-----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, Chax2jwyfoLKA3+olSjNa0xqh84aIG5JgPY8l6B0o2cSb8awv/t4uibrWGIVElz6 KIYLMVxl1hsgnD/U8zFQKg== 0000753258-98-000004.txt : 19981116 0000753258-98-000004.hdr.sgml : 19981116 ACCESSION NUMBER: 0000753258-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LARCHDALE OWNERSHIP CO LTD CENTRAL INDEX KEY: 0000753258 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 953932760 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-24906 FILM NUMBER: 98748238 BUSINESS ADDRESS: STREET 1: 6355 TOPANGA CANYON BLVD STREET 2: STE 428 CITY: WOODLAND HILLS STATE: CA ZIP: 91367 BUSINESS PHONE: 8183460509 MAIL ADDRESS: STREET 1: 6355 TOPANGA CANYON BLVD SUITE 428 CITY: WOODLAND HILLS STATE: CA ZIP: 91367 10-Q 1 [ARTICLE] 5 [PERIOD-TYPE] 9-MOS YEAR 9-MOS [FISCAL-YEAR-END] DEC-31-1997 DEC-31-1998 DEC-31-1997 [PERIOD-END] SEP-30-1998 DEC-31-1997 SEP-30-1997 [CASH] 45486 30642 0 [SECURITIES] 0 0 0 [RECEIVABLES] 0 0 0 [ALLOWANCES] 0 0 0 [INVENTORY] 0 0 0 [CURRENT-ASSETS] 574966 618563 0 [PP&E] 14039753 14039753 0 [DEPRECIATION] 9716552 9218993 0 [TOTAL-ASSETS] 4943653 5469965 0 [CURRENT-LIABILITIES] 874925 746227 0 [BONDS] 13827877 13916575 0 [PREFERRED-MANDATORY] 0 0 0 [PREFERRED] 0 0 0 [COMMON] 0 0 0 [OTHER-SE] (9759149) (9192837) 0 [TOTAL-LIABILITY-AND-EQUITY] 4943653 5469965 0 [SALES] 0 0 0 [TOTAL-REVENUES] 2334826 0 2440620 [CGS] 0 0 0 [TOTAL-COSTS] 0 0 0 [OTHER-EXPENSES] 2046202 0 2923895 [LOSS-PROVISION] 0 0 0 [INTEREST-EXPENSE] 854936 0 939001 [INCOME-PRETAX] 0 0 0 [INCOME-TAX] 0 0 0 [INCOME-CONTINUING] 0 0 1265414 [DISCONTINUED] 0 0 0 [EXTRAORDINARY] 0 0 0 [CHANGES] 0 0 0 [NET-INCOME] (566312) 0 (156862) 478543 [EPS-PRIMARY] 0 0 0 [EPS-DILUTED] 0 0 0
EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended September 30, 1998 Commission File Number 0-24906 Larchdale Ownership Company, Ltd. (Exact name of registrant as specified in its charter) California 95-3932760 (State or other jurisdiction of (I.R.S. Employer corporation or organization) Identification No.) 6355 Topanga Canyon Blvd., #428, Woodland Hills, CA 91367 (Address of Principal executive offices) (818) 346-0509 (Registrant'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 LARCHDALE OWNERSHIP COMPANY, LTD. (A California Limited Partnership) Page Number Part I - Financial Information Balance Sheets Sept 30, 1998 (Unaudited) and December 31, 1997 3 Statement of Operations and Computation of Net Loss per Partnership Interest (Unaudited) for the Nine Months ended Sept 30, 1998 and 1997 4 Statement of Cash Flows (Unaudited) for the Nine Months Ended Sept 30, 1998 and 1997 5 Notes to Unaudited Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II - Other Information 10 LARCHDALE OWNERSHIP COMPANY, LTD. (A California Limited Partnership) Balance Sheets Sept 30, 1998 (Unaudited) and December 31, 1997 Sept 30, December 31, 1998 1997 ASSETS PROPERTY AT COST Land $ 1,679,198 $ 1,679,198 Buildings and improvements 11,949,710 11,949,710 Furniture and fixtures 410,845 410,845 __________________________ 14,039,753 14,039,753 Less accumulated depreciation 9,716,552 9,218,993 __________________________ 4,323,201 4,820,760 CASH 45,486 30,642 LOAN FEES - net of accumulated amortization of $57,404 at Sept 30, 1998 and $30,213 at December 31, 1997 305,149 332,340 PREPAID EXPENSES AND OTHER ASSETS 269,817 286,223 _____________________ $ 4,943,653 $ 5,469,965 LIABILITIES AND PARTNERS' CAPITAL NOTE PAYABLE $ 13,827,877 $13,916,575 ACCTS PAYABLE-ACCRUED EXPENSES 672,177 639,962 ADVANCE DUE TO AFFILIATE 80,000 TENANT SECURITY DEPOSITS 122,748 106,265 PARTNERS' CAPITAL (DEFICIT) (9,759,149) (9,192,837) ___________________________ $ 4,943,653 $ 5,469,965 -3- LARCHDALE OWNERSHIP COMPANY, LTD. (A California Limited Partnership) Statement of Operations (Unaudited) Nine Months Ended Sept 30, Sept 30, 1998 1997 REVENUES Rental Income $2,263,338 $2,350,783 Other Income 71,488 89,837 _________________________ 2,334,826 2,440,620 EXPENSES Interest 854,936 939,001 Depreciation and amortization 524,751 581,655 Repairs and maintenance 428,694 1,324,740 Utilities 334,018 261,522 Salaries and related expenses 243,832 278,313 Management and administrative fee 140,975 144,583 Property taxes 234,967 151,380 Professional services 50,957 40,709 Insurance 53,035 59,757 Administrative costs 21,825 39,821 Advertising and promotion 12,398 14,945 Licenses and fees 750 26,470 ____________________ 2,901,138 3,862,896 NET LOSS before gain on debt discount (566,312)(1,422,276) Gain on debt discount 1,265,414 _________________________ NET INCOME (LOSS) $ (566,312) $(156,862) Net income (loss) per weighted number of limited partnership interests outstanding (35,371 at Sept 30, 1998 and 1997) $ (16) $ (4) -4- LARCHDALE OWNERSHIP COMPANY, LTD. (A California Limited Partnership) Statement of Cash Flows (Unaudited) Nine Months Ended Sept 30, 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES Net loss from operations $ (566,312) $ (156,862) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation and amortization 524,751 581,655 (Increase) decrease in: Prepaid expenses