-----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, EyHqB/UUFvK7C9iDyma7pFS+9KiMt5YgLdvpR8Ptgj1agbeWWmBYloCCPUidqJt8 0mH6g5OSeU2Fn469/bF67A== 0000809799-95-000003.txt : 19951204 0000809799-95-000003.hdr.sgml : 19951204 ACCESSION NUMBER: 0000809799-95-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951201 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DBSI TRI EQUITY INCOME FUND CENTRAL INDEX KEY: 0000809799 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 820410175 STATE OF INCORPORATION: ID FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-11418 FILM NUMBER: 95598474 BUSINESS ADDRESS: STREET 1: 1070 N CURTIS RD STE 270 CITY: BOISE STATE: ID ZIP: 83706 BUSINESS PHONE: 2083225858 MAIL ADDRESS: STREET 1: 1070 N CURTIS ROAD SUITE 270 CITY: BOISE STATE: ID ZIP: 83706 FORMER COMPANY: FORMER CONFORMED NAME: DBSI TRI EQUITY INVESTORS I DATE OF NAME CHANGE: 19870716 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 For Quarter Ended: September 30, 1995 Commission file number: 33-11418 DBSI/TRI EQUITY INCOME FUND A Real Estate Limited Partnership State of Organization: Idaho Employer ID #: 82-0410175 1070 N. Curtis Rd., Suite 270, Boise, Idaho 83706 Telephone number: (208) 322-5858 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) Yes [X] No [ ] (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] FORM 10-Q File Number: 3311418 PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Included herein on pages 5-10 Item 2 - Mangement's Discussion and Analysis of Financial Condition and Results of Operations Included herein on page 3-4 DBSI/TRI EQUITY INCOME FUND A Real Estate Limited Partnership (an Idaho limited partnership) MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION September 30, 1995 Liquidity and Capital Resources The Partnership generates funds primarily from the operation of rental properties and to a lesser extent from interest on savings and certificates of deposit. Funds are used for rental property operating expenses, distributions to partners, debt service, fixed asset replacements, capital improvements, management and professional fees. The Partnership does not anticipate acquiring any additional properties or refinancing any existing properties. Vista Cornell Apartments is currently being sold with closing on October 19, 1995. The general partners believe that the Partnership will have the liquidity and capital resources to meet all of its known obligations and commitments. The cash and cash equivalents position of the Partnership at September 30, 1995 represented approximately $87,000 available for Partnership operations, including approximately $62,500 of reserves and $24,500 of operating cash. There were no external sources of liquidity and there are no outstanding capital commitments. The average rate of interest earned on cash deposits was 3.2%. Cash Flow and Operations For the nine months ended September 30, 1995 and 1994 the projects generated $146,832 and $250,010 respectively of cash flow from operating activities per the Statements of Cash Flows. The following adjustments should be made to the cash flow in order to arrive at an amount comparable to the first year pro forma funds from operations as shown in the supplement to the prospectus. First, transitory changes in noncash operating assets and liabilities of approximately $11,800 should be subtracted, decreasing cash flow to the actual funds which are being generated from operations on an ongoing basis. Additionally, cash flow should be reduced for principal payments of approximately $8,100 and for normal operations fixed asset purchases of approximately $35,900. Cash flow should finally be increased for approximately $11,000 of partnership activity. After the above adjustments, the three properties combined annualized funds from operations for the first nine months of 1995 were approximately 52% of the first year pro forma amount. In the third quarter of 1995 and 1994 total rental operations income were $674,355 and $668,311. Real estate operating expenses increased from $606,407 in 1994 to $687,672 in 1995. The largest expense increases came from on-site management costs, administrative expenses, and maintenance items at Emerald Court Apartments. The General Partners have since reduced staff and changed both on-site and area managers over Emerald Court Apartments