhi"), executed leases, effective March 1, 1996, for 62,625
square feet (including 4,344 in the basement) and 24,704 square
feet (including 567 in the basement), respectively. Marathon's
lease has a five year term and two five-year renewal options;
Delhi's lease is for two years, with an option to extend for three
additional years. Registrant is seeking a tenant for the vacant
portion (13.5%) of the building.
Annual rent under such leases is approximately $750,600 ($8.75
per square foot, plus $6.00 per square foot for basement space, as
compared to approximately $15.60 per square foot under the Mesa
lease). Marathon has received an abatement of such base rent for
the six month period ending August 31, 1996. Marathon and Delhi
must also pay additional rent equal to their proportionate share of
any increases in operating costs of the building after 1996.
Registrant anticipates funding tenant improvements of approximately
$266,000 for Marathon and $20,000 for Delhi in 1996.
Market conditions in the northwest section of Oklahoma City
have declined from those prevailing at the time Tenneco executed
its lease for the building. Such market contains approximately 4.8
million square feet of commercial space of which approximately 14%
is vacant. Average rents for commercial space range from $9.00 to
$15.00 per square foot. Registrant can expect to fund tenant
improvements of approximately $6.00 to $8.00 per square foot plus
leasing commissions in connection with leasing the vacant space in
the Marathon Oil Building. Such expenditures are expected to be
funded out of working capital. See Item 7 - "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources."
Item 3. Legal Proceedings.
------------------
Registrant does not know of any material legal proceedings,
other than ordinary immaterial routine litigation incidental to its
business, pending against or involving Registrant or any of its
properties.
Item 4. Submission of Matters to a Vote of Security-Holders.
----------------------------------------------------
There were no matters submitted to a vote of Limited Partners
or Unitholders and none were required to be submitted during the
fourth quarter of the fiscal year covered by this report through
the solicitation of proxies or otherwise.
PART II
Item 5. Market for Registrant's Securities and Related Security-
-------------------------------------------------------
Holder Matters.
--------------
The Units of Registrant are not traded in any established
public trading market. Because of certain provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), as
described below, the General Partners have not applied to include
the Units for quotation or listing on any national or regional
stock exchange or any other established securities market.
The General Partners have adopted a Unit Repurchase Plan,
pursuant to which Registrant may, in its discretion, purchase
outstanding Units. Any such purchases are made at prices no higher
than the lowest current independent offer quotation. During 1995,
Registrant repurchased 72,116 Units at a price of $10.75 per Unit.
Provisions found in Section 7704 of the Code have an adverse
impact on investors in a "publicly traded partnership" ("PTP"). A
PTP is a partnership whose interests are traded on an established
securities market or readily tradeable on a secondary market (or
the substantial equivalent thereof). If Registrant were classified
as a PTP, (i) Registrant may be taxed as a corporation or (ii)
income derived from an investment in Registrant would be treated as
non-passive income.
The IRS has established alternative safe harbors that allow
interests in a partnership to be transferred or redeemed in certain
circumstances without causing the partnership to be characterized
a
PTP. Although the Units are not listed or quoted for trading on an
established securities market, it is possible that transfers of
Units could occur in a secondary market in sufficient amount and
frequency to cause Registrant to be treated as a PTP. To the
extent that any proposed transfer of Units in secondary market
transactions would exceed a safe harbor volume limitation, the
proposed transfer will be restricted pursuant to a policy adopted
by Registrant. Such a restriction could impair the ability of an
investor to liquidate its investment quickly and thus, possibly
prevent the reclassification of Registrant as a corporation
pursuant to Code Section 7704. It is anticipated that Registrant's
policy will remain in effect until such time, if ever, as further
clarification of Code Section 7704 permits Registrant to lessen the
scope of its policy.
The General Partners, if so authorized, will take such steps
as are necessary, if any, to prevent the reclassification of
Registrant as a PTP.
As of March 26, 1996, there were 3,160 Unitholders of record.
The following represents per Unit cash distributions to
investors for the fiscal years ended December 31, 1995 and 1994.
Quarter Ended Distribution Payment Date
Per Unit
December 31, 1995 $ 0.30 February 1996
September 30, 1995 $ 0.30 November 1995
June 30, 1995 $ 0.30 August 1995
March 31, 1995 $ 0.30 May 1995
December 31, 1994 $ 0.30 February 1995
September 30, 1994 $ 0.25 November 1994
June 30, 1994 $ 0.25 August 1994
March 31, 1994 $ 0.20 May 1994
There are no material legal restrictions upon Registrant's
present or future ability to make distributions in accordance with
the provisions of Registrant's Agreement of Limited Partnership, as
amended through the date of this report. See, however, Item 7 -
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" for a discussion of economic conditions
affecting Registrant's ability to make distributions in the future.
Item 6. Selected Financial Data.
------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
Operating
Revenues $ 9,827,431 $ 8,957,620 $11,205,823 $ 9,989,266 $ 9,727,701
Net Income $ 2,008,688 $ 2,450,563 $ 5,060,250 $ 3,655,955 $ 3,911,135
Net Income
per Unit (1)$ 0.62 $ 0.76 $ 1.57 $ 1.13 $ 1.21
Total
Assets $74,415,351 $76,388,992 $76,891,703 $76,939,783 $78,134,133
Long-Term
Obligations $ 7,800,000 $ 7,800,000 $ 7,800,000 $ 7,800,000 $ 7,685,812
Distributions
per Unit
(1)(2) $ 1.20 $ 1.00 $ 1.40 $ 1.90 $ 1.50
_________________________
(1) Per Unit numbers are based on 3,200,000 Units for all years except 1995,
which uses a weighted average number of Units of 3,184,222.
(2) Each year's distributions include funds distributed after the end of the
year which are attributable to that year (except for 1991).
Item 7. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations.
--------------------------
Liquidity and Capital Resources
- -------------------------------
At December 31, 1995, Registrant had cash and receivables of
approximately $835,000. However, Registrant's current payables
(exclusive of mortgage loan) exceeded its current assets as of such
date by approximately $560,000, primarily due to Registrant's
expenditure of approximately $775,000 to repurchase Units during
1995. Despite such working capital shortage, Registrant expects
sufficient cash flow to continue to be generated from operations to
meet its current operating and debt service requirements on a
short-
term and long-term basis.
