-----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, LkV4cxekGA2XZXKMzdAn6vFaQVEiHx9DgHQKqqKpu32dY485/J0OnS1U00eSLcjD W7A4/7DlTWpr1iv/IrHoTg== 0000950148-95-000860.txt : 19951121 0000950148-95-000860.hdr.sgml : 19951121 ACCESSION NUMBER: 0000950148-95-000860 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951117 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: REAL ESTATE ASSOCIATES LTD VII CENTRAL INDEX KEY: 0000722648 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953290316 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13810 FILM NUMBER: 95594718 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 QUARTERLY REPORT 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 SEPTEMBER 30, 1995 COMMISSION FILE NUMBER 2-84816 REAL ESTATE ASSOCIATES LIMITED VII A CALIFORNIA LIMITED PARTNERSHIP I.R.S. EMPLOYER IDENTIFICATION NO. 95-3290316 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 VII (A CALIFORNIA LIMITED PARTNERSHIP) INDEX TO FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets, September 30, 1995 and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . 1 Statements of Operations, Nine and Three Months Ended September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . 2 Statement of Partners' Deficiency, Nine Months Ended September 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Statements of Cash Flows, Nine Months Ended September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 VII (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
ASSETS 1995 1994 (Unaudited) (Audited) ------------- ------------- INVESTMENTS IN LIMITED PARTNERSHIPS $ 18,447,393 $ 19,757,594 CASH 568,639 498,954 SHORT-TERM INVESTMENTS 125,000 125,000 OTHER ASSETS 105,129 29,568 ------------ ------------ TOTAL ASSETS $ 19,246,161 $ 20,411,116 ============ ============ LIABILITIES AND PARTNERS' DEFICIENCY LIABILITIES: NOTES PAYABLE $ 24,869,501 $ 24,869,501 ACCRUED INTEREST PAYABLE 21,903,267 20,514,472 ACCRUED FEES DUE GENERAL PARTNER 2,564,304 2,041,574 ACCOUNTS PAYABLE AND OTHER LIABILITIES 11,701 17,101 ------------ ------------ 49,348,773 47,442,648 PARTNERS' DEFICIENCY (30,102,612) (27,031,532) ------------ ------------ TOTAL LIABILITIES AND PARTNERS' DEFICIENCY $ 19,246,161 $ 20,411,116 ============ ============
The accompanying notes are an integral part of these financial statements. 1 4 REAL ESTATE ASSOCIATES LIMITED VII (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF OPERATIONS NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (Unaudited)
Nine months Three months Nine months Three months ended ended ended ended Sept. 30, 1995 Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1994 -------------- -------------- -------------- -------------- INTEREST INCOME $ 15,849 $ 4,854 $ 11,235 $ 4,758 ----------- ----------- ----------- --------- OPERATING EXPENSES: Interest expense 1,742,569 580,856 1,758,379 586,126 Management fees-general partner 557,730 185,910 557,730 185,910 General and administrative 76,914 25,538 72,546 16,871 Legal and accounting 58,213 2,000 49,192 18 ----------- ----------- ----------- --------- Total operating expenses 2,435,426 794,304 2,437,847 788,925 ----------- ----------- ----------- --------- LOSS FROM OPERATIONS (2,419,577) (789,450) (2,426,612) (784,167) DISTRIBUTIONS RECOGNIZED AS INCOME 23,497 - 181,931 17,405 EQUITY IN LOSS OF LIMITED PARTNERSHIPS AND AMORTI- ZATION OF ACQUISITION COSTS (675,000) (225,000) (426,000) (142,000) ----------- ----------- ----------- --------- NET LOSS $(3,071,080) $(1,014,450) $(2,670,681) $(908,762) =========== =========== =========== ========= NET LOSS PER LIMITED PARTNERSHIP INTEREST $ (148) $ (49) $ (128) $ (44) =========== =========== =========== =========
The accompanying notes are an integral part of these financial statements. 2 5 REAL ESTATE ASSOCIATES LIMITED VII (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENT OF PARTNERS' DEFICIENCY NINE MONTHS ENDED SEPTEMBER 30, 1995 (Unaudited)
General Limited Partners Partners Total --------- ------------ ------------ PARTNERSHIP INTERESTS September 30, 1995 20,802 ============ PARTNERS' DEFICIENCY, at January 1, 1995 $(593,446) $(26,438,086) $(27,031,532) Net loss for the nine months ended September 30, 1995 (30,711) (3,040,369) (3,071,080) --------- ------------ ------------ PARTNERS' DEFICIENCY, at September 30, 1995 $(624,157) $(29,478,455) $(30,102,612) ========= ============ ============
The accompanying notes are an integral part of these financial statements. 3 6 REAL ESTATE ASSOCIATES LIMITED VII (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOW NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (Unaudited)
