-----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, Lr5fboKML/m6LS2Qm5Nm0SB6Pf3bQMcxOYdAtZ3Veiw/xkD6g6RBMegpyc3tlIlz e6Db1U+efcCx9uukdwO4OA== 0000726315-00-000002.txt : 20000203 0000726315-00-000002.hdr.sgml : 20000203 ACCESSION NUMBER: 0000726315-00-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991031 FILED AS OF DATE: 20000126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WITTER DEAN REALTY INCOME PARTNERSHIP I LP CENTRAL INDEX KEY: 0000726315 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 133174553 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-13260 FILM NUMBER: 513789 BUSINESS ADDRESS: STREET 1: 2 WORLD TRADE CENTER STREET 2: 64TH FL CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123921054 MAIL ADDRESS: STREET 1: TWO WORLD TRADE CENTER STREET 2: 46TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10048 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______to _______ Commission File Number 0-13260 DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. (Exact name of registrant as specified in its charter) Delaware 13- 3174553 (State organization) (IRS Employer Identification No.) 2 World Trade Center, New York, NY 10048 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 3921054 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None None Securities registered pursuant to Section 12(g) of the Act: Units of Limited Partnership Interest (Title of Class) Indicate by check-mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No 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's or any amendment to this Form 10-K. [X] State the aggregate market value of the voting stock held by nonaffiliates of the registrant. Not Applicable DOCUMENTS INCORPORATED BY REFERENCE None PART I. ITEM 1. BUSINESS The Registrant, Dean Witter Realty Income Partnership I, L.P. (the "Partnership"), is a limited partnership formed in August 1983 under the Uniform Limited Partnership Act of the State of Delaware for the purpose of investing primarily in income-producing office, industrial and retail properties. The Managing General Partner of the Partnership is Dean Witter Realty Income Properties I Inc. (the "Managing General Partner"), a Delaware corporation which is wholly owned by Dean Witter Realty Inc. ("Realty"). The Associate General Partner is Dean Witter Realty Income Associates I, L.P. (the "Associate General Partner"), a Delaware limited partnership, the general partner of which is Dean Witter Realty Income Associates I Inc., a wholly-owned subsidiary of the Managing General Partner. The Managing General Partner manages and controls all aspects of the business of the Partnership. The terms of transactions between the Partnership and its affiliates are set forth below in footnote 8 to the Financial Statements in Item 8 and in Item 13 below. The Partnership issued 92,780 units of limited partnership interest (the "Units") with gross proceeds from the offering of $92,780,000. The offering has been terminated and no additional Units will be sold. The proceeds from the offering were used to make equity investments in four office properties, two office/research and development properties and one retail property, all of which were acquired without mortgage debt. Except for the North Lake Plaza property (which is described in Item 2 below), all of the Partnership's properties were sold to unaffiliated purchasers prior to October 31, 1998. The Partnership is currently working on an arrangement with the City of Altamonte Springs, FL., the location of the North Lake Plaza property, whereby the Partnership and the city will jointly offer their properties for sale. See Item 7. The Partnership considers its business to include one industry segment, investment in real property. Financial information regarding the Partnership is included in the Partnership's Financial Statements in Item 8 below. The North Lake Plaza property is subject to competition from similar retail properties in the vicinity in which it is located. Further information regarding competition and market conditions where the property is located is set forth in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." The Partnership has no employees. All of the Partnership's business is conducted in the United States. ITEM 2. PROPERTY The Partnership's principal offices are located at Two World Trade Center, New York, New York 10048. The Partnership has no other offices. As of October 31, 1999, the Partnership owned directly the North Lake Plaza property, a shopping center located in Altamonte Springs, FL. The acquisition was completed in 1986 for a cost of approximately $10,110,000. The property has a net rentable area of 137,000 square feet, and was built with on-site parking facilities. Generally, the leases pertaining to the property provide for pass-throughs to the tenants of their pro- rata share of certain operating expenses. In the opinion of the Managing General Partner, the property is adequately covered by insurance. An affiliate of the Partnership was the property manager for the North Lake Plaza property through December 31, 1999. Further information relating to the Partnership's properties is included in Item 7 and Footnotes 4, 5, 6 and 7 to the Financial Statements in Item 8 below. ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted during the fourth quarter of the fiscal year to a vote of Unit holders. PART II. ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND STOCKHOLDER MATTERS An established public trading market for the Units does not exist, and it is not anticipated that such a market will develop in the future. Accordingly, information as to the market value of a Unit at any given date is not available. However, the Partnership does allow its limited partners (the "Limited Partners") to transfer their units if a suitable buyer can be located. As of January 19, 2000, there were 13,093 holders of limited partnership interests. The Partnership is a limited partnership and, accordingly, does not pay dividends. It does, however, make distributions of cash to its partners. Pursuant to the partnership agreement, distributable cash, as defined, is paid 90% to the Limited Partners and 10% to the general partners (the "General Partners"). The Partnership did not pay cash distributions during the year ended October 31, 1999. For the year ended October 31, 1998, the Partnership paid cash distributions aggregating $418.03 per Unit (including $405.78 per Unit from proceeds from the sales of the Arlington Business Center, Carmel Park I and II, Westwood 10 and Harborgate properties, which was paid 100% to the Limited Partners). The total distributions aggregated $38,911,108 with $38,784,823 distributed to the Limited Partners and $126,285 to the General Partners. The Partnership has not made distributions of distributable cash since the fiscal 1998 first quarter distribution (paid February 1998), and does not anticipate making regular distributions to its partners in the future. Generally, future cash distributions will be paid from proceeds received from the sale of the North Lake Plaza property and cash reserves. Sale proceeds are distributed, to the extent available, first, to each Limited Partner, until there has been a return of the Limited Partner's capital contribution plus cumulative distributions of distributable cash and sale proceeds in an amount sufficient to provide a 9% cumulative annual return on the Limited Partner's adjusted capital contribution. Thereafter, any remaining sale proceeds will be distributed 85% to the Limited Partners and 15% to the General Partners after the Managing General Partner receives a brokerage fee, if earned, of up to 3% of the selling price of any equity investment. Taxable income generally is allocated in the same proportions as distributions of distributable cash or sale proceeds (except that the General Partners must be allocated at least 1% of taxable income from sales). In the event there is no distributable cash or sale proceeds, taxable income will be allocated 90% to the Limited Partners and 10% to the General Partners. Any tax loss will be allocated 90% to the Limited Partners and 10% to the General Partners. ITEM 6. SELECTED FINANCIAL DATA The following sets forth a summary of selected financial data for the Partnership:
For the years ended October 31, 1995 1999 19981 19972 19963 Total $ $14,765 $10,453, $ $ revenues 1,131,3 ,035 915 8,493,73 8,000,5 37 7 66 Net income $ $13,380 $ $(5,607, $ (loss) 478,655 ,578 5,854,20 581)4 1,535,1 8 37 Net income (loss) Per Unit of Limited $ $ $ $ $ partnership 4.64 143.68 60.72 (53.66) 14.89 Interest Cash distributions Paid per Unit Of limited $ - $ $ $ $ Partnership 418.03 144.61 42.28 18.75 Interest5,6 Total assets at $ $ $33,613, $43,069, $58,295 October 31 8,174,5 7,781,2 496 014 ,735 90 23 1. Revenues and net income include gains of $12.9 million on the sales of the Carmel Park I and II, Westwood 10 and Harborgate properties. 2. Revenues and net income include gains of $3.7 million on the sales of the Century Square and Arlington Business Center properties. 3. Revenues and net income include a gain of $0.7 million on the sale of the 1718 Connecticut Avenue property. 4. Includes a $8.5 million loss on impairment recorded for the Westwood 10, 1718 Connecticut Avenue, Northlake Plaza and Carmel Park I and II properties. 5. Distributions paid to Limited Partners in 1998 include a return of capital of $351.10 per Unit, calculated as the excess of cash distributed per Unit over accumulated earnings per Unit not previously distributed. All distributions paid to Limited Partners in 1995-1997 represent returns of capital. 6. Includes distributions of proceeds from sales of real estate of $405.78, $110.05, and $12.28 in 1998, 1997 and 1996, respectively. The above financial data should be read in conjunction with the Financial Statements and the related notes in Item 8.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The Partnership raised $92,780,000 in a public offering which was terminated in 1984. The Partnership has no plans to raise additional capital. The Partnership purchased six properties and made one investment in the Partnership which owned the Century Square property on an all-cash basis. The Partnership's acquisition program has been completed. No additional investments are planned. The 1718 Connecticut property was sold in fiscal 1996. The Century Square and Arlington Business Center properties were sold in fiscal 1997. The Carmel Park I and II, Westwood 10, and Harborgate properties were sold in fiscal 1998. See Notes 5 and 6 to the Financial Statements in Item 8. The Partnership's sole remaining property is the North Lake Plaza Shopping Center. The North Lake Plaza property is located in the city of Altamonte Springs, FL. Due to changes in the city's zoning code, the property has become "non-conforming". Although