The expiration of the GE Medical Systems Office Building lease
in
October 1995 and the Marathon Oil Building lease in February 1996
have placed additional demands on Registrant's capital resources
and liquidity. Registrant is obliged to fund tenant improvements and
leasing commissions to re-lease such buildings. Registrant
expended approximately $503,000 on tenant improvements during 1995 for the
Directory Building and the Austin Place Building. Registrant
anticipates expending a minimum of an additional $419,000 for
tenant improvements at the GE Medical Systems Office Building, the Austin
Place Building, and the Marathon Oil Building during 1996.
The replacement leases with GE, Marathon, and Delhi reflect
prevailing market rents (and include a six months rent abatement
for Marathon), which are substantially lower than the rental rates
previously realized by Registrant from such buildings.
To date, Registrant has funded its capital requirements out of
working capital and through reductions in distributions to
partners. Registrant's quarterly distribution to partners for each of the
four quarters of 1995 was $0.30 per Unit. Registrant intends to
maintain this level of distributions through 1996 and, if possible,
thereafter. However, to the extent Registrant's sources of capital
are inadequate for its requirements, Registrant may need to reduce
or suspend distributions to partners, obtain additional financing,
and/or dispose of one or more of its properties.
The Loan matures on March 31, 1996. In March 1996, the Lender
informed Registrant that it had agreed to extend the maturity date
to September 30, 1996 and increase the maximum credit line by
$2,000,000. Upon such extension, Registrant may utilize any unused
portion of its credit line to meet any capital requirements. Upon
its maturity, Registrant anticipates satisfying the Loan out of the
proceeds of a refinancing or a sale of assets.
Registrant's intention to acquire additional properties is
dependent upon its ability to leverage its existing properties.
Absent such acquisitions, Registrant will be unable to
significantly increase its operating results and distributions to
partners in the
near future. Moreover, the terms of any such financing will affect
the profitability of Registrant's operations.
In the past, Registrant has used working capital reserves
provided from the net proceeds of the Offering, sales proceeds from
the Gypsum common stock and senior notes, and any undistributed
cash from operations as its primary source of liquidity. Registrant
generally intends to distribute its distributable cash from
operations to Unitholders. However, such distributions are subject
to suspension or reduction to meet capital requirements.
Results of Operations
- ----------------------
1995 versus 1994
- ----------------
Rental revenues in 1995 increased from 1994 primarily as a
result of GTE's full occupancy of the Directory Building in 1995 as
contrasted to the vacancy and partial occupancy of such building in
1994. Such increase in rental revenues was partially offset by the
recognition in 1994 of approximately $958,000 in gain from Gypsum
securities as compared to the receipt in 1995 of approximately
$227,000 of other income attributable to Gypsum.
Interest expense in 1995 increased over 1994, reflecting higher
rates of interest under the Loan. Depreciation increased because
of additional tenant improvements made by Registrant. Property
operating expenses increased from 1994 to 1995 primarily because
the Directory Building was not fully utilized in 1994. Management fees
increased in 1995, reflecting the increase in adjusted cash from
operations and the fees attributable to replacement leases.
Professional fees increased in 1995 primarily as a result of due
diligence investigations of possible property acquisitions
following Unitholder approval of Registrant's plan to acquire additional
properties. General and administrative expenses increased in 1995,
primarily reflecting inclusion of Registrant's employees for a full
year in 1995.
Net income was $2,008,688 in 1995 as compared to $2,450,563 in
1994. After adjusting for non-cash items (principally deferred
revenue, depreciation, and amortization), operations generated cash
flows of approximately $4,160,000 in 1995 and $2,202,000 in 1994.
1994 versus 1993
- ----------------
Rental revenues in 1994 declined from 1993 primarily as the
result of the vacancy of the Directory Building until the summer of
1994, when GTE began to occupy part of the building, and the 1993
receipt of Gypsum common stock and senior notes valued at
approximately $2,801,000. Such decline in rental revenues was
partially offset by the recognition in 1994 of approximately
$958,000 in gain from such Gypsum securities.
Interest expense in 1994 increased over 1993, reflecting higher
rates of interest under the Loan. Depreciation increased because
of additional tenant improvements made by Registrant and amortization
increased because of additional leasing commissions paid by
Registrant. Property operating expenses decreased slightly from
1993 to 1994 because decreases in real estate taxes, on-site
property management fees, and building maintenance at the Directory
Building more than offset increases in general maintenance expenses
at the Austin Place and Flatiron Buildings and utilities at the
Flatiron, Austin Place, and Directory Buildings. Management fees
decreased in 1994 from 1993, reflecting a decrease in adjusted cash
from operations.
Net income was $2,450,563 in 1994 as compared to $5,060,250 in
1993. After adjusting for non-cash items (principally deferred
revenue, depreciation and amortization), operations generated cash
flows of approximately $2,202,000 in 1994 and $5,686,000 in 1993.
Inflation
- ---------
In the past, inflation has not had a material impact on
Registrant's operations or financial condition, as certain leases
of Registrant's properties provide for increases in rents based on
changes in the consumer price index, and other leases provide lease
payments that escalate over time. Registrant's properties with
performing leases are protected by arrangements whereby the tenants
pay to Registrant an amount equal to all or a portion of the
operating costs of the properties, with Registrant's share of
expenses, if any, subject to a predetermined limit. These
arrangements help to insulate Registrant from the effects of any
increases in operating costs. However, to the extent that there is
vacant space or unperforming leases at any of the Registrant's
properties, Registrant lacks this protection against inflation,
particularly with regards to increased expenses that are not
reimbursed.
Item 8. Financial Statements and Supplementary Data.
--------------------------------------------
See list of Financial Statements and Financial Statement
Schedules at page F-2, filed as part of this report.
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.
--------------------------------------------------
Registrant has no officers or directors. The General Partners
manage and control substantially all of Registrant's affairs and
have general responsibility and ultimate authority in all matters
affecting Registrant's business.
