-----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, B0a8JSmQJmJoj+nHTsa+Wd0eZAamFK8eJNLYSlTGiU0B+yTS/nfor4x4tEMAwVEs uTXN8pRovvYr87Y95qK1Lg== 0000950148-96-001817.txt : 19960820 0000950148-96-001817.hdr.sgml : 19960820 ACCESSION NUMBER: 0000950148-96-001817 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960819 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: REAL EQUITY PARTNERS CENTRAL INDEX KEY: 0000717303 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953881219 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-82765 FILM NUMBER: 96617489 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 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 2-82765 REAL EQUITY PARTNERS A CALIFORNIA LIMITED PARTNERSHIP I.R.S. EMPLOYER IDENTIFICATION NO. 95-3784125 9090 Wilshire Boulevard, Suite 201, Beverly Hills, CA 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 EQUITY PARTNERS (A CALIFORNIA LIMITED PARTNERSHIP) INDEX TO FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996 PART I. FINANCIAL INFORMATION Item 1. Financial Statements and Notes to 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 Partners' 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 Position and Results of Operations . . . . . . . . . . . . 9 PART II. OTHER INFORMATION Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 12 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 12 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3 REAL-EQUITY PARTNERS (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS JUNE 30, 1996 AND DECEMBER 31, 1995 ASSETS
1996 1995 (Unaudited) (Audited) ------------- ------------- RENTAL PROPERTY, at cost (Notes 1 and 2) Land $ 6,553,357 $ 7,077,565 Buildings 22,096,723 26,949,118 Furniture and equipment 3,720,901 4,034,243 ------------- ------------- 32,370,981 38,060,926 Less accumulated depreciation (12,732,178) (14,497,544) ------------- ------------- 19,638,803 23,563,382 ------------- ------------- CASH AND CASH EQUIVALENTS 1,973,856 1,794,041 ------------- ------------- OTHER ASSETS: Due from affiliated rental agent 614,484 448,634 Other receivables and prepaid expenses 234,523 225,144 Receivable for earthquake loss (Note 1) - 334,591 ------------- ------------- 849,007 1,008,369 ------------- ------------- TOTAL ASSETS $ 22,461,666 $ 26,365,792 ============= ============= LIABILITIES AND PARTNERS' EQUITY LIABILITIES: Mortgage notes payable (Notes 2 and 7) $ 14,180,521 $ 17,747,363 Accrued fees and expenses due general partner (Notes 5 and 7) 672,324 651,320 Accrued interest payable 57,073 388,551 Accounts payable and accrued expenses (Note 1) 161,755 269,663 Liability for earthquake loss (Note 1) 591,421 627,738 Tenant security deposits 235,078 255,772 ------------- ------------- 15,898,172 19,940,407 COMMITMENTS AND CONTINGENCIES (Notes 5 and 6) PARTNERS' EQUITY 6,563,494 6,425,385 ------------- ------------- TOTAL LIABILITIES AND PARTNERS' EQUITY $ 22,461,666 $ 26,365,792 ============= =============
The accompanying notes are an integral part of these financial statements. 1 4 REAL-EQUITY PARTNERS (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 ------------- ------------- ------------- ------------- RENTAL OPERATIONS: Revenues Rental income $ 2,370,038 $ 1,128,555 $ 2,656,272 $ 1,322,005 Other income 88,541 39,519 144,170 80,035 ------------- ------------- ------------- ------------- 2,458,579 1,168,074 2,800,442 1,402,040 ------------- ------------- ------------- ------------- Expenses Operating expenses 1,119,929 518,126 1,381,308 768,476 Management fees - affiliate (Note 4) 124,636 56,828 154,665 81,198 Depreciation (Note 1) 455,228 227,614 455,226 227,613 General and administrative expenses 130,422 57,743 129,945 72,182 Interest expense (Note 2) 707,103 269,039 892,735 444,520 2,537,318 1,129,350 3,013,879 1,593,989 ------------- ------------- ------------- ------------- (Loss) income from rental operations (78,739) 38,724 (213,437) (191,949) ------------- ------------- ------------- ------------- PARTNERSHIPS OPERATIONS: Interest income 35,306 19,037 22,780 17,868 ------------- ------------- ------------- ------------- Expenses General and administrative expenses 28,799 9,318 39,831 18,303 Professional fees 27,743 6,478 21,964 9,841 Interest expense - general partner (Note 5) 21,004 10,502 20,889 10,502 ------------- ------------- ------------- ------------- 77,546 26,298 82,684 38,646 ------------- ------------- ------------- ------------- Loss from partnership operations (42,240) (7,261) (59,904) (20,778) ------------- ------------- ------------- ------------- GAIN ON FORECLOSURE OF RENTAL PROPERTIES 259,088 259,088 - - ------------- ------------- ------------- ------------- NET INCOME (LOSS) $ 138,109 $ 290,551 $ (273,341) $ (212,727) ============= ============= ============= ============= NET INCOME (LOSS) PER LIMITED PARTNERSHIP INTEREST $ 5 $ 10 $ (9) $ (7) ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements. 2 5 REAL-EQUITY PARTNERS (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 30,000 ============ EQUITY (DEFICIENCY), January 1, 1996 (720,324) 7,145,709 6,425,385 Net income for the six months ended June 30,1996 1,381 136,728 138,109 ------------ ------------ ------------ EQUITY (DEFICIENCY), June 30, 1996 (718,943) 7,282,437 6,563,494 ============ ============ ============