it can still be occupied and used, the Managing General Partner believes that the property can not currently be sold at a price which reflects its full value. The Partnership is currently working on an arrangement with the city, whereby the city would offer the North Lake Plaza property and an adjacent property owned by the city for sale as part of a redevelopment plan, which would allow higher density development than currently exists. Under the plan, the city would have sole authority to market the North Lake Plaza property for sale, but the Partnership would be able to refuse to sell North Lake Plaza if the sale price is not acceptable to it. The Managing General Partner has hired a real estate appraiser to determine the market value which reflects North Lake Plaza's highest and best use. The Managing General Partner will use this valuation to determine its minimum acceptance price. The Managing General Partner believes that the minimum acceptance price will be greater than the property's carrying value. However, there can be no assurance that an acceptable price will be realized and the property sold through the above-described plan. The retail market in Altamonte Springs is improving and currently has stable market rental rates. During 1999, average occupancy at the property was approximately 87%, and, at October 31, 1999, occupancy at the property was 89% (an increase of 5% from October 31, 1998). The lease for Home Depot (for approximately 50% of the property's space) is scheduled to expire in 2003. The Burlington Coat Factory, which sub-leased all the space leased to Home Depot, vacated the space in October 1999; however, Home Depot remains obligated, and continues to pay rent under its lease. As a result, the Managing General Partner believes that this vacancy will not adversely affect its ability to sell the property. The lease of Marshalls Inc., (for approximately 21% of the space) is scheduled to expire in 2002. The property is leased to 10 other tenants; no other tenant occupies more than 10% of the property's space. During the year ended October 31, 1999, the North Lake Plaza property generated positive cash flow from operations, and it is anticipated that the property will continue to do so during the period the Partnership continues to own it. The Partnership's cash flow from North Lake Plaza also exceeded the Partnership's capital expenditures (which totaled approximately $263,000) for tenant improvements and leasing commissions at the property. Generally, future cash distributions will be paid from proceeds received from the sale of the North Lake Plaza property and cash reserves (including approximately $1,000,000 of undistributed proceeds from the sale of the Harborgate property). During the year ended October 31, 1999, the Partnership did not pay cash distributions. The Partnership believes that its cash reserves are adequate for its needs in fiscal 2000. Except as discussed above and in the financial statements, the Managing General Partner is not aware of any trends or events, commitments or uncertainties that may have a material impact on liquidity. Operations Fluctuations in the Partnership's operating results for the year ended October 31, 1999 compared to 1998 and the year ended October 31, 1998 compared to 1997 were primarily attributable to the following: In 1999, rental income, property operating expenses, and general and administrative expenses decreased as a result of the fiscal 1998 sales of the Westwood 10 and Carmel Park properties in December 1997 and the Harborgate property in July 1998. In 1998, rental income, property operating expenses and depreciation and amortization expenses decreased as a result of the sales of the Arlington Business Center (sold in October 1997), Westwood 10, Carmel Park, and Harborgate properties. The gains on sales of real estate in fiscal 1998 resulted from the sales of the Carmel Park, Harborgate and Westwood 10 properties. In 1997, the gain on sale of real estate resulted from the sale of the Arlington Business Center property. See Note 5 to the Financial Statements. Equity in earnings of joint venture in 1997 included the Partnership's share (approximately $2.2 million) of the gain from the sale of the Century Square office building. Because of the sale, there was no equity in earnings of joint venture in 1999 and 1998. See Note 6 to the Financial Statements. Interest and other income decreased in 1999 compared to 1998 and 1997 primarily because the Partnership earned interest in 1998 and 1997 on proceeds from the sales of properties until such proceeds were distributed to Limited Partners. There were no other individually significant factors which caused changes in revenues and expenses. Inflation Inflation has been consistently low during the periods presented in the financial statements and, as a result, has not had a significant effect on the operations of the Partnership or its properties. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. INDEX Page (b) Financial Statements Independent Auditors' Report Balance Sheets at October 31, 1999 and 1998 Income Statements for the years ended October 31, 1999, 1998 and 1997 Statements of Partners' Capital for the years ended October 31, 1999, 1998 and 1997 Statements of Cash Flows for the years ended October 31, 1999, 1998 and 1997 Notes to Financial Statements (b) Financial statement schedule Real Estate and Accumulated Depreciation III _____________ All schedules other than those indicated above have been omitted because either the required information is not applicable or the information is shown in the financial statements or notes thereto. Independent Auditors' Report To The Partners of Dean Witter Realty Income Partnership I, L.P.: We have audited the accompanying balance sheets of Dean Witter Realty Income Partnership I, L.P. (the "Partnership") as of October 31, 1999 and 1998, and the related statements of income, partners' capital, and cash flows for each of the three years in the period ended October 31, 1999. Our audits also included the financial statement schedule listed in the Index at Item 8. These financial statements and financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the 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, such financial statements present fairly, in all material respects, the financial position of Dean Witter Realty Income Partnership I, L.P. as of October 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended October 31, 1999 in conformity with generally accepted accounting principles. Also, in our opinion, such 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/Deloitte & Touche LLP DELOITTE & TOUCHE LLP New York, New York January 14, 2000 DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. BALANCE SHEETS
October 31, 1999 1998 ASSETS Cash and cash equivalents $ 1,355,995 $1,074,634 Real estate: Land 2,312,300 2,312,300 Building and improvements 7,454,594 7,230,844 9,766,894 9,543,144 Accumulated depreciation (3,071,562) (2,866,051) 6,695,332 6,677,093 Other assets 123,263 29,496 $ 8,174,590 $7,781,223 LIABILITIES AND PARTNERS' CAPITAL Accounts payable and other liabilities $ 208,462 $ 293,750 Partners' capital (deficiency) General partners (4,392,557) (4,440,423) Limited partners ($1,000 per Unit, 92,780 Units issued 12,358,685 11,927,896 Total partners' capital 7,966,128 7,487,473 $8,174,590 $7,781,223 See accompanying notes to financial statements.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. INCOME STATEMENTS For the years ended October 31, 1999, 1998 and 1997
1999 1998 1997 Revenues: Rental $ 1,060,291 $ 1,738,413 $ 6,325,230 Gains on sales of real estate - 12,878,953 1,470,551 Interest and other 71,046 147,669 174,649 Equity in earnings of joint venture - - 2,483,485 1,131,337 14,765,035 10,453,915 Expenses: Property operating 320,502 742,794 2,851,534 Depreciation and amortization 216,168 234,547 1,336,212 General and administrative 116,012 407,116 411,961 652,682 1,384,457 4,599,707 Net income $ 478,655 $13,380,578 $ 5,854,208 Net income allocated to: Limited partners $ 430,789 $13,330,415 $ 5,633,960 General partners 47,866 50,163 220,248 $ 478,655 $13,380,578 $ 5,854,208 Net income per Unit of limited partnership interest $ 4.64 $ 143.68 $ 60.72 See accompanying notes to financial statements.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. STATEMENTS OF PARTNERS' CAPITAL For the years ended October 31, 1999, 1998 and 1997
Limited General Partners Partners Total Partners' capital (deficiency) at November 1, 1996 $45,165,637 $(4,228,169) $40,937,468 Net income 5,633,960 220,248 5,854,208 Distributions (13,417,293) (356,380) (13,773,673) Partners' capital (deficiency) at October 31, 1997 37,382,304 (4,364,301) 33,018,003 Net income 13,330,415 50,163 13,380,578 Distributions (38,784,823) (126,285) (38,911,108) Partners' capital (deficiency) at October 31, 1998 11,927,896 (4,440,423) 7,487,473 Net income 430,789 47,866 478,655 Partners' capital (deficiency) at October 31, 1999 $12,358,685 $(4,392,557)$ 7,966,128 See accompanying notes to financial statements.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. STATEMENTS OF CASH FLOWS For the years ended October 31, 1999, 1998 and 1997
1999 1998 1997 Cash flows from operating activities: Net income $ 478,655 $13,380,578 $ 5,854,208 Adjustments to reconcile net income to net cash provided by operating activities: Gains on sales of real estate - (12,878,953) (1,470,551) Depreciation and amortization 216,168 234,547 1,336,212 Equity in earnings of joint venture - - - (2,483,485) Increases in other assets (104,424) (27,004) (505,989) Decreases in accounts payable and other liabilities (85,288) (169,665) (2,124) Net cash provided by operating activities 505,111 539,503 2,728,271 Cash flows from investing activities: Additions to real estate (223,750) (639,228) (146,509) Proceeds from sales of real estate - 34,110,840 4,538,453 Distributions from joint venture - - 10,912,889 Investments in joint venture - - - (5,559) Net cash (used in) provided by investing activities (223,750) 33,471,612 15,299,274 Cash flows from financing activities: Cash distributions - (38,911,108) (13,773,673) Decrease in deferred distributions - - (1,233,837) Net cash used in financing activities - (38,911,108) (15,007,510) Increase (decrease) in cash and cash equivalents 281,361 (4,899,993) 3,020,035 Cash and cash equivalents at beginning of year 1,074,634 5,974,627 2,954,592 Cash and cash equivalents at end of year $ 1,355,995$ 1,074,634 $ 5,974,627 Supplemental disclosure of non-cash investing activities: Reclassification of real estate held for sale: Decrease in real estate at cost Land $ $ $ - - 3,144,90 0 Building and improvements - - 25,116,7 82 Accumulated depreciation - - (12,500, 443) Increase in real estate held for $ $ $ sale - - - 15,761,2 39 See accompanying notes to financial statements.
DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. Notes to Financial Statements 1. The Partnership Dean Witter Realty Income Partnership I, L.P. (the "Partnership") is a limited partnership organized under the laws of the State of Delaware in 1983. The Partnership is managed by Dean Witter Realty Income Properties I Inc. (the "Managing General Partner"). The Partnership's fiscal year ends on October 31. In 1984, the Partnership issued 92,780 units of limited partnership interest (the "Units") for $92,780,000. No additional Units will be sold. The proceeds of the offering were used to make equity investments in income-producing office, industrial and retail properties which were not encumbered by debt when acquired. The Partnership expects to sell its remaining real estate investment in fiscal 2000. Pursuant to the Partnership Agreement, the sale of the Partnership's last such investment will cause the dissolution of the Partnership. Thereafter, the Partnership will wind up its affairs, make a final cash distribution, and terminate. 2. Summary of Significant Accounting Policies The Partnership's records are maintained on the accrual basis of accounting for financial reporting and tax purposes. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Partnership's 25% interest in the Century Square property was accounted for on the equity method until the sale of the property in fiscal 1997. Cash and cash equivalents consist of cash and highly liquid investments with maturities, when purchased, of three months or less. DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. Notes to Financial Statements The carrying value of real estate includes the purchase price paid by the Partnership and acquisition fees and expenses. Costs of improvements to the properties are capitalized, and repairs are expensed. Depreciation is recorded on the straight- line method. The Partnership stops recording depreciation on a property when it is reclassified as real estate held for sale. At least annually, and more often if circumstances dictate, the Partnership evaluates the recoverability of the net carrying value of its real estate and any related assets. As part of this evaluation, the Partnership assesses, among other things, whether there has been a significant decrease in the market value of any of its properties. If events or circumstances indicate that the net carrying value of a property may not be recoverable, the expected future net cash flows from the property are estimated for a period of approximately five years (or a shorter period if the Partnership expects that the property may be disposed of sooner), along with estimated sales proceeds at the end of the period. If the total of these future undiscounted cash flows were less than the carrying amount of the property, the property would be written down to its fair value as determined (in some cases with the assistance of outside real estate consultants) based on discounted cash flows, and a loss on impairment recognized by a charge to earnings. Because the determination of fair value is based upon projections of future economic events such as property occupancy rates, rental rates, operating cost inflation and market capitalization rates which are inherently subjective, the amounts ultimately realized at disposition may differ materially from the net carrying value as of October 31, 1999. The cash flows used to evaluate the recoverability of the properties and to determine fair value are based on good faith estimates and assumptions developed by the Managing General Partner. Unanticipated events and circumstances may occur and some assumptions may not materialize; therefore, actual results may vary from the estimates and the variances may be material. The Partnership may provide additional write-downs which could be material in subsequent years if real estate markets or local economic conditions change. DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. Notes to Financial Statements Deferred leasing commissions are amortized over the applicable lease terms. Rental income is accrued on a straight- line basis over the terms of the leases. Accruals in excess of amounts payable by tenants pursuant to their leases (resulting from rent concessions or rents which periodically increase over the term of a lease) are recorded as receivables and included in other assets. Net income per Unit amounts are calculated by dividing net income allocated to Limited Partners, in accordance with the Partnership Agreement, by the weighted average number of Units outstanding. No provision for income taxes has been made in the financial statements, since the liability for such taxes is that of the partners rather than the Partnership. For income tax purposes, Partnership results are reported for the calendar year. The accounting policies used for tax reporting purposes differ from those used for financial reporting as follows: (a) depreciation is calculated using accelerated methods, (b) rental income is recognized based on the payment terms in the applicable leases, and (c) writedowns for impairment of real estate are not deductible. In addition, offering costs are treated differently for tax and financial reporting purposes. The tax basis of the Partnership's assets and liabilities is approximately $6.8 million higher than the amounts reported for financial statement purposes. The implementation in 1999 of Statements of Financial Accounting Standards Statement No. 130, "Reporting Comprehensive Income" and Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information", effective for the Partnership's 1999 year-end financial statements, did not have any impact on the Partnership's financial statements. DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. Notes to Financial Statements 3. Partnership Agreement The Partnership Agreement provides that distributable cash, as defined, will be paid 90% to the Limited Partners and 10% to the General Partners. Sale proceeds will be distributed, to the extent available, first, to each Limited Partner, until there has been a return of the Limited Partner's capital contribution