The Individual General Partner is Robert F. Gossett, Jr. The
Corporate General Partner is 1345 Realty Corporation. All of the
outstanding capital stock of 1345 Realty Corporation is owned by
the
Individual General Partner and his wife.
The directors and executive officers of the Corporate General
Partner are as follows:
Officer/
Director
Name Age Position Since
---- --- ---------- ---------
Robert F. Gossett, Jr. 52 President, Treasurer
and Director 1994
Pauline G. Gossett 52 Secretary 1994
Information with respect to the Individual General Partner and
with respect to the above officers and directors is set forth
below:
ROBERT F. GOSSETT, JR., the Individual General Partner since
1985, is Managing Director of Vance Capital Corporation (1981 to
present), a real estate management and finance company. Between
1978 and 1981, Mr. Gossett served as Executive Vice President and
Director of Loeb Capital Corporation. From 1974 until 1978, he was
a Vice President of Oppenheimer Properties, Inc. and, between 1969
and 1974, was associated with the Investment Banking Division of
Merrill, Lynch, Pierce, Fenner & Smith, Inc. He received a B.A.
degree from the University of Texas, a J.D. degree from Georgetown
University, and an M.B.A. degree from the University of
Pennsylvania. He is a member of the Texas Bar.
PAULINE G. GOSSETT, the Secretary of the Corporate General
Partner, is a stockholder and Director of Vance Capital Corporation
(1981 to present). Mrs. Gossett received an Associate of Arts
degree from Briarcliff College. Mrs. Gossett is the wife of Robert
F. Gossett, Jr.
Registrant employs the following employees who make significant
contributions to the business of Registrant:
Employee
Name Age Position Since
Howard F. Husum 46 Executive Director 1994
Madeline Matlak 30 Fund Administrator 1994
HOWARD F. HUSUM is the Executive Director of the Registrant.
Mr. Husum formerly practiced law in New York City and acted as General
Counsel to Shaheen Natural Resources Company, Inc., an independent
international oil company (1981 through 1987), and as General
Counsel and Vice President of Aeronautics and Astronautics
Services, Inc., an international aircraft leasing company (1990 through
1993). Mr. Husum was in private practice as an attorney from 1987 to 1990.
He graduated cum laude from Harvard College and earned a law degree
from The University of Chicago Law School. He is a member of the
New York Bar.
MADELINE MATLAK is the Fund Administrator of the Registrant.
Mrs. Matlak was formerly employed as a Fund Administrator in the
Direct Investment Department of Smith Barney, Inc. (1989 through
1994).
Based solely upon its review of copies of Forms 3 received by it
during 1995, and written representations from reporting persons
that no Forms 5 were required for such persons for 1995, Registrant
believes that all filing requirements applicable to its General
Partners and the directors and officers of the Corporate General
Partner pursuant to Section 16(a) of the Securities Exchange Act of
1934, as amended, for 1995 and prior years were complied with on a
timely basis except as previously reported.
Item 11. Executive Compensation.
-----------------------
Registrant is not required to and did not pay remuneration to
the officers and directors of the Corporate General Partner. However,
the General Partners and/or their affiliates receive compensation
for services performed for Registrant.
Summary Compensation Table
Share of
Adjusted Cash Management Leasing Expense
Name Year from Operations Fees Commissions Reimbursement
- ---- ---- --------------- ---------- ----------- -------------
Corporate General
Partner 1995 $31,006 $445,625 $194,490 $106,714
Individual General
Partner 1995 $ 7,752 $111,406 $ 48,623 $ 26,679
Corporate General
Partner 1994 $25,859 $253,670 $613,355 $ 58,540
Individual General
Partner 1994 $ 6,465 $ 63,417 $153,339 $ 7,509
Corporate General
Partner 1993 $36,202 $376,805 - $ 62,640
Individual General
Partner 1993 $ 9,051 $ 94,201 - $ 5,094
See Item 13 - "Certain Relationships and Related Transactions"
for a discussion of the above compensation.
Item 12. Security Ownership of Certain Beneficial Owners and
---------------------------------------------------
Management.
----------
As of March 15, 1996 no person was known by Registrant
to be the beneficial owner of more than five percent (5%) of the
outstanding Units of Registrant.
As of March 15, 1996, neither the Individual General
Partner nor the Corporate General Partner nor any of its directors
or officers owned any Units of Registrant.
Robert F. Gossett, Jr., the Individual General Partner
and an officer and director of the Corporate General Partner, and
Pauline G. Gossett, an officer of the Corporate General Partner,
own all of the outstanding capital stock of the Corporate General
Partner.
Item 13. Certain Relationships and Related Transactions.
----------------------------------------------
Registrant has and will continue to have certain
relationships with the General Partners and their affiliates as
discussed below.
The General Partners received $38,757 ($31,006 to the
Corporate General Partner and $7,752 to the Individual General
Partner) as their allocable share (1%) of adjusted cash from
operations with respect to the year ended December 31, 1995. For
the year ended December 31, 1995, $20,087 (1%) of Registrant's net
income was allocated to the General Partners ($16,070 to the
Corporate General Partner and $4,017 to the Individual General
Partner).
The General Partners or their affiliates are also
entitled to receive: a partnership management fee for managing the
affairs of Registrant, equal to 7% of adjusted cash from operations
less the asset management fee; an asset management fee for managing
Registrant's funds which are not invested in properties, equal to
0.5% per annum of the average amount of outstanding funds during
each calendar month which are not otherwise invested in properties;
and a property management fee for property management services for
Registrant's properties, equal to the normal and competitive fees
customarily charged by unaffiliated parties rendering similar
services in the same geographic area, not to exceed 1% of the
annual gross revenues for leases with terms of ten years or more or 6% of
the annual gross revenues for replacement leases. During the year
ended December 31, 1995, the General Partners earned and were paid
an aggregate of $557,031 of such management fees ($445,625 to the
Corporate General Partner and $111,406 to the Individual General
Partner). At December 31, 1995, all of such fees had been paid.