The accompanying notes are an integral part of these financial statements. 3 6 REAL-EQUITY PARTNERS (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 (loss) $ 138,109 $ (273,341) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 455,228 455,225 Gain on foreclosure of rental property (259,088) - Decrease (increase) in: Due from affiliated rental agent (248,702) (180,719) Other receivables and prepaid expenses (29,845) 8,159 Receivable for earthquake loss 334,591 - Increase (decrease) in: Accrued fees and expenses due general partner 21,004 20,889 Accounts payable and accrued expenses (31,792) 43,128 Accrued interest payable (50,016) - ------------- ------------- Net cash provided by operating activities 329,489 73,341 ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on mortgage notes payable (113,357) (125,488) Payments on liability for earthquake loss (36,317) - ------------- ------------- Net cash used in financing activities (149,674) (125,488) ------------- ------------- NET INCREASE (DECREASE) IN CASH AND AND CASH EQUIVALENTS 179,815 (52,147) CASH AND CASH EQUIVALENTS, beginning of period 1,794,041 1,195,937 ------------- ------------- CASH AND CASH EQUIVALENTS, end of period $ 1,973,856 $ 1,143,790 ============= ============== NON CASH INVESTING AND FINANCING ACTIVITIES During 1996, the Partnership was relieved of a nonrecourse mortgage note payable and related accrued interest upon foreclosure of a rental property, summarized as follows: Mortgage note payable 3,453,485 - Accrued interest payable 281,462 - Write off of rental property (3,469,351) - Write off of other assets and liabilities (6,508) - ------------- -------------- Gain on foreclosure of rental property 259,088 - ============= ==============
The accompanying notes are an integral part of these financial statements. 4 7 REAL EQUITY PARTNERS (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 filed by Real Equity Partners (the "Partnership"). National Partnership Investments Corp. ("NAPICO") is the corporate general partner of the Partnership. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire year. In the opinion of the general partners of the Partnership, the accompanying unaudited financial statements contain all adjustments (consisting primarily of normal recurring accruals) necessary to present fairly the financial position of the Partnership 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. 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. RENTAL PROPERTY AND DEPRECIATION Rental property is stated at cost. Depreciation is provided for on the straight-line method over the estimated useful lives of the buildings and equipment. On January 17, 1994, the Park Creek and Warner Willows I and II rental properties sustained damage, estimated at approximately $1,454,000, due to the Northridge earthquake in the Los Angeles area. Insurance proceeds of approximately $630,000 were allocated to the Partnership in 1994, as the estimated full settlement under a master umbrella insurance policy covering earthquake damage for these and other properties managed by a related party. The total estimated expenditures needed to repair the properties, net of the insurance recoveries, which nets to approximately $824,000, were expensed in 1994 since they do not extend the useful life of the properties. In April 1996, the Partnership received from the insurance company a final settlement payment of $334,591 related to the earthquake loss. This was reflected in income in the fourth quarter of 1995 and as a receivable at December 31, 1995. 