-----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, EhZbGLP2UwzudjLr1bENDttwCp4mP0xlP8ZXPy3bQPIPbT9OikiNpNtL/EQuA5bu DrVSBd+Cg5RLhtiSO/xz0g== 0000950148-96-001788.txt : 19960819 0000950148-96-001788.hdr.sgml : 19960819 ACCESSION NUMBER: 0000950148-96-001788 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960816 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: REAL ESTATE ASSOCIATES LTD/CA CENTRAL INDEX KEY: 0000225789 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 953187912 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-60561 FILM NUMBER: 96616935 BUSINESS ADDRESS: STREET 1: 9090 WILSHIRE BLVD STE 201 CITY: BEVERLY HILLS STATE: CA ZIP: 90211 BUSINESS PHONE: 3102782191 MAIL ADDRESS: STREET 1: 9090 WILSHIRE BLVD STREET 2: STE 201 CITY: BEVERLY HILLS STATE: CA ZIP: 90211 FORMER COMPANY: FORMER CONFORMED NAME: REAL ESTATE ASSOCIATES LTD DATE OF NAME CHANGE: 19900828 10-Q 1 FORM 10-Q ENDED JUNE 30, 1996 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 FOR QUARTER ENDED JUNE 30, 1996 COMMISSION FILE NUMBER 2-60561 REAL ESTATE ASSOCIATES LIMITED A CALIFORNIA LIMITED PARTNERSHIP I.R.S. EMPLOYER IDENTIFICATION NO. 95-3187912 9090 Wilshire Blvd., Suite 201, Beverly Hills, Calif. 90211 Registrant's Telephone Number, Including Area Code (310) 278-2191 Securities Registered Pursuant to Section 12(b) or 12(g) of the Act NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed with the Commission by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve 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 REAL ESTATE ASSOCIATES LIMITED (a California limited partnership) INDEX TO FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets, June 30, 1996 and December 31, 1995 . . . . 1 Statements of Operations, Six and Three Months Ended June 30, 1996 and 1995 . 2 Statement of Partner's Equity (Deficiency), Six Months Ended June 30, 1996 . . . . . . . . . . . 3 Statements of Cash Flows Six Months Ended June 30, 1996 and 1995 . . . . . . 4 Notes to Financial Statements . . . . . . . . . . . . . . . 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . 9
PART II. OTHER INFORMATION Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . 10 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 10 Signatures . . . . . . . . . . . . . . . . . . . . . . . 11
3 REAL ESTATE ASSOCIATES LIMITED (a California limited partnership) BALANCE SHEETS JUNE 30, 1996 AND DECEMBER 31, 1995 ASSETS
1996 1995 (Unaudited) (Audited) ------------- -------------- INVESTMENTS IN LIMITED PARTNERSHIPS (Note 2) $ 2,403,853 $ 2,191,335 CASH AND CASH EQUIVALENTS (Note 1) 334,065 250,570 SHORT TERM INVESTMENTS (Note 1) 125,000 125,000 RECEIVABLES FROM LIMITED PARTNERSHIPS (Note 2) $ 148,932 $ 148,931 ------------ ------------ TOTAL ASSETS $ 3,011,850 $ 2,715,836 ============ ============ LIABILITIES AND PARTNERS' EQUITY (DEFICENCY) LIABILITIES: Accounts payable $ 3,626 $ 20,036 Accrued fees and expenses due general partner (Notes 3 and 6) 968,007 1,014,337 ------------ ------------ $ 971,633 1,034,373 ------------ ------------ COMMITMENTS AND CONTINGENCIES (Notes 3 and 4) PARTNERS' EQUITY (DEFICIENCY): General partners (106,667) (110,255) Limited partners 2,146,884 1,791,718 ------------ ------------ 2,040,217 1,681,463 ------------ ------------ TOTAL LIABILITIES AND PARTNERS' EQUITY (DEFICIENCY) $ 3,011,850 $ 2,715,836 ============ ============
The accompanying notes are an integral part of these financial statements. 1 4 REAL ESTATE ASSOCIATES LIMITED (a California limited partnership) STATEMENTS OF OPERATIONS SIX AND THREE MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED)
Six months Three months Six months Three months ended ended ended ended June 30, 1996 June 30, 1996 June 30, 1995 June 30, 1995 ------------- ------------- ------------- ------------- INTEREST AND OTHER INCOME $ 7,694 $ 3,785 $ 9,879 $ 5,471 ------------ ------------ ------------ ------------ OPERATING EXPENSES: Legal and accounting 42,448 10,898 27,160 12,678 Management fees - general partner 203,670 101,835 203,670 101,835 Administrative (Note 3) 23,345 11,697 27,611 1,813 ------------ ------------ ------------ ------------ Total operating expenses 269,463 124,430 258,441 116,326 ------------ ------------ ------------ ------------ LOSS FROM OPERATIONS (261,769) (120,645) (248,562) (110,855) DISTRIBUTIONS FROM LIMITED PARTNERSHIPS RECOGNIZED AS INCOME (Note 2) 398,522 332,070 690,525 635,109 EQUITY IN INCOME OF LIMITED PARTNERSHIPS AND AMORTIZATION OF ACQUISITION COSTS (Note 2) 222,000 111,000 116,000 58,000 ------------ ------------ ------------ ------------ NET INCOME $ 358,753 $ 322,425 $ 557,963 $ 582,254 ------------ ------------ ------------ ------------ NET INCOME PER LIMITED PARTNERSHIP INTEREST (Note 1) $ 22 $ 20 $ 34 $ 35 ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements. 2 5 REAL ESTATE ASSOCIATES LIMITED (a California limited partnership) STATEMENT OF PARTNERS' EQUITY (DEFICIENCY) SIX MONTHS ENDED JUNE 30, 1996 (Unaudited)