and other assets 16,406 (244,885) Increase (decrease) in: Accts payable and accrued expenses 32,214 165,418 Accrued interest to affiliate (379,618) ____________________ Net cash provided (used) by operating activities 7,059 (34,292) CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in note payable (88,698) 770,688 Increase (decrease) to affiliate 80,000 (664,596) Increase (decrease) in tenant sec. deps. 16,483 25,098 ____________________ Net cash provided (used) by 7,785 131,190 financing activities Net increase (decrease) in cash 14,844 96,898 Cash beginning of year 30,642 18,044 ____________________ Cash at end of period $ 45,486 $ 114,942 -5- LARCHDALE OWNERSHIP COMPANY, LTD. (A California Limited Partnership) NOTES TO UNAUDITED FINANCIAL STATEMENTS NOTE 1 - FINANCIAL STATEMENTS The balance sheet as of Sept 30, 1998, the statement of operations for the nine months ended Sept 30, 1998 and 1997, and the statement of cash flows for the nine month periods then ended have been prepared by the partnership without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at Sept 30, 1998, and for all periods presented, have been made. NOTE 2 - INCOME TAXES The net loss reported for financial reporting purposes is different from that reported for tax purposes, for the nine months ended Sept 30, 1998, as shown below: Net loss for financial statements reporting purposes $ 566,312 Tax depreciation difference (129,936) _________ Net loss for income tax reporting purposes $ 436,376 -6- Management's Discussion and Analysis of Financial Condition and Results of Operation Liquidity and Capital Resources The Partnership's primary source of liquidity has been funds from operations, proceeds from the initial capitalization, and the exercise of warrants in 1986 and 1987. With the completion of the 1987 warrant offering, the Partnership is fully capitalized. Future capital requirements are expected to be primarily provided by operations. On November 10, 1986, the Partnership obtained a new loan of $12,750,000 from an institutional third-party lender. The note bears interest at a variable rate of 225 basis points over the 11th District Federal Home Loan Bank cost of funds, with a floor of 10%. In May 1992, the Partnership completed a modification of the payment terms of the loan for a one year period commencing with the payment due January 1, 1992. Under the terms of the modification, monthly interest only payments were made at the reduced rate of 5%, with the difference between interest at the full rate and the reduced payment rate added to the principal amount of the loan. In addition, payments for property taxes were impounded by the lender on a monthly basis. After the end of the modification period, the partnership made partial monthly payments until April 6, 1993 when payment in full of past due amounts was made and the loan reverted to its unmodified terms. In May 1994, the Partnership completed a second modification of the loan payment terms for a one year period commencing on November 1, 1993. Under the terms of the second modification, monthly interest only payments were paid at the reduced rate of 9%, with the difference between interest at the full rate of 10% and the reduced payment rate added to the principal amount of the loan. In addition, payments for property taxes were impounded by the lender on a monthly basis. In March 1995, the modification was extended for a one year period commencing on November 1, 1994. Starting with the payment due on November 1, 1995, the modification expired and monthly payments at the full rate of 10% per annum plus principal amortization were required under the original terms of the note. However, the lender continued to bill the Partnership under the terms of the modification and the Partnership paid the amounts as billed. The Partnership contacted the lender in September 1996 to initiate negotiations to resolve the billing disparity which had accumulated to $281,000 and the problems of the property taxes due starting in September 1996 and the deferred maintenance of the property. In November 1996, the Partnership and the lender entered into a forbearance agreement under which the Partnership agreed to make full monthly payments of $124,031 beginning November 1, 1996 and the lender agreed to forestall any foreclosure proceedings while negotiations continued. In December 1996, the lender agreed to accept $11,800,000 as payment in full on its loan under the conditions, among others, that payment be received before April 15, 1997, that the property taxes be paid, and that the loan be purchased by a third party independent of the Partnership. The purchase price was reduced by the principal portion of the monthly payments made from January 1, 1997 through the purchase date. The property taxes were paid by the Partnership in December 1996. On February 28, 1997, the Partnership completed the refinancing of the property and paid off the existing loan which had a balance at closing of $13,245,725 with a cash payment of $11,767,496 for a gain of $1,481,229. The Partnership paid a fee of $50,000 to a