-----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, WfB9YZPgfxigIlvFVq3yOndDfxOceyOjydZSzIOZmN9zhspX7fPDyP2Ja69ea/dB 5gXQaQn4cOYKLxLWF/UnmA== 0000752743-97-000022.txt : 19970814 0000752743-97-000022.hdr.sgml : 19970814 ACCESSION NUMBER: 0000752743-97-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14308 FILM NUMBER: 97658804 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-Q 1 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 Commission File Number 0-14308 Exact Name of Registrant as Specified in Its Charter: T. ROWE PRICE REALTY INCOME FUND I, A NO-LOAD LIMITED PARTNERSHIP State or Other Jurisdiction of Incorporation or Organization: Maryland I.R.S. Employer Identification No.: 52-1363144 Address of Principal Executive Offices: 100 East Pratt Street, Baltimore, Maryland 21202 Registrant's Telephone Number, Including Area Code: 1-800-638-5660 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 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements The financial statements of T. Rowe Price Realty Income Fund I, A No-Load Limited Partnership ("Partnership") are set forth in Exhibit 19 hereto, which statements are incorporated by reference herein. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources and Results of Operations The Partnership's liquidity and capital resources and its results of operations are discussed in the Chairman's letter to partners on pages 1-2 of Exhibit 19 hereto, the Partnership's Quarterly Report to Security-Holders, which letter is hereby incorporated by reference herein. PART II - OTHER INFORMATION Item 5. Other Information. In May 1997, the Partnership distributed the proceeds of the sale of Royal Biltmore to the Partners. The amount of the distribution was $6,035,000 to the Limited Partners and $251,000 to the General Partner. In July 1997, the Partnership distributed the proceeds of the sale of Van Buren to the Partners. The amount of the distribution was $3,836,000 to the Limited Partners and $160,000 to the General Partner. The total distribution to the Limited Partners equals $108.92 per Unit. On July 28, 1997, the Partnership began mailing to the Limited Partners a consent solicitation statement seeking their consent to a sale of substantially all of the Partnership's assets to Glenborough Realty Trust Incorporated and to complete the liquidation of the Partnership. The solicitation will expire on September 11, 1997, unless extended. 3 Item 6. Exhibits and Reports on Form 8-K: (a) Exhibits. 19 - Quarterly Report Furnished to Security-Holders,including Financial Statements of the Partnership. 27 - Financial Data Schedule (b) Reports on Form 8-K None. All other items are omitted because they are not applicable or the answers are none. 4 SIGNATURES 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. T. ROWE PRICE REALTY INCOME FUND I, A NO-LOAD LIMITED PARTNERSHIP By: T. Rowe Price Realty Income Fund I Management, Inc., General Partner Date: August 14, 1997 By: /s/ Lucy B. Robins Lucy B. Robins Vice President Date: August 14, 1997 By: /s/ Mark S. Finn Mark S. Finn Chief Accounting Officer for the Partnership The Quarterly Report to Limited Partners for the Quarter ended June 30, 1997 should be inserted here. EX-13 2 QUARTERLY REPORT T. ROWE PRICE REALTY INCOME FUND I AMERICA'S SALES-COMMISSION-FREE REAL ESTATE LIMITED PARTNERSHIP QUARTERLY REPORT FOR THE PERIOD ENDED JUNE 30, 1997 For information on your Realty Income Fund account, call: 1-800-962-8300 toll free 410-625-6500 Baltimore area For information on your mutual fund account, call: 1-800-225-5132 toll free 410-625-6500 Baltimore area T. Rowe Price Real Estate Group 100 East Pratt Street Baltimore, Maryland 21202 Invest With Confidence(registered trademark) T. Rowe Price FELLOW PARTNERS: By now you should have received materials requesting your consent to sell T. Rowe Price Realty Income Fund I's interests in its remaining five properties to Glenborough Realty Trust Incorporated for $27,408,000, and also to complete the liquidation of the Fund. A majority of the Fund's outstanding units must be voted in favor of the proposal for the transaction to proceed. As mentioned previously, the Fund has held the properties for the period anticipated when the Fund was organized, and current market conditions appear favorable for a sale. The Fund expects to benefit substantially by selling all of the properties in bulk instead of individually. In particular, the costs of selling each property individually-including sales commissions and other closing-related costs-could be materially higher. Our experience indicates that there could be more negative price adjustments as a result of each buyer's due diligence