The General Partners are also entitled to receive
leasing commissions in connection with leasing, releasing or
leasing related services performed on behalf of the Registrant in
connection with the negotiation of tenant leases. Such fees are computed at a
rate equal to 3% of the gross revenue for the first five years of
each lease signed where the General Partners performed such leasing
services. During the year ended December 31, 1995, the General
Partners were paid an aggregate of $243,113 ($194,490 to the
Corporate General Partner and $48,623 to the Individual General
Partner).
During the year ended December 31, 1995, the General
Partners were also entitled to reimbursement for expenses incurred
in connection with Registrant's operations aggregating $133,393
($106,714 to the Corporate General Partner and $26,679 to the
Individual General Partner).
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on
- -------------------------------------------------------
Form 8-K.
--------
(a)(1), (2) See page F-2.
Sequential
Page
Number
-----------
(a)(3) Exhibits:
3. Certificate of Limited
Partnership, incorporated
by reference to Exhibit 4
to Registration Statement
No. 33-2258 (the
"Registration Statement").
4.(a) Amended and Restated
Agreement of Limited
Partnership dated as of
July 24, 1995, incorporated
by reference to Exhibit 4
to Registrant's Quarterly
Report on Form 10-Q for the
quarter ended September 30,
1995.
10.(a) Property Management
Agreement, incorporated by
reference to Exhibit 10B to
the Registration Statement.
(b) Lease for Los Angeles
District Sales and Service
Office, Monterey Park,
California, dated as of
December 15, 1984 between
James E. Pohrer &
Associates and General
Electric Company,
incorporated by reference
to Exhibit 10(e) to Form 8,
Amendment No. 1 to
Registrant's Current Report
on Form 8-K Dated July 10,
1986.
(c) Lease Amendment dated
October 31, 1989 by and
between Registrant and
General Electric Company,
incorporated by reference
to Exhibit 10(c) to
Registrant's Report on Form
Sequential
Page
Number
-----------
10-K for the year ended
December 31, 1989.
(d) Lease dated as of December
30, 1986 by and between
Registrant and Austin,
incorporated by reference
to Exhibit 10(b) to
Registrant's Current Report
on Form 8-K Dated December
30, 1986.
(e) Lease dated August 1986 by
and between Panattoni,
Oates and Massie
Development Company and
Crown Zellerbach. (1)
(f) Assignment of Lease dated
October 16, 1987, by and
between Exchange
Intermediary, Inc. and
Registrant. (1)
(g) Management Agreement dated
January 5, 1988 by and
between Registrant and
Colorado Management Group,
incorporated by reference
to Exhibit 10(e) to
Registrant's Current Report
on Form 8-K Dated January
5, 1988.
(h) Deed of Trust Note dated as
of March 31, 1992, made by
Registrant. (2)
(i) Deed of Trust and Security
Agreement dated as of March
27, 1992, made by
Registrant with respect to
the Directory Building. (2)
- -------------------------
(1) Incorporated by reference to Exhibits 10(b) and (c) to
Registrant's Current Report on Form 8-K Dated October
9, 1987.
(2) Incorporated by reference to Exhibits 10(1), (m), (n),
(o), (p), (q), (r), (s), (t), (u), (v), (w), and (x) to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993.
Sequential
Page
Number
-----------
(j) Deed of Trust and Security
Agreement dated as of March
27, 1992, made by
Registrant with respect to
the James River Warehouse. (2)
(k) Deed of Trust and Security
Agreement dated as of March
27, 1992, made by
Registrant with respect to
the GE Medical Systems
Office Building. (2)
(l) Assignment of Leases and
Rents dated as of March 27,
1992, made by Registrant
with respect to the James
River Warehouse. (2)
(m) Assignment of Leases and
Rents dated as of March 27,
1992, made by Registrant
with respect to the GE
Medical Systems Office
Building. (2)
(n) Assignment of Leases and
Rents dated as of March 27,
1992, made by Registrant
with respect to the
Directory Building. (2)
(o) Assignment of Leases and
Rents dated as of March 27,
1992, made by Registrant
with respect to the Austin
Place Building. (2)
(p) Assignment of Leases and
Rents dated as of March 27,
1992, made by Registrant
with respect to the
Marathon Oil Building. (2)
(q) Assignment of Leases and
Rents dated as of March 27,
1992, made by Registrant
with respect to the
Flatiron Building. (2)
Sequential
Page
Number
-----------
(r) Hazardous Materials
Certificate and Indemnity
Agreement dated as of March
27, 1992, made by
Registrant. (2)
(s) Negative Pledge Agreement
dated as of March 27, 1992,
made by Registrant. (2)
(t) Amendment to Lease dated
October 1, 1993, between
Registrant and James River
Paper Company, Inc. (2)
(u) Lease dated as of April 20,
1994 between Registrant and
GTE. (3)
(v) Amendment No. 1 to Lease
dated as of July 29, 1994
between Registrant and
GTE. (3)
(w) Amendment No. 2 to Lease
dated as of February 22,
1995 between Registrant and
GTE. (3)
27. Financial Data Schedule.
(b) Reports on Form 8-K: No reports on Form 8-K were filed
during the last quarter of the period covered by this
report.
- ---------------------
(3) Incorporated by reference to Exhibits 10(y), (z) and
(aa) to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994.
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CORPORATE REALTY INCOME FUND I, L.P.
(Registrant)
By: 1345 REALTY CORPORATION
as Corporate General Partner
Dated: March 29, 1996 By: /s/ Robert F. Gossett, Jr.
--------------------------
ROBERT F. GOSSETT, JR.,
President
Dated: March 29, 1996 By: /s/ ROBERT F. GOSSETT, JR.
--------------------------
ROBERT F. GOSSETT, JR.
Individual General 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 (with
respect to the Corporate General Partner) and on the dates
indicated.
1345 REALTY CORPORATION
Dated: March 29, 1996 By: /s/ ROBERT F. GOSSETT, JR.
--------------------------
Robert F. Gossett, Jr.
President, Director
Dated: March 29, 1996 By: /s/ PAULINE G. GOSSETT
-----------------------
Pauline G. Gossett
Secretary
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14 (a) (1) and (2) AND ITEM 14 (d)
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENTS
DECEMBER 31, 1995
CORPORATE REALTY INCOME FUND I, L.P.
FORM 10-K -- ITEM 14 (A) (1) AND (2)
CORPORATE REALTY INCOME FUND I, L.P.