third party to purchase the existing loan from the lender and subsequently sell the loan to the Partnership and a fee of $25,213 to a consultant for assistance in making the initial contact with the appropriate lender representative. In addition, the partnership paid a fee of $140,602 to the general partner, LMH Realty, Inc., equal to 10% of the net gain of $1,406,016 for success in the negotiating of the loan discount and arranging the third party purchase of the loan. The Partnership will recognize the remaining gain of $1,265,414 in 1997. The loan was purchased and the refinancing completed with funds from a new loan to the Partnership of $14,000,000 at 8.20% per annum maturing on March 1, 2007 with monthly principal and interest payments of $104,686. The Partnership paid fees to the lender and loan broker of $280,000, loan costs, title insurance, transfer taxes and recording fees of $50,996, and estimated legal fees of $25,000. The new loan provided for reserves for the initial two monthly payments, property taxes and insurance. In addition, the new lender held a reserve of $493,000 for deferred property maintenance items. After the payment of $11,767,496 to the prior lender, the Partnership received net proceeds from the refinancing of $1,316,015. In September 1997, the Partnership completed the pay off of advances due to an affiliate of the general partner of $664,596 plus accrued interest of $430,295. As of the date of this Report, the Partnership does not foresee any trends, demands, commitments, events, or uncertainties which are reasonably likely to result in a material increase or decrease in the Partnership's liquidity. -8- Results of Operations Rental income decreased by $105,794, or 4.3%, to $2,334,826 in the first nine months of 1998 compared with $2,440,620 in the comparable quarter of 1997. This decrease was caused by several factors, including lower occupancy related to a change in terms of tenancy wherein all tenants are now responsible for an allocation of gas utility costs. Another factor in the decreased rental revenue was the disruption to the property caused by the County's widening of the street leading to the property. This street improvement, which was completed in February 1998, will be a benefit in the long run by improving access to the property with the installation of a traffic signal and greater visibility for the property signage. Rental delinquencies increased starting in the third quarter of 1997 as a result of a slowdown by the County Sheriff in processing evictions in the entire area which also had a negative impact on rental revenue. The Sheriff has caught up on the backlog and evictions in March 1998 are now processed on the normal timetable. Rental delinquencies have started to decline in 1998. A substantial increase in billing for water consumption has more than offset the savings in gas utility costs. The water billings are currently being contested with the utility company. The utility expense for the period reflects the full amount billed by the water utility company. In 1995, the county enacted a solid waste service charge on property tax bills. However the county did not bill the charge for 1996, 1997, and 1998 until May 1998. The property tax expense reflects this three year charge of $81,530 that was paid in July 1998. An affiliate of the general partner advanced $80,000 to the Partnership to provide the funds for payment of these property tax bills. Interest expense declined in 1998 from 1997 as a result of the lower interest rate on the partnership's new financing which was obtained on February 28, 1997 and the payment of the advances due to an affiliate of the general partner in September 1997. Amortization expense includes the expense of writing off the remaining balance of loan fees originating from the partnership's prior financing. As a part of the financing, funds were provided for the rehabilitation of the property. Work was initiated on this project during the second quarter of 1997, including street, driveway, and parking lot pavement, additional parking spaces, concrete and brick repairs, hallway carpeting and painting, and gutter and downspout repairs. This phase of the property rehabilitation was substantially completed by the end of 1997. -9- Part II Other Information Item 1 - Legal Proceedings Not Applicable Item 2 - Change in Securities Not Applicable Item 3 - Default Upon Senior Securities Not Applicable Item 4 - Submission of Matters to a Vote of Security Holders Not Applicable Item 5 - Other Information Not Applicable Item 6 - Exhibits and Reports on Form 8-K Not Applicable -10- SIGNATURE 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. LARCHDALE OWNERSHIP COMPANY, LTD. By: L. Mark Hammerschmitt, President LMH Realty, Inc. Managing General Partner Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following person on behalf of the Partnership in the capacity and on the date indicated. Signature Title Date L. Mark Hammerschmitt, President Managing Nov 5, 1998 LMH Realty, Inc. General Partner -11-
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