-----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, CsWbQy7YtoCdpA+80k2b3goHt4xTzR8K9A5PsUZqnu588vagF1ARIRM85d0KLJk/ KsQ0ORGa2Zmh0/syEi6Pmg== 0000913906-00-000021.txt : 20000328 0000913906-00-000021.hdr.sgml : 20000328 ACCESSION NUMBER: 0000913906-00-000021 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000327 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FJS PROPERTIES FUND I LP CENTRAL INDEX KEY: 0000756435 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 133252067 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-15755 FILM NUMBER: 579255 BUSINESS ADDRESS: STREET 1: 264 ROUTE 537 EAST CITY: COLTS NECK STATE: NJ ZIP: 07722 BUSINESS PHONE: 7325429209 10-K 1 10 - K FORM 10-K U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 |X| ANNUAL REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 OR |_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________. Commission File number 0-15755 ------- FJS PROPERTIES FUND I, L.P. ------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-3252067 ------------ -------------- (State of other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 264 Route 537 East, Colts Neck, NJ 07722 ------------------------------------------ (Address of principalexecutive offices) (Zip Code) Registrant's telephone number, including area code 732-542-9209 ------------ Securities registered pursuant to Section 12(b) of the Exchange Act: Title of each class Name of each exchange on which registered NONE N/A ----- -------- Securities registered pursuant to Section 12(g) of the Exchange Act: Units of Limited Partnership Interest ------------------------------------- (Title of Class) 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] State the aggregate market value of the voting stock held by non-affiliates computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within the past 60 days. N/A No public market exists. Documents Incorporated by Reference Prospectus of Registrant, dated June 10, 1985, as supplemented by Supplement dated November 7, 1985, filed pursuant to Rule 424 under the Securities Act of 1933. Annual Report on Form 10-K of Registrant for the fiscal years ended December 31, 1986 through December 31, 1998, filed pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934, but each only to the extent expressly incorporated by reference in Parts I, II and III. Forms 8-K and 8-K/A filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on December 13, 1999, and December 23, 1999, respectively. PART I Item 1. Business Registrant is a Delaware limited partnership formed as of October 5, 1984. FJS Properties, Inc., a Delaware corporation and an affiliate of First Jersey Securities, Inc. ("First Jersey" or the "Underwriter"), is the general partner ("General Partner") of the Registrant. Reference is made to the Prospectus (the "Prospectus") of Registrant dated June 10, 1985, as supplemented by a Supplement (the "Supplement"), dated November 7, 1985, which have been filed pursuant to rule 424 under the Securities Act of 1933, as amended, each of which is incorporated herein by reference. The Prospectus was filed as part of Registrant's Registration State ment on Form S-11, pursuant to which 100,000 Units of Limited Partnership Interest (the "Units") were registered. On May 1, 1986, the sole closing of the Units, the Registrant received $8,391,500 in Gross Proceeds from the sale of 16,783 Units to investors. Registrant paid $671,320 in underwriting commissions to First Jersey and a total of $419,575 in organization and offering expenses to the General Partner. Registrant owns and operates one 312 unit garden apartment complex, the Pavilion Apartments ("Pavilion"), located in West Palm Beach, Florida. The description of the acquisition is set forth in the Prospectus under "Property Acquisitions" and is incorporated herein by reference. Registrant will not invest in or acquire any other properties. For the years ended December 31, 1999, 1998 and 1997, revenues from Pavilion accounted for approximately 99.4%, 98.4%, and 98.7% respectively of Registrant's gross revenues. Competition The real estate business is highly competitive and Pavilion has active competition from similar properties in the vicinity. Registrant will also experience competition for potential buyers at such time as it seeks to sell Pavilion. Employees Services are performed by Registrant's employees at Pavilion by ten full-time and one part-time on site personnel. The personnel are under the direct supervision of a local unaffiliated management company which in turn is supervised by the General Partner. Salaries for such on-site personnel are paid by Registrant or by the local unaffiliated management company from fees received