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following financial statements of Corporate Realty Income Fund
I, L.P. are included in Item 8:
Page
----
Independent Auditors' Report F-3
Financial Statements:
Balance Sheets at December 31, 1995 and 1994 F-4
Statements of Income for the years ended
December 31, 1995, 1994 and 1993 F-5
Statements of Changes in Partners' Capital (Deficit)
for the years ended December 31, 1995, 1994 and 1993 F-6
Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 F-7
Notes to Financial Statements F-8
Schedule III - Real Estate and Accumulated Depreciation F-14
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission
have been omitted since (1) the information required is
disclosed in the financial statements and notes thereto; (2) the
schedules are not required under the related instructions; or (3)
the schedules are inapplicable.
INDEPENDENT AUDITORS' REPORT
The Partners
Corporate Realty Income Fund I, L.P.:
We have audited the financial statements of Corporate Realty Income
Fund I, L.P. ( a Delaware limited partnership) as listed in the
accompanying index. In connection with our audits of the financial
statements, we also have audited the financial statement schedule
as listed in the accompanying index. These financial statements
and the financial statement schedule are the responsibility of the
Partnership's management. Our responsibility is to express an
opinion on these financial statements and the financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Corporate Realty Income Fund I, L.P. as of December 31, 1995 and
1994 and the results of its operations and its cash flows for
each of the years in the three-year period ended December 31, 1995,
in conformity with generally accepted accounting principles. Also
in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken
as a whole, presents fairly, in all material respects, the
information set forth therein.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
March 8, 1996
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
1995 1994
---- ----
ASSETS
Real estate, at cost:
Land $ 13,598,425 $ 13,598,425
Buildings and improvements 71,444,155 70,987,144
---------- ----------
85,042,580 84,585,569
Less accumulated depreciation 15,974,431 13,571,654
---------- ----------
69,068,149 71,013,915
Cash and short-term investments at cost,
which approximates market value 397,432 1,291,972
Accounts receivable 437,191 45,281
Note receivable 17,694 24,787
Investments in marketable securities
(market value $100,897 in 1994) - 100,897
Step rent receivables 2,784,802 2,240,931
Deferred charges, net of accumulated amortization
of $21,937 in 1995 and $14,625 in 1994 7,313 4,875
Deposits 33,142 33,142
Lease commissions, net of accumulated amortization
of $1,007,199 in 1995 and $652,478 in 1994 1,628,004 1,579,429
Other assets 41,624 53,763
---------- ----------
Total assets $ 74,415,351 $ 76,388,992
---------- ----------
---------- ----------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Accounts payable and accrued expenses 1,457,029 699,104
Due (from) to affiliates (44,788) 71,885
Mortgage loan payable 7,800,000 7,800,000
Other liabilities 325,161 297,747
---------- ----------
Total liabilities 9,537,402 8,868,736
---------- ----------
Partners' capital (deficit):
General partners:
Capital contributions 1,000 1,000
Net income 373,356 353,269
Cash distributions (456,581) (417,825)
---------- ----------
(82,225) (63,556)
---------- ----------
Limited partners: ($25 per unit;
4,000,000 units authorized,
3,127,884 and 3,200,000 issued and
outstanding in 1995 and 1994, respectively)
Capital contributions,
net of offering costs 73,276,650 74,051,897
Net income 36,962,115 34,973,514
Cash distributions (45,278,591) (41,441,599)
---------- ----------
64,960,174 67,583,812
---------- ----------
Total partners' capital 64,877,949 67,520,256
---------- ----------
Total liabilities and
partners' capital $ 74,415,351 $ 76,388,992
---------- ----------
---------- ----------
See accompanying notes to financial statements.
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
----------- ---------- ------------
Revenue:
Rental $ 9,127,768 $ 7,917,328 $ 11,180,956
Interest and other income 699,663 1,040,292 24,867
----------- ---------- ------------
9,827,431 8,957,620 11,205,823
----------- ---------- ------------
Expenses:
Interest 733,005 604,618 514,042
Depreciation 2,448,270 2,079,717 1,922,996
Amortization 381,533 472,776 199,967
Property operations 2,831,459 2,667,193 2,724,068
Management fees 557,031 317,087 471,006
Professional fees 543,573 155,703 108,076
General and administrative 323,872 209,963 205,418
----------- ---------- ------------
7,818,743 6,507,057 6,145,573
----------- ---------- ------------
Net income $ 2,008,688 $ 2,450,563 $ 5,060,250
----------- ---------- ------------
----------- ---------- ------------
Net income allocated:
To the general partners 20,087 24,506 50,602
To the limited partners 1,988,601 2,426,057 5,009,648
----------- ---------- ------------
$ 2,008,688 $ 2,450,563 $ 5,060,250
----------- ---------- ------------
----------- ---------- ------------
Net income per unit of
limited partnership
interest $ 0.62 $ 0.76 $ 1.57
---- ---- ----
---- ---- ----
See accompanying notes to financial statements.
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
General Limited
Total Partners Partners
------------ ------------ ------------
Partners' capital (deficit) at
December 31, 1992 $ 68,090,321 $ (57,856) $ 68,148,177
Cash distributions to partners (5,171,788) (51,717) (5,120,071)
Net income 5,060,250 50,602 5,009,648
------------ ------------ ------------
Partners' capital (deficit) at
December 31, 1993 67,978,783 (58,971) 68,037,754
Cash distributions to partners (2,909,090) (29,091) (2,879,999)
Net income 2,450,563 24,506 2,426,057
------------ ------------ ------------
Partners' capital (deficit) at
December 31, 1994 67,520,256 (63,556) 67,583,812
Redemptions of units (775,247) - (775,247)
Cash distributions to partners (3,875,748) (38,756) (3,836,992)
Net income 2,008,688 20,087 1,988,601
------------ ------------ ------------
Partners' capital (deficit) at
December 31, 1995 $ 64,877,949 $ (82,225) $ 64,960,174
------------ ------------ ------------
------------ ------------ ------------
See accompanying notes to financial statements.
