-----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, OfRJcgHLNhzFFguyJUkfiiRN1K46JED8v9En+4jIRThM5JTZ8bGn5YHhHi9Qvrrk 5tIjiV0s2F7/Rk9RK2ERig== 0000312903-96-000001.txt : 19960814 0000312903-96-000001.hdr.sgml : 19960814 ACCESSION NUMBER: 0000312903-96-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREFERRED PROPERTIES FUND 80 CENTRAL INDEX KEY: 0000312903 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 942599964 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-09508 FILM NUMBER: 96610310 BUSINESS ADDRESS: STREET 1: 5665 NORTHSIDE DR NW STREET 2: STE 370 CITY: ATLANTA STATE: GA ZIP: 30328 BUSINESS PHONE: 4049169090 MAIL ADDRESS: STREET 1: POST & HEYMANN STREET 2: 5665 NORTHSIDE DR NW CITY: ATLANTA STATE: GA ZIP: 30328 FORMER COMPANY: FORMER CONFORMED NAME: MONTGOMERY PROPERTIES FUND 80 DATE OF NAME CHANGE: 19791024 10QSB 1 FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Quarterly or Transitional Report (As last amended by 34-32231, eff. 6/3/93.) U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.........to......... Commission file number 0-9508 PREFERRED PROPERTIES FUND 80 (Exact name of small business issuer as specified in its charter) California 94-2599964 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) (864) 239-1000 Issuer's telephone number 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 . PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) PREFERRED PROPERTIES FUND 80 CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) June 30, 1996
Assets Cash and cash equivalents $ 513 Other assets 81 Deferred costs, net 49 Investment property: Land $ 1,059 Buildings and related personal property 4,286 5,345 Less accumulated depreciation (1,802) 3,543 $ 4,186 Liabilities and Partners' Deficit Liabilities Accrued expenses and other liabilities $ 171 Notes payable 5,385 Promissory notes: Principal 236 Deferred interest payable 171 Partners' Deficit: General partner's $ (887) Limited partners' (19,997 units (890) (1,777) $ 4,186 See Accompanying Notes to Consolidated Financial Statements
b) PREFERRED PROPERTIES FUND 80 CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 Revenues: Rental income $ 201 $ 240 $ 414 $ 439 Interest income 20 14 25 53 Total revenues 221 254 439 492 Expenses: Operating 32 59 61 80 Interest 137 139 274 273 Depreciation 27 28 55 56 General and administrative 117 72 168 140 Total expenses 313 298 558 549 Net loss $ (92) $ (44) $ (119) $ (57) Net loss allocated to general partner (5%) $ (5) $ (2) $ (6) $ (3) Net loss allocated to limited partners (95%) (87) (42) (113) (54) $ (92) $ (44) $ (119) $ (57) Net loss per limited partnership unit $ (4.35) $ (2.10) $ (5.65) $ (2.70) Distribution per limited partnership unit $ -- $ 65.06 $ -- $ -- See Accompanying Notes to Consolidated Financial Statements
c) PREFERRED PROPERTIES FUND 80 CONSOLIDATED STATEMENT OF PARTNERS' DEFICIT (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner's Partners' Total Original capital contributions 19,997 $ 100 $ 19,997 $ 20,097 Partners' deficit at December 31, 1995 19,997 $ (881) $ (777) $ (1,658) Net loss for the six months ended June 30, 1996 -- (6) (113) (119) Partners' deficit at June 30, 1996 19,997 $ (887) $ (890) $ (1,777) See Accompanying Notes to Consolidated Financial Statements
d) PREFERRED PROPERTIES FUND 80 CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 1996 1995 Cash flows from operating activities: Net loss $ (119) $ (57) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 64 61 Change in accounts: Other assets (52) 84 Accrued expenses and other liabilities 66 (70) Net cash (used in) provided by operating activities (41) 18 Cash flows from investing activities: Net cash provided by investing activities -- -- Cash flows from financing activities: Notes payable principal payments (30) (32) Joint venture partner distributions -- (9) Retirement of promissory notes (24) (390) Purchase of minority interest in joint venture -- (10) Cash distributions to limited partners -- (1,301) Net cash used in financing activities (54) (1,742) Net decrease in cash and cash equivalents (95) (1,724) Cash and cash equivalents at beginning of period 608 2,498 Cash and cash equivalents at end of period $ 513 $ 774 Supplemental disclosure of cash flow information: Cash paid for interest $ 283 $ 437 See Accompanying Notes to Consolidated Financial Statements
e) PREFERRED PROPERTIES FUND 80 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited financial statements of Preferred Properties Fund 80 (the "Partnership") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of NPI Equity Investments II, Inc. ("NPI Equity" or the "Managing General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1996. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the year ended December 31, 1995. Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. Note B - Transactions with Affiliated Parties The Partnership has no employees and is dependent on the Managing General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following transactions with affiliates of Insignia Financial Group, Inc. ("Insignia"), National Property Investors, Inc. ("NPI"), and affiliates of NPI were charged to expense in 1996 and 1995:
For the Six Months Ended June 30, 1996 1995 Reimbursement for services of affiliates (included in general and administrative expenses) $ 76,000 $ 80,000
