-----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, UMReZusCvThXKs3TomVjwyVVlMBtggFUZTleQhrRZwjkbxEfcjR0fv3b8oiotYAC RLlwLQ15/1OCBri2nUCW+A== 0000317969-96-000005.txt : 19961111 0000317969-96-000005.hdr.sgml : 19961111 ACCESSION NUMBER: 0000317969-96-000005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961108 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREFERRED PROPERTIES FUND 80 CENTRAL INDEX KEY: 0000312903 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] 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: 96656681 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 September 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) September 30, 1996 Assets Cash and cash equivalents $ 267 Other assets 162 Deferred costs, net 45 Investment property: Land $ 1,059 Buildings and related personal property 4,286 5,345 Less accumulated depreciation (1,829) 3,516 $ 3,990 Liabilities and Partners' Deficit Liabilities Accrued expenses and other liabilities $ 115 Notes payable 5,369 Promissory notes: Principal 231 Deferred interest payable 168 Partners' Deficit: General partner's $ (893) Limited partners' (19,997 units issued and outstanding) (1,000) (1,893) $ 3,990 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 Nine Months Ended September 30, September 30, 1996 1995 1996 1995 Revenues: Rental income $ 204 $ 208 $ 618 $ 647 Other income 6 7 31 60 Total revenues 210 215 649 707 Expenses: Operating 44 30 105 110 Interest 136 137 410 410 Depreciation 28 28 83 84 General and administrative 118 72 286 212 Total expenses 326 267 884 816 Net loss $ (116) $ (52) $ (235) $ (109) Net loss allocated to general partner (5%) $ (6) $ (3) $ (12) $ (5) Net loss allocated to limited partners (95%) (110) (49) (223) (104) $ (116) $ (52) $ (235) $ (109) Net loss per limited partnership unit $ (5.51) $ (2.45) $ (11.16) $ (5.20) 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 nine months ended September 30, 1996 -- (12) (223) (235) Partners' deficit at September 30, 1996 19,997 $ (893) $ (1,000) $ (1,893) See Accompanying Notes to Consolidated Financial Statements
d) PREFERRED PROPERTIES FUND 80 CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, 1996 1995 Cash flows from operating activities: Net loss $ (235) $ (109) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 95 91 Deferred costs paid -- (42) Change in accounts: Other assets (133) 122 Accrued expenses and other liabilities 10 (85) Net cash used in operating activities (263) (23) Cash flows from investing activities: Net cash provided by investing activities -- -- Cash flows from financing activities: Notes payable principal payments (46) (46) Joint venture partner distributions -- (9) Retirement of promissory notes (32) (418) Purchase of minority interest in joint venture -- (10) Cash distributions to limited partners -- (1,301) Net cash used in financing activities (78) (1,784) Net decrease in cash and cash equivalents (341) (1,807) Cash and cash equivalents at beginning of period 608 2,498 Cash and cash equivalents at end of period $ 267 $ 691 Supplemental disclosure of cash flow information: Cash paid for interest $ 409 $ 586 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 nine month periods ended September 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 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 Financial Group, Inc. ("Insignia") acquired control of NPI Equity, the managing general partner of FRI. NPI Equity is a wholly- owned subsidiary of National Property Investors, Inc. ("NPI"). In connection with these transactions, affiliates of Insignia appointed new officers and directors of NPI Equity. The following transactions with affiliates of Insignia, NPI and affiliates of NPI were charged to expense in 1996 and 1995: For the Nine Months Ended September 30, 1996 1995 Reimbursement for services of affiliates (included in general and administrative expenses) $ 101,000 $ 116,000 NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES - (CONTINUED) For the period from January 19, 1996, to September 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. 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 1996 and 1995. The Partnership's net loss for the nine months ended September 30, 1996, was approximately $235,000 versus a net loss of approximately $109,000 for the same period of 1995. For the three months ended September 30, 1996, the Partnership incurred a net loss of approximately $116,000 compared to a net loss of approximately $52,000 for the three months ended September 30, 1995. The increase in the net loss for the nine month period is primarily attributable to decreases in rental and other 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 other 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 incurred 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). The increase in the net loss for the three month period is primarily attributable to increases in operating expenses and general and administrative expenses. Operating expenses increased due to an increase in insurance expense. General and administrative expenses increased due to the aforementioned increase in legal expenses. 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 September 30, 1996, the Partnership had unrestricted cash of $267,000 as compared to $691,000 at September 30, 1995. Net cash used in operating activities increased primarily as a result of the decrease in total revenues and the payment of legal fees as discussed above. Also contributing to the increase in cash used in operating activities was an increase in other assets due to increased receivables for common area maintenance charges, and prepaids 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 $4,069,000 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 level of net cash generated from a property sale. A cash distribution totalling approximately $1,301,000 was made in 1995. No cash distributions were made during the nine months ended September 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. 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 b) Reports on Form 8-K: None filed during the quarter ended September 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: November 8, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Preferred Properties Fund 80 1996 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000312903 PREFERRED PROPERTIES FUND 80 1,000 9-MOS DEC-31-1996 SEP-30-1996 267 0 0 0 0 0 5,345 (1,829) 3,990 0 5,369 0 0 0 (1,893) 3,990 0 649 0 0 884 0 410 (235) 0 (235) 0 0 0 (235) (11.16) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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