-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P398w1dKtoOvy/ImuqzFhMlQLgCe+Y0Gvjug7urJY4YUWqy2g4F1NkCcia3W07Gm TFEx4ffZI/vUB6u4hK2OBw== 0000721673-96-000006.txt : 19960515 0000721673-96-000006.hdr.sgml : 19960515 ACCESSION NUMBER: 0000721673-96-000006 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAVIDSON DIVERSIFIED REAL ESTATE I LP CENTRAL INDEX KEY: 0000721673 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 621181565 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13530 FILM NUMBER: 96564135 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 FORMER COMPANY: FORMER CONFORMED NAME: FREEMAN DIVERSIFIED REAL ESTATE I LP DATE OF NAME CHANGE: 19910501 10QSB 1 FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Quarterly or Transitional Report (As last amended by 34-32231, eff. 6/3/93.) U.S. Securities and Exchange Commission Washington, D.C. 20549 Form 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 [ ] 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 0-13530 DAVIDSON DIVERSIFIED REAL ESTATE I, L.P. (Exact name of small business issuer as specified in its charter) Delaware 62-1181565 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (864) 239-1000 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) DAVIDSON DIVERSIFIED REAL ESTATE I, L.P. CONSOLIDATED BALANCE SHEET (in thousands, except unit data) (Unaudited) March 31, 1996 Assets Cash: Unrestricted $ 672 Restricted-tenant security deposits 93 Accounts receivable 8 Escrows for taxes and insurance 161 Restricted escrows 315 Other assets 220 Investment properties: Land $ 1,072 Buildings and related personal property 11,338 12,410 Less accumulated depreciation (5,707) 6,703 $8,172 Liabilities and Partners' Deficit Liabilities Accounts payable $ 25 Tenant security deposits 92 Accrued taxes 224 Other liabilities 197 Due to affiliates 321 Mortgage notes payable 8,602 Partners' Deficit General partners $ (86) Limited partners (751.59 units issued and outstanding) (1,203) (1,289) $ 8,172 See Accompanying Notes to Consolidated Financial Statements b) DAVIDSON DIVERSIFIED REAL ESTATE I, L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended March 31, 1996 1995 Revenues: Rental income $ 679 $ 673 Other income 54 48 Total revenues 733 721 Expenses: Operating 223 189 General and administrative 31 23 Maintenance 78 60 Depreciation 128 121 Interest 218 220 Property taxes 62 51 Total expenses 740 664 Net (loss) income $ (7) $ 57 Net (loss) income allocated to general partners (5%) $ -- $ 3 Net (loss) income allocated to limited partners (95%) (7) 54 $ (7) $ 57 Net (loss) income per limited partnership unit $(8.71) $71.85 See Accompanying Notes to Consolidated Financial Statements
c) DAVIDSON DIVERSIFIED REAL ESTATE I, L.P. CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 751.84 $ 1 $ 15,008 $ 15,009 Partners' deficit at December 31, 1995 751.59 (73) (956) (1,029) Distributions to partners -- (13) (240) (253) Net loss for the three months ended March 31, 1996 -- -- (7) (7) Partners' deficit at March 31, 1996 751.59 $ (86) $ (1,203) $ (1,289) See Accompanying Notes to Consolidated Financial Statements
d) DAVIDSON DIVERSIFIED REAL ESTATE I, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, 1996 1995 Cash flows from operating activities: Net (loss) income $ (7) $ 57 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 128 121 Amortization of discounts and loan costs 15 15 Change in accounts: Restricted cash (6) (4) Accounts receivable 6 8 Escrows for taxes and insurance (5) (7) Other assets 15 16 Accounts payable (21) 53 Tenant security deposit liabilities 6 4 Accrued taxes (8) (21) Other liabilities 14 (6) Net cash provided by operating activities 137 236 Cash flows from investing activities: Property improvements and replacements (34) (33) Deposits to restricted escrows (21) (18) Receipts from restricted escrows -- 3 Net cash used in investing activities (55) (48) Cash flows from financing activities: Payments on mortgage notes payable (25) (23) Distributions to partners (253) (154) Net cash used in financing activities (278) (177) Net (decrease) increase in cash (196) 11 Cash at beginning of period 868 810 Cash at end of period $ 672 $ 821 Supplemental disclosure of cash flow information: Cash paid for interest $ 203 $ 205 See Accompanying Notes to Consolidated Financial Statements
e) DAVIDSON DIVERSIFIED REAL ESTATE I, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements of Davidson Diversified Real Estate I, L.P. (the "Partnership") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Managing General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the year ended December 31, 1995. Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. Note B - Due to Affiliates The Partnership is liable to a company affiliated with the Managing General Partner through common ownership for real estate commissions in the amounts of $124,500 for Revere Village and $196,330 for Essex which were sold in previous years. Payment of the commissions will not be made to the affiliated company until after payment to the limited partners of their original invested capital, plus 8% per annum cumulative non-compounded on their adjusted invested capital commencing on the last day of the calendar quarter in which each limited partner was admitted to the Partnership through the date of payment. Note C - Transactions with Affiliated Parties The Partnership has no employees and is dependent on the Managing General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following amounts were paid to affiliates of the Managing General Partner for such services in 1996 and 1995: Three Months Ended March 31, 1996 1995 (in thousands) Property management fees $ 37 $ 36 Reimbursement for services of affiliates 18 17 Note C - Transactions with Affiliated Parties (continued) The Partnership insures its properties under a master policy through an agency and insurer unaffiliated with the Managing General Partner. An affiliate of the Managing General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. The current agent assumed the financial obligations to the affiliate of the Managing General Partner who receives payments on these obligations from the agent. The amount of the partnership's insurance premiums accruing to the benefit of the affiliate of the Managing General Partner by virtue of the agent's obligations is not significant. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The Partnership's investment properties consist of two apartment complexes. The following table sets forth the average occupancy of the properties for the quarters ended March 31, 1996 and 1995: Average Occupancy 1996 1995 Ashley Woods Apartments Cincinnati, Ohio 91% 95% Versailles on the Lake Apartments Fort Wayne, Indiana 92% 92% The Managing General Partner attributes the decrease in occupancy at Ashley Woods to the closing of several businesses in the area. Although there was a significant decrease in occupancy in the first quarter at Ashley Woods, the Partnership expects this occupancy decrease to be short-term. The Partnership realized a net loss for the quarter ended March 31, 1996, of $7,000 compared to net income of $57,000 for the corresponding period of 1995. The Managing General Partner attributes the net loss to increases in operating, general and administrative and maintenance expenses during the first quarter of 1996. Operating expense increased due to increased advertising and commissions for tenant referrals at Ashley Woods Apartments. Collection costs also increased at Ashley Woods due to job losses in the area. General and administrative expense increased due to an increase in insurance expense resulting from additional coverage. Maintenance expense increased due to resurfacing the tennis courts at Ashley Woods and refurbishing a number of apartments due to tenant turnover at Versailles on the Lake. Maintenance expense also increased due to the cost of snow removal as a result of the severe winter experienced by both properties. Offsetting these increases in expense was an increase in other income due to the renegotiation of laundry contracts at Ashley Woods and Versailles on the Lake. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Managing General Partner will be able to sustain such a plan. At March 31, 1996, the Partnership held unrestricted cash of $672,000 compared to $821,000 at March 31, 1995. Net cash provided by operating activities decreased primarily due to the increased expenses discussed above as well as fewer collections of prepaid rent from tenants. Net cash used in investing activities increased as a result of increased deposits to restricted escrows. Net cash used in financing activities increased due to greater distributions to partners in the first quarter of 1996 compared to the first quarter of 1995. The Partnership has no material capital programs scheduled to be performed in 1996, although certain routine capital expenditures and maintenance expenses have been budgeted. These capital expenditures and maintenance expenses will be incurred only if cash is available from operations or the repairs are funded from the capital reserve account. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the property to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the partnership. The mortgage indebtedness of $8,602,000, net of discount, is amortized over varying periods. Of this amount, $6,003,000, which matures in 2000, relates to Ashley Woods and $2,599,000, which matures in 2002, relates to Versailles on the Lake. At the time of maturity, the properties will either be sold or refinanced. Distributions to partners of $253,000 and $154,000 were made during the first quarter of 1996 and 1995, respectively. Future cash distributions will depend on the levels of net cash generated from operations, property sales and the availability of cash reserves. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended March 31, 1996. SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DAVIDSON DIVERSIFIED REAL ESTATE I By: Davidson Diversified Properties, Inc. Managing General Partner By: /s/Carroll D. Vinson Carroll D. Vinson President By: /s/Robert D. Long, Jr. Robert D. Long, Jr. Vice President/CAO Date: May 14, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Davidson Diversified Real Estate I 1996 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000721673 DAVIDSON DIVERSIFIED REAL ESTATE I LP 1,000 3-MOS DEC-31-1996 MAR-31-1996 672 0 8 0 0 0 12,410 5,707 8,172 0 8,602 0 0 0 (1,289) 8,172 0 733 0 740 0 0 218 0 0 0 0 0 0 (7) (8.71) 0 The Partnership has an unclassified balance sheet.
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