Item 1. Business
The registrant, First Dearborn Income Properties L.P. II (the "Partnership"), is a limited partnership formed in May 1988 under the Revised Uniform Limited Partnership Act of the State of Delaware to invest in income producing commercial and residential real estate consisting principally of existing shopping centers and office buildings, as well as apartment complexes, parking garages and lots and warehouse and industrial buildings. On February 1, 1989, the Partnership commenced an offering of $10,000,000 (subject to increase by an additional $5,000,000) of its limited partnership interests (the "Units") at $500 per Unit, pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933 (File No. 33-23048). A total of 10,000 Units was sold. The holders of 3,345 Units were admitted to the Partnership in 1989, holders of 4,444 Units were admitted to the Partnership in 1990, and holders of 2,211 Units were admitted in 1991. Of the 2,211 Units purchased in 1991, 1,669 Units were purchased by an affiliate of the General Partners pursuant to its Agreement to Purchase Units. The offering terminated on January 31, 1991 (extended from its originally scheduled termination date of January 31, 1990). Since admission to the Partnership, no holder of Units (hereinafter, a "Limited Partner") has made any additional capital contributions. The Limited Partners of the Partnership share in the benefits of ownership of the Partnership's real property investments in proportion to the number of Units held.
Net of offering costs, Limited Partners have contributed a total of $4,058,963 to the Partnership. The Partnership is engaged solely in the business of real estate investment. It is the Partnership's objective to realize cash flow from operations and appreciation in the value of the real estate. The Partnership has entered into three joint venture agreements with partnerships sponsored by affiliates of the General Partners. Pursuant to such agreements, the Partnership has made capital contributions aggregating $3,652,066 through December 31, 1996. The Partnership has acquired, through these ventures, interests in two shopping centers and a mixed use apartment/retail building. No investments have been made since 1991 and no properties have been sold. As of December 31, 1996, the Partnership had made the real property investments set forth in the following table:
Sycamore Mall represents the most significant investment made by the Partnership. A total of $2,275,000 has been invested by the Partnership which represents 62% of the Partnership's real estate investments. Since acquiring the Sycamore Mall investment in 1990, the Partnership has received cash distributions of $1,423,351 from Sycamore Mall Associates. Country Isles represents an investment of $775,000 or 21% of the Partnership's real estate investments. Since acquiring the Country Isles investment in 1991, the Partnership has received distributions of $449,770. Evanston Galleria accounts for $602,066 or 17% of the Partnership's real estate investments. Since acquiring the Evanston Galleria investment in 1989, the Partnership has received distributions of $50,133.
During the past five years, operations at Sycamore Mall and Country Isles Shopping Center have been stable with occupancy in the range of 95%- 99%. However, during 1996, Randall's, a tenant at Sycamore Mall, vacated its leased premises of 19,800 square feet. Occupancy at Sycamore Mall, fell to 86% during the second quarter of 1996, however, Randall's has continued to pay rent through December, 1996 so that there was no adverse financial impact in 1996. Management is currently negotiating with a potential replacement tenant, however there can be no assurance that a new lease will be entered into. If this space is not released, the ability of Sycamore Mall to meet its financial obligations could be effected as a result of decreased revenues. During 1995, the Evanston Galleria experienced a problem with retail tenants. There is currently 13,635 square feet of retail space of which the tenants are in default of their leases for non payment of rent. Occupancy at December 31, 1996 was 84%. Management has taken legal action to collect amounts due under the defaulted leases and it is expected that partial payments will eventually be obtained. However, management does not have an estimate of the amount or timing of any such collection. Re-leasing efforts are in process and negotiations are currently taking place with prospective tenants, but there can be no assurance that new leases will be entered into. If this vacant space is not released, the ability of the Evanston Galleria to meet its financial obligations could be effected as a result of decreased revenues.
Rental rates for the three properties have not risen appreciably over the past five years. The real estate market in general has suffered from overbuilding in the 1980's which has increased the competition for the Partnership's properties. This resulted in a decrease in rental rates from 1990 to 1994. The decrease in market rental rates has not significantly impacted the Partnership's properties since they were primarily occupied under long term leases which did not result in decreased rental income for most of the space. Since 1994, the market rental rates have leveled off and appear to be rising.
The Partnership's real property investments are subject to competition from similar types of properties in the vicinities in which they are located. Approximate occupancy levels for the Partnership's properties are set forth on a quarterly basis in the table set forth in Item 2
Item 2 below to which reference is hereby made. The Partnership has no real property investments located outside the United States.
Only one of the three Partnership's investments is consolidated for financial reporting purposes. Industry segment information is presented below in order to illustrate applicable information about each of the three properties individually and does not relate to financial information presented about the Partnership in Item 6 and Item 8.
The Partnership has no employees and is largely dependent on the General Partners and their affiliates for services. A description of the terms of transactions between the Partnership and affiliates of the General Partners is set forth in Item 11 below to which reference is hereby made.
Evanston Galleria Limited Partnership On October 31, 1989, the Partnership acquired an interest in Evanston Galleria Limited Partnership (the "Galleria Partnership") which owns a 100% beneficial interest in the Evanston Galleria, a mixed-use residential and retail property located in Evanston, Illinois. The property, located on a 0.79 acre site, contains 36,068 square feet of rentable retail space and 55 loft apartments. The Partnership's acquisition of its interest was effected through its acquisition of an 18.30% general partnership interest in the Galleria Partnership from First Dearborn Evanston Associates Limited Partnership ("Evanston Associates"), an affiliate of the General Partners. Evanston Associates originally agreed to purchase a 76.67% interest in the Galleria Partnership by agreeing to contribute an aggregate $2,313,125 to the Galleria Partnership. The Partnership acquired a portion of the 76.67% general partnership interest on the same terms by contributing $552,066 for its 18.30% general partnership interest. The seller retained a 23.33% limited partnership interest.
The Partnership and Evanston Associates, as general partners of the Galleria Partnership, have certain preferences from operating cash flow and distributions from sales or refinancing. Profits are generally allocated in accordance with cash distributions (including preferences) and then in accordance with the respective partner's interest. Losses are allocated first to partners with positive capital account balances and then in accordance with the respective partner's interest.