from Registrant. The General Partner also provides certain supervisory property management services to Registrant under a management agreement. Page 1 Tax Legislation The Tax Reform Act of 1986 (the "1986 Act"), which was enacted on October 22, 1986, requires that losses from "passive activities" (which includes any rental activity) may only offset income from "passive activities" Passive losses in excess of passive income are suspended and are carried over to future years when they may be deducted against passive income generated by the Partnership in such year (including gain recognized on the sale of the Partnership's assets) or against passive income derived by Unitholders from other sources. The Revenue Act of 1987 (the "1987 Act") was enacted on December 22, 1987 and provides certain adverse tax consequences for "publicly traded partnerships." A "publicly traded partnership" is defined as a partnership whose interests are traded on an established securities market or readily tradable on a secondary market (or the substantial equivalent thereof). Such a partnership will be taxed as a corporation (unless at least 90% of its gross income is derived from certain passive sources, such as real property rents, dividends or interest) and each tax-exempt entity acquiring an interest in any such partnership after December 17, 1987 will have all of its share of the partnership's income attributable to interests acquired after such date treated as unrelated business income. In addition, the income from such a partnership would be treated as other than passive income, and losses from any such partnership could only be offset by income from the same partnership. The Revenue Act of 1987 adopted provisions which have an adverse impact on in vestors in a "publicly traded partnership." A "publicly traded partnership" is a partnership whose interests are traded on an established securities market or readily tradable on a secondary market (or the substantial equivalent thereof). If the Partnership were classified as such, (i) it may be taxed as a corporation, (ii) qualified plans and other entities exempt from taxation acquiring interests in the Partnership after December 17, 1987 would have to treat income derived from the Partnership as unrelated business income, with the result that the limited partnership interests would be less attractive to tax-exempt investors (and therefore could be less marketable) or (iii) income derived from an investment in the Partnership would be treated as other than passive income, in which case losses from the Partnership could only be offset by income from the same partnership. The IRS has established alternative safe harbors that allow interests in a partnership to be transferred or redeemed in certain circumstances without causing the partnership to be characterized a "publicly traded partnership." Interests in the Partnership are not listed or quoted for trading on an established securities exchange. However, it is possible that transfers of interests could occur in a secondary market in sufficient amount and frequency to cause the Partnership to be treated as a "publicly traded partnership." The Partnership has adopted a policy of prohibiting transfers in secondary market transactions unless, notwithstanding such transfers, the Partnership will satisfy at least one of the safe harbors. Such a restriction could impair the ability of an investor to liquidate its investment quickly. It is anticipated that such policy will remain in effect until such time, if ever, as further clarification of the Revenue Act of 1987 permits the Partnership to lessen the scope of these restrictions. The General Partner, if so authorized, will take such steps as are necessary, if any, to prevent the reclassification of the Partnership as a "publicly traded partnership." Page 2 Item 2. Properties ---------- The sole property owned and operated by Registrant is the Pavilion Apartments (the "Project"), a 312 Unit garden apartment complex located at 401 Executive Center Drive, West Palm Beach, Florida. Registrant will not acquire or invest in any other properties. Registrant acquired a 50% interest in the Pavilion on December 31, 1984, and the remaining 50% on January 1, 1985. It owns Pavilion in fee ownership, subject to a first mortgage. Pavilion, constructed in 1972, is located on a 15 acre tract and consists of 312 apartment units containing 286,500 square feet of rentable area in 11 low-rise buildings. Rental units are available in one, two and three bedroom plans. There are 108 one-bedroom apartments, 44 two- bedroom apartments with one bath, 116 two-bedroom apartments with two baths, and 44 three- bedroom apartments. Ground amenities include a