plus cumulative distributions of distributable cash and sale proceeds in an amount sufficient to provide a 9% cumulative annual return on the Limited Partner's adjusted capital contribution. Thereafter, any remaining sale proceeds will be distributed 85% to the Limited Partners and 15% to the General Partners after the Managing General Partner receives a brokerage fee, if earned, of up to 3% of the selling price of any equity investment. Taxable income generally is allocated in the same proportions as distributions of distributable cash or sale proceeds (except that the General Partners must be allocated at least 1% of taxable income from sales). In the event there is no distributable cash or sale proceeds, taxable income will be allocated 90% to the Limited Partners and 10% to the General Partners. Any tax loss will be allocated 90% to the Limited Partners and 10% to the General Partners. No distributions were paid to the Limited Partners during the year ended October 31, 1999. Distributions paid to the Limited Partners during the year ended October 31, 1998 included a return of capital, determined as cash distributed per Unit in excess of accumulated earnings per Unit not previously distributed, of $351.10 per Unit. All distributions paid to Limited Partners during the year ended October 31, 1997 were a return of capital. DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. Notes to Financial Statements 4. Real Estate Investments The location, years of acquisition and net carrying value of the Partnership's sole property are as follows: Net Carrying Value Year of at October 31_______ Acquisition 1999 1998 North Lake Plaza, Altamonte Springs, FL 1984, 1986 $6,695,332 $6,677,093 The North Lake Plaza property is located in the city of Altamonte Springs, FL. Due to changes in the city's zoning code, the property has become "non-conforming". Although it can still be occupied and used, the Managing General Partner believes that the property can not currently be sold at a price which reflects its full value. The Partnership is currently working on an arrangement with the city, whereby the city would offer the North Lake Plaza property and an adjacent property owned by the city for sale as part of a redevelopment plan, which would allow higher density development than currently exists. Under the plan, the city would have sole authority to market the North Lake Plaza property for sale, but the Partnership would be able to refuse to sell North Lake Plaza if the sale price is not acceptable to it. The Managing General Partner has hired a real estate appraiser to determine the market value which reflects North Lake Plaza's highest and best use. The Managing General Partner will use this valuation to determine its minimum acceptance price. The Managing General Partner believes that the minimum acceptance price will be greater than the property's carrying value. However, there can be no assurance that an acceptable price will be realized and the property sold through the above-described plan. DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. Notes to Financial Statements 5. Sales of Real Estate
________________($000)________________ Date of Negotiated Net Proceeds Property Sale Sale Price from the Sale Gain on Sale Fiscal 1998 Sales: Carmel Park I & II 12/8/97 $17,675 $17,159 $ 6,234 Westwood 10 12/23/97 9,400 8,906 3,097 Harborgate 7/10/98 _8,500 8,046 3,548 $35,575 $34,111 $12,879 Fiscal 1997 Sale: Arlington Business Center 10/10/97 $ 5,200 $ 4,538 $ 1,471 All of the properties were sold to unaffiliated buyers. The net proceeds from the sale are net of closing costs. As of October 31, 1999, all of the net sales proceeds were distributed except for approximately $1,000,000 from the sale of the Harborgate property, which was added to the Partnership's cash reserves. In accordance with the Partnership Agreement, all of the distributed net sales proceeds were paid 100% to the Limited Partners, and all gains from property sales were allocated 100% to the Limited Partners. 6. Investment in Joint Venture Century Square, Pasadena, California In 1985, the Partnership purchased a 25% general partnership interest in the partnership (the "Joint Venture") which owned the property, an office building. An affiliate of the Partnership, Dean Witter Realty Income Partnership II, L.P., purchased the remaining 75% general partnership interest. Cash flow and profits and losses were allocated to the Partnership and the affiliate according to their interests in the Joint Venture.
[CAPTION] DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. Notes to Financial Statements On April 10, 1997, the Joint Venture sold the property to an unaffiliated party for approximately $41.5 million ($40.8 million, net of closing costs). The Partnership's share of the net sales proceeds was approximately $10.2 million, which was paid 100% to the Limited Partners. The Partnership's share of the gain on sale was approximately $2.2 million, which was included in equity in earnings of joint venture and allocated 100% to the Limited Partners in accordance with the Partnership Agreement. 7. Leases Minimum future rental income under noncancellable operating leases at the North Lake Plaza property as of October 31, 1999 is as follows: Year ending October 31: 2000 $ 850,558 2001 799,276 2002 648,732 2003 267,405 2004 20,125 Total $2,586,096 The Partnership has determined that all the property's leases are operating leases. The lease terms range from three to eight years, and generally provide for fixed minimum rents with rental escalation and/or expense reimbursement clauses. 8. Related Party Transactions An affiliate of the Managing General Partner provided property management services for North Lake Plaza in 1999; the affiliate managed three and five properties in 1998 and 1997, respectively. The Partnership paid the affiliate management fees of approximately $43,000, $58,000 and $191,000 for the years ended October 31, 1999, 1998 and 1997, respectively. These amounts are included in property operating expenses. DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. Notes to Consolidated Financial Statements Another affiliate of the Managing General Partner performs administrative functions and processes certain investor transactions and prepares tax information on behalf of the Partnership. In 1999, 1998, and 1997 the affiliate was reimbursed approximately $46,000, $159,000, and $240,000, respectively (included in general and administrative expenses) for these services. In November 1996, the Partnership paid the remaining $1,233,837 of deferred distributions to the General Partners. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The Partnership is a limited partnership which has no directors or officers. The directors and executive officers of the Managing General Partner are as follows: Position with the Name Managing General Partner William B. Smith Chairman of the Board of Directors E. Davisson Hardman, Jr. President and Director Ronald T. Carman Secretary and Director Lewis A. Raibley, III Director All of the directors have been elected to serve until the next annual meeting of the shareholder of the Managing General Partner or until their successors are elected and qualify. Each of the executive officers has been elected to serve until his successor is elected and qualifies. William B. Smith, age 56, has been a Managing Director of Morgan Stanley Dean Witter & Co.("MWD") and Co-Head of Morgan Stanley Realty Incorporated since the merger of Morgan Stanley and Dean Witter, Discover & Co. in 1997. Prior to the merger, Mr. Smith was an Executive Vice President of Dean Witter Reynolds, Inc. and Director of its Investment Banking Department since January 1987. Mr. Smith joined Dean Witter in 1982 as Co-Director of Dean Witter Realty Inc. E. Davisson Hardman, Jr., age 50, has been a Managing Director of Morgan Stanley Asia, Ltd. since 1997, and a Managing Director of Dean Witter Realty Inc., which he joined in 1982. DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P Ronald T. Carman, age 48, is a Director and the Secretary of Dean Witter Realty, Inc. He has been an Assistant Secretary of MWD and a Managing Director of Morgan Stanley & Co. Inc. since July 1998. Previously, he was a Senior Vice President and Associate General Counsel of Dean Witter Reynolds Inc., which he joined in 1984. Lewis A. Raibley, III, age 38, is a Senior Vice President and Controller in the Individual Asset Management Group of MWD. From July 1997 to May 1998, Mr. Raibley was Senior Vice President and Director in the Internal Reporting Department of MWD; from 1992 to 1997, he served as Senior Vice President and Director in the Financial Reporting and Policy Division of MWD. He has been with MWD and its affiliates since 1986. There is no family relationship among any of the foregoing persons. ITEM 11. EXECUTIVE COMPENSATION The General Partners are entitled to receive cash distributions, when and as cash distributions are made to the Limited Partners, and a share of taxable income or tax loss. Descriptions of such distributions and allocations are in Item 5 above. The General Partners received cash distributions of $126,285 and $356,380 for fiscal years 1998 and 1997, respectively. There were no cash distributions paid to the General Partner in fiscal year 1999. The General Partners and their affiliates were paid certain fees and reimbursed for certain expenses. Information concerning such fees and reimbursements is contained in Note 8 to the Financial Statements in Item 8 above. The directors and officers of the Partnership's Managing General Partner received no remuneration from the Partnership. DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. (a) No person is known to the Partnership to be the beneficial owner of more than five percent of the Units. (b) The directors and executive officers of the Managing General Partner own the following Units as of January 1, 2000: (1) (2) (3) Amount and Title of Name of Nature of Class Beneficial Owner Beneficial Ownership Limited All directors and executive * Partnership officers of the Managing General Interest Partner, as a group. *Own, by virtue of their ownership of Limited Partnership interests in the Associate General Partner, less than 1% of the Units of the Partnership. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS As a result of their being partners of a limited partnership which is the limited partner of the Associate General Partner, certain current and former officers and directors of the Managing General Partner also own indirect general partnership interests in the Partnership. The Partnership Agreement of the Partnership provides that cash distributions and allocations of income and loss to the General Partners be distributed or allocated 50% to the Managing General Partner and 50% to the Associate General Partner. The General Partners' share of cash distributions and income or loss is described in Item 5 above. All of the outstanding shares of common stock of the Managing General Partner are owned by Realty, a Delaware corporation which is a wholly-owned subsidiary of Morgan Stanley Dean Witter & Co. The general partner of the Associate General Partner is Dean Witter DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. Realty Income Associates I Inc., which is a whollyowned subsidiary of the Managing General Partner. The limited partner of theAssociate General Partner is LSA 84 L.P., a Delaware limited partnership. Realty and certain current and former officers and directors of Realty are partners of LSA 84 L.P. Additional information with respect to the directors and executive officers and compensation of the Managing General Partner and affiliates is contained in Items 10 and 11 above. The General Partners and their affiliates were paid certain fees and reimbursed for certain expenses. Information concerning such fees and reimbursements is contained in Note 8 to the Financial Statements in Item 8 above. The Partnership believes that the payment of fees and the reimbursement of expenses to the General Partners and their affiliates are on terms as favorable as would be obtained from unrelated third parties. DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this Annual Report: 1. Financial Statements (see Index to Financial Statements filed as part of Item 8 of this Annual Report). 