The limited partners ("Guarantors") of the Galleria Partnership had provided the Partnership and Evanston Associates with a guaranty of minimum rentals on certain retail space, maximum debt service levels and maximum real estate tax expenses in the Galleria Partnership. The property has failed to perform as expected and the Galleria Partnership has called upon the Guarantors to satisfy their obligations under the guaranties. The Guarantors have failed to fulfill their obligations to the Partnership, and the General Partners have taken actions to protect the rights of the Partnership, including receipt of an assignment in favor of the Partnership of the Guarantors' limited partnership interests in the Galleria Partnership of 5.57% and the receipt of security interests in certain other limited partnership interests owned by the Guarantors. Amounts owed pursuant to such guaranties which are secured by the limited partners' partnership interests will be recorded upon receipt.
The property is managed by an affiliate of the General Partners. During 1996, management fees totaling $25,091 werre paid to an affiliate of the General Partners. No management fee was paid in 1995 or 1994.
In connection with the loan modification to the first mortgage on the Evanston Galleria, which closed in February of 1993 and was effective August 1, 1992, the Galleria Partnership received an infusion of additional capital and obtained modifications of the terms of its loans. $202,000 of additional capital was contributed to the Galleria Partnership by Evanston Associates, of which the Partnership's share was $50,000, in exchange for a preferred equity position. The preferred equity holders shall receive an annual preferred return from cash distributions in an amount equal to the lesser of: a) prime rate plus 2%, or b) 10% per annum. For financial reporting purposes, the Partnership has a 23.87% interest in the Galleria Partnership.
Evanston Galleria is located in downtown Evanston, Illinois, a short distance from Northwestern University. Demand for the apartments has been strong over the past five years with occupancy averaging 98%. Apartment rents have been rising approximately 3% per year. The ground floor retail space had been 100% occupied during the past five years, except for several instances where tenants defaulted. This resulted in vacancies and a reduction in rental income. Demand for the ground floor retail space has generally been strong. The lower level retail space, however, has been vacant since 1995. One retail tenant, with a lease for 11,500 square feet, filed a petition for bankruptcy on January 11, 1994. The tenant stopped paying rent and vacated the premises during the third quarter of 1995. During the fourth quarter of 1995, a second tenant representing 2,135 square feet defaulted under the terms of its lease and vacated the space. Management has taken legal action against the defaulted tenants, but currently has no estimate of the amount, if any, or timing of collection of amounts due from these tenants. The decrease in revenues resulting from these vacacies has made it difficult for the property to meet its financial obligations. The property is located in an established downtown area, and there is little vacant land upon which additional retail space or apartments could be developed, in the immediate area. Management is currently negotiating with prospective replacement tenants. However there can be no assurances that these prospective leases will be consummated.
The property is subject to a first mortgage which matured May 1, 1996. Effective May 1, 1996, a modification of the first mortgage was entered into which, among other modifications, extended the maturity of the loan until May 1, 1998. Commencing on May 1, 1996, monthly payments were adjusted to $57,143, which represents interest only payments at an annual rate of 8.25%, based on the outstanding principal balance of the loan as of May 1, 1996. Notwithstanding the pay rate of 8.25%, interest on the loan continues to accrue and compound monthly on the unpaid principal balance at the annual rate of 9.00%. The interest differential, as defined, will be paid only from proceeds resulting from a sale or refinancing of the property or from any remaining funds in the cash flow escrow. The unpaid interest together with the unpaid principal balance of the loan will be due and payable May, 1 1998. All net cash flow from the property, in excess of the payments due for interest, shall be deposited into a cash flow escrow account. If cash flow in any month is insufficient to pay amounts due under the loan, then the amounts may be withdrawn from the cash flow escrow account.
Sycamore Mall Associates On October 26, 1990, the Partnership contributed $2,275,000 to acquire a 53.40% general partnership interest in Sycamore Mall Associates, a general partnership formed to acquire the Sycamore Mall Shopping Center in Iowa City, Iowa. The property, situated on an approximate 21.2 acre site, includes a main building containing 213,206 square feet and an out parcel building containing 27,000 square feet. A 14,000 square foot parcel which contains a 4,590 square foot building is under a ground lease to McDonald's. Sycamore Mall Associates acquired the property on October 26, 1990 for a purchase price of $9,400,000, subject to a purchase money note of $5,140,000 bearing interest at 10% payable interest only until maturity on October 26, 1995. On August 8, 1991, Sycamore Mall Associates obtained a first mortgage in the amount of $5,140,000 which bore interest at a rate of 9.625% payable in monthly installments of principal and interest of $45,355 commencing October 1, 1991 for 60 months until September 30, 1996. The proceeds of this first mortgage were used to repay the original purchase money note. In October 1995, the first mortgage loan was modified. The terms of the modification reduced the interest rate to 8.125%, reduced the monthly payments of principal and interest to $44,375 and extended the maturity to March 1, 2002.
First Dearborn Income Properties L.P., a public limited partnership affiliated with the General Partners of the Partnership, and First Dearborn Sycamore Associates Limited Partnership ("FDSALP"), a privately offered limited partnership also affiliated with the General Partners, are the joint venture partners in Sycamore Mall Associates and contributed a total of $1,075,000 and $910,000 for 25.24% and 21.36% of the general partner interests, respectively. The terms of the Sycamore Mall Associates partnership agreement provide that cash flow, sale or refinancing proceeds and profit and loss will be distributed or allocated in proportion to the partner's ownership interests.
The property is managed by an affiliate of the General Partners and an affiliate of the seller under a five year management agreement that provides for a fee equal to 5% of the effective gross income, of which 1% is paid to an affiliate of the General Partners. During 1996, 1995 and 1994 the property incurred management fees of $96,048, $97,270 and $88,306, respectively.
During 1996, Randall's vacated its leased premises of 19,800 square feet. Occupancy fell to 86%, however, Randall's has continued to pay rent through December, 1996 so that there was no adverse financial impact in 1996. Management is currently negotiating with a potential replacement tenant, however there can be no assurance that a new lease will be entered into. If this space is not released, the ability of Sycamore Mall to meet its financial obligations could be effected. Further, there have been newspaper reports that Sears will be vacating Sycamore Mall and moving to a new mall which has recently begun construction. These reports are unconfirmed and no official word has been received from Sears. The Sears lease at Sycamore Mall expires in 2002. The Sears lease comprises 82,605 square feet which is 34% of the leaseable area of the shopping center. However, the annual rental income received from Sears is approximately $109,000 or approximately 6% of total revenues.
