-----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, Sd2veku4QDyXHcJoUy9g2jBt/BJBLdxrMhnUEXQCq+2iDpTUrhc8rF0vQm9/sd3K J5t1Unp9f2TF+q1c4NEnFg== 0000752743-96-000019.txt : 19961227 0000752743-96-000019.hdr.sgml : 19961227 ACCESSION NUMBER: 0000752743-96-000019 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961226 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE T ROWE REALTY INCOME FUND I CENTRAL INDEX KEY: 0000752743 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 521363144 STATE OF INCORPORATION: MD FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14308 FILM NUMBER: 96686143 BUSINESS ADDRESS: STREET 1: 100 E PRATT ST STREET 2: C/O T ROWE PRICE ASSOCIATES INC CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 8006385660 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 10-K 1 EX-13 2 THE ANNUAL REPORT TO LIMITED PARTNERS FOR THE YEAR ENDED SEPTEMBER 30, 1996. ANNUAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996 FELLOW PARTNERS: Now that we have initiated the liquidation phase of your real estate portfolio, the amount of your distributions and the estimated value of a Fund unit will be influenced more by sales than by operations. As a result, we thought it appropriate to begin this report with your fourth quarter and fiscal 1996 distributions from the Fund and the estimated unit value. As we move forward in the process of liquidating the Fund's properties, our primary focus will shift from the production of income to the strategic positioning of the properties to maximize potential sales proceeds. Thus, while we will continue to try to keep lease rates as high as possible, we may place additional emphasis on longer-term leases with creditworthy, stable tenants who are valued by prospective purchasers because of their lower risk. It may take somewhat longer to obtain such tenants, but we believe this strategy will help us obtain higher sales prices. Cash Distributions For the fourth quarter ended September 30, 1996, the per-unit distribution from fiscal 1996 operations was $7.00, bringing the total for the year to $21.25. In addition, the remainder of the proceeds withheld from the sale of DuPont in 1990 are being paid to you. The $14.55 per unit from DuPont is in addition to the $17.79 you received in May from the Spring Creek sale. As indicated in the Statements of Operations on page 6, the cash distributed from both operations and sales proceeds for 1996 was higher than for the prior two years. In 1990, the Fund began paying a fixed quarterly distribution from operations for the first three quarters of each year in order to provide limited partners with a more predictable income stream and the Fund with sufficient reserves to cover projected capital needs. This planned rate was evaluated periodically to determine if a change were warranted, and any adjustment was made in the fourth quarter. As you know, the quarterly rate during the first nine months of fiscal 1996 was $4.75 per unit. Because the projected cash balances required to operate the portfolio going forward are lower and because of improved 1996 operating results, we increased the fourth quarter rate to $7.00. In fiscal 1997, we will determine cash distributions from operations each quarter based on: (1) net cash flows for the quarter; (2) money needed to operate the properties and pay Fund expenses; (3) anticipated capital needed to repair and maintain the properties and occupancy-related tenant improvements; and (4) property dispositions. This will result in variable quarterly distributions going forward. Unit Valuation As you know, at the end of each fiscal year we employ a third-party appraiser to review and assess the analysis and assumptions used to prepare an estimated current unit value. These valuations are not necessarily representative of the value of your units when the Fund ultimately liquidates its holdings. Nor is there any assurance that you could sell your units today at a price equal to the current estimated value. At September 30, 1996, the unit value of the Fund was $420. After adjusting for our November distribution, the value per unit was $398, an increase of 4.7% over our comparable valuation last year. Results of Operations For the 12 months ended September 30, 1996, the Fund's net income declined only 8% from the prior year, excluding the effects of property writedowns. Impairments recorded for The Business Park, Airport Perimeter, and