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
---- ---- ----
Cash flows from operating activities:
Net income $2,008,688 $ 2,450,563 $ 5,060,250
---------- ----------- -----------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,829,803 2,552,493 2,122,963
Receipt of marketable securities - - (2,800,596)
Gain on sale of marketable securities (27,682) (930,750) -
Unrealized gain on marketable securities - (26,925) -
Changes in operating assets and liabilities:
(Increase) decrease in accounts
receivable (391,910) 181,875 303,537
Decrease (increase) in note
receivable 7,093 6,818 (31,605)
(Increase ) decrease in step
rent receivables (543,871) (476,909) 1,100,945
Increase in deposits - (207) (2,800)
Increase in lease commissions (403,296) (1,500,030) (124,407)
Decrease (increase) in other assets 12,139 (10,540) (5,730)
Increase (decrease) in accounts payable
and accrued expenses 757,925 (48,187) 110,564
(Decrease) increase in due to
affiliates (116,673) (16,284) 43,864
Increase (decrease) in other
liabilities 27,414 20,287 (90,970)
---------- ----------- -----------
Total adjustments 2,150,942 (248,359) 625,765
---------- ----------- -----------
Net cash provided by
operating activities 4,159,630 2,202,204 5,686,015
---------- ----------- -----------
Cash flows from investing activities:
Proceeds from sale of marketable
securities 128,579 3,657,374 -
Acquisition of real estate (502,504) (2,461,326) (694,770)
---------- ----------- -----------
Net cash provided by (used in)
investing activities (373,925) 1,196,048 (694,770)
---------- ----------- -----------
Cash flows from financing activities:
Deferred loan costs (29,250) (19,500) -
Redemption of units (775,247) - -
Cash distributions to partners (3,875,748) (2,909,090) (5,171,788)
---------- ----------- -----------
Net cash used in financing
activities (4,680,245) (2,928,590) (5,171,788)
---------- ----------- -----------
Net increase (decrease) in cash
and short-term investments (894,540) 469,662 (180,543)
Cash and short-term investments at
beginning of year 1,291,972 822,310 1,002,853
---------- ----------- -----------
Cash and short-term investments at
end of year $ 397,432 $ 1,291,972 $ 822,310
---------- ----------- ----------
---------- ----------- ----------
See accompanying notes to financial statements.
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Corporate Realty Income Fund I, L.P. (the "Partnership") was
formed as a limited partnership on November 25, 1985 under the laws
of the State of Delaware. The Partnership was formed for the
purpose of acquiring and owning income-producing commercial and
industrial real estate properties for lease to others. The
Partnership will terminate on December 31, 2010 or sooner, in
accordance with the Partnership Agreement.
The general partners of the Partnership are 1345 Realty
Corporation, the corporate general partner, and Robert F. Gossett,
Jr., the individual general partner.
On November 30, 1994, all of the outstanding capital stock of
the corporate general partner was acquired by the individual
general partner in a transaction which was effective as of July
1, 1994. As a result of this acquisition, the entire interest of
the general partners is controlled by the individual general
partner.
The initial capital was $1,025 representing capital
contributions of $1,000 by the general partners and $25 by the
original limited partner. The Partnership commenced operations
on June 2, 1986 with the acceptance of subscriptions for 1,082,640
Depositary Units of limited partnership interests (the "Units").
The Partnership has authorized the issuance of up to 4,000,000
Units. The Partnership sold 3,200,000 Units, representing
$80,000,000, which completed the offering. Upon the
first admittance of the additional limited partners and
unitholders, the original limited partner withdrew from the
Partnership.
During 1995, 72,116 units were redeemed from limited partners
and cancelled.
2. SIGNIFICANT ACCOUNTING POLICIES
The Partnership's records are maintained on the accrual basis
of accounting for financial reporting and tax reporting purposes.
Depreciation of buildings for financial reporting purposes is
computed under the straight-line method over an estimated economic
useful life of forty years. Depreciation of buildings for tax
purposes is determined in accordance with the Accelerated
Cost Recovery System.
Acquisition fees in connection with investment properties
acquired have been capitalized as a cost of the property upon
acquisition.
Deferred charges consist principally of costs incurred in
connection with obtaining a mortgage. These expenses are being
amortized using the straight-line method over the term of the
mortgage.
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
In accordance with the Statement of Financial Accounting
Standards No. 13, "Accounting for Leases", the Partnership
recognizes rental income on a straight-line basis over the fixed
term of the lease period. Step rent receivables represent unbilled
future rentals. The following reconciles rental income received in
cash to rental income recognized:
1995 1994 1993
----------- ----------- ------------
Rental income billed to tenants $ 8,583,897 $ 7,440,419 $ 12,281,901
Step rent receivables 543,871 476,909 (1,100,945)
----------- ----------- ------------
Rental income recognized 9,127,768 7,917,328 11,180,956
----------- ----------- ------------
----------- ----------- ------------
Offering costs are nonamortizable and have been deducted from limited
partners' capital.
No provision for income taxes has been made since all items of income or
losses and tax benefits are passed through to the individual partners. At
December 31, 1995, the net difference between the tax bases and the reported
amounts of assets and liabilities was $14,170,152.
The Partnership Agreement provides that net income shall be allocated to
each calendar month of the year and shall be apportioned on a monthly basis to
the holders of interests in the ratio in which the number of interests owned by
each limited partner or unitholder on the first day of the month bears to the
total number of interests owned by the limited partners and unitholders as of
that date.
The amount of net income per limited partnership unit was calculated using
the weighted average number of units outstanding of 3,184,222 in 1995 and
3,200,000 in 1994 and 1993.
Short-term investments, which consist principally of money market funds,
are carried at cost which approximates market value. For purposes of the
statements of cash flows, the Partnership considers short-term investments
to be cash equivalents.
The general partners have made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
3. PARTNERSHIP AGREEMENT
The Partnership Agreement provides that profits, losses and distributions
shall be allocated 99% to the limited partners and 1% to the general partners.
Sale or refinancing proceeds will generally be distributed 99% to the
limited partners and 1% to the general partners until the limited partners have
received an amount which, when added to all prior distributions of cash, will
equal their original invested capital plus an 8% per annum cumulative
noncompounded return. Thereafter, after payment of the subordinated disposition
fee, proceeds will be distributed 75% to the limited partners and 25% to the
general partners.