Sycamore Mall is located in Iowa City, Iowa. Construction has begun on a new regional shopping center in the area. This development will create additional competition for Sycamore Mall. As a precautionary measure, Sycamore Mall Associates had reduced distributions to its partners, in 1995 and 1996, in order to maintain its working capital reserves. It is believed that the additional working capital might be necessary to help maintain existing tenants and attract new tenants, due to the increased competition from the new shopping center. However, during the fourth quarter of 1996, Sycamore Mall Associates distributed the extra reserve to its partners. The partners have agreed to maintain these additional reserves and will contribute these amounts back to Sycamore Mall Associates if it is considered appropriate by the partners. The Partnership has no definite plans for improvements to the property at this time. Distributions to the Partners in 1996 were $407,998 as compared to $190,325 in 1995 and $245,974 in 1994.
Country Isles On July 12, 1991 the Partnership acquired from an unaffiliated seller, a 21% interest in Country Isles Associates, an Illinois general partnership owning Country Isles Shopping Center. The Partnership paid $775,000 for its 21% interest in the joint venture. The remaining interest in the joint venture is held by the Seller. The partners of Country Isles Associates are the Partnership and Arvida/JMB Partners. Arvida/JMB Partners, which owns a 79% interest in Country Isles Associates, is the managing general partner. All profits, losses and cash distributions of Country Isles Associates are allocated between its partners in accordance with their percentage interests, described above, except that, in the case of the Partnership, a special preferential distribution of cash is to be made to the Partnership to compensate it for certain rental discounts granted by the Seller in connection with the lease of the property.
The Country Isles Shopping Center, located in Fort Lauderdale, Florida, is an approximately 106,000 square foot retail shopping center containing approximately 71,000 square feet which opened in 1986 and an additional expansion of approximately 35,000 square feet which opened in 1989. The shopping center is 99% occupied as of December 31, 1996. The Country Isles Shopping Center is managed by an affiliate of the Seller.
There is over 4.0 million square feet of competing retail space availale within a 15 minute drive of the Country Isles property. Within 4 miles of the property there are two additional shopping centers which have recently opened, which added an additional 116,000 square feet of retail space to the competitive market. Country Isles is located in a rapidly growing area and management anticipates that the additional competition will not have an adverse impact on the operations of the property.
On April 25, 1996, Country Isles Associates completed the refinancing of Country Isles Plaza in Ft. Lauderdale, Florida. The new mortgage provided funding of $8,100,000, the proceeds of which were used to repay the outstanding balance of $6,807,669 on the previous mortgage, pay the costs of completing the new loan (approximately $174,000), and provide for property tax escrow and working capital. Out of the remaining proceeds, the Partnership received a distribution of $210,650 from Country Isles Associates. The Partnership made a special distribution to the Limited Partners. No significant impact to the property is anticipated as a result of the increased mortgage indebtedness. As a result of the refinancing, the interest rate was reduced from 9.75% to 7.00%, the monthly payments have decreased from $60,141 to $57,250. The mortgage matures on May 1, 2001.
Through March of 1992, Country Isles Shopping Center was managed by Arvida Management, Limited Partnership, a Delaware limited partnership which is affiliated with Arvida/JMB Partners. In March of 1992, JMB Property Management, also an affiliate of Arvida/JMB Partners, became the manager. Both the previous and current Management Agreements provide that the Manager will rent and manage the project for a term of five years, and thereafter for yearly periods, unless otherwise terminated by the parties in accordance with the management agreement. Country Isles Associates shall pay the Manager a management fee in an amount equal to 4% of the monthly operating revenues from the operation of the property. Notwithstanding the foregoing, until such time as the management agent notifies owner of its election to receive the management fee discussed immediately above, Country Isles Associates shall pay the Manager, in lieu of the management fee, an amount equal to 15% of amounts paid by tenants at the project on account of reimbursement of operating expenses, excluding taxes and insurance. During 1996, 1995 and 1994, the property incurred management fees of $68,053, $62,912, and $63,623, respectively.
Item 2. Properties
The Partnership owns through joint venture partnerships the properties referred to in Item 1. The three properties that the Partnership has an interest in are described below:
Sycamore Mall Associates The property is a retail shopping center located in Iowa City, Iowa, and is situated on an approximate 21.2 acre site. It includes a main building containing 213,206 square feet and an out parcel building containing 27,000 square feet. A 14,000 square foot parcel which contains a 4,590 square foot building is under a ground lease. The property is owned fee simple by a partnership of which the Partnership is a partner. It is subject to a first mortgage in the amount of $4,728,865 which bears interest at a rate of 8.125% payable in monthly installments of principal and interest of $44,375 until March 1, 2002, when the balance comes due.
The major tenants are Sears and Von Maur which occupy approximately 34% and 17%, respectively, of the net rentable area. Occupancy at Sycamore Mall has remained in the 94% - 99% range through 1995. During 1996, Randall's vacated its leased premises of 19,800 square feet. Occupancy fell to 86%, however, Randall's has continued to pay rent through December, 1996 so that there was no adverse financial impact in 1996. The Sears lease expires in 2002 and the annual rent is approximately $109,000. The Von Maur lease expires in 2009 and the annual rent is approximately $210,000. Average total rents received per square foot at the property during the last three years are $8.15 in 1996, $8.14 in 1995, and $7.42 in 1994.
There are currently no plans for any significant improvements to the property. However, construction has begun on a new regional shopping center in the area. The location of the new mall will create additional competition for Sycamore Mall. Management is closely monitoring the situation.
The following table illustrates the scheduled lease expirations for Sycamore Mall, over the next ten years:
Management believes that the Sycamore Mall property has adequate insurance coverage.
Country Isles The Country Isles Shopping Center, located in the Weston community of Fort Lauderdale, Florida, is an approximately 106,000 square foot retail shopping center containing approximately 71,000 square feet which opened in 1986 and an additional expansion of approximately 35,000 square feet which opened in 1989. On April 25, 1996, Country Isles Associates completed the refinancing of Country Isles Plaza in Ft. Lauderdale, Florida. The new mortgage provided funding of $8,100,000, the proceeds of which were used to repay the outstanding balance of $6,807,669 on the previous mortgage, pay the costs of completing the new loan (approximately $174,000), and provide for property tax escrow and working capital. Out of the remaining proceeds, the Partnership received a distribution of $210,650 from Country Isles Associates. The Partnership made a special distribution to the Limited Partners. No significant impact to the property is anticipated as a result of the increased mortgage indebtedness. As a result of the refinancing, the interest rate was reduced from 9.75% to 7.00%, the monthly payments have decreased from $60,141 to $57,250. The mortgage matures on May 1, 2001.