to improve control over discretionary expenditures and thereby improve operating cash flow for the remainder of 1995. On October 19,1995, the Partnership closed the sale of Vista Cornell Apartments to an unrelated buyer for $1,700,000. The buyer gave a note secured by the property for $1,460,000 and paid $240,000 cash for the balance. The Partnership paid costs of sale and prorations of approximately $75,000 (including commissions to unrelated real estate brokers of $50,000), and received net cash proceeds of approximately $165,000. The Partnership used these proceeds to pay the Partnership's note payable (Note 3) and other Partnership expenses. The buyer's installment note requires payments of approximately $11,750 per month including interest of 9% on the unpaid balance. The note may be prepaid at any time and is due in full on October 19, 1999. The cash flow generated from the interest on the note should exceed the annualized year to date cash flow of the Vista Cornell Apartments by approximately 28% or an increase of $29,000. Distributions to partners of $244,452 were made in the first nine months of 1995, with $140,275 from current cash flow from operations and $104,177 from Partnership reserves. Partnership net loss after depreciation (on a GAAP basis) for the nine months ended September 30, 1995 was $13,317. Therefore, 1995 cash distributions to date have been a return of capital. The Partnership's intent is to match distributions with ongoing cash flow from operations. Per $1,000 investment (on the basis of a $1,000 investment made at the inception of the escrow and offering) quarterly distributions have been made in the following amounts: escrow period - $83; October 1988 through February 1990 - $18; April 1990 through February 1991 - $19; and May 1991 through July 1995 - - $18. DBSI/TRI EQUITY INCOME FUND A REAL ESTATE LIMITED PARTNERSHIP (an Idaho limited partnership) BALANCE SHEETS
ASSETS September 30, 1995 December 31, 1994 __________________ _________________ Rental property: Land $567,500 $567,500 Buildings and improvements 4,568,497 4,557,725 Furniture and fixtures 300,222 275,128 _________ _________ 5,436,219 5,400,353 Less accumulated depreciation (1,130,843) (1,005,747) __________ __________ 4,305,376 4,394,606 Cash and cash equivalents 24,831 41,956 Prepaid expenses 2,409 2,464 Reserves 62,489 39,693 Tenant security deposits 25,550 25,496 Intangible costs (net) (Note 4) 39,959 38,107 __________ __________ Total assets $4,460,614 $4,542,322
LIABILITIES AND CAPITAL Accounts payable 24,562 $23,732 Interest payable 23,375 $16,879 Taxes payable 18,230 5,964 Note payable affiliate (Note 3) 158,000 Mortgage payable (Note 2) 1,967,889 1,976,032 Tenant security deposits payable 22,742 16,130 _________ _________ Total liabilities 2,214,798 2,038,737 _________ _________ Partners' capital 2,245,816 2,503,585 __________ __________ Total liabilities and capital $4,460,614 $4,542,322 The Accompanying Notes are an Integral Part of these Financial Statements
DBSI/TRI EQUITY INCOME FUND A REAL ESTATE LIMITED PARTNERSHIP (an Idaho limited partnership) STATEMENTS OF EARNINGS
Nine Months Ended Nine Months Ended REVENUES September 30, 1995 September 30, 1994 __________________ __________________ Tenant rent $651,955 $638,800 Interest income 137 1,944 Other income 22,263 27,567 _______ _______ 674,355 668,311 EXPENSES Interest 158,449 152,423 Depreciation 125,096 126,316 Property tax and insurance 72,598 64,133 Utilities 75,538 73,150 Maintenance and repairs 105,567 71,490 Administrative 65,621 40,770 Management fees 27,963 27,963 On-site manager 47,992 42,627 Amortization 8,848 7,535 _______ _______ 687,672 606,407 _______ _______ Net income ($13,317) $61,904
STATEMENTS OF PARTNERS' CAPITAL
Nine Months Ended Nine Months Ended September 30, 1995 September 30, 1994 __________________ __________________ Beginning capital $2,503,585 $2,778,683 Distributions (244,452) (187,487) Net income (13,317) 61,556 __________ __________ Ending capital $2,245,816 $2,652,752 The Accompanying Notes are an Integral Part of these Financial Statements
DBSI/TRI EQUITY INCOME FUND A REAL ESTATE LIMITED PARTNERSHIP (an Idaho limited partnership) STATEMENTS OF CASH FLOWS