1995 1994 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(3,071,080) $(2,670,681) Adjustments to reconcile net loss to net cash used in operating activities: Equity in loss of limited partnership 618,000 369,000 Amortization of acquisition costs 57,000 57,000 Increase in other assets (3,561) (8,839) Increase (decrease) in - Accrued interest payable 1,388,795 1,341,308 Accrued fees due general partner 522,730 557,730 Accounts payable (5,400) (4,125) ----------- ----------- Net cash used in operating activities (493,516) (358,607) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Distributions from limited partnerships recognized as a return of capital 635,201 734,431 Advances to limited partnership (72,000) - ----------- ----------- Net cash provided by investing activities 563,201 734,431 ----------- ----------- NET INCREASE IN CASH AND CASH EQUIVALENTS 69,685 375,824 CASH AND CASH EQUIVALENTS, beginning of period 498,954 609,263 ----------- ----------- CASH AND CASH EQUIVALENTS, end of period $ 568,639 $ 985,087 =========== ===========
The accompanying notes are an integral part of these financial statements. 4 7 REAL ESTATE ASSOCIATES LIMITED VII (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 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 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, 1994 prepared by Real Estate Associates Limited VII (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 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 at September 30, 1995, and the results of operations for the three and nine months then ended and changes in cash flows for the nine 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. METHOD OF ACCOUNTING FOR INVESTMENT IN LIMITED PARTNERSHIPS The investment in limited partnerships is accounted for on the equity method. Acquisition, selection and other costs related to the acquisition of the projects were capitalized as part of the investment account. NET LOSS PER LIMITED PARTNERSHIP INTEREST Net loss per limited partnership interest was computed by dividing the limited partners' share of net loss by the number of limited partnership interests outstanding during the year. The number of limited partnership interests was 20,802 for the periods presented. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash and bank certificates of deposit. 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. 5 8 REAL ESTATE ASSOCIATES LIMITED VII (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 - INVESTMENT IN LIMITED PARTNERSHIPS The Partnership holds limited partnership interests in 32 limited partnerships. In addition, the Partnership holds a general partner interest in REA IV, NAPICO is also the general partner in REA IV. REA IV, in turn, holds limited partner interests in 16 additional limited partnerships. In total, therefore, the Partnership holds interests, either directly or indirectly through REA IV, in 48 partnerships all of which own residential rental projects consisting of 4,731 apartment units. The mortgage loans of these projects are insured by various governmental agencies. The Partnership, as a limited partner, is entitled to between 98 percent and 99 percent of the profits and losses in the limited partnerships it has invested in directly. The Partnership is also entitled to 99 percent of the profits and losses of REA IV. REA IV holds a 99 percent interest in each of the limited partnerships in which it has invested. Equity in losses of limited partnerships is 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 September 30, 1995: Balance, beginning of period $19,757,594 Cash distributions recognized as a return of capital (635,201) Amortization of acquisition costs (57,000) Equity in loss of limited partnerships (618,000) ----------- Balance, end of period $18,447,393 ===========
6 9 REAL ESTATE ASSOCIATES LIMITED VII (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIPS The following are unaudited combined estimated statements of operations for the limited partnerships in which the Partnership has investments:
Nine months Three months Nine months Three months ended ended ended ended Sept. 30, 1995 Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1994 -------------- -------------- -------------- -------------- Revenues: Rental and other $19,881,000 $6,627,000 $19,683,000 $6,561,000 ----------- ---------- ----------- ---------- Expenses: Depreciation 4,401,000 1,467,000 4,014,000 1,338,000 Interest 2,904,000 968,000 3,225,000 1,075,000 Operating 14,601,000 4,867,000 13,974,000 4,658,000 ----------- ---------- ----------- ---------- 21,906,000 7,302,000 21,213,000 7,071,000 ----------- ---------- ----------- ---------- Net loss $(2,025,000) $ (675,000) $(1,530,000) $ (510,000) =========== ========== =========== ==========