Newport Center, plus a valuation allowance at Van Buren, net of a recovery in Spring Creek's value recorded prior to its disposition, totaled $3,115,000. This net charge was offset to a limited extent by lower depreciation associated with properties held for sale. Excluding the effect of these adjustments, the Fund had net income of $512,000 for 1996 versus net income of $555,000 for 1995. After the declines in property values, the Fund reported a net loss of $2,603,000 in 1996 compared with net income of $8,000 in 1995. At the property operating level, the higher average leased status at The Business Park as well as increased rental rates at Royal Biltmore and Newport Center had a positive effect on revenues. This more than offset the effect on rental income of a decline in the average leased status at Montgomery and of the absence of revenues from Spring Creek since its sale in April 1996. While the leased status at Airport Perimeter declined by nine percentage points over the course of the year, its average leased status (shown in the table below) and contribution to income from operations was up slightly. Based on recent communications with the Hartsfield International Airport Acquisition Office, it appears that the Atlanta Airport will be expanded and that the Fund will be forced, through condemnation proceedings, to sell this property within the next 12 to 24 months. Because of the uncertainty surrounding the condemnation, we do not believe it is in your best interests to put the property on the market. While leases on 31% of the space expire in fiscal 1997, leasing activity in the submarket is positive, and Airport Perimeter is receiving its share of interest. Since we do not anticipate any additional value impairments on this property next year, there is a good chance that Airport Perimeter will make an improved contribution to portfolio results in fiscal 1997. The impact of Montgomery's poor revenue performance was exacerbated by an increase in bad debt expense plus associated legal fees and depreciation resulting from the write-off of tenant improvements, primarily for those tenants who were credit problems and vacated prior to their lease expirations. We discussed our "full-floor" leasing strategy and the increasing interest in the property in last quarter's report. Our concept was to pursue leases with large users with sound credit in support of the disposition strategy. During the most recent three-month period, there was no activity for 22,000 square feet, which is the full-floor area, but we have been in contact with two potential tenants who are each interested in approximately 11,000 square feet. This would still fill our goal of large users, and we are continuing to talk with these prospects to determine their level of interest and their financial strength. At Springdale, the average leased status remained at 100% throughout both 1995 and 1996, and this industrial property's contribution to income from operations was again positive. After September 30, however, one tenant left, and the property is currently 92% leased. Based on the healthy market environment in Southern California, LaSalle expects to re-lease the space in the near future. Leasing activity at Newport Center was brisk throughout the year, as leases covering 50% of the total space were negotiated. At the end of September, 93% of the space was leased, and LaSalle is optimistic about prospects for this year because occupancy in the submarket has tightened and rental rates have firmed. Results at the two remaining properties in the portfolio - Royal Biltmore and Van Buren - were favorably affected because their depreciation expenses declined by $126,000 and $159,000, respectively. A property that is being held for sale is no longer depreciated under applicable accounting standards. Disposition Update Three offers on Royal Biltmore were received during the first week of October, and each is currently under review. We have a signed letter of intent on Van Buren and are negotiating a purchase and sale agreement, which we hope to sign by December 31. However, the closing of the sale will depend on the timing of registering three drywells on the site with the state. Van Buren is located in an area of Phoenix with broad environmental implications, but the situation does not seem to concern the prospective buyer. We have retained an environmental attorney and consultant to assist in resolving the issue