activities. Also considered was the advantage of limited partners receiving their sales proceeds immediately rather than having them spread over the next several years. The price offered by Glenborough should allow the Fund to liquidate its investment for an amount that exceeds the most recent adjusted estimated aggregate value. Under the heading "THE TRANSACTION-Recommendations of the General Partner" in the consent materials you received, we discussed in detail the advantages and disadvantages of the Glenborough transaction. After carefully weighing the facts and circumstances associated with this transaction against alternative courses of action, we concluded that the bulk sale to Glenborough and subsequent liquidation of the Fund is an outstanding opportunity to maximize value for investors. Therefore, we recommend that you consent to the proposed transaction by voting now and returning the consent card in the postage-paid envelope, if you have not already done so. Your participation is extremely important, and your response to the solicitation will save your Fund the substantial costs associated with a follow-up mailing. If you have not received your materials, or if you need an additional consent card, please call one of our real estate representatives at 1-800-962-8300. Real Estate Investments (Dollars in Thousands) ______________________________________________________________ Average Contri- Leased Leased bution to Status Status Net Income _________ _______ _______ Nine Nine Gross Months Months Properties Leasable Ended Ended Held for Area June 30, June 30, June 30, Sale (Sq. Ft.) 1997 1996 1997 1996 1997 _______ ________ _____ ___ ___ ___ ___ Airport Perimeter 121,000 81% 72% 76% $ 18 $ 179 Montgomery 116,300 90 72 71 (69) 226 Springdale 144,000 100 100 98 244 276 The Business Park 157,200 97 96 99 168 488 Newport Center 62,400 100 93 99 125 228 ________ ____ ____ ____ _____ ______ 600,900 93 87 89 486 1,397 Properties Sold - - - - 578 1,769 Fund Expenses Less Interest Income - - - - (334) (436) ________ ____ ____ ____ _____ ______ Total 600,900 93% 87% 89% $ 730 $ 2,730 Cash Distributions Pending the completion of the sale to Glenborough, the Fund has suspended cash distributions from operations. Net proceeds from the sale of Royal Biltmore were distributed in May, and net proceeds from the disposition of Van Buren were distributed on July 15. Deducting the combined distributions of $108.92 per unit from the December 1996 estimated unit value of $398 results in $289. Assuming all remaining properties are sold during the next few months, the General Partner will determine the amount it believes sufficient for the payment of Fund liabilities; the balance of the assets will then be promptly distributed. Based on the negotiated sales prices and other information currently available, we expect total future distributions to exceed the figure mentioned above. Results of Operations For the nine months ended June 30, 1997, the Fund's net income was $2,730,000, an increase of $2,000,000 over the same period last year. Of the increase, $1,210,000 was attributable to the gain for financial statement purposes on Royal Biltmore, for which the Fund received proceeds of $6,286,000. The Fund also received proceeds of $3,996,000 from the Van Buren sale. The remaining increase in net income of $790,000 was due primarily to the $925,000 decline in depreciation expense, which was a result of stopping the depreciation of the Fund's remaining properties now Held for Sale. The absence of net income from Spring Creek, which was sold last year, partly offset the reduced expenses. Net income for the third quarter increased $1,947,000 over the third quarter of 1996. Of this amount, $1,210,000 came from the gain on the Royal Biltmore sale, while $487,000 resulted from ceased depreciation. At the property level, the average leased status of Fund properties increased to 89% from 87% in the comparable 1996 nine-month period. During the third quarter, a lease was signed at Montgomery for 16,879 square feet, boosting occupancy 15% at the property. Outlook As the real estate market has been improving in recent years, we have taken advantage of the opportunity to capture higher prices for portfolio properties. We believe it is in the best interests of investors to liquidate the Fund's portfolio while real estate values continue to strengthen, since the Fund is nearing the end of its planned lifespan. In the normal course of events, as the real estate cycle runs its course, rising property prices usually lead to an increased supply of new properties, which could lead to softer prices sometime later. No one can forecast exactly when the real estate market will