5 8 REAL EQUITY PARTNERS (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1996 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash and bank certificates of deposit with an original maturity of three months or less. NOTE 2 - MORTGAGE NOTES PAYABLE Mortgage notes payable consist of the following: a. Conventional mortgage notes bearing interest at rates ranging from 8% to 10.375% per annum, payable in monthly installments ranging from $14,105 to $44,300 per month and having maturity dates from February 1996 to March 2001. These notes total $15,303,235 at June 30, 1996. b. Mortgage note, insured by the Department of Housing and Urban Development under the Section 221(d)(4) program, bearing interest at the rate of 7 percent per annum, payable in monthly installments of approximately $19,500, including interest through maturity in the year 2013. The note has a balance of $2,330,771 at June 30, 1996. The mortgage notes are secured by deeds of trust on the rental properties. In March 1995, the Parkside Apartments rental property ceased making payments to the mortgage lender and the mortgage was in default. A Trust Deed Sale has been completed as of May 23, 1996 and the property was forclosed upon on May 23, 1996. The assets and liabilities were written off at June 30, 1996 and the operating statement reflects a gain of $259,000. NOTE 3 - INCOME TAXES No provision has been made for income taxes in the accompanying financial statements as such taxes, if any, are the liability of the individual partners. NOTE 4 - RELATED PARTY TRANSACTIONS The Partnership has entered into agreements with an affiliate of NAPICO to manage the operations of the rental properties. The agreements are on a month-to-month basis and provide, among other things, for a management fee equal to 5 percent of gross rentals and other collections. Management fees charged to operations under this agreement were approximately $124,600 and $154,700 for the six months ended June 30, 1996 and 1995, respectively. 6 9 REAL EQUITY PARTNERS (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1996 NOTE 4 - RELATED PARTY TRANSACTIONS (CONTINUED) An affiliate of NAPICO performed certain of the earthquake repairs at the Park Creek and Warner Willows I and II rental properties. The payments to this affiliate for these repairs were approximately $737,000 as of December 31, 1995. (Note 1). The remaining earthquake work which shall be funded from insurance proceeds is estimated to be approximately $226,891 will be competitively bid. On February 22, 1996, the Partnership entered into contracts with the affiliate of NAPICO to perform earthquake related repairs of $107,700 at the damaged properties, of which $37,000 has been paid as of June 30, 1996. NOTE 5 - FEES AND EXPENSES DUE GENERAL PARTNER Under the terms of the Restated Certificate and Agreement of Limited Partnership (the "Partnership Agreement"), the Partnership is obligated to the corporate general partner for a deferred acquisition fee. This fee is for services rendered in connection with the selection, purchase, acquisition, development, and management of the Partnership and monitoring the operations of the properties. Distribution of any part of this fee shall be subordinated to receipt by each Limited Partner of an amount equal to a cumulative non- compounded 6 percent annual distribution with respect to the adjusted capital value (as defined in the Partnership Agreement). The aggregate amount of the deferred acquisition fee distributed in any year from net cash from operations shall not exceed an amount equal to 3 percent of the investment in properties plus any proceeds from sale or refinancing of the properties. The deferred acquisition fee shall be an amount which, when present valued at 8 percent from certain dates as defined in the Partnership Agreement, equals 10 percent of the gross proceeds of the offering ($3,000,000). Distribution of deferred acquisition fees will be made from net cash from operations and net proceeds from sale or refinancing for a maximum of 15 years, or until the above limit is met. The present value of the deferred acquisition fee plus accrued interest has been reflected in the accompanying financial statements and has been capitalized as part of the cost of rental property acquired. In March 1994, the Partnership paid approximately $2,300,000 to the corporate general partner from refinancing proceeds. The amount outstanding as of June 30, 1996 was approximately $672,000. The Partnership reimburses NAPICO for certain expenses. The reimbursement paid to NAPICO was $5,388 and $5,352 for the six months ended June 30, 1996 and 1995, respectively, and is included in general and administrative expenses. NOTE 6 - CONTINGENCIES The corporate general partner of the Partnership is a plaintiff in various lawsuits and has also been named as 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. 7 10 REAL EQUITY PARTNERS (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1996 NOTE 7 - 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. One of the mortgage notes payable is insured by HUD and is secured by a rental property. The operations generated by the property are subject to various government rules, regulations and restrictions which make it impracticable to estimate the fair value of this mortgage note payable. The book values of all other debt instruments approximate their fair values because the interest rates of these instruments are comparable to rates currently offered to the Partnership. The carrying amount of other assets and liabilities reported on the balance sheets that require such disclosure approximates fair value due to their short-term maturity. 