and will report on the results early in 1997. Outlook Over the past 12 months, occupancy and rental rates in most of the regions where your properties are located stabilized or improved. In LaSalle's opinion, this trend should continue into next year. During the current fiscal year, we will continue to poise the portfolio to take advantage of the more favorable operating environment. In addition, we expect to begin actively marketing several other properties in the coming year. Sincerely, James S. Riepe Chairman November 8, 1996 Real Estate Investments (Dollars in thousands) ______________________________________________________________________________ Leased Average Leased Contribution to Status Status Net Income _______ ________________ __________________ Gross Years Ended Years Ended Property Leasable September September 30, September 30, Name Area(Sq. Ft.) 30, 1996 1995 1996 1995 1996 ________ _________ _________ ________ ________ ________ _______ Airport Perimeter 120,986 71% 74% 73% $ (250) $(1,031) Montgomery 116,348 68 76 71 86 (376) Springdale 144,000 100 100 100 345 332 The Business Park 157,153 97 88 96 (68) (1,120) Newport Center 62,411 93 94 90 182 (745) ________ ____ ____ ____ _____ _______ 600,898 86 86 87 295 (2,940) Held for Sale Royal Biltmore 71,443 96 98 98 155 343 Van Buren 173,878 92 91 92 87 36 ________ ____ ____ ____ _____ _______ 846,219 88 88 89 537 (2,561) Properties Sold - - - - (152) 411 Fund Expenses Less Interest Income - - - - (377) (453) ________ ____ ____ ____ _____ _______ Total 846,219 88% 88% 89% $ 8 $(2,603) REAL ESTATE HOLDINGS September 30, 1996 (In thousands) Current Property Date Accumulated Carrying Name Type and Location Acquired Cost Depreciation Amount _________ ______________________ _________ ________ ____________ _________ Airport Perimeter Industrial 12/85 $ 2,210 - $ 2,210 College Park, Georgia Montgomery Office 12/85 16,955 (6,964) 9,991 Gaithersburg, Maryland Springdale Industrial 6/86 7,352 (2,555) 4,797 Santa Fe Springs, California The Business Park Office/Service 8/86 6,660 - 6,660 Gwinnett Co., Georgia Newport Center Office/Service 5/87 3,170 - 3,170 Deerfield Beach, Florida ________ ________ ________ $36,347 $(9,519) 26,828 ________ ________ ________ ________ ________ ________ Held for Sale Royal Biltmore Office 1/86 4,966 Phoenix, Arizona Van Buren Industrial 7/86 3,999 ________ Phoenix, Arizona $ 35,793 ________ ________ BALANCE SHEETS (In thousands) September 30, September 30, 1996 1995 ___________ ____________ Assets Real Estate Property Investments Land. . . . . . . . . . . . . . . . . . $ 6,759 $ 11,014 Buildings and Improvements. . . . . . . 29,588 54,237 ________ ________ 36,347 65,251 Less: Accumulated Depreciation and Amortization. . . . . . . . . . . (9,519) (24,092) ________ ________ 26,828 41,159 Held for Sale . . . . . . . . . . . . . 8,965 1,226 ________ ________ 35,793 42,385 Cash and Cash Equivalents. . . . . . . . 2,290 2,832 Accounts Receivable (less allowances of $175 and $85) . . . 154 292 Other Assets . . . . . . . . . . . . . . 492 624 ________ ________ $ 38,729 $ 46,133 ________ ________ ________ ________ Liabilities and Partners' Capital Security Deposits and Prepaid Rents . . . . . . . . . . . . . $ 418 $ 364 Accrued Real Estate Taxes. . . . . . . . 231 202 Accounts Payable and Other Accrued Expenses. . . . . . . . . 266 281 ________ ________ Total Liabilities. . . . . . . . . . . . 915 847 Partners' Capital. . . . . . . . . . . . 37,814 45,286 ________ ________ $ 38,729 $ 46,133 ________ ________ ________ ________ The accompanying notes are an integral part of the financial statements. STATEMENTS OF OPERATIONS (In thousands except per-unit amounts) Years Ended September 30, 1996 1995 1994 ________ ________ ________ Revenues Rental Income. . . . . . . . . . . . . . . $ 6,067 $ 5,927 $ 5,874 Interest Income. . . . . . . . . . . . . . 104 116 119 _______ _______ _______ 6,171 6,043 5,993 _______ _______ _______ Expenses Property Operating Expenses. . . . . . . . 1,878 1,681 1,933 Real Estate Taxes. . . . . . . . . . . . . 660 632 592 Depreciation and Amortization. . . . . . . 2,562 2,681 2,779 Decline (Recovery) of Property Values . . . . . . . . . . . . . 3,115 547 (2) Partnership Management Expenses. . . . . . 