heated swimming pool, lighted tennis courts, basketball and shuffle-board courts, and a clubhouse with game room, saunas, lounge and outdoor barbecues. An equipped children's playground is also provided. The apartments in the Project are available for rent to residential tenants, generally under one year leases. No tenant occupies more than one apartment in the Pavilion except for the West Palm Beach Recovery Center which occupies 8 Units. Each of such units was leased at the then current market rents. With substantially all tenants occupying their apartments under one year leases, it is anticipated that leases for all apartments will expire each year. The current rent schedule for leases is as follows: Unit Size1 Monthly Rent2 1 BR/1B $549/$569 2 BR/1B $649/$669 2 BR/2B $669/$689 3 BR/2B $769/$789 In the opinion of the management of Registrant, the Project is adequately covered by insurance. First Mortgage: The existing first mortgage affecting the Project is held of record by Greenwich Capital Financial Products, Inc., and serviced by Bank United of Texas FSB, Houston, Texas. As of December 31, 1999, the mortgage had an unpaid principal balance of approximately $4,644,938. This mortgage was closed on March 31, 1994, and refinanced the former first mortgage held by The Bank of Tokyo. At that time, a new loan secured by a first mortgage on the project was obtained from the Long Beach Bank, FSB, Orange, California, in the amount of $5,000,000. This - -------- 1BR = Bedroom; B = Bathroom 2Range of rents/unit's rent varies depending on location of unit in the Project. Page 3 loan provides for a term of ten (10) years with an interest rate of 9.75% per annum. The loan is repayable in equal monthly installments of $44,556.87 for principal and interest, with a balloon payment due in March 2004. At maturity a balance of approximately $4,215,000 will be due. The loan requires deposits with the lender for real estate taxes, insurance premiums, a debt service reserve of one month's payment, as well as deposits for replacement reserves for the project. These deposits are held in interest bearing accounts for the benefit of Registrant. The loan was not prepayable during the first five years of its term, and thereafter is prepayable with payment of a penalty based upon a "rate protection" formula for the lender. The loan requires consent of the holder to the transfer or sale of the Pavilion Apartments and to certain transfers of ownership interests in Registrant. For the complete terms and provisions of this loan see Exhibits 10(m) through 10(s). The following table sets forth the components of the Pavilion Apartments upon which depreciation, for Federal Tax purposes, is taken: Item Tax Basis Rate Method Life ---- --------- ---- ------ ---- Building $6,897,424 4% - 5% ACRS 18 yrs Improvements $528,798 Fully SL 10 yrs Depreciated Improvements $224,322 3.6% MACRS 27.5 yrs Improvements $124,430 1.6% - 2.8% MACRS 27.5 yrs Improvements $157,938 0.2% - 1.3% MACRS 27.5 yrs Furniture/Fixtures $1,048,378 Fully ACRS 5 yrs Depreciated Furniture/Fixtures $6,635 Fully MACRS 7 yrs Depreciated Furniture/Fixtures $10,905 8.9% MACRS 7 yrs Furniture/Fixtures $10,336 12.5% MACRS 7 yrs Furniture/Fixtures $65,649 19.2% MACRS 5 yrs Furniture/Fixtures $117,749 32.0% MACRS 5 yrs Furniture/Fixtures $140,787 20.0% MACRS 5 yrs Page 4 Ad Valorem Real Estate taxes for the 1999 calendar year were in the amount of $162,571.50 which was based upon an assessed valuation of $6,500,000 and the following millage rates: Taxing Authority: Millage rate: County 4.6000 School State 5.9620 School Local 2.6250 City of West Palm Beach 8.3129 So Fl Water Management Dist. 0.5970 Children's Services Council 0.4696 F.I.N.D. 0.0440 PBC Health Care District 0.9750 Everglades Construction Project 0.1000 County - Debt 0.3456 School - Debt 0.4560 City of West Palm Beach - Debt 0.5239 Total: 25.0110 In addition a non-advalorem assessment of $17,723.30 was levied by the Solid Waste Authority against the Pavilion. The aggregate tax of $180,294.80 was paid in the discounted amount of $173,083.01 in December 1999. Item 3. Legal Proceedings ----------------- There are no material legal proceedings pending against or involving Registrant or Pavilion. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- No matters were submitted to a vote of security holders during the 1999 calendar year. Page 5 PART II Item 5. Market for Registrant's Securities and Related Security Holder Matters ----------------------------------------------------------------------- Units of the Registrant are not publicly traded nor is it anticipated that a public trading market will develop for the Units. On and as of December 31, 1997, beneficial interests in an aggregate of 1,843 Units were acquired from the unaffiliated holders thereof, by three third parties at a price of $75 per Unit, pursuant to a tender offer filed with the Securities and Exchange Commission. As of March 15, 2000, there were approximately 674 holders owning an aggregate of 16,788 Units. The General Partner has established a policy of limiting transfers of Units in secondary market transactions unless, notwithstanding such transfers, the Partnership will satisfy one or more applicable safe harbors prescribed by the Internal Revenue Service to avoid having the Partnership classified as a publicly traded partnership which could have adverse tax effects on limited partners. In order to comply with the safe harbor provisions, the transfer of Units may be restricted. There were no distributions per Unit of Registrant during the 1985 fiscal year. The Registrant distributed $3.01 per Unit for the 1986 fiscal year, $4.63 per Unit for 1987, $6.59 per Unit for 1988, $14.72 per Unit for 1989, $7.75 per Unit for 1990, and $1.97 per Unit for the first quarter of 1991. There were no distributions made for the second, third or fourth quarters of 1991, for 1992, or for 1993. Distributions aggregating $5.19 and $5.64 per Unit were distributed for 1994 and 1995 respectively, and a distribution of $1.54 was made for the first quarter of 1996. No distributions were made for the remaining quarters of 1996, during which period all available cash flow was utilized for work being done on the Pavilion Apartments. Distributions of $1.30, $2.40 and $1.83 were made for the first three quarters of 1997 respectively. No distribution was made for the fourth quarter of 1997 as all available cash flow was utilized for capital improvements at the Pavilion Apartments. Distributions of $2.70, $2.62, $0.91 and $2.19 (disbursed in February 1999) were made for the respective quarters of 1998. A distribution of $2.29 per Unit was made in May 1999, for the first quarter of 1999. No distributions were made for the second, third or fourth quarters of 1999, during which period all available cash flow was utilized for capital improvements at the Pavilion Apartments. There are no material legal restrictions set forth in Registrant's Limited Partnership Agreement, annexed to the Prospectus as Exhibit A thereto ("Partnership Agreement"), upon Reg istrant's present or future ability to make distributions. Page 6 Item 6. Selected Financial Information ------------------------------ The information set forth below presents selected financial data of Registrant. Additional financial information is set forth in the audited financial statements and footnotes contained herein. Years Ended December 31, 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Total Assets $6,910,861 $7,076,729 $7,258,818 $7,448,953 $7,756,871 Mortgage Note Payable$4,644,938 $4,722,579 $4,793,033 $4,856,968 $4,914,986 Rental Revenue $2,189,322 $2,081,901 $2,040,543 $1,852,877 $1,841,892 Interest Expense - $456,410 $463,687 $470,769 $476,199 $481,611 Mortgages Net Profit [Loss] ($50,566) $34,952 ($50,582) ($270,996) ($121,682) Net Cash Provided by $335,890 $233,979 $280,140 $51,495 $116,822 Operating Activities Net Cash [Used] in ($423,155) ($134,645) ($80,481) ($10,336) ($2,687) Investing Activities - Capital Expenditures Net Cash [Used] in ($153,611) ($176,098) ($157,710) ($89,899) ($146,425) Financing Activities Profit (Loss) Per ($2.98) $2.06 ($2.98) ($15.98) ($7.18) Limited Partnership Unit Distributions Per $4.48 $6.23 $5.53 $1.88 $5.53 Limited Partnership Unit Weighted Average 16,788 16,788 16,788 16,788 16,788 Number of Limited Partnership Units Outstanding Page 7 Item 7. Management's Discussion and Analysis of Financial Conditions and Results of Operations --------------------------------------------------------------------- Liquidity and Capital Resources As of the present date, Registrant owns one Property, the Pavilion Apartments, and does not intend to acquire any other property. As of May 1, 1986, Registrant admitted as Limited Partners purchasers of 16,783 Units. Total capital raised was $8,391,500. In addition, Registrant received accrued interest on the escrow account in the amount of $82,471. Thus proceeds from the admission of Limited Partners aggregated $8,473,971. The Pavilion Apartments are owned by Registrant subject to a first mortgage loan in the original principal amount of $5,000,000. This loan was obtained from Long Beach Bank in March 1994, to refinance the previous first mortgage affecting the property. (See "First Mortgage" above for a description of the terms of this loan). Registrant anticipates that cash flow from Pavilion should be sufficient to permit the Partnership to