0000950168-95-000631.txt : 19950818 0000950168-95-000631.hdr.sgml : 19950818 ACCESSION NUMBER: 0000950168-95-000631 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950810 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAVIDSON DIVERSIFIED REAL ESTATE I LP CENTRAL INDEX KEY: 0000721673 STANDARD INDUSTRIAL CLASSIFICATION: 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: 95560851 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 INSIGNIA DDREI 82141.1 10-QSB 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 June 30, 1995 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the transition period.........to......... Commission file number 0-13530 DAVIDSON DIVERSIFIED REAL ESTATE I LIMITED PARTNERSHIP (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 (803) 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 LIMITED PARTNERSHIP BALANCE SHEET (Unaudited) June 30, 1995
Assets Cash: Unrestricted $ 868,132 Restricted-tenant security deposits 92,110 Accounts receivable 7,158 Escrows for taxes and insurance 45,259 Restricted escrows 264,315 Other assets 297,537 Investment properties: Land $ 1,071,881 Buildings and related personal property 11,166,313 12,238,194 Less accumulated depreciation (5,330,006) 6,908,188 $8,482,699 Liabilities and Partners' Deficit Liabilities Accounts payable $ 59,524 Tenant security deposits 92,806 Accrued taxes 166,255 Other liabilities 180,030 Due to affiliates 320,830 Mortgage notes payable 8,662,551 Partners' Deficit General partners $ (71,683) Limited partners (751.84 units issued and outstanding) (927,614) (999,297) $8,482,699
See Accompanying Notes to Financial Statements 1 b) DAVIDSON DIVERSIFIED REAL ESTATE I LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 1995 1994 1995 1994 Revenues: Rental income $688,775 $633,893 $1,361,707 $1,241,435 Other income 68,058 37,059 115,919 71,468 Total revenues 756,833 670,952 1,477,626 1,312,903 Expenses: Operating 174,141 182,839 327,629 344,766 General and administrative 39,370 23,810 61,988 42,632 Property management fees 37,356 32,195 73,148 64,023 Maintenance 110,859 67,775 170,491 134,607 Depreciation 116,185 103,884 237,649 206,554 Interest 219,734 221,435 439,885 443,272 Property taxes 63,189 63,419 114,120 121,788 Total expenses 760,834 695,357 1,424,910 1,357,642 Loss on disposal of property -- -- -- (1,799) Net income (loss) $ (4,001) $(24,405) $ 52,716 $ (46,538) Net loss allocated to general partners (5%) $ (200) $ (1,220) $ 2,636 $ (2,327) Net loss allocated to limited partners (95%) (3,801) (23,185) 50,080 (44,211) $ (4,001) $(24,405) $ 52,716 $ (46,538) Net income per limited partnership unit $ (5.06) $ (30.84) $ 66.61 $ (58.80)
See Accompanying Notes to Financial Statements 2 c) DAVIDSON DIVERSIFIED REAL ESTATE I LIMITED PARTNERSHIP STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 751.84 $ 1,000 $15,008,000 $15,009,000 Partners' deficit at December 31 1994 751.84 $(66,620) $ (831,418) $ (898,038) Cash distributions for the six months ended June 30, 1995 -- (7,699) (146,276) (153,975) Net income for the six months ended June 30, 1995 -- 2,636 50,080 52,716 Partners' deficit at June 30, 1995 751.84 $(71,683) $ (927,614) $ (999,297)
See Accompanying Notes to Financial Statements 3 d) DAVIDSON DIVERSIFIED REAL ESTATE I LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, 1995 1994 Cash flows from operating activities: Net income (loss) $ 52,716 $ (46,538) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 237,649 206,554 Amortization of discounts, loan fees, and leasing commissions 31,116 30,720 Loss on disposal of property -- 1,799 Change in accounts: Restricted cash (5,641) (6,239) Accounts receivable 8,116 (6,975) Escrows for taxes and insurance 96,413 70,299 Other assets (28,500) (36,020) Accounts payable (2,563) (16,786) Tenant security deposit liabilities 5,720 6,239 Accrued taxes (75,404) (33,896) Other liabilities 65,302 (6,883) Net cash provided by operating activities 384,924 162,274 Cash flows from investing activities: Property improvements and replacements (91,763) (254,989) Deposits to restricted escrows (36,656) (36,259) Receipts from restricted escrows 3,119 19,302 Net cash used in investing activities (125,300) (271,946)
See Accompanying Notes to Consolidated Financial Statements 4 DAVIDSON DIVERSIFIED REAL ESTATE I LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS (Continued) (Unaudited)
Six Months Ended June 30, 1995 1994 Cash flows from financing activities: Payments on mortgage notes payable $ (47,236) $ (43,454) Cash distributions to partners (153,975) -- Net cash used in financing activities (201,211) (43,454) Net increase (decrease) in cash 58,413 (153,126) Cash at beginning of period 809,719 995,230 Cash at end of period $ 868,132 $ 842,104 Supplemental disclosure of cash flow information: Cash paid for interest $ 408,770 $ 412,553