559 494 526 _______ _______ _______ 8,774 6,035 5,828 _______ _______ _______ Net Income (Loss). . . . . . . . . . . . . $ (2,603) $ 8 $ 165 _______ _______ _______ _______ _______ _______ Activity per Limited Partnership Unit Net Income (Loss). . . . . . . . . . . . . $ (25.85) $ 0.08 $ 1.64 _______ _______ _______ _______ _______ _______ Cash Distributions Declared from Operations. . . . . . . . . . . . . $ 21.25 $ 21.00 $ 16.00 from Sales Proceeds. . . . . . . . . . . 32.34 9.00 34.00 _______ _______ _______ Total Distributions Declared . . . . . . . $ 53.59 $ 30.00 $ 50.00 _______ _______ _______ _______ _______ _______ Units Outstanding. . . . . . . . . . . . . 90,622 90,622 90,622 _______ _______ _______ _______ _______ _______ The accompanying notes are an integral part of the financial statements. STATEMENTS OF PARTNERS' CAPITAL (In thousands) General Limited Partner Partners Total ________ ________ ________ Balance, September 30, 1993. . . . $(3,313) $54,857 $51,544 Net Income . . . . . . . . 16 149 165 Cash Distributions . . . . (286) (4,440) (4,726) _______ _______ _______ Balance, September 30, 1994. . . . (3,583) 50,566 46,983 Net Income . . . . . . . . 1 7 8 Cash Distributions . . . . (165) (1,540) (1,705) _______ _______ _______ Balance, September 30, 1995. . . . (3,747) 49,033 45,286 Net Loss . . . . . . . . . (260) (2,343) (2,603) Cash Distributions . . . . (335) (4,534) (4,869) _______ _______ _______ Balance, September 30, 1996. . . . $(4,342) $42,156 $37,814 _______ _______ _______ _______ _______ _______ The accompanying notes are an integral part of the financial statements. STATEMENTS OF CASH FLOWS (In thousands) Years Ended September 30, 1996 1995 1994 ________ ________ ________ Cash Flows from Operating Activities Net Income (Loss). . . . . . . . . . . . . $ (2,603) $ 8 $ 165 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities Depreciation and Amortization. . . . . . 2,562 2,681 2,779 Decline (Recovery) of Property Values. . . . . . . . . . . 3,115 547 (2) Other Changes in Assets and Liabilities . . . . . . . . . . . . 171 (210) (373) _______ _______ _______ Net Cash Provided by Operating Activities . . . . . . . . . . 3,245 3,026 2,569 _______ _______ _______ Cash Flows from Investing Activities Proceeds from Property Disposition . . . . 1,679 - 3,379 Investments in Real Estate . . . . . . . . (597) (1,092) (1,048) _______ _______ _______ Net Cash Provided by (Used in) Investing Activities. . . . . . . . . . . 1,082 (1,092) 2,331 _______ _______ _______ Cash Flows Used in Financing Activities Cash Distributions . . . . . . . . . . . . (4,869) (1,705) (4,726) _______ _______ _______ Cash and Cash Equivalents Net Increase (Decrease) during Year. . . . (542) 229 174 At Beginning of Year . . . . . . . . . . . 2,832 2,603 2,429 _______ _______ _______ At End of Year . . . . . . . . . . . . . . $ 2,290 $ 2,832 $ 2,603 _______ _______ _______ _______ _______ _______ The accompanying notes are an integral part of the financial statements. NOTES TO FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION T. Rowe Price Realty Income Fund I, A No-Load Limited Partnership (the "Partnership"), was formed on August 31, 1984, under the Maryland Revised Uniform Limited Partnership Act for the purpose of acquiring, operating, and disposing of existing income-producing commercial and industrial real estate properties. T. Rowe Price Realty Income Fund I Management, Inc., is the sole General Partner. A total of 90,622 limited partnership units were issued at $1,000 per unit and remain outstanding as of September 30, 1996. In accordance with provisions of the partnership agreement, income from operations is allocated and related cash distributions are generally paid to the General and Limited Partners at the rates of 10% and 90%, respectively. Allocations to the General Partner are, in part, in lieu of separate management fees. Sale or refinancing proceeds are in general allocated, first 4% to the General Partner, next to the Limited Partners in an amount equal to their Adjusted Capital Contributions (as defined), next to the Limited Partners to provide specific returns on their Adjusted Capital Contributions, with any remaining proceeds allocated 85% to the Limited Partners and 15% to the General Partner. Gains on property sales are generally allocated in the same ratio as the distribution of sale proceeds. Cash distributions, if any, are made quarterly based upon cash available for distribution, as defined in the partnership agreement. Cash available for distribution will fluctuate as changes in cash flows and adequacy of cash balances warrant. The partnership agreement includes provisions limiting the maximum contribution the General Partner can be required to fund upon the dissolution and termination of the Partnership if, at that time, the General Partner's capital account has a negative balance. The maximum contribution is approximately $913,000. If after making such a contribution, the General Partner's capital account still has a negative balance, a reallocation of income equal to the remaining negative balance will be made to the General Partner from the Limited Partners. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Partnership's financial statements are prepared in accordance with generally accepted accounting principles which requires the use of estimates and assumptions by the General Partner. Depreciation is calculated on the straight-line method over the estimated useful lives of buildings and improvements, which range from five to 40 years. Lease commissions and tenant improvements are capitalized and amortized over the life of the lease using the straight-line method. Cash equivalents consist of all short-term, highly liquid investments including money market mutual funds. The cost of such investments approximates fair value. The Partnership uses the allowance method of accounting for doubtful accounts. Provisions for uncollectible tenant receivables in the amounts of $186,000, $20,000, and $96,000 were recorded in 1996, 1995 and 1994, respectively. Bad debt expense is included in Property Operating Expenses. The Partnership reviews its real estate property investments for impairment whenever events or changes in circumstances indicate that the property carrying amounts may not be recoverable. Such a review may result in the Partnership recording a provision for impairment of the carrying value of its real estate property investments whenever the estimated future cash flows from a property's operations and sale are less than the property's net carrying value. The General Partner believes that the estimates and assumptions used in evaluating the carrying value of the Partnership's properties are appropriate; however, changes in market conditions and circumstances could occur in the near term which would cause these estimates to change. Rental income is recognized on a straight-line basis over the term of each lease. Rental income accrued, but not yet billed, is included in Other Assets and aggregates $276,000 and $435,000 at September 30, 1996 and 1995, respectively. Under provisions of the Internal Revenue Code and applicable state taxation codes, partnerships are generally not subject to income taxes; therefore, no provision has been made for such taxes in the accompanying financial statements. NOTE 3 - TRANSACTIONS WITH RELATED PARTIES AND OTHER As discussed in Note 1, the General Partner receives 10% of distributable cash from operations and a portion of the proceeds from property dispositions as compensation for the services rendered in managing the affairs of the Partnership. The General Partner earned $214,000, $211,000, and $161,000 from operations in fiscal 1996, 1995, and 1994, respectively. In addition, the General Partner earned $122,000, $34,000, and $128,000 in fiscal 1996, 1995, and 1994 from property dispositions. In accordance with the partnership agreement, certain operating expenses are reimbursable to the General Partner. The General Partner's reimbursement of such expenses totaled $162,000, $123,000, and $134,000 for communications and administrative services performed on behalf of the Partnership during fiscal 1996, 1995, and 1994, respectively. An affiliate of the General Partner earned a normal and customary fee of $4,000, $9,000, and $11,000 from the money market mutual funds in which the Partnership made its interim cash investments during fiscal 1996, 1995, and 1994, respectively. LaSalle Advisors Limited Partnership ("LaSalle") is the Partnership's advisor and is compensated for its advisory services directly by the General Partner. LaSalle is reimbursed by the Partnership for certain operating expenses pursuant to its contract with the Partnership to provide real estate advisory, accounting, and other related services to the Partnership. LaSalle's reimbursement for such expenses during each of the last three years totaled $150,000. An affiliate of LaSalle earned $227,000, $205,000, and $200,000 in fiscal 1996, 1995, and 1994, respectively, for