8 11 REAL EQUITY PARTNERS (A CALIFORNIA LIMITED PARTNERSHIP) JUNE 30, 1996 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES The Partnership was formed to invest in residential rental properties either directly or through investments in joint ventures and other partnerships which will invest in such real estate. The Partnership acquired 6 buildings at various dates during 1984 and 1985. One of the buildings was foreclosed in 1996. The Partnership's primary sources of funds are income from rental operations and interest income earned on cash reserves. Distributions of net cash from operations were normally intended to be made to the Limited Partners of record on a quarterly basis during the months of February, May, August, and November pro rata in proportion to the number of units held. The November 1994 and subsequent distributions to the limited partners were not made due to the Partnership setting aside funds for losses incurred by REP as a result of the January 17, 1995 earthquake in the Los Angeles area. The Partnership will resume distributions to the limited partners once sufficient funds are in cash reserves to repair such earthquake damage. Currently, it is anticipated that the Partnership will continue to meet its current and long term obligations as they become due. RESULTS OF OPERATIONS Rental operations consist primarily of rental income and depreciation expense, debt service, and normal operating expenses to maintain the properties. Depreciation is provided on the straight-line method over the estimated useful lives of the buildings and equipment. Substantially all of the rental units in the apartment projects are leased on a month-to-month basis. An annual property management fee, which shall in any event not exceed 5% of gross revenues from each property under management, is payable by the properties to an affiliate of NAPICO. The Parkside Apartments rental property was operating at a deficit. In March 1995, the Parkside Apartments rental property ceased making payments to the mortgage lender. The mortgage lender filed a notice of default on January 17, 1996, and foreclosed on the property on May 23, 1996. The foreclosure resulted in a gain of $259,088 because the Partnership was relieved of nonrecourse liabilities which were in excess of the net book value of the property. 9 12 REAL EQUITY PARTNERS (A CALIFORNIA LIMITED PARTNERSHIP) JUNE 30, 1996 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (CONTINUED) RESULTS OF OPERATIONS (CONTINUED) Occupancy at the Warner Willows I and II properties averaged 92 percent during the first six months of 1996, a 5 percent decrease from the same period in 1995. Both properties operated with positive cash earnings for the six months ended June 30, 1996, (excluding earthquake repair costs, depreciation and principal payments on the mortgage loans). Positive cash earnings for the six months ended June 30, 1996 were approximately $41,000 and $9,000 for Warner Willows I and II, respectively. Occupancy at the Arbor Glen property averaged 95 percent during the first six months of 1996 a 1 percent increase from the same period in 1995. The property operated with a positive cash flows of approximately $133,000 during the first six months of 1996. The existing loan of $5 million maturing on May 1, 1996 was extended to August 1996 while concurrently entering into negotiations with Home Savings of America to refinance the existing loan. A good faith deposit check was given to Home Savings of America on February 28, 1996. Occupancy at the Park Creek property averaged 70 percent during the first six months of 1996, a 15 percent decrease from the same period in 1995. The property operated with a positive cash flows of approximately $23,000 (excluding earthquake repair costs, depreciation and principal payments on the mortgage loan) during the first six months of 1996. Occupancy at the Willowbrook property averaged 92 percent during the first six months of 1996, a 4 percent decrease from the same period in 1995. The property operated with a positive cash flow of approximately $129,000, (excluding depreciation and principal payments on the mortgage loan) during the first six months of 1996. On January 17, 1994, the Park Creek and Warner Willows I and II rental properties sustained damage, estimated at approximately $1,454,000, due to the earthquake in the