The major tenants are Publix Supermarkets, Inc. and Eckerd Drugs which ocupy 37% and 10%, respectively, of the leaseable area. Occupancy at Country Isles has remained in the 94% - 99% range during the last five years. The Publix Supermarkets lease expires in 2006 and the annual rent is approximately $60,000. The Eckerd lease expires in 2006 and the annual rent is approximately $31,500. Average total rent received per square foot at the property during the last three years were $16.36 in 1996, $14.90 in 1995 and $14.47 in 1994.
The following table illustrates the scheduled lease expirations for Country Isles, over the next ten years:
Management believes that the Country Isles property has adequate insurance coverage.
Evanston Galleria Limited Partnership Evanston Galleria is a mixed-use residential and retail property located in Evanston, Illinois. The property, located on a 0.79 acre site, contains 36,068 square feet of rentable retail space and 55 loft apartments containing a total of 45,190 square feet of rentable area. The apartments are leased on a one or two year lease term. The retail space is generaaly leased with 5 to 10 year leases.
The property is owned fee simple by a partnership of which the Partnership is a partner. The property is subject to a first mortgage which matured May 1, 1996. Effective May 1, 1996, a modification of the first mortgage was entered into which, among other modifications, extended the maturity of the loan until May 1, 1998. Commencing on May 1, 1996, monthly payments were adjusted to $57,143, which represents interest only payments at an annual rate of 8.25%, based on the outstanding principal balance of the loan as of May 1, 1996. Notwithstanding the pay rate of 8.25%, interest on the loan continues to accrue and compound monthly on the unpaid principal balance at the annual rate of 9.00%. The interest differential, as defined, will be paid only from proceeds resulting from a sale or refinancing of the property or from any remaining funds in the cash flow escrow. The unpaid interest together with the unpaid principal balance of the loan will be due and payable May, 1 1998. All net cash flow from the property, in excess of the payments due for interest, shall be deposited into a cash flow escrow account. If cash flow in any month is insufficient to pay amounts due under the loan, then the amounts may be withdrawn from the cash flow escrow account.
Evanston Galleria has no single tenant which accounts for more then 10% of the rentable area. Occupancy in the apartments at Evanston Galleria has remained in the 94% - 100% range during the last five years. The retail space has had a problem with tenant defaults, which has reduced overall occupancy to as low as 80% in 1991. As of December 31, 1996, occupancy is 84%. Average total rents received per square foot at the property during the last three years were $21.85 in 1996, $18.21 in 1995 and $17.35 in 1994.
The following table illustrates the scheduled lease expirations relating to the retail space, for Evanston Galleria, over the next ten years:
The residential leases have terms typically expiring in one year. During 1997 residential leases representing $681,468 of annual rent will expire. One retail tenant, with a lease for 11,500 square feet, at Evanston Galleria filed a petition for bankruptcy on January 11, 1994. The tenant stopped paying rent and vacated the premises during the third quarter of 1995. During the fourth quarter of 1995, a second tenant representing 2,135 square feet defaulted under the terms of its lease and vacated the space. During 1996, two additional retail tenats vacated a total of 3,487 square feet. Management has taken legal action action against the defaulted tenants, but currently has no estimate of the amount, if any, or timing of collection of amounts due from these tenants. Management is currently negotiating with prospective replacement tenants.
Management believes that the Evanston Galleria property has adequate insurance coverage.
The following is a list of approximate occupancy levels by quarter for the Partnership's investment properties:
Item 3.
Item 3. Legal Proceedings
The Partnership is not aware of any material pending legal proceedings to which it or its properties are subject.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
As of December 31, 1996, there were 525 Limited Partners holding 10,000 Units. There is no public market for Units and it is not anticipated that a public market for Units will develop. Pursuant to the terms of the Limited Partnership Agreement of the Partnership (the "Partnership Agreement"), there are restrictions on the ability of the Limited Partners to transfer their Units. In all cases, the General Partners must consent to the substitution of a Limited Partner.
Distributions to Limited Partners, through December 31, 1996, have totaled $1,311,795 since the Partnership's formation. This is approximately $131.18 of cash distributions per Unit. Each Unit originally sold for $500 and the offering was closed on January 31, 1991. Reference is made to Item 6
Item 6. Selected Financial Data
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources:
On February 1, 1989, the Partnership commenced a public offering of $10,000,000 of units of Limited Partnership interest (the "Units") (subject to increase by an additional $5,000,000 of Units) pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The Partnership terminated the offering of Units on January 31, 1991, having issued 10,000 Units, resulting in gross proceeds of $5,000,000 and net proceeds to the Partnership (after deducting offering costs and selling discounts related to the purchase of Units by the General Partners and their affiliates) of $4,058,963.
At December 31, 1996, the Partnership had cash and cash equivalents of $592,001 as compared to $353,531 as of December 31, 1995. The increase in cash and cash equivalents results from $882,490 of net cash provided from operating activities of which $13,538 was used for improvements to the Sycamore Mall property, $195,479 was distributed to Venture Partners in Sycamore Mall, $293,045 was distributed to the Limited Partners in the Partnership and $141,958 was used to reduce the principal on mortgage indebtedness at Sycamore Mall. The increase in net cash provided by operations, from $638,030 in 1995 to $882,490 in 1996, is primarily attributable to a special distribution of $210,650 made by Country Isles Associates, to the Partnership. The distribution represented the Partnership's share of excess proceeds generated by the refinancing of Country Isles' mortgage loan in April 1996. Cash flow from operations is dependent on occupancy at the Partnership's properties and upon the payment of rent by the properties' tenants. Cash Flow from operations has been sufficient to meet the Partnerships' obligations in the past, however, past performance is not necessarily indicative of future performance.
As of December 31, 1996, the Partnership has no material commitments for capital expenditures. The Partnership does not anticipate any need for external sources of liquidity.