See Accompanying Notes to Financial Statements 5 e) DAVIDSON DIVERSIFIED REAL ESTATE I LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited financial statements 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 six month period ended June 30, 1995, are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the year ended December 31, 1994. Certain reclassifications have been made to the 1994 information to conform to the 1995 presentation. Note B - Transactions with Affiliated Parties Affiliates of Insignia Financial Group, Inc. ("Insignia") own the controlling ownership interest in the Partnership s Managing General Partner. As a result, affiliates of Insignia provide property management and asset management services to the Partnership. The following payments were made to Insignia and its affiliates for the six months ended June 30, 1995, and June 30, 1994:
1995 1994 Property management fees - Insignia $73,148 $64,023 Data processing services 1,115 1,025 Marketing services 294 2,657 Reimbursement for services of affiliates 44,229 32,610
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. 6 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 by property for the six months ended June 30, 1995 and 1994:
Average Occupancy 1995 1994 Ashley Woods Apartments Cincinnati, Ohio 95% 83% Versailles on the Lake Apartments Fort Wayne, Indiana 93% 94%
The Managing General Partner attributes the increase in occupancy at Ashley Woods to increased concessions and other leasing incentives since 1994. In addition, the rehabilitation of the property's exterior has enhanced its ability to compete in the Cincinnati market. The Partnership's net income for the six months ended June 30, 1995, was $52,716 compared to a net loss of $46,538 for the corresponding period in 1994. The Partnership incurred a net loss of $4,001 for the three months ended June 30, 1995, compared to a net loss of $24,405 for the three months ended June 30, 1994. Rental income increased for the three and six months ended June 30, 1995, primarily due to the 12% increase in occupancy at Ashley Woods, in addition to rental rates increasing at both properties. Other income also increased for the three and six months ending June 30, 1995, due to increases at Ashley Woods in cleaning and damage fees totalling approximately $14,000, lease cancellation fees totalling approximately $9,000, and increased pet fees and laundry income at both properties. Total expenses increased for the three and six months ended June 30, 1995, due primarily to increases in maintenance and depreciation expenses. The increase in maintenance expense was due primarily to increases in interior building repairs and parking lot paving and striping at Ashley Woods. The increase in depreciation expense relates to major exterior rehabilitation at Ashley Woods that was completed in June 1994 in combination with other property improvements and replacements at both properties. The loss on disposal of property related to roof replacements at Versailles on the Lake during the second quarter of 1994. 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. 7 The Partnership held unrestricted cash of $868,132 at June 30, 1995, and unrestricted cash of $842,104 at June 30, 1994. Net cash provided by operating activities increased due to increased revenues as noted above in combination with increases in other liabilities. Net cash used in investing activities decreased due to reduced levels of property improvements and replacements partially offset by reduced receipts from restricted escrows. Net cash used in financing activities increased due to distributions paid to partners during the six months ended June 30, 1995. 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 $8,662,551, net of discount, is amortized over varying periods. Of this amount, $6,027,207, which matures in 2000, relates to Ashley Woods and $2,635,344, which matures in 2002, relates to Versailles on the Lake. At the time of maturity, the properties will either be sold or the debt refinanced. No cash distributions were made in 1994. Cash distributions of $153,975 were made during the first six months of 1995. Future cash distributions will depend on the levels of net cash generated from operations, property sales and the availability of cash reserves. 8 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 June 30, 1995. 9 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. Controller and Principal Accounting Officer Date: 10 EX-27 2 EXHIBIT 27
5 This schedule contains summary financial information extracted from Davidson Diversified Properties Real Estate I's 1995 Second Quarter 10- QSB and is qualified in its entirety by reference to such 10-QSB filing. 1 6-MOS DEC-31-1995 JUN-30-1995 868,132 0 7,158 0 0 1,574,511 12,238,194 5,330,006 8,482,699 498,615 8,662,551 0 0 0 (999,297) 8,482,699 0 1,477,626 0 1,424,910 0 0 439,885 0 0 0 0 0 0 52,716 66.61 0