CASH FLOWS FROM Nine Months Ended Nine Months Ended OPERATING ACTIVITIES September 30, 1995 September 30, 1994 __________________ __________________ Net income ($13,317) $61,904 Adjustments to reconcile net income to cash flows from operating activities Depreciation and amortization 133,944 133,851 Changes in operating assets and liabilities Prepaid expenses 55 15,561 Tenant security deposits (54) (153) Accounts payable 830 20,055 Interest payable 6,496 Taxes payable 12,266 15,614 Tenant security deposits payable 6,612 3,178 ______ _______ Net cash provided by operating activities 146,832 250,010 CASH FLOWS FROM INVESTING ACTIVITIES Rental property purchases (35,866) (29,868) Increase in reserves (22,796) (36) ________ _______ Net used in investing activities (58,662) (29,904) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from financing 158,000 Increase in intangible costs (10,700) Principal payments on loans (8,143) (7,353) Distributions to partners (244,452) (268,965) _________ _________ Net cash used in financing activities (105,295) (276,318) Net decrease in cash and cash equivalents (17,125) (56,212) Cash and cash equivalents at beginning of period 41,956 100,513 _______ _______ Cash and cash equivalents at end of period $24,831 $44,301 The Accompanying Notes are an Integral Part of these Financial Statements
DBSI/TRI EQUITY INCOME FUND A REAL ESTATE LIMITED PARTNERSHIP (an Idaho limited partnership) NOTES TO UNAUDITED FINANCIAL STATEMENTS For the Nine Months Ended September 30, 1995 and 1994 1. SUMMARY OF PARTNERSHIP ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Partnership Organization. DBSI/TRI Equity Income Fund - A Real Estate Limited Partnership, was formed on November 15, 1986 with general partners DBSI Housing Inc., an Idaho corporation, and Tomlinson Realty Investment II, an Idaho general partnership. The business purpose of the Partnership is to acquire and operate leveraged multi-family housing projects primarily in the Northwestern United States. The partnership agreement provides that the Partnership will be dissolved no later than December 31, 2036, unless sooner terminated as provided in the agreement. The Partnership acquired three properties during the offering period: Vista Cornell Apartments, an existing 46 unit project; Oak Square Apartments, an existing 22 unit project, both located in the Portland, Oregon metropolitan area; and Emerald Court Apartments, a new 68 unit apartment project located in the Seattle metropolitan area. Operating profits and losses exclusive of losses from the sale or disposition of Partnership properties and cash distributions, are allocated 98 percent to limited partners and two percent to general partners. After the limited partners have received distributions equal to a 7% annual simple interest return on their capital contributions the general partners receive additional distributions equal to 5% of total distributions. Proceeds from sale or refinancings are to be distributed 100 percent to the limited partners until they have received cumulative distributions equal to their capital contributions plus an amount equal to ten percent per annum, then 85 percent to the limited partners and 15 percent to the general partners. Significant Accounting Policies. The balance sheets include only those assets, liabilities, and partners' capital which relate to the business of the Partnership and do not include any assets, liabilities, revenues or expenses attributable to the partners' activities. No partners receive salaries from the Partnership for services. No provision has been made for federal and state income taxes since these taxes are the personal responsibility of the partners. Loan fees are amortized over the estimated life of the note (ten years) beginning in May, 1989. Rental property is recorded at cost. Depreciation is computed by the Modified Accelerated Cost Recovery System (MACRS) or straight-line method over the estimated useful lives of the assets as follows: buildings and structural improvements - 15 to 32 years; furniture and fixtures - 5 to 12 years. Expenditures for maintenance and repairs are charged to operating expenses as incurred. The cost and accumulated depreciation of assets sold or otherwise retired are removed from the accounts and gain or loss on disposition is included in the results of operations. Cash and cash equivalents include cash in banks (except for security deposits and reserve bank accounts) and bank certificates of deposit with original maturities of ninety days or less. Reserves consist of bank deposits maintained for replacements and repairs, property taxes, insurance, Partnership reserves and return to owners. 