As the Partnership intends to distribute all "net cash receipts" and "sales proceeds" in accordance with the terms of the Partnership Agreement, and does not intend to reinvest any such proceeds, the Partnership is intended to be self-liquidating in nature. The Partnership's future source of liquidity and distributions is expected to come from cash generated by the Partnership's investment properties and from the sale and refinancing of such properties. To the extent a property does not generate adequate cash flow to meet its working capital requirements, the Partnership may (i) withdraw funds from the working capital reserve it maintains, (ii) fund such shortfall from excess cash generated by other properties owned or (iii) pursue outside financing sources. However, the Partnership may decide not to, or may not be able to, commit additional funds to certain of its investment properties. Nonetheless, it is anticipated that the current and future capital resources of the Partnership will be adequate to fund currently anticipated short and long-term requirements of its investment portfolio taken as a whole.
There are certain risks and uncertainties associated with the Partnership's investments made through joint ventures including the possibility that the Partnership's joint venture partners in an investment might become unable or unwilling to fulfill their financial or other obligations, or that such joint venture partners may have economic or business interests or goals that are inconsistent with those of the Partnership. To date, the Partnership has not experienced any significant detrimental impact from these uncertainties and risks, except at Evanston Galleria as more fully described in Note 2 (b) to the Notes to Consolidated Financial Statements included in Item 8.
Item 8. Financial Statements and Supplementary Data
FIRST DEARBORN INCOME PROPERTIES L.P. II (a limited partnership) and Consolidated Venture
INDEX
Page (s)
Independent Auditors' Report 17
Consolidated Balance Sheets, December 31, 1996 and 1995 18 - 19
Consolidated Statements of Operations, Years ended December 31, 1996, 1995 and 1994 20
Consolidated Statements of Partners' Capital Accounts (Deficits), Years ended December 31, 1996, 1995 and 1994 21
Consolidated Statements of Cash Flows, Years ended December 31, 1996, 1995 and 1994 22
Notes to Consolidated Financial Statements 23 - 29
Schedule
Consolidated Real Estate and Accumulated Depreciation III
Schedules not filed:
All schedules other than those indicated in the index have been omitted as the required information is inapplicable or the information is presented in the financial statements or the related notes.
Independent Auditors' Report
The Partners First Dearborn Income Properties L.P. II
We have audited the consolidated financial statements of First Dearborn Income Properties L.P. II (a limited partnership) and consolidated venture as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule as listed in the accompanying index. These consolidated financial statements and the financial statement schedule are the responsibility of the General Partners of the Partnership. Our responsibility is to express an opinion on these consolidated 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 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 the General Partners of the Partnership, 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of First Dearborn Income Properties L.P. II and consolidated venture as of December 31, 1996 and 1995 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1996, in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP Chicago, Illinois March 7, 1997
FIRST DEARBORN INCOME PROPERTIES L.P. II (a limited partnership) and Consolidated Venture
Notes to Consolidated Financial Statements
December 31, 1996, 1995 and 1994
(1) Organization and Basis of Accounting
The Partnership was formed under the Delaware Revised Uniform Limited Partnership Act by the recording of a Certificate of Limited Partnership as of May 19, 1988. Initial capital contributions were $1,000 by the General Partners and $1,000 by the Initial Limited Partner. The Initial Limited Partner (an affiliate of the Managing General Partner) withdrew as a Limited Partner upon the admission of the first additional Limited Partners on October 16, 1989 when the initial closing of the offering was consummated. The Agreement of Limited Partnership authorized the issuance of up to 20,000 additional Units (subject to increase by an additional 10,000 Units) at $500 per Unit. A total of 7,789 Units was subscribed for and issued between February 1, 1989 and December 31, 1990. An additional 2,211 Units were issued during 1991 of which 1,669 Units were purchased by an affiliate of the General Partners pursuant to its Agreement to Purchase Units. The offering terminated on January 31, 1991 at which time an aggregate 10,000 Units had been sold.
The accompanying consolidated financial statements include the accounts of the Partnership and its consolidated venture - Sycamore Mall Associates. The effect of all transactions between the Partnership and the venture has been eliminated.
The equity method of accounting has been applied in the accompanying consolidated financial statements with respect to the Partnership's interest in Evanston Galleria Limited Partnership and Country Isles Associates.
The Partnership records are maintained on the accrual basis of accounting as adjusted for Federal income tax reporting purposes. The accompanying Consolidated Financial Statements have been prepared from such records after making appropriate adjustments, where applicable, to present the Partnership's accounts in accordance with generally accepted accounting principles (GAAP). Such adjustments are not recorded for the Partnership. The net effect of these is as follows:
FIRST DEARBORN INCOME PROPERTIES L.P. II (a limited partnership) and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
Partnership distributions from unconsolidated ventures are considered cash flow from operating activities to the extent of the Partnership's cumulative share of net operating earnings before depreciation and non-cash items. In addition, the Partnership records amounts held in U.S. Government obligations, commercial paper and certificates of deposit at cost which approximates market. For the purposes of these statements, the Partnership's policy is to consider all such investments, with an original maturity of three months or less ($312,653 and $94,912 at December 31, 1996 and 1995, respectively), as cash equivalents.
Deferred offering costs were charged to the partners' capital accounts upon consummation of the offering. Deferred organization costs were amortized over a 60-month period using the straight-line method. Deferred loan costs are amortized over the terms of the related agreements using the straight-line method. Leasing commissions are amortized over the terms of the related tenant leases using the straight- line method.
Depreciation on the investment properties acquired has been provided over the estimated useful lives of 5 to 30 years using the straight-line method.
No provision for Federal income taxes has been made as any liability for such taxes would be that of the partners rather than the Partnership.
The preparation of financial statements in conformity with generally accepted accounting principles requires the General Partner 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.
Under the Partnership's current impairment policy, provisions for value impairment are recorded with respect to investment properties pursuant to the basic principles of Statement of Financial Accounting Standards No. 121 ("SFAS 121") "Accounting for the Impairment of Long- Lived Assets and for Long Lived Assets to be Disposed Of". The Partnership's adoption of SFAS 121 on January 1, 1996, had no effect on the consolidated financial statements.
(2) Venture Agreements
(a) General
The Partnership has entered into three joint venture agreements with partnerships sponsored by affiliates of the General Partners. Pursuant to such agreements, the Partnership has made capital contributions aggregating $3,652,066 through December 31, 1996. The Partnership has acquired, through these ventures, interests in a mixed use retail/residential property and two shopping centers.