Taxable income and tax loss generally will be allocated 99% to the limited
partners and 1% to the general partners.
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
4. INVESTMENTS IN REAL ESTATE
GE MEDICAL SYSTEMS OFFICE BUILDING
On July 10, 1986, the Partnership purchased the GE Medical
Systems Office Building, an office building located in Monterey
Park, California, and the 90,000 square feet of underlying land.
The property contains approximately 20,250 square feet of
net rentable area.
The terms of the agreement with the seller provided for a
purchase price, including acquisition fees, of $4,182,000.
The building was fully leased to GE through October 21, 1995.
In October 1995, GE renewed its lease with respect to 52% of the
rentable area of the building for a term which expires in October
2000.
THE DIRECTORY BUILDING
On October 27, 1986, the Partnership purchased the Directory
Building (formerly the IBM Building), an office building located in
Las Colinas, Texas, and the 6.67 acres of underlying land. The
property contains approximately 152,100 square feet of net rentable
area.
The terms of the agreement with the seller provided for a
purchase price, including acquisition fees, of $24,580,375.
As of December 31, 1995, the building was 100% leased to GTE
Directories Corporation for a term which expires on September 30,
2000. Rent from the tenant represented 16% of the Partnership's
total rental income in 1995. In connection with this lease,
the Partnership expended $2,628,000 and $1,063,640 for tenant
improvements and leasing commissions, respectively.
AUSTIN PLACE BUILDING
On December 30, 1986, the Partnership purchased the Austin
Place Building, an office building located in South Plainfield, New
Jersey, and the five acres of underlying land. The property
contains approximately 105,000 square feet of net rentable area.
The terms of the agreement with the seller provided for a
purchase price, including acquisition fees, of $16,473,000.
As of December 31, 1995, the building had been fully leased to
various tenants under leases with terms ranging from four to
fifteen years. The Partnership has expended approximately
$2,195,000 and $738,000 for tenant improvements and leasing
commissions, respectively, in connection with these leases.
Rent from one of the tenants, The Austin Company, represented
16% of the Partnership's total rental income in 1995.
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
In December 1993, the Partnership received a settlement from
National Gypsum Co., a former tenant, who filed for protection
under Chapter 11 of the U.S. Bankruptcy Code and terminated its
lease. The settlement amounted to 77,476 shares of its common
stock and $486,000 of 10%, 10-year debt. These securities were
recorded at their market value of $2,800,596 on the date of
issuance. During 1994, the debt securities were redeemed and
75,000 shares of the common stock were sold at a gain of $930,750.
During 1995, the remaining 2,476 shares were sold at a gain of
$27,682. The Partnership also received other income of $227,222 in
1995 as part of the settlement.
JAMES RIVER BUILDING
On October 16, 1987, the Partnership purchased the James River
Building (formerly the Crown Zellerbach building) located in
Woodland, California (a suburb of Sacramento), and the 21 acres of
underlying land. The building contains approximately 570,000
square feet of net rentable area.
The terms of the agreement with the seller provided for a
purchase price, including acquisition fees, of $14,551,456. The
building is net leased to James River Corporation of Nevada, Inc.
for a term which expires in January, 2002.
Rent from the tenant, James River Corporation of Nevada, Inc.,
represented 16% of the Partnership's total rental income in 1995.
FLATIRON BUILDING
On January 5, 1988, the Partnership purchased the Flatiron
Building (formerly the Cadnetix Building) located in Boulder,
Colorado, and the five acres of underlying land. The
building contains approximately 95,500 square feet of net rentable
area.
The terms of the agreement with the seller provided for a
purchase price, including acquisition fees, of $9,003,085.
As of December 31, 1995, 100% of the building was leased to
various tenants under leases with terms ranging from three to five
years. The Partnership has expended approximately $501,000 and
$587,000 for tenant improvements and leasing
commissions, respectively, in connection with these leases.
MARATHON OIL BUILDING
On March 21, 1988, the Partnership purchased the Marathon Oil
Building (formerly the Tenneco Oil building) located in Oklahoma
City, Oklahoma, and the 6.1 acres of underlying land. The building
contains approximately 90,925 net rentable square feet plus a
10,016 square foot basement. The building is net leased to
Marathon Oil Company (Marathon) for a term which expires
in February, 1996.
The terms of the agreement with the seller provided for a
purchase price, including acquisition fees, of $10,736,200.
Rent from Marathon represented 20% of the Partnership's total
rental income in 1995.
During 1995, the Partnership entered into a new five-year
lease with Marathon with respect to 62,600 square feet of space and
a two-year lease with an affiliate of Marathon with respect to
24,700 square feet of space. These leases will commence upon
the expiration of the original lease with Marathon.
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
5. LEASES
Minimum future rentals under noncancellable operating leases
as of December 31, 1995 are approximately as follows:
Year ending December 31:
1996 $ 6,438,000
1997 6,741,000
1998 6,247,000
1999 5,981,000
2000 5,332,000
Thereafter 5,568,000
------------
Total $ 36,307,000
------------
------------
In addition to the minimum lease amounts, the leases provide
for escalation charges to the tenants for operating expenses and
real estate taxes. For the years ended December 31, 1995, 1994 and
1993 escalation charges amounting to $1,735,411, $1,728,374 and
$2,168,086, respectively, have been included in rental income.
6. TRANSACTIONS WITH GENERAL PARTNERS AND AFFILIATES
The general partners or their affiliates receive a property
management fee equal to either 1% in the case of a long-term net
lease or 6% for other types of leases on the gross revenue from the
property, and a partnership management fee equal to 7% of
adjusted cash from operations, as defined, and reimbursement
of administrative expenses. The general partners also receive
leasing commissions in connection with leasing, releasing or
leasing related services performed on behalf of the Partnership in
connection with the negotiation of tenant leases. Such commissions
are computed at a rate equal to 3% of the gross revenues for
the first five years of each lease signed where the general
partners have performed such leasing services.