2. MORTGAGES PAYABLE A $2,020,000 loan from York Associates to the Partnership was used for the purchase of Emerald Court Apartments in May, 1989. The loan is secured by a deed of trust on the Emerald Court Apartments. At September 30, 1995, the carrying value of Emerald Court Apartments was $2,850,502 ($3,558,787 cost basis of land, buildings, improvements and equipment, net of $708,285 accumulated depreciation). Principal and interest at 10.25 percent are payable on the note in monthly installments of $17,753 through June, 1999. After that date, York Associates holds a call option which, if exercised at that date, would require a balloon payment of $1,916,363. 3. NOTES PAYABLE The Partnership borrowed $158,000 through the second quarter of 1995 from an affiliate of the General Partner. This loan bears interest at the General Partner's bank borrowing rate of prime plus 1.5% (10.25% as of September 30). The loan proceeds provide funds for short term operating cash flow needs of the Seattle project and enables the Partnership to maintain the distribution rate during the period of the lower operating cash flow. The loan was repaid with proceeds from the sale of Vista Cornell Apartments. 4. INTANGIBLE COSTS As of September 30, 1995 loan fees amounted to $96,980 with accumulated amortization of $57,021 leaving a net amount of $39,959. 5. SUBSEQUENT EVENT On October 19,1995, the Partnership closed the sale of Vista Cornell Apartments to an unrelated buyer for $1,700,000. The buyer gave a note secured by the property for $1,460,000 and paid $240,000 cash for the balance. The Partnership paid costs of sale and prorations of approximately $75,000 (including commissions to unrelated real estate brokers of $50,000), and received net cash proceeds of approximately $165,000. The Partnership used these proceeds to pay the Partnership's note payable (Note 3) and other Partnership expenses. The buyer's installment note requires payments of approximately $11,750 per month including interest of 9% on the unpaid balance. The note may be prepaid at any time and is due in full on October 19, 1999. The cash flow generated from the interest on the note should exceed the annualized year to date cash flow of the Vista Cornell Apartments by approximately 28% or an increase of $29,000. 6. NET INCOME (LOSS) FROM RENTAL PROPERTIES The following schedule details separate rental property and partnership operations for the year ended September 30, 1995. _____________________________________________________ Emerald Vista Oak Partnership Court Apts Cornell Apt Square Apts Operations Total _____________________________________________________ REVENUES Tenant rent $358,407 $186,571 $106,977 $651,955 Interest income 100 $37 137 Other income 13,327 7,132 1,804 22,263 _____________________________________________________ 371,834 193,703 108,781 37 674,355 EXPENSES Interest 151,633 6,816 158,449 Depreciation 83,250 27,446 14,400 125,096 Tax and insurance 37,619 24,338 10,641 72,598 Utilities 36,893 27,965 10,680 75,538 Maintenance 56,041 38,650 10,876 105,567 Administrative 40,682 8,352 4,594 11,993 65,621 Management fees 13,455 9,594 4,914 27,963 On-site manager 30,327 12,464 5,201 47,992 Amortization 8,848 8,848 _____________________________________________________ 449,900 148,809 61,306 27,657 687,672 _____________________________________________________ Net income(loss) ($78,066) $44,894 $47,475 ($27,620) ($13,317) _____________________________________________________ _____________________________________________________ Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DBSI/TRI EQUITY INCOME FUND A Real Estate Limited Partnership Date 11/09/95 by _________________________ Douglas L. Swenson, President of DBSI Housing Inc., general partner of DBSI/TRI EQUITY INCOME FUND A Real Estate Limited Partnership Date 11/09/95 by _________________________ Charles E. Hassard, Secretary-Treasurer and principal financial officer of DBSI Housing Inc., the Idaho corporation that is a general partner and principal financial officer of DBSI/TRI EQUITY INCOME FUND Real Estate Limited Partnership -----END PRIVACY-ENHANCED MESSAGE-----