(b) Evanston Galleria Limited Partnership
On October 31, 1989, the Partnership acquired an interest in Evanston Galleria Limited Partnership (the "Galleria Partnership") which owns a 100% beneficial interest in the Evanston Galleria, a mixed-use residential and retail property located in Evanston, Illinois. The property, located on a .79 acre site, contains 36,068 square feet of rentable retail space and 55 loft apartments. The Partnership's acquisition of its interest was effected through its acquisition of an 18.30% general partnership interest in the Galleria Partnership from First Dearborn Evanston Associates Limited Partnership ("Evanston Associates"), an affiliate of the General Partners. Evanston Associates originally agreed to purchase a 76.67% interest in the Galleria Partnership by agreeing to contribute an aggregate $2,313,125 to the Galleria Partnership. The Partnership acquired a portion of the 76.67% general partnership interest on the same terms by contributing $552,066 for its 18.30% general partnership interest. The seller retained a 23.33% limited partnership interest.
FIRST DEARBORN INCOME PROPERTIES L.P. II (a limited partnership) and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
The Partnership and Evanston Associates, as general partners of the Galleria Partnership, have certain preferences from operating cash flow and distributions from sales or refinancing. Profits are generally allocated in accordance with cash distributions (including preferences) and then in accordance with the respective partner's interest. Losses are allocated first to partners with positive capital account balances and then in accordance with the respective partner's interest.
The limited partners ("Guarantors") of the Galleria Partnership had provided the Partnership and Evanston Associates with a guaranty of minimum rentals on certain retail space, maximum debt service levels and maximum real estate tax expenses in the Galleria Partnership. The property has failed to perform as expected and the Galleria Partnership has called upon the Guarantors to satisfy their obligations under the guaranties. The Guarantors have failed to fulfill their obligations to the Partnership, and the General Partners have taken actions to protect the rights of the Partnership, including receipt of an assignment in favor of the Partnership of the Guarantors' limited partnership interests in the Galleria Partnership of 5.57% and the receipt of security interests in certain other limited partnership interests owned by the Guarantors. Amounts owned pursuant to such guaranties which are secured by the limited partners' partnership interests will be recorded upon receipt.
The property is managed by an affiliate of the General Partners. During 1996, management fees totaling $25,091 werre paid to an affiliate of the General Partners. No management fee was paid in 1995 or 1994.
The property is subject to a first mortgage which matured May 1, 1996. Effective May 1, 1996, a modification of the first mortgage was entered into which, among other modifications, extended the maturity of the loan until May 1, 1998. Commencing on May 1, 1996, monthly payments were adjusted to $57,143, which represents interest only payments at an annual rate of 8.25%, based on the outstanding principal balance of the loan as of May 1, 1996. Notwithstanding the pay rate of 8.25%, interest on the loan continues to accrue and compound monthly on the unpaid principal balance at the annual rate of 9.00%. The interest differential, as defined, will be paid only from proceeds resulting from a sale or refinancing of the property or from any remaining funds in the cash flow escrow. The unpaid interest together with the unpaid principal balance of the loan will be due and payable May, 1 1998. All net cash flow from the property, in excess of the payments due for interest, shall be deposited into a cash flow escrow account. If cash flow in any month is insufficient to pay amounts due under the loan, then the amounts may be withdrawn from the cash flow escrow account.
(c) Sycamore Mall Associates
On October 26, 1990, the Partnership contributed $2,275,000 to acquire a 53.40% general partnership interest in Sycamore Mall Associates, a general partnership formed to acquire the Sycamore Mall Shopping Center in Iowa City, Iowa. The property, situated on an approximate 21.2 acre site, includes a main building containing 213,206 square feet and an out parcel building containing 27,000 square feet. A 14,000 square foot parcel which contains a 4,590 square foot building is under a ground lease. Sycamore Mall Associates acquired the property on October 26, 1990 for a purchase price of $9,400,000, subject to a purchase money note of $5,140,000 bearing interest at 10% payable interest only until maturity on October 26, 1995. On August 8, 1991, Sycamore Mall Associates obtained a first mortgage in the amount of $5,140,000 which bore interest at a rate of 9.625% payable in monthly installments of principal and interest of $45,355 commencing October 1, 1991 for 60 months until September 30, 1996. The proceeds of this first mortgage were used to repay the original purchase money note. In October 1995, the first mortgage loan was modified. The terms of the modification reduced the interest rate to 8.125%, reduced the monthly payments of principal and interest to $44,375 and extended the maturity to March 1, 2002.
FIRST DEARBORN INCOME PROPERTIES L.P. II (a limited partnership) and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
First Dearborn Income Properties L.P., a public limited partnership affiliated with the General Partners of the Partnership, and First Dearborn Sycamore Associates Limited Partnership ("FDSALP"), a privately offered limited partnership also affiliated with the General Partners, are the joint venture partners in Sycamore Mall Associates and contributed a total of $1,075,000 and $910,000 for 25.24% and 21.36% of the general partner interests, respectively.
The terms of the Sycamore Mall Associates partnership agreement provide that cash flow, sale or refinancing proceeds and profit and loss will be distributed or allocated in proportion to the partner's ownership interests.
The property is managed by an affiliate of the General Partners and an affiliate of the seller under a five year management agreement that provides for a fee equal to 5% of the effective gross income, of which 1% is paid to an affiliate of the General Partners. During 1996, 1995 and 1994 the property incurred management fees of $96,048, $97,270 and $88,306, respectively.
(d) Country Isles
The Country Isles Shopping Center, located in the Weston community of Fort Lauderdale, Florida, is an approximately 106,000 square foot retail shopping center containing approximately 71,000 square feet which opened in 1986 and an additional expansion of approximately 35,000 square feet which opened in 1989. The shopping center is 99% occupied as of December 31, 1995. The Country Isles Shopping Center is managed by an affiliate of the seller.
On April 25, 1996, Country Isles Associates completed the refinancing of Country Isles Plaza in Ft. Lauderdale, Florida. The new mortgage provided funding of $8,100,000, the proceeds of which were used to repay the outstanding balance of $6,807,669 on the previous mortgage, pay the costs of completing the new loan (approximately $174,000), and provide for property tax escrow and working capital. Out of the remaining proceeds, the Partnership received a distribution of $210,650 from Country Isles Associates. The Partnership made a special distribution to the Limited Partners. No significant impact to the property is anticipated as a result of the increased mortgage indebtedness. As a result of the refinancing, the interest rate was reduced from 9.75% to 7.00%, the monthly payments have decreased from $60,141 to $57,250. The mortgage matures on May 1, 2001.