Following is a summary of the fees earned and reimbursable
expenses for the years ended December 31, 1995, 1994 and 1993:
1995 1994 1993
--------- --------- ---------
Partnership management fees $ 271,302 $ 203,636 $ 316,768
Property management fees 285,729 113,451 154,238
Administrative expenses 133,393 66,049 67,734
--------- --------- ---------
--------- --------- ---------
In 1995, leasing commissions of $243,113 were billed to the
Partnership by the general partners and recorded by the Partnership
as deferred leasing commissions on the balance sheet. In 1994, the
general partners billed to the Partnership and the
Partnership recorded as deferred leasing commissions on the
balance sheet $380,353, $106,590, $202,595 and $77,156 relating to
the years 1994, 1993, 1992 and 1991, respectively.
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
7. MORTGAGE LOAN PAYABLE
In March 1995, the Partnership extended the $7,800,000
mortgage loan from PNC Bank, N.A. (the "Lender") for an additional
one-year period to end on March 31, 1996. In connection
with this extension, the structure of the indebtedness was changed
from a term loan to a one-year secured revolving line of credit.
The loan bears interest at the rate per annum equal to the Lender's
prime rate plus one-half percent based on a 360-day year and
actual days elapsed. The Lender's prime rate was 8 3/4% at
December 31, 1995. Interest only is payable monthly on the first
day of each calendar month with all unpaid interest and
outstanding principal due on March 31, 1996. In connection with
the extension of the loan, the Partnership paid fees of $29,250
which are being amortized over the term of the loan extension.
The loan is secured by a deed of trust given with respect to the
Directory, James River, Austin Place and GE properties.
8. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
1995 1994 1993
--------- --------- ---------
Cash paid during the year
for interest $ 734,608 $ 604,618 $ 557,700
--------- --------- ---------
--------- --------- ---------
9. SUBSEQUENT EVENTS
In February 1996, the Partnership paid distributions of
$941,994 to the limited partners and $9,515 to the general partners
representing fourth quarter 1995 cash from operations.
In March 1996, the Lender informed the Partnership that it
approved an extension of the line of credit for a period of six
months, to end on September 30, 1996, with the ability to draw an
additional $2 million for purposes of funding financing commitment
fees and good faith deposits in connection with a new financing
facility the Partnership is currently seeking and/or the
acquisition of additional properties. The terms of the extension
include the same terms which exist with respect to the expiring
line of credit, with the following additions: (i) loan fees of
.25% based on total projected outstandings, (ii) debt service
coverage ratio of four times earnings before interest, taxes,
depreciation, and amortization, and (iii) any deposits that are
returned be used to repay the line of credit.
Schedule III
CORPORATE REALTY INCOME FUND I, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
Costs Capitalized
Subsequent to Gross Amount at which
Initial Costs (B) Acquisition Carried at Close of Period
------------------- --------------- --------------------------
Building and Building and
Description Encumbrances (A) Land Improvements Improvements Land Improvements
- ----------- ---------------- ---- ------------ ------------ ---- ------------
Office Building
Monterey Park, CA $ - $ 1,762,126 $ 2,459,141 $ - $ 1,762,126 $ 2,459,141
Office Building
Las Colinas, TX 7,800,000 4,925,745 19,702,979 2,627,999 4,925,745 22,330,978
Office Building
So. Plainfield, NJ - 3,147,912 13,378,294 2,194,765 3,147,912 15,573,059
Distribution Center
Woodland, CA - 1,618,579 12,989,498 - 1,618,579 12,989,498
Office Building
Boulder, CO - 1,080,369 7,922,716 455,415 1,080,369 8,378,131
Office Building
Oklahoma City, OK - 1,063,694 9,713,348 - 1,063,694 9,713,348
---------- ----------- ----------- ----------- ----------- -----------
$7,800,000 $13,598,425 $66,165,976 $ 5,278,179 $13,598,425 $71,444,155
---------- ----------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- ----------- -----------
Life on Which
Depreciation in
Latest Income
Accumulated Date of Date Statement
Description Total Depreciation Construction Acquired is Computed
- ----------- ----- ------------ ------------ -------- -----------
Office Building
Monterey Park, CA $ 4,221,267 $ 584,042 1985 July, 1986 40 years
Office Building
Las Colinas, TX 27,256,723 5,076,380 1982 October, 1986 40 years
Office Building
So. Plainfield, NJ 18,720,971 3,832,934 1986 December, 1986 40 years
Distribution Center
Woodland, CA 14,608,077 2,665,795 1987 October, 1987 40 years
Office Building
Boulder, CO 9,458,500 1,933,322 1988 January, 1988 40 years
Office Building
Oklahoma City, OK 10,777,042 1,881,958 1986 March, 1988 40 years
----------- -----------
$85,042,580 $15,974,431
----------- -----------
----------- -----------
Notes:
(A) Encumbrances represent a mortgage loan secured by a deed of trust given with respect to the office buildings located in
Monterey Park, California, Las Colinas, Texas, South Plainfield, New Jersey and the distribution center located in Woodland,
California.
(B) The initial cost to the Partnership represents the original purchase price of the properties net of any purchase price
adjustments, including amounts incurred subsequent to acquisition which were contemplated. The initial cost includes the
purchase price paid by the Partnership and acquisition fees and expenses. There is no difference between cost for financial
reporting purposes and cost for federal income tax purposes.
(C) Reconciliation of real estate owned: 1995 1994 1993
---- ---- ----
Balance at beginning of period $ 84,585,569 $ 82,124,243 $ 81,429,473
Additions during period:
Building improvements and land 502,504 2,461,326 694,770
Write-off of fully depreciated assets (45,493) - -
------------ ------------ ------------
Balance at end of period $ 85,042,580 $ 84,585,569 $ 82,124,243
------------ ------------ ------------
------------ ------------ ------------
(D) Reconciliation of accumulated depreciation:
Balance at beginning of period $ 13,571,654 $ 11,491,937 $ 9,568,941
Depreciation expense 2,448,270 2,079,717 1,922,996
Write-off of fully depreciated assets (45,493) - -
------------ ------------ ------------
Balance at end of period $ 15,974,431 $ 13,571,654 $ 11,491,937
------------ ------------ ------------
------------ ------------ ------------
F-14