peak, but we believe it is likely that there will be less capital available to real estate investors in the future and that speculative construction may commence in several markets in which the Fund owns properties. Each of these factors, if they occur, could have a negative impact on the value of our properties. Once again we urge you to read the consent solicitation materials and return the card as quickly as possible so that we can proceed with the orderly liquidation of your investment. Thank you for your cooperation. Sincerely, James S. Riepe Chairman August 7, 1997 CONDENSED BALANCE SHEETS Unaudited (In thousands) June 30, September 30, 1997 1996 ___________ ____________ Assets Real Estate Property Investments Land. . . . . . . . . . . . . . . $ 6,759 Buildings and Improvements . . . . . . . . . 29,588 ________ 36,347 Less: Accumulated Depreciation and Amortization. . . . . . . . . . . (9,519) ________ 26,828 Held for Sale. . . . . . . . . . . . $ 26,872 8,965 ________ ________ 26,872 35,793 Cash and Cash Equivalents . . . . . . . 5,773 2,290 Accounts Receivable (less allowances of $22 and $175). . . . . . . . . . . . . . 57 154 Other Assets. . . . . . . . . . . . . . 78 492 ________ ________ $ 32,780 $ 38,729 ________ ________ ________ ________ Liabilities and Partners' Capital Security Deposits and Prepaid Rents. . . . . . . . . . . . $ 411 $ 418 Accrued Real Estate Taxes . . . . . . . 119 231 Accounts Payable and Other Accrued Expenses . . . . . . . . . . 170 266 ________ ________ Total Liabilities . . . . . . . . . . . 700 915 Partners' Capital . . . . . . . . . . . 32,080 37,814 ________ ________ $ 32,780 $ 38,729 ________ ________ ________ ________ See the accompanying notes to condensed financial statements. CONDENSED STATEMENTS OF OPERATIONS Unaudited (In thousands except per-unit amounts) Three Months Nine Months Ended Ended June 30, June 30, 1997 1996 1997 1996 ____ ____ ____ ____ Revenues Rental Income . . . . . . $ 1,402 $ 1,495 $ 4,369 $ 4,517 Interest Income . . . . . 35 29 76 74 ________ ________ ________ ________ 1,437 1,524 4,445 4,591 ________ ________ ________ ________ Expenses Property Operating Expenses . . . . . . 366 465 1,195 1,322 Real Estate Taxes. . . . . . . . 130 162 397 489 Depreciation and Amortization . . . . - 487 782 1,707 Decline (Recovery) of Property Values . . . . . . . 39 237 39 (66) Partnership Management Expenses . . . . . . 140 148 512 409 ________ ________ ________ ________ 675 1,499 2,925 3,861 ________ ________ ________ ________ Income from Operations before Gain on Real Estate Sold . . . . . . . . 762 25 1,520 730 Gain on Real Estate Sold. . . . . 1,210 - 1,210 - ________ ________ ________ ________ Net Income. . . . . . . . $ 1,972 $ 25 $ 2,730 $ 730 ________ ________ ________ ________ ________ ________ ________ ________ Activity per Limited Partnership Unit Net Income . . . . . . . $ 19.58 $ 0.25 $ 27.11 $ 7.25 ________ ________ ________ ________ ________ ________ ________ ________ Cash Distributions Declared from Sale Proceeds. . . . . $ 108.92 $ 108.92 $ 17.79 from Operations. . . . - $ 4.75 1.00 14.25 ________ ________ ________ ________ Total Distributions Declared . . . . . . $ 108.92 $ 4.75 $ 109.92 $ 32.04 ________ ________ ________ ________ ________ ________ ________ ________ Units Outstanding. . . . . 90,622 90,622 90,622 90,622 ________ ________ ________ ________ ________ ________ ________ ________ See the accompanying notes to condensed financial statements. CONDENSED STATEMENT OF PARTNERS' CAPITAL Unaudited (In thousands) General Limited Partner Partners Total ________ ________ ________ Balance, September 30, 1996 . . . . . . . . . . . . . $ (4,342)$ 42,156 $ 37,814 Net Income. . . . . . . . . . . . . 273 2,457 2,730 Cash Distributions. . . . . . . . . (386) (8,078) (8,464) _______ _______ _______ Balance, June 30, 1997 . . . . . . . . . . . . . $ (4,455)$ 36,535 $ 32,080 _______ _______ _______ _______ _______ _______ See the accompanying notes to condensed financial statements. CONDENSED STATEMENTS OF CASH FLOWS Unaudited (In thousands) Nine Months Ended June 30, 1997 1996 _________ _________ Cash Flows from Operating Activities Net Income. . . . . . . . . . . . . . . . $ 2,730 $ 730 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation and Amortization. . . . . . . . . . . 782 1,707 Decline (Recovery) of Property Values . . . . . . . . . 39 (66) Gain on Real Estate Sold . . . . . . (1,210) - Decrease in Accounts Receivable, Net of Allowances . . . . . . . . . . 64 28 Decrease in Other Assets . . . . . . 