For the period from January 19, 1996, to June 30, 1996, the Partnership insured its property under a master policy through an agency and insurer unaffiliated with the Managing General Partner. An affiliate of the Managing General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. The current agent assumed the financial obligations to the affiliate of the Managing General Partner who received payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Managing General Partner by virtue of the agent's obligations is not significant. Note B - Transactions with Affiliated Parties - (continued) The general partner of the Partnership is Montgomery Realty Company - 80 ("MRC- 80"), a limited partnership. The general partner of MRC-80 is Fox Realty Investors ("FRI"). Pursuant to a series of transactions which closed during the first half of 1996, affiliates of Insignia acquired control of NPI Equity, the managing general partner of FRI. In connection with these transactions, affiliates of Insignia appointed new officers and directors of NPI Equity. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership has one investment property, Creekside Business Park, located in Milpitas, California. The property has been fully occupied throughout 1995 and 1996. The Partnership's net loss for the six months ended June 30, 1996, was approximately $119,000 versus an approximate $57,000 net loss for the same period of 1995. For the three months ended June 30, 1996, the Partnership incurred a net loss of approximately $92,000 compared to a net loss of approximately $44,000 for the three months ended June 30, 1995. The increase in the net loss for the three and six month periods is primarily attributable to decreases in rental and interest income and an increase in general and administrative expenses. Rental income decreased as a result of a tenant renewing its lease at Creekside Business Park in February 1996 at a lower rental rate. This reduction was necessary in order to bring this tenant's rent in line with the current market rental rates. The decrease in interest income is due to a reduction in cash reserves in 1996 resulting primarily from a cash distribution in 1995. General and administrative expenses increased due to an increase in legal expenses in 1996, as a result of fees accrued in the Kaufman et al. v. Northern Trust Bank of California, N.A., et al. litigation (see the Partnership's annual report on Form 10-K for the year ended December 31, 1995 for a further discussion). Partially offsetting the increases in net loss was a decrease in operating expenses for both the three and six month periods. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of its investment property to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expense. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Managing General Partner will be able to sustain such a plan. At June 30, 1996, the Partnership had unrestricted cash of $513,000 as compared to $774,000 at June 30, 1995. Net cash provided by operating activities decreased primarily as a result of the decrease in total revenues as discussed above. Also contributing to the decrease in cash provided by operating activities was an increase in other assets due to increased receivables and increased tax escrow funding. Net cash used in financing activities decreased due to the Partnership not making a distribution in 1996 and fewer redemptions of promissory notes in 1996 compared to 1995. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the property to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The first mortgage indebtedness of $4,085,000 matures on April 1, 1997, at which time a balloon payment is due. Unless the Partnership is able to extend or replace a tenant's lease representing 58 percent of the leasable space of Creekside Business Park, which expires on September 30, 1997, the Managing General Partner does not expect to be able to refinance the Partnership's first mortgage. If this loan is not refinanced or modified, or the property sold, the Partnership could lose this property through foreclosure. Also included in the Partnership's notes payable is a $1,300,000 ground lease obligation. The ground lease is accounted for as a loan and calls for payments equal to 12 percent interest on the principal until April 1, 1998, when the lease terminates. The ground lease provides an option to purchase the land at a purchase price of $1,300,000. Future cash distributions will depend on the levels of net cash generated from operations, a property sale, and the availability of cash reserves. A cash distribution totalling approximately $1,301,000 was made in 1995. No cash distributions were made during the six months ended June 30, 1996. In addition, the Partnership's cash has been adversely affected by the lawsuit brought by former promissory note holders of the Partnership against, among others, the Partnership's general partner, MRC-80 (see discussion of Kaufman et al. v. Northern Trust Bank of California, N.A. et al. contained in the Partnership's annual reports on Form 10-K for year ended December 31, 1995 (Item 3. Legal Proceedings)). Pursuant to the terms of the Partnership Agreement, the Partnership is required to indemnify the general partner and its affiliates. At this time, it appears that the original investment objective of capital growth will not be attained and that limited partners will not receive a return of all their invested capital. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended June 30, 1996. SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned thereunto, duly authorized. PREFERRED PROPERTIES FUND 80 By: MONTGOMERY REALTY COMPANY - 80, Its General Partner By: FOX REALTY INVESTORS, Managing General Partner of the General Partner By: NPI EQUITY INVESTMENTS II, INC., Its Managing General Partner By: /s/William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/Ronald Uretta Ronald Uretta Principal Financial Officer and Principal Accounting Officer Date: August 13, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Preferred Properties Fund 80 1996 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000312903 PREFERRED PROPERTIES FUND 80 1,000 6-MOS DEC-31-1996 JUN-30-1996 513 0 0 0 0 0 5,345 1,802 4,186 0 5,385 0 0 0 (1,777) 4,186 0 439 0 0 558 0 274 0 0 0 0 0 0 (119) (5.65) 0 The Registrant has an unclassified balance sheet. Multiplier is 1.
-----END PRIVACY-ENHANCED MESSAGE-----