General Limited Partners Partners Total ----------- ----------- ----------- PARTNERSHIP INTERESTS June 30, 1996 16,505 ============ EQUITY (DEFICIENCY), January 1, 1996 $ (110,255) $ 1,791,719 $ 1,681,464 Net income for the six months ended June 30, 1996 3,588 355,165 358,753 ----------- ----------- ----------- EQUITY (DEFICIENCY), June 30, 1996 $ (106,667) $ 2,146,884 $ 2,040,217 =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 3 6 REAL ESTATE ASSOCIATES LIMITED (a California limited partnership) STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (Unaudited)
1996 1995 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 358,753 $ 557,963 Adjustments to reconcile net income to net cash provided by operating activities: Equity in income of limited partnerships and amortization of acquisition costs (222,000) (116,000) (Decrease) Increase in accrued fees and expenses due general partner (46,330) 88,670 Decrease in accounts payable (16,410) (634) Decrease in deferred distributions - (183,588) Increase in receivables from limited partnership - (21,558) --------- --------- Net cash provided by operating activities 74,013 324,853 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Distributions from limited partnership recognized as return of capital 9,481 - --------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS 83,494 324,853 CASH AND CASH EQUIVALENTS, beginning of period 250,570 406,711 --------- --------- CASH AND CASH EQUIVALENTS, end of period $ 334,064 $ 731,564 ========= =========
The accompanying notes are an integral part of these financial statements. 4 7 REAL ESTATE ASSOCIATES LIMITED (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: GENERAL The information contained in the following notes to the financial statements is condensed from that which would appear in the annual audited financial statements; accordingly, the financial statements included herein should be reviewed in conjunction with the financial statements and related notes thereto contained in the annual report for the year ended December 31, 1995 prepared by Real Estate Associates Limited (the "Partnership.") Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the interim period presented are not necessarily indicative of the results for the entire year. In the opinion of the Partnership, the accompanying unaudited financial statements contain all adjustments (consisting primarily of normal recurring accruals) neccessary to present fairly the financial position as of June 30, 1996, and the results of operations for the six and three months then ended and changes in cash flows for the six months then ended. The general partners have a 1 percent interest in profits and losses of the Partnership. The limited partners have the remaining 99 percent interest which is allocated in proportion to their respective individual investments. National Partnership Investments Corp. (NAPICO) is the corporate general partner of the Partnership. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. METHOD OF ACCOUNTING FOR INVESTMENT IN LIMITED PARTNERSHIPS The investment in limited partnerships is accounted for on the equity method. Acquisition, selection fees and other costs related to the acquisition of the projects have been capitalized to the investment account. NET INCOME PER LIMITED PARTNERSHIP INTEREST Net income per limited partnership interest was computed by dividing the limited partners' share of net income by the number of limited partnership interests outstanding during the year. The number of limited partnership interests was 16,505 for the periods presented. 5 8 REAL ESTATE ASSOCIATES LIMITED (a California limited partnership) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1996 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash and bank certificates of deposit with an original maturity of six months or less. SHORT-TERM INVESTMENTS Short-term investments consist of bank certificates of deposit with original maturities ranging from more than three months to twelve months. The fair value of these securities, which have been classified as held for sale, approximates their carrying value. INCOME TAXES No provision has been made for income taxes in the accompanying financial statements since such taxes, if any, are the liability of the individual partners. NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS The Partnership has limited partnership interests in 18 limited partnerships. The limited partnerships own residential rental projects consisting of 1,969 apartment units. The mortgage loans of these projects are insured by various governmental agencies. The Partnership, as a limited partner, is entitled from 50 percent to 99 percent of