property management fees and leasing commissions on tenant renewals and extensions for several of the Partnership's properties. NOTE 4 - PROPERTY DISPOSITIONS On January 31, 1994, the Partnership sold Corporate Square and received net proceeds of $3,379,000. The net book value of this property at the time of disposition was also $3,379,000, after accumulated depreciation and previously recorded property valuation allowances. Therefore, no gain or loss was recognized on the property sale. On April 30, 1996, the Partnership sold Spring Creek and received net proceeds of $1,679,000. The net book value of this property at the time of disposition was also $1,679,000, after accumulated depreciation expense and previously recorded property valuation allowances. Therefore, no gain or loss was recognized on the property sale. NOTE 5 - PROPERTY VALUATIONS On October 1, 1995, the Partnership adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which changed the Partnership's method of accounting for its real estate property investments when circumstances indicate that the carrying amount of a property may not be recoverable. Measurement of an impairment loss on an operating property is now based on the estimated fair value of the property, which becomes the property's new cost basis, rather than the sum of expected future cash flows. Properties held for sale continue to be reflected at the lower of historical cost or estimated fair value less anticipated selling costs. In addition, properties held for sale are no longer depreciated. Based upon a review of current market conditions, estimated holding period, and future performance expectations of each Partnership property, the General Partner has determined that the net carrying value of certain Partnership properties held for operations may not be fully recoverable. Charges recognized for such impairments aggregated $3,189,000 in fiscal 1996, $354,000 in fiscal 1995, and $365,000 in fiscal 1994. The General Partner has approved a plan of disposition for and is actively marketing the Royal Biltmore and Van Buren properties, the carrying amounts of which are classified as held for sale in the accompanying September 30, 1996 balance sheet. Results of operations for Royal Biltmore, Van Buren and properties sold are summarized below for each of the fiscal years ended September 30: 1996 1995 1994 ________ ________ ________ Recovery (Decline) of Property Values. . . . . . . . . . $ 74,000 $(193,000) $ 368,000 Other Components of Operating Income . . . . . . . . . 716,000 284,000 236,000 ________ ________ ________ Results of Operations. . . . . . . . $ 790,000 $ 91,000 $ 604,000 ________ ________ ________ ________ ________ ________ NOTE 6 - LEASES Future minimum rentals to be received by the Partnership under noncancelable operating leases in effect as of September 30, 1996, are: Fiscal Year (in thousands) ___________ 1997 $ 4,794 1998 3,394 1999 1,946 2000 1,293 2001 650 Thereafter 818 _______ Total $ 12,895 _______ _______ NOTE 7 - RECONCILIATION OF FINANCIAL STATEMENT TO TAXABLE INCOME As described in Note 2, the Partnership has not provided for an income tax liability; however, certain timing differences exist between amounts reported for financial reporting and federal income tax purposes. These differences are summarized below for years ended September 30: 1996 1995 1994 ________ ________ ________ (in thousands) Book net income (loss) . . . . . . . $ (2,603) $ 8 $ 165 Allowances for property valuations. . . . . . . . 3,115 547 (2) Tax basis loss on property sale. . . . . . . . . . . (1,296) - (3,133) Other. . . . . . . . . . . . . . . . 152 58 32 ________ ________ ________ Taxable income (loss). . . . . . . . $ (632) $ 613 $ (2,938) ________ ________ ________ ________ ________ ________ NOTE 8 - SUBSEQUENT EVENT The Partnership declared a quarterly cash distribution of $21.55 per unit to Limited Partners of the Partnership as of the close of business on September 30, 1996. The distribution totals $2,078,000 and represents $7.00 per unit of cash available for distribution from operations and $14.55 per unit from previously retained proceeds from the sale of Dupont Business Park. The Limited Partners will receive $1,953,000, and the General Partner will receive $125,000. INDEPENDENT AUDITORS' REPORT To the Partners T. Rowe Price Realty Income Fund I, A No-Load Limited Partnership: We have audited the accompanying balance sheets of T. Rowe Price Realty Income Fund I, A No-Load Limited Partnership, as of September 30, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for each of the years in the three-year period ended September 30, 1996. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements 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 from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of T. Rowe Price Realty Income Fund I, A No-Load Limited Partnership as of September 30, 1996 and 1995, and the results of its operations and its cash flows for each of the years in the three-year period ended September 30, 1996, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Chicago, Illinois October 23, 1996 EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the unaudited condensed financial statements of T. Rowe Price Realty Income Fund I, A No-Load Limited Partnership included in the accompanying Form 10-K Report for the year ended September 30, 1996 and is qualified in its entirety by reference to such financial statements. 0000752743 T. ROWE PRICE REALTY INCOME FUND I, A NO-LOAD LIMITED PARTNERSHIP YEAR SEP-30-1996 OCT-01-1996 SEP-30-1996 2,290,000 0 329,000 175,000 0 0 45,312,000 9,519,000 38,729,000 0 0 0 0 0 37,814,000 38,729,000 0 6,171,000 0 8,774,000 0 0 0 (2,603,000) 0 (2,603,000) 0 0 0 (2,603,000) 0 0 Not contained in registrant's unclassified balance sheet. Partners' capital. Not applicable. Net income per limited partnership unit is ($25.85). EX-99.C 4 SCHEDULE III SCHEDULE III T. Rowe Price Realty Income Fund I, A No-Load Limited Partnership Consolidated Real Estate and Accumulated Depreciation September 30, 1996 Dollars in Thousands (000's) Description Type Encumbrance Properties Held for Real Estate Investment Airport Perimeter (1) Industrial $0 Business Center College Park, Georgia Montgomery Executive Center Office 0 Gaithersburg, Maryland Springdale Commerce Center Industrial 0 Santa Fe Springs, California The Business Park (1) Office 0 Gwinnett County, Georgia Newport Center Business Park (1) Office 0 Deerfield Beach, Florida _________ Totals $0 Properties Held for Sale Royal Biltmore (1) Office 0 Phoenix, Arizona Van Buren Industrial Center Industrial 0 Phoenix, Arizona __________ Portfolio Totals $0 Initial Cost to Partnership Costs Capitalized Buildings and Subsequent to Description Land Improvements Acquisition (1,4) Properties Held for Real Estate Investment Airport Perimeter (1) $ 640 $ 4,824 ( $ 3,254) Business Center College Park, Georgia Montgomery Executive Center 2,300 12,573 2,082 Gaithersburg, Maryland Springdale Commerce Center 1,640 5,325 387 Santa Fe Springs, California The Business Park (1) 1,625 11,825 (6,790) Gwinnett County, Georgia Newport Center Business Park (1) 1,377 3,543 (1,750) Deerfield Beach, Florida _______ _______ ________ Totals 7,582 38,090 (9,325) Properties Held for Sale Royal Biltmore (1) 3,565 8,052 (2,506) Phoenix, Arizona Van Buren Industrial Center 1,260 4,077 892 Phoenix, Arizona _______ _______ ________ Portfolio Totals $12,407 $50,219 _______ _______ ($10,939) _________ Gross Amounts at which Carried at Close of Period Buildings and Description Land Improvements Total (2) Properties Held for Real Estate Investment Airport Perimeter (1) $ 492 $ 1,718 $ 2,210 Business Center College Park, Georgia Montgomery Executive Center 2,300 14,655 16,955 Gaithersburg, Maryland Springdale Commerce Center 1,640 5,712 7,352 Santa Fe Springs, California The Business Park (1) 1,200 5,460 6,660 Gwinnett County, Georgia Newport Center Business Park (1) 1,127 2,043 3,170 Deerfield Beach, Florida _______ _______ ________ Totals 6,759 29,588 36,347 Properties Held for Sale Royal Biltmore (1) 2,356 6,755 9,111 Phoenix, Arizona Van Buren Industrial Center 1,260 4,969 6,229 Phoenix, Arizona _______ _______ _______ Portfolio Totals $10,375 $41,312 $51,687 ________ Accumulated Date of Date Description Depreciation (3,4) Construction Acquired Properties Held for Real Estate Investment Airport Perimeter (1) $ 0 1982 12/85 Business Center College Park, Georgia Montgomery Executive Center 6,964 1982 12/85 Gaithersburg, Maryland Springdale Commerce Center 2,555 1985 06/86 Santa Fe Springs, California The Business Park (1) 0 198508/86 Gwinnett County, Georgia Newport Center Business Park (1) 0 1984 05/87 Deerfield Beach, Florida _______ Totals 9,519 Properties Held for Sale Royal Biltmore (1) 4,147 1982 01/86 Phoenix, Arizona Van Buren Industrial Center 2,003 