NAPICO, or one of its affiliates, is the general partner and property management agent for certain of the limited partnerships included above. NOTE 3 - NOTES PAYABLE Certain of the Partnership's investments involved purchases of partnership interests from partners who subsequently withdrew from the operating partnership. The Partnership is obligated on non-recourse notes payable, bearing interest at 9 1/2 percent, to the sellers of the Partnership interests. The notes have principal maturity dates ranging from December 1996 to December 2002 or upon sale or refinancing of the underlying partnership properties. These obligations are collateralized by the Partnership's investments in the investee partnerships and are payable out of cash distributions from the investee partnerships, as defined in the notes. Unpaid interest, equal to $21,903,267 at September 30, 1995, is due at maturity of the notes. NOTE 4 - 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 .5 percent of the invested assets of the partnerships. Invested assets is 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 fee was approximately $557,700 for the nine months ended September 30, 1995 and 1994. 7 10 REAL ESTATE ASSOCIATES LIMITED VII (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 NOTE 4 - ACCRUED FEES AND EXPENSES DUE TO GENERAL PARTNER (CONTINUED) The Partnership reimburses NAPICO for certain expenses. In 1995, the reimbursement to NAPICO of $29,925 was paid and included in the Partnership's operating expenses. NOTE 5 - CONTINGENCIES The corporate general partner of the Partnership and the Partnership are plaintiffs in various lawsuits and have also been named defendants 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. 8 11 REAL ESTATE ASSOCIATES LIMITED VII (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 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. Certain of the Partnership's investments involved purchases of partnership interests from partners who subsequently withdrew from the operating partnership. The Partnership is obligated on non-recourse notes payable, bearing interest at 9 1/2 percent, to the sellers of the Partnership interests. The notes have principal maturity dates ranging from December 1996 to December 2002 or upon sale or refinancing of the underlying partnership properties. These obligations are collateralized by the Partnership's investments in the investee partnerships and are payable out of cash distributions from the investee partnerships, as defined in the notes. Unpaid interest, equal to $21,903,267 at September 30, 1995, is due at maturity of the notes. RESULTS OF OPERATIONS Partnership revenues consist primarily of interest income earned on certificates of deposit and other temporary investment of funds not requred 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 invested assets is payable to the corporate general partner. 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. Losses incurred after the limited partnership account is reduced to zero are not recognized. 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 and general partnerships owning government assisted projects. Available cash is invested in money market funds and certificates of deposit which provide interest income as reflected in the statement of operations. These temporary investments can be easily converted to cash to meet obligations as they arise. The Partnership intends to continue investing available funds in this manner. 9 12 REAL ESTATE ASSOCIATES LIMITED VII (A CALIFORNIA LIMITED PARTNERSHIP) SEPTEMBER 30, 1995 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS As of September 30, 1995, the Partnership's Corporate General Partner was a plaintiff or defendant in several suits, including the following related to REAL VII: 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 VII (A CALIFORNIA LIMITED PARTNERSHIP) SEPTEMBER 30, 1995 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 VII (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 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 568,639 0 0 0 0 693,639 0 0 19,246,161 11,701 0 0 0 0 (30,102,612) 19,246,161 0 39,346 0 0 1,367,857 0 1,742,569 (3,071,080) 0 (3,071,080) 0 0 0 (3,071,080) 0 0
-----END PRIVACY-ENHANCED MESSAGE-----