the profits and losses in the limited partnerships. Equity in losses of limited partnerships are recognized in the financial statements until the limited partnership investment account is reduced to a zero balance. Losses incurred after the limited partnership investment account is reduced to zero are not recognized. Distributions from the limited partnerships are accounted for as a return of capital until the investment balance is reduced to zero. Subsequent distributions received are recognized as income. The following is a summary of the investment in limited partnerships as of June 30, 1996: Balance, beginning of period $2,191,335 Amortization acquisition costs (2,000) Cash distribution recognized as return of capital (9,482) Equity in income of limited partnerships 224,000 ----------- Balance, end of period $2,403,853 ==========
6 9 REAL ESTATE ASSOCIATES LIMITED (a California limited partnership) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1996 NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED): The limited partnership which owns Chidester Place Apartments, has executed, with NAPICO's consent, an Agreement for Purchase and Sale of the Chidester Place apartment complex. The pending sale is predicated on a $4,600,000 purchase offer from a Tennessee Limited Partnership sponsored by Brencor Capital Funding ("Brencor"). Brencor has obtained preliminary approval from the Ypsilanti Downtown Development Authority to finance the acquisition of the property with a new tax-exempt bond issue which will qualify the prospective buyer to receive an allocation of Low Income Housing Tax Credits. If the sale is completed, it is anticipated that the Partnership will receive sale proceeds more than sufficient to return the Partnership's original capital investment and to offset the projected tax liability associated with the Partnership's disposition of the property. The Partnership has a zero carrying value for this investment. The following are unaudited combined estimated statements of operations for the six months ended June 30, 1996 and 1995 for the limited partnerships in which the Partnership has investments:
Six months Three months Six months Three months ended ended ended ended June 30, 1996 June 30, 1996 June 30, 1995 June 30, 1995 ------------- ------------- ------------- ------------- INCOME Rental and other $8,276,000 $4,138,000 $8,390,000 $4,195,000 ---------- ---------- ---------- ---------- EXPENSES Depreciation 1,338,000 669,000 1,362,000 681,000 Interest 2,388,000 1,194,000 2,504,000 1,252,000 Operating 4,406,000 2,203,000 4,254,000 2,127,000 ---------- ---------- ---------- ---------- 8,132,000 4,066,000 8,120,000 4,060,000 ---------- ---------- ---------- ---------- NET INCOME $ 142,000 $ 72,000 $ 270,000 $ 135,000 ========== ========== ========== ==========
NAPICO, or one of its affiliates, is the general partner and property management agent for certain of the limited partnerships included above. NOTE 3 - ACCRUED FEES AND EXPENSES DUE TO GENERAL PARTNER Under the terms of the Restated Certificate and Agreement of Limited Partnership, the Partnership is obligated to NAPICO for an annual management fee equal to 1/2 of 1 percent of the original invested assets of the limited partnerships. Invested assets are defined as the costs of acquiring project interests, including the proportionate amount of the mortgage loans related to the Partnership's interests in the capital accounts of the respective partnerships. The management fee incurred for the six-month periods presented was $203,670. 7 10 REAL ESTATE ASSOCIATES LIMITED (A CALIFORNIA LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1996 NOTE 3 - ACCRUED FEES AND EXPENSES DUE TO GENERAL PARTNER (CONTINUED) The Partnership reimburses NAPICO for certain expenses. The reimbursement paid to NAPICO was approximately $10,000 for the six months ended June 30, 1996 and 1995, and is included in administrative expenses. As of June 30, 1996, the fees and expenses due NAPICO exceeded the Partnership's cash. The general partner, during the forthcoming year, will not demand payment of amounts due in excess of such cash or such that the Partnership would not have sufficient operating cash. NOTE 4 - CONTINGENCIES The corporate general partner of the Partnership is a plaintiff in various lawsuits and has also been named a defendant in other lawsuits arising from transactions in the ordinary course of business. In the opinion of management and the corporate general partner, the claims will not result in any material liability to the Partnership. NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107, "Disclosure about Fair Value of Financial Instruments," requires disclosure of fair value information about financial instruments, when it is practicable to estimate that value. The operations generated by the investee limited partnerships, which account for the Partnership's primary source of revenues, are subject to various government rules, regulations and restrictions which make it impracticable to estimate the fair value of accrued fees and expenses due general partner. The carrying amount of other assets and liabilities reported on the balance sheets that require such disclosure approximtes fair value due to their short-term maturity. 