Through March of 1992, Country Isles Shopping Center was managed by Arvida Management, Limited Partnership, a Delaware limited partnership which is affiliated with Arvida/JMB Partners. In March of 1992, JMB Property Management, also an affiliate of Arvida/JMB Partners, became the manager. Both the previous and current Management Agreements provide that the Manager will rent and manage the project for a term of five years, and thereafter for yearly periods, unless otherwise terminated by the parties in accordance with the agreement. Country Isles Associates shall pay the Manager a management fee in an amount equal to 4% of the monthly operating revenues from the operation of the property. Notwithstanding the foregoing, until such time as the management agent notifies owner of its election to receive the management fee discussed immediately above, Country Isles Associates shall pay the Manager, in lieu of the management fee, an amount equal to 15% of amounts paid by tenants at the project on account of reimbursement of operating expenses, excluding taxes and insurance. During 1996, 1995 and 1994, the property incurred management fees of $68,053, $62,912, $ and $63,623, respectively.
FIRST DEARBORN INCOME PROPERTIES L.P. II (a limited partnership) and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
(3) Long-Term Debt
Long-term debt consists of the following at December 31, 1996 and 1995:
Five year maturities of long-term debt are as follows:
(4) Partnership Agreement
Pursuant to the terms of the Partnership Agreement, net profits or losses of the Partnership for Federal income tax purposes from operations generally will be allocated 99% to the Limited Partners and 1% to the General Partners. Net profits for Federal income tax purposes from the sale or refinancing of properties will be allocated as follows: (i) first, to the Partners who have a deficit capital account balance in an amount equal to their deficit balance; (ii) second, to the Limited Partners in an amount equal to their contributed capital plus a stipulated return thereon; and (iii) thereafter, 90% to the Limited Partners and 10% to the General Partners. Net losses from the sale or refinancing of properties will be allocated as follows: (i) first, to the Partners who have a positive capital account balance in an amount equal to their positive balance; and (ii) thereafter, 99% to the Limited Partners and 1% to the General Partners.
FIRST DEARBORN INCOME PROPERTIES L.P. II (a limited partnership) and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
Operating Cash Flow, as defined in the Partnership Agreement, prior to the date the public offering terminated was distributed 100% to the Limited Partners. Operating Cash Flow subsequent to termination of the public offering will be distributed during the first five years, 99% to the Limited Partners and 1% to the General Partners and, thereafter, 90% to the Limited Partners and 10% to the General Partners subject to certain limitations. Sale or refinancing proceeds will be distributed 100% to the Limited Partners until the Limited Partners have received their contributed capital plus a stipulated return thereon. Any remaining sale or refinancing proceeds will then be distributed 90% to the Limited Partners and 10% to the General Partners.
For financial reporting purposes, net profits or losses from operations are allocated 99% to the Limited Partners and 1% to the General Partners. The General Partners are not required to make any capital contributions except under certain limited circumstances upon dissolution and termination of the Partnership.
(5) Leases
The Partnership has determined that all leases relating to the properties are properly classified as operating leases; therefore, rental income is reported when earned and the cost of the property, excluding the cost of the land, is depreciated over the estimated useful life of the property. Leases with tenants range in term from one to thirty years and provide for fixed minimum rent and partial to full reimbursement of operating costs. In addition, many of the leases provide for additional rent based upon percentages of tenants' sales volume.
Minimum lease payments, including amounts representing executory costs (e.g. taxes, maintenance, insurance) and any related profit, to be received in the future under the operating leases are as follows:
Percentage rents (based on tenants' sales volume) included in rental income were $180,846, $171,305 and $158,279 for the years ended December 31, 1996, 1995 and 1994, respectively.
(6) Transactions with Affiliates
Affiliates of the General Partners are entitled to receive from the Partnership acquisition fees, equal to 9% of the gross proceeds from the offering of Units, in connection with the evaluation, investigation, negotiation, selection and purchase of the Partnership's investment properties. The Managing General Partner and its affiliates are entitled to reimbursement for salaries and direct expenses of officers and employees of the Managing General Partner and its affiliates relating to the administration of the Partnership.
FIRST DEARBORN INCOME PROPERTIES L.P. II (a limited partnership) and Consolidated Venture
Notes to Consolidated Financial Statements - Continued
Fees, commissions and other expenses required to be paid by the Partnership to affiliates of the General Partners for the years ended December 31, 1996, 1995 and 1994 are as follows:
(7) Investment in Unconsolidated Ventures
Summary combined financial information for Evanston Galleria Limited Partnership and Country Isle Associates as of December 31, 1996 and 1995 is as follows:
The total revenues, expenses and net loss for the above ventures for the year ended December 31, 1994 were $2,943,721, $3,224,669 and $280,948, respectively.
(8) Subsequent Event
In March 1997, the Partnership paid cash distributions of $20,703 to the Limited Partners.
Item 9.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
The General Partners of the Partnership are:
FDIP, Inc., an Illinois corporation, Managing General Partner; and FDIP Associates, an Illinois general partnership, Associate General Partner.
FDIP, Inc., the Managing General Partner, is a corporation formed under the laws of the State of Illinois. Its issued and outstanding shares are owned by Messrs. Bruce H. Block and Robert S. Ross. The officers of the Managing General Partner are Robert S. Ross, President, and Bruce H. Block, Vice President and Secretary. Messrs. Block and Ross are its sole directors.
FDIP Associates, the Associate General Partner, was formed under the laws of the State of Illinois and has a nominal net worth. Its constituent partners are First Dearborn Partners, an Illinois general partnership formed in January, 1984, whose constituent partners are Messrs. Block and Ross, and Hampshire Syndications, Inc., a New Hampshire corporation. Hampshire Syndications, Inc. is wholly owned by Hampshire Funding, Inc., a New Hampshire corporation, which is a wholly- owned subsidiary of Chubb Life Insurance Company of America. The officers and directors of Hampshire Syndications, Inc. are Ronald Angarella, President and Director, Charles C. Cornelio, Vice President, Counsel, Secretary and Director, Frederick H. Condon, Vice President and Director, John A. Weston, Treasurer.
Messrs. Block and Ross are not affiliated with Chubb Securities Corporation, except that each is affiliated with the Associate General Partner.