Los Angeles area. Insurance proceeds of approximately $630,000 were allocated to the Partnership in 1994, as the estimated settlement under a master umbrella insurance policy covering earthquake damage for these and other properties managed by a related party. Included in liabilities as of June 30, 1996 is approximately $591,000 related to the earthquake damages. The total estimated expenditures needed to repair the properties, net of the insurance recoveries, which nets to approximately $824,000, were expensed in the period ended December 31, 1994, since they did not extend the useful life of the properties. In April 1996, the Partnership received from the insurance company a final settlement payment of $334,591 related to the earthquake loss. This was reflected in income in the fourth quarter of 1995 and included as a receivable at December 31, 1995. An affiliate of NAPICO performed certain of the earthquake repairs at the Park Creek and Warner Willows I and II rental properties. The payments to this affiliate for these repairs were approximately $737,000 as of December 31, 1995. The remaining earthquake work to be performed will be competitively bid. On February 22, 1996, the Partnership entered into contracts with the affiliate of NAPICO to perform earthquake related repairs of $107,700 at the properties, of which $37,000 has been paid as of June 30, 1996. 10 13 REAL EQUITY PARTNERS (A CALIFORNIA LIMITED PARTNERSHIP) JUNE 30, 1996 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (CONTINUED) RESULTS OF OPERATIONS (CONTINUED) The Partnership operations consist primarily of interest income earned on certificates of deposit and other temporary investments of funds not required for investment in projects. The amount of interest income varies with market rates available on certificates of deposit and with the amount of funds available for investment. Operating expenses of the Partnership consist substantially of recurring general and administrative expenses and professional fees for services rendered to the Partnership and interest on the deferred acquisition fee due the General Partners. The Partnership is incurring interest expense at a rate of 8 percent per annum on the unpaid fees due the general partner. Under the terms of the Partnership Agreement, the Partnership is obligated to the general partner for a deferred acquisition fee for services rendered in connection with the selection, purchase, development, management and monitoring the operations of the properties, in an amount which, when calculated on a present value basis (using a discount factor of 8 percent for this purpose) from the date of payment to the general partners to September 27, 1984 equals 10 percent of the gross proceeds of the offering ($3,000,000). Distribution of any part of this fee from net cash from operations shall be subordinate to receipt by each Limited Partner of an amount equal to a cumulative noncompounded 6% distribution. The acquisition fee distributed in any year from net cash from operations shall not exceed an amount equal to 3 percent of investment in properties (approximately $600,000) plus any proceeds from sale or refinancing of the properties. An annual property management fee, which shall not in any event exceed 5% of gross revenues from each property under management, is also payable to an affiliate of the corporate general partner. On March 21, 1994, the excess proceeds received from the Park Creek and the Warner Willows I and II refinancings were used to partially pay the deferred acquisition fees due the general partner. The amount outstanding as of June 30, 1996 was approximately $672,000. 11 14 REAL EQUITY PARTNERS (A CALIFORNIA LIMITED PARTNERSHIP) JUNE 30, 1996 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS As of June 30, 1996, the Partnership's corporate general partner was a plaintiff or defendant in several lawsuits. None of these were 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. 12 15 REAL EQUITY PARTNERS (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 EQUITY PARTNERS (a California limited partnership) By: National Partnership Investments Corp. Corporate General Partner Date: --------------------------------------------- By: --------------------------------------------- Bruce Nelson President Date: --------------------------------------------- By: --------------------------------------------- Shawn Horwitz Executive Vice President and Chief Financial Officer 13 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 1,973,856 0 0 0 0 2,822,863 32,370,981 12,732,178 22,461,666 834,079 0 0 0 0 6,563,494 22,461,666 0 2,752,973 0 0 1,886,757 0 728,107 138,109 0 138,109 0 0 0 138,109 0 0
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