8 11 REAL ESTATE ASSOCIATES LIMITED (a California limited partnership) JUNE 30, 1996 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES The Partnership's primary sources of funds include interest income earned from investing available cash and distributions from limited partnerships in which the Partnership has invested. It is not expected that any of the local limited partnerships in which the Partnership has invested will generate cash flow sufficient to provide for distributions to limited partners in any material amount. The limited partnership which owns Chidester Place Apartments, has executed, with NAPICO's consent, an Agreement for Purchase and Sale of the Chidester Place apartment complex. The pending sale is predicated on a $4,600,000 purchase offer from a Tennessee Limited Partnership sponsored by Brencor Capital Funding ("Brencor"). Brencor has obtained preliminary approval from the Ypsilanti Downtown Development Authority to finance the acquisition of the property with a new tax-exempt bond issue which will qualify the prospective buyer to receive an allocation of Low Income Housing Tax Credits. If the sale is completed, it is anticipated that the Partnership will receive sale proceeds more than sufficient to return the Partnership's original capital investment and to offset the projected tax liability associated with the Partnership's disposition of the property. The Partnership has a zero carrying value for this investment. RESULTS OF OPERATIONS Partnership revenues consist primarily of interest income earned on certificates of deposit and other temporary investment of funds not required for investment in local partnerships. Operating expenses consist primarily of recurring general and administrative expenses and professional fees for services rendered to the Partnership. In addition, an annual Partnership management fee in an amount equal to .5 percent of investment assets is payable to the corporate general partner. Operating expenses are consistent with the prior year. The Partnership accounts for its investments in the local limited partnerships on the equity method, thereby adjusting its investment balance by its proportionate share of the income or loss of the local limited partnerships. The equity in income of limited partnerships is received from one investee limited partnership. All other investee limited partnerships have reduced their investment balances to zero and as a result thereof, the Partnership does not recognize equity in losses from those investments. Distributions received from limited partnerships are recognized as return of capital until the investment balance has been reduced to zero or to a negative amount equal to future capital contributions required. Subsequent distributions received are recognized as income. Except for certificates of deposit and money market funds, the Partnership's investments are entirely interests in other limited partnerships owning government assisted projects. Available cash is invested in these funds earning interest income as reflected in the statements of operations. These investments can be converted to cash to meet obligations as they arise. 9 12 REAL ESTATE ASSOCIATES LIMITED (A CALIFORNIA LIMITED PARTNERSHIP) JUNE 30, 1996 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The corporate general partner is a plaintiff or defandant in several lawsuits. None of these are related to the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) No exhibits are required per the provision of Item 7 of regulation S-K. 10 13 REAL ESTATE ASSOCIATES LIMITED (A CALIFORNIA LIMITED PARTNERSHIP) JUNE 30, 1996 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. REAL ESTATE ASSOCIATES LIMITED (a California limited partnership) By: National Partnership Investments Corp. General Partner Date: ------------------------------------------------ By: ------------------------------------------------ Bruce Nelson President Date: ------------------------------------------------ By: ------------------------------------------------ Shawn Horwitz Executive Vice President and Chief Financial Officer 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PARTNERSHIP'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 334,065 0 0 0 0 607,997 0 0 3,011,850 3,626 0 0 0 0 2,040,217 3,011,850 0 628,216 0 0 269,463 0 0 358,753 0 358,753 0 0 0 358,753 0 0
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