145 76 Decrease in Security Deposits and Prepaid Rents. . . . . . . . . (7) (50) Decrease in Accrued Real Estate Taxes. . . . . . . . . . . (112) (6) Decrease in Accounts Payable and Other Accrued Expenses . . . . . . . . . . . (96) (48) ________ ________ Net Cash Provided by Operating Activities . . . . . . . . . . . . . 2,335 2,371 ________ ________ Cash Flows from Investing Activities Proceeds from Property Dispositions . . . . . . . . . . . . 10,282 1,679 Investments in Real Estate. . . . . . . . (670) (455) ________ ________ Net Cash Provided by Investing Activities . . . . . . . . . . . . . 9,612 1,224 ________ ________ Cash Flows Used in Financing Activities Cash Distributions. . . . . . . . . . . . (8,464) (4,391) ________ ________ Cash and Cash Equivalents Net Increase (Decrease) during Period . . . . . . . . . . . . . . . 3,483 (796) At Beginning of Year. . . . . . . . . . . 2,290 2,832 ________ ________ At End of Period. . . . . . . . . . . . . $ 5,773 $ 2,036 ________ ________ ________ ________ See the accompanying notes to condensed financial statements. NOTES TO CONDENSED FINANCIAL STATEMENTS Unaudited The unaudited interim condensed financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal, recurring nature. The unaudited interim financial information contained in the accompanying condensed financial statements should be read in conjunction with the financial statements contained in the fiscal 1996 Annual Report to Partners. NOTE 1 - TRANSACTIONS WITH RELATED PARTIES AND OTHER As compensation for services rendered in managing the affairs of the Partnership, the General Partner receives 10% of cash available for distribution from operations and a portion of the proceeds from property dispositions. The General Partner's share of cash available for distribution from operations totaled $10,000 and from property dispositions totaled $411,000 for the first nine months of fiscal 1997. In accordance with the partnership agreement, certain operating expenses are reimbursable to the General Partner. The General Partner's reimbursement of such expenses totaled $148,000 for communications and administrative services performed on behalf of the Partnership during the first nine months of fiscal 1997. An affiliate of the General Partner earned a normal and customary fee of $2,000 from the money market mutual funds in which the Partnership made its interim cash investments during the first nine months of fiscal 1997. 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 the first nine months of fiscal 1997 totaled $113,000. An affiliate of LaSalle earned $190,000 in the first nine months of fiscal 1997 for property management fees and leasing commissions on tenant renewal and extensions for several of the Partnership's properties. 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 - PROPERTY DISPOSITIONS On April 30, 1997, the Partnership sold Royal Biltmore for net proceeds of $6,286,000. The net book value of the property at the date of sale was $5,076,000 after accumulated depreciation expense and previously recorded permanent impairments. Accordingly, the Partnership recognized a $1,210,000 gain on the sale of this property in the third quarter of fiscal 1997. On June 26, 1997, the Partnership sold Van Buren for net proceeds of $3,996,000. The net book value of the property at the date of sale was also $3,996,000 after accumulated depreciation expense and previously recorded property valuation allowances. Therefore, no gain or loss was recognized on the property sale. NOTE 3 - PROPERTIES HELD FOR SALE On April, 11, 1997, the Partnership entered into a contract with a buyer for the sale of all of its real estate property investments at a price of $27,408,000 before selling expenses. The transaction is subject to the approval of the Limited Partners. If the transaction closes, the Partnership will have sold all of its real estate properties and will begin liquidation. NOTE 4 - SUBSEQUENT EVENT On July 15, 1997, the Partnership distributed the sales proceeds from Van Buren-96% to the Limited Partners of record at June 30, 1997 ($3,836,000) and 4% to the General Partner ($160,000). EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains 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-Q for the period ended June 30, 1997 and is qualified in its entirety by reference to such financial statements. 0000752743 T. ROWE PRICE REALTY INCOME FUND I, A NO-LOAD LIMITED PARTNE 9-MOS SEP-30-1997 OCT-01-1996 JUN-30-1997 5,773,000 0 79,000 22,000 0 0 26,872,000 0 32,780,000 0 0 0 0 0 32,080,000 32,780,000 0 4,445,000 0 2,925,000 0 0 0 2,730,000 0 2,730,000 0 0 0 2,730,000 0 0 Not contained in registrant's unclassified balance sheet. Partners' capital. Not reported at interim. Not applicable. Net income per limited partnership unit is $27.11. -----END PRIVACY-ENHANCED MESSAGE-----