The persons listed below occupy key management position with the General Partners:
Mr. Bruce H. Block, age 59, has been a principal in numerous real estate ventures which own, have an interest in, or have owned various types of property that have included apartment and office buildings, shopping centers and vacant land. Mr. Block is an Illinois licensed attorney, a certified public accountant and a licensed real estate broker in the State of Illinois. Mr. Block practiced corporate and real estate law in Chicago for over 20 years and is a shareholder in the Chicago law firm of Ross & Block, P.C.
Mr. Robert S. Ross, age 59, has been a principal in many real estate ventures which own, have an interest in, or have owned various types of property including apartment and office buildings, shopping centers and vacant land. Mr. Ross is an Illinois licensed attorney, a licensed real estate broker in the State of Illinois and is an affiliate member of Real Estate Securities and Syndication Institute. He also practiced general and real estate law in the Chicago area for over 22 years and is a shareholder in the Chicago law firm of Ross & Block P.C.
Mr. Ronald R. Angarella, age 39, currently serves as President, Chairman and Director of Chubb Securities Corporation and Hampshire Funding, Inc. and President and Director of Hampshire Syndications, Inc. Mr. Angarella is also President and Director of Chubb America Fund, Inc., Senior Vice President and Director of Chubb Investment Funds, Inc. and Senior Vice President, Sales of Chubb Life Insurance Company of America. Mr. Angarella is a graduate of Providence College and Brown University.
Mr. Charles C. Cornelio, age 37, is Vice President, General Counsel and Secretary of Chubb Securities Corporation, Hampshire Syndications, Inc. and Hampshire Funding, Inc. He is also Executive Vice President and Chief Administrative Officer of Chubb Life Insurance Company of America, Vice President and General Counsel of Chubb America Fund, Inc. and Chubb Investment Funds, Inc.
Mr. Frederick H. Condon, age 62, is a Director of Hampshire Funding, Inc. and Chubb Securities Corporation. Mr. Condon also serves as Senior Vice President, General Counsel and Secretary of Chubb Life Insurance Company of America, Director, Senior Vice President, General Counsel and Secretary of Chubb Colonial Life Insurance Company and Chubb Sovereign Life Insurance Company.
John Weston, age 37, Treasurer of Hampshire Funding, Inc., Chubb Securities Corporation, Hampshire Syndications, Inc., Chubb Investment Funds, Inc., Chubb America Fund, Inc. and Chubb Investment Advisory Corporation. Mr. Weston also serves as Assistant Vice President of Chubb Life Insurance Company of America.
Item 11.
Item 11. Executive Compensation
The Partnership has no officers or directors and instead is managed by FDIP, Inc., its Managing General Partner.
Officers and directors of the Managing General Partner receive no direct remuneration in such capacities from the Partnership. In addition, the Partnership is a registrant that qualifies as a small business issuer as defined in Item 10(a)(1) of Regulation S-B. Accordingly, certain of the disclosures typically required by Item 402 are not applicable to the Partnership and the information set forth herein has been appropriately modified.
The Partnership is required to pay certain fees to the General Partners or their affiliates and the General Partners are entitled to receive a share of cash distributions, when and as cash distributions are made to the Limited Partners, and a share of profits or losses as described under the caption "Compensation Table" at pages 9-10 of the Prospectus, a copy of which descriptions is filed herewith and is hereby incorporated herein by reference. Reference is also made to Note 4 of Notes to Consolidated Financial Statements filed with this annual report for a description of such distributions and allocations.
Certain compensation has accrued to the General Partners and their affiliates for services rendered on behalf of the Partnership. Affiliates of the General Partners are entitled to receive from the Partnership acquisition fees, equal to 9% of the gross proceeds from the offering of Units, in connection with the evaluation, investigation, negotiation, selection and purchase of the Partnership's investment properties.
The Managing General Partner and its affiliates are entitled to reimbursement for salaries and direct expenses of officers and employees of the Managing General Partner and its affiliates relating to the administration of the Partnership.
Fees, commissions and other expenses required to be paid by the Partnership to affiliates of the General Partners for the years ended December 31, 1996, 1995 and 1994 are as follows:
There are no compensatory plans or arrangements regarding termination of employment or change of control.
Item 12.
Item 12. Security ownership of certain Beneficial Owners and Management
(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding Units of the Partnership.
(b) The following table sets forth information regarding the beneficial ownership of Units as of December 31, 1996 by directors and/or general partners of the General Partners, and by all officers, directors and for general partners of the General Partners as a group:
Item 13.
Item 13. Certain Relationships and Related Transactions
There were no significant transactions or business relationships with the Managing General Partner, affiliates, or other management other than those described in Item 10 and 11 above, and Note 6 to the Consolidated Financial Statements.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) (1)(2) See Index to Financial Statements and Financial Statement Schedules on page 16.
(3) Exhibits (3-A) The Prospectus of the Partnership dated February 1, 1989 as supplemented February 24, 1989, October 27, 1989, April 26, 1990, October 9, 1990 and December 24, 1990 filed pursuant to Rule 424(b) under the Securities Act of 1933 as amended (File No. 33-23048), is hereby incorporated herein by reference.
(3-B) Amended Agreement of Limited Partnership set forth as Exhibit A to the Prospectus, pursuant to Rule 424(b) under the Securities Act of 1933 as amended (File No. 33-23048), is hereby incorporated herein by reference.
(b) No reports on Form 8-K were filed in the last quarter of 1996.
(c) An annual report for the fiscal year 1996 will be sent to the Limited Partners subsequent to this filing and the Partnership will furnish copies of such report to the Securities and Exchange Commission at that time.
(d) Exhibits - See Item 14(a) - (3).
(e) Financial Statement Schedules. See Index to Financial Statements and Financial Statement Schedules on page 16.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FIRST DEARBORN INCOME PROPERTIES L.P. II (Registrant)
BY: FDIP, Inc. (Managing General Partner)
Date: March 28, 1997 BY: /s/ Robert S. Ross Its: President
BY: FDIP Associates II (Associate General Partner) BY: First Dearborn Partners, a Partner
Date: March 28, 1997 BY: /s/ Bruce H. Block a Partner
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.
Signatures Title Date
/s/ Robert S. Ross President and Director March 28, Robert S. Ross of FDIP, Inc. (Principal Executive Officer)
/s/ Bruce H. Block Secretary and Director March 28, Bruce H. Block of FDIP, Inc. (Principal Financial Officer)