1982 07/86 Phoenix, Arizona _______ Portfolio Totals $15,669 _______ Life on which Depreciation in Latest Statement of Operations is Description Computed Properties Held for Real Estate Investment Airport Perimeter (1) 5 - 40 years Business Center College Park, Georgia Montgomery Executive Center 5 - 40 years Gaithersburg, Maryland Springdale Commerce Center 5 - 40 years Santa Fe Springs, California The Business Park (1) 5 - 40 years Gwinnett County, Georgia Newport Center Business Park (1) 5 - 40 year Deerfield Beach, Florida Totals Properties Held for Sale Royal Biltmore (1) (5) Phoenix, Arizona Van Buren Industrial Center (5) Phoenix, Arizona Notes: (1) The Partnership recorded provisions for value impairment totaling $3,189, $354, and $365 in 1996, 1995, and 1994, respectively. See note 5 of Notes to Financial Statements. (2) Reconciliation of real estate owned for Real Estate Property Investments: 1996 1995 1994 Balance at beginning of period $65,251 $65,412 $73,807 Additions during period 597 1,092 1,008 Corporate Square disposition - - (9,038) Reductions during period (4) (26,329) (899) - Provision for value impairment (3,172) (354) (365) ________ ________ ________ Balance at end of period $36,347 $65,251 $65,412 _______ (3) Reconciliation of accumulated depreciation for Real Estate Property Investments: 1996 1995 1994 Balance at beginning of period $24,092 $22,422 $22,203 Depreciation and amortization expense 2,562 2,569 2,667 Corporate Square disposition - - (2,448) Reductions during period (4) (17,135) (899) - ________ ________ ________ Balance at end of period $9,519 $24,092 $22,422 _______ (4)Reductions during 1996 reflect the write-off of tenant improvements and leasing commissions relating to tenants who have vacated the property, and the write-off of accumulated depreciation to the cost basis for properties with value impairments recorded in fiscal year 1996. Additionally, reductions to real estate owned reflect the change in classification of Royal Biltmore and Van Buren to Properties Held for Sale. (5) The Partnership has approved a plan of disposition for and is actively marketing the Royal Biltmore and Van Buren properties. Van Buren is being carried at its estimated fair value less selling costs. The Partnership recorded a downward adjustment of $229 to establish Van Buren's valuation allowance at September 30, 1996. As a result, the property's net book value was $3,999 at September 30, 1996. No adjustments were recorded to the carrying value of Royal Biltmore in fiscal year 1996. Royal Biltmore's net book value at September 30, 1996 was $4,966. These properties held for sale are no longer being depreciated. See note 5 of Notes to Financial Statements. (6) The Partnership sold Spring Creek on April 30, 1996 and received net sale proceeds of $1,679. The net book value of the property at the time was also $1,679. (7) Aggregate cost of real estate owned at September 30, 1996 for Federal income tax purposes was $69,762. EX-99.D 5 INDEPENDENT AUDITORS' REPORT The Partners T. Rowe Price Realty Income Fund I, A No-Load Limited Partnership: We have audited the accompanying balance sheets of T. Rowe Price Realty Income Fund I, A No-Load Limited Partnership as of September 30, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for each of the years in the three-year period ended September 30, 1996. In connection with our audits of the aforementioned financial statements, we also have audited the information included in the related financial statement schedule as of and for each of the years in the three-year period ended September 30, 1996. These financial statements and financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and 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 and financial statement schedule are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of T. Rowe Price Realty Income Fund I, A No-Load Limited Partnership as of September 30, 1996 and 1995, and the results of its operations and its cash flows for each of the years in the three-year period ended September 30, 1995, in conformity with generally accepted accounting principles. Also, in our opinion, the information included in the related financial statement schedule as of and for each of the years in the three-year period ended September 30, 1996 when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. Chicago, Illinois October 23, 1996 -----END PRIVACY-ENHANCED MESSAGE-----