2. Financial Statement Schedule (see Index to Financial Statements filed as part of Item 8 of this Annual Report). 3. Exhibits (a) Amended and Restated Agreement of Limited Partnership dated as of August 15, 1983 set forth in Exhibit A to the Prospectus included in Registration Statement Number 286041 is incorporated herein by reference. (b) Certificate of Limited Partnership included in Registration Statement Number 286041 is incorporated herein by reference. (4)(a) Amended and Restated Agreement of Limited Partnership dated as of August 15, 1983 set forth in Exhibit A to the Prospectus included in Registration Statement Number 286041 is incorporated herein by reference. (b) Certificate of Limited Partnership included in Registration Statement Number 286041 is incorporated herein by reference. 10)(a)Purchase and Sale Agreements for properties purchased were filed as Exhibits to Form 8-K on April 26, 1984, October 17, 1984, October 26, 1984, October 31, 1984, December 20, 1984, July 15, 1985 and October 29, 1985 and are incorporated herein by reference. (b) "Purchase Agreement" dated as of May 31, 1996 for sale of the 1718 Connecticut Avenue property was filed as an Exhibit to Form 8-K on June 24, 1996 and is incorporated herein by reference. (c) "Purchase and Sale Agreement" dated as of February 28, 1997 for sale of the Century Square property was filed as an Exhibit to Form 8-K on April 10, 1997 and is incorporated herein by reference. (d)"Purchase and Sale Agreement" dated as of September 8, 1997 or sale of the Arlington Business Center property was filed as an Exhibit to Form 8-K on October 10, 1997 and is incorporated herein by reference. (e)"Purchase and Sale Agreement" dated as of November 10,1997 for sale of the Carmel Park property and the related "First Amendment to Purchase and Sale Agreement" dated as of December 2, 1997 were filed as Exhibits to Form 8-K on December 8, 1997 and are incorporated herein by reference. (f)"Purchase and Sale Agreement" dated as of October 30,1997 for sale of the Westwood 10 property was filed as an Exhibit to Form 8-K on December 23, 1997 and is incorporated herein by reference. (g)"Purchase and Sale Agreement" dated as of May 29, 1998 for sale of the Harborgate property was filed as an Exhibit to Form 8-K on July 10, 1998 and is incorporated herein by reference. (27) Financial Data Schedule. (b) No Forms 8-K were filed by the Partnership during the last quarter of the period covered by this report. SCHEDULE III DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. Real Estate and Accumulated Depreciation October 31, 1999 Initial Cost to Partnership (A)
Cost Capitalized Building and Subsequent Description Land Improvements Total Acquisition Shopping Center Altamonte Springs, FL $ 2,300,000 $7,626,517 $9,926,517 $1,217,377 Gross Amount at which Carried at End of Period (B) Losses on Impairment of Buildings & Description Real Estate Land Improvements Total Shopping Center Altamonte Springs, FL $(1,377,000) $2,312,300 $7,454,594 $9,766,894 Life on which Depreciation in Latest Income Accumulated Date of Date Statements is Description Depreciation Construction Acquired Computed Shopping Center Altamonte Springs, FL $3,071,562 1981-1985 October 1984 5-40 years Notes: (A) The initial cost includes the purchase price paid by the Partnership and acquisition fees and expenses. No carrying costs have been capitalized subsequent to acquisition. There is no difference between cost for financial reporting purposes and federal income tax purposes. SCHEDULE III (Cont'd) (B) Reconciliation of real estate owned at October 31: 1999 1998 1997 Balance at beginning of period $9,543,144 $17,679,197 $ 53,050,614 Improvements 223,750 639,228 146,509 Sale of real estate - (8,775,281) (7,256,244) Real estate held for sale - - (28,261,682) Balance at end of period $9,766,894 $9,543,144 $17,679,197 (C) Reconciliation of accumulated depreciation: Balance at beginning of period $2,866,051 $ 7,054,850 $22,598,452 Depreciation expense 205,511 207,369 1,220,659 Sale of real estate - (4,396,168) (4,263,818) Real estate held for sale - - (12,500,443) Balance end of period $3,071,562 $ 2,866,051 $ 7,054,850
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. DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. By: Dean Witter Realty Income Properties I Inc. Managing General Partner By: __________________ Date: January 26, 2000 E. Davisson Hardman, Jr. President By: ___________________ Date: January 26, 2000 Charles M. Charrow Controller (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. DEAN WITTER REALTY INCOME PROPERTIES I INC. Managing General Partner _________________________________________ Date: January 26, 2000 William B. Smith Chairman of the Board of Directors _________________________________________ Date: January 26, 2000 E. Davisson Hardman, Jr. Director _________________________________________ Date: January 26, 2000 Lewis A. Raibley, III Director ___________________ Date: January 26, 2000 Ronald T. Carman Director DEAN WITTER REALTY INCOME PARTNERSHIP I, L.P. Year Ended Octob er 31, 1999 Exhib it Index Exhibit No. 27 Financial Data Schedule EX-27 2
5 Registrant is a limited partnership which invests in real estate, and real estate joint ventures. In accordance with industry practice, its balance sheet is unclassified. For full information, refer to the accompanying audited financial statements. 12-MOS OCT-31-1999 OCT-31-1999 1,355,995 0 75,928 0 0 0 0 0 8,174,590 0 0 0 0 0 7,966,128 8,174,590 0 1,131,337 0 0 652,682 0 0 478,655 0 478,655 0 0 0 478,655 4.64 0 In addition to cash and receivables, total assets include net investments in real estate of $6,695,332 and net deferred leasing commissions of $47,335. Represents partners' capital. Liabilities include accounts payable and other liabilities of $208,462. Total revenue includes rent of $1,060,291 and interest and other revenue of $71,046. Represents net income per Unit of limited partnership interest.
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