make the monthly payments on the first mortgage due prior to maturity and to meet Registrant's monthly operating expenses, however, should there be a significant decrease in Pavilion's occupancy or rental rates, or should there be a significant increase in capital repair/replacement requirements that can be funded from available cash flow and current reserves, there can be no assurance that Registrant would be able to obtain sufficient funds to make such payments. Registrant distributed $3.01 per Unit for the 1986 fiscal year, $4.63 per Unit for 1987, $6.59 per Unit for 1988, $14.72 per Unit for 1989, $7.75 per Unit for 1990, and $1.97 per Unit for the first quarter of 1991. There were no distributions made for the second, third or fourth quarters of 1991, for 1992, or for 1993. Distributions aggregating $5.19 and $5.64 per Unit were made for 1994 and 1995 respectively, and a distribution of $1.54 was made for the first quarter of 1996. No distributions were made for the remaining quarters of 1996. The reduction in distributions in the years from 1989 through 1991, resulted from decreasing interest rates and the reduced occupancy levels which the Pavilion Apartments experienced. When there was cash flow available for distribution during 1992 and 1993, no distributions were made to retain available cash which might be required for use in connection with the refinancing of the existing first mortgage. During the last three quarters of 1996 all available cash flow was utilized for work being done on the Pavilion Apartments. Distributions of $1.30, $2.40 and $1.83 were made for the first three quarters of 1997 respectively. No distribution was made for the fourth quarter of 1997 as all available cash flow was utilized for capital improvements at the Pavilion Apartments. Distributions of $2.70, $2.62, $0.91 and $2.19 (disbursed in February 1999) were made for the respective quarters of 1998.(See "Operations - 1998 Fiscal Year" below). A distribution of $2.29 was disbursed in May 1999, for the first quarter of the year. No distributions were made for the subsequent quarters as all cash flow was utilized for capital improvements at the Pavilion Apartments. (See "Operations - 1999 Fiscal Year" below). Page 8 OPERATIONS Registrant has operated the Pavilion Apartments, located in West Palm Beach, Florida, since January 1985. Management Agreement The Pavilion Apartments are currently managed by M.L. Property Management Inc., an unaffiliated property manager, under a five year agreement as extended in January 1999. The agreement will also terminate on the earlier sale or disposition of the Pavilion Apartments. 1999 Fiscal Year Rental Revenue for the year ended December 31, 1999, was $2,189,322 as compared with $2,081,901 for the 1998 calendar year. The increase in income in 1999 reflected increased rental rates for apartments at the project as well as reduced vacancies and rental allowances, which while in a reduced amount, were still being utilized to attracted tenants to the Pavilion. Occupancy rates at the project held in the low to mid 90% range for the 1999 year. As of February 29, 2000, the Pavilion Apartments had 12 apartments out of 312 available for rent. These 12 apartments represent 10 of nineteen presently vacant apartments and 2 additional apartments where the tenants have given notice of their intent to vacate. Eight of the vacant apartments have already been rented, while the remaining vacant unit is the model apartment. The nineteen apartments presently vacant equates to a physical occupancy of 93.9%. Operating Expenses, consisting mainly of real estate taxes, repairs and maintenance and utilities, increased in 1999 to $716,919 as compared to the 1998 cost of $625,402. This increase reflected increases in amounts spent on Replacements, Repairs and Maintenance, as well as increased costs for Water and Sewer and Landscaping. These were offset somewhat by a decrease in Real Estate Taxes as a result of a reduced assessed valuation of the project. General and Administrative Expenses for 1999 increased to $752,824 from $689,444 in 1998. This increase resulted from increases in court costs and eviction expenses as well as increased costs for security services. Capital Improvements and Replacements Page 9 During 1999, in addition to items which were expensed under Cost of Rental Income, substantial sums were spent on capital improvements, upgrades and replacements at the Pavilion Apartments. Among these items were the following: Aggregate Item Expenditures Furniture & Fixtures Carpeting $95,877 Copy Machine $2,332 Security Cameras $1,393 Stoves/Refrigerators/Dishwashers $41,185 ------- Total: $140,787 -------- Building Improvements Aluminum Roof Coating $21,935 Bathroom Tile Replacements $140,933 Counter Tops $16,514 Entrance Gates $6,480 Miscellaneous Interior Improvements $26,538 Parking Lot $4,785 Roof Repairs $38,228 Sewer Replacement $22,647 Sidewalk Replacements $4,308 -------- Total: $282,368 -------- Aggregate 1999 Capital Expenditures $423,155 ======== Funds for these expenditures were provided from Cash Flow from the Pavilion Apartments for the last three quarters of the year and from cash reserves on hand. Future Capital Improvement and Replacements It is anticipated that substantial additional funds will be expended for capital improvements during 2000 and subsequent years in order to keep the Pavilion Apartments competitive in the rental market. Funds for such items may be provided from sources such as Partnership cash reserves and cash flow from the Pavilion Apartments. To the extent these sources are insufficient to complete work which may be required, the Partnership may be forced to explore outside sources of financing. There can be no assurance that sufficient financing can be obtained to complete such work, and the Pavilion Apartments' ability to compete in the rental market may be adversely affected. Page 10 In addition to regular ongoing replacements of items such as carpeting and appliances, other major capital items which may be required to be completed during the next few years, include but may not be limited to the following: Estimated Potential Project Costs Roof Replacements - all buildings $500,000 Asphalt Overlay for parking Lots $105,000 Shower Tile & Pan Replacements $145,000 Sprinkler System Replacement $55,000 1998 Fiscal Year Rental Revenue for the year ended December 31, 1998, was $2,081,901 as compared with $2,040,543 for the 1997 calendar year. The increase in income in 1998 reflected increased rental rates for apartments at the project as reduced by slightly increased vacancies at the property. Rental allowances, were still being utilized to attracted tenants to the Pavilion, and were in substantially the same amounts as experienced in the prior year. Occupancy rates at the project held in the low to mid 90% range for the 1998 year. As of March 15, 1999, the Pavilion Apartments had sixteen apartments out of 312 available for rent. These sixteen apartments represent seven of nine presently vacant apartments and nine additional apartments where the tenants have given notice of their intent to vacate. Two of the vacant apartments have already been rented. The nine apartments presently vacant equates to a physical occupancy of 97.1%. Operating Expenses, consisting mainly of real estate taxes, repairs and maintenance and utilities, decreased in 1998 to $625,402 as compared to the 1997 cost of $665,541. This decrease principally reflected reductions in Real Estate Taxes as a result of a reduced assessed valuation of the project, as well as a reduction in replacements at the Pavilion. General and Administrative Expenses for 1998 decreased to $689,444 from $711,626 in 1997. This decrease resulted principally from insurance costs which showed a reduction as a result of better rates from a change in the company providing such coverage to the Project. In connection with the Tender Offer made by unaffiliated third parties in December 1997 for Units of Limited Partnership Interests of Registrant, other income of $10,300 for transfer fees was received, and expenses of $13,200 for administrative fees and disbursements in connection with the preparation of required Securities and Exchange Commission filings and subsequent mailings to Limited Partners were incurred. This resulted in the net Other Expenses of $2,900 which appears in 1998. Page 11 INFLATION As of the present date, inflation has not had a major impact on the operations of the Partnership. It is anticipated that future increases in operating expenses will be offset if not exceeded by corresponding increases in operating income. YEAR 2000 ISSUES Registrant experienced no negative operational consequences of Year 2000 issues. Page 12 Item 8. Financial Statements and Supplementary Data FJS Properties Fund I, L.P. Financial Statements INDEX Page Number Report of Independent Certified Public Accountants....................14 Financial statements Balance Sheets as of December 31, 1999 and 1998..................15 Statements of Operations for the years ended December 31, 1999, 1998 and 1997.......................16 Statements of Partners' Capital [Deficit] for the years ended December 31, 1999, 1998 and 1997.......................17 Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997 .....................18 Notes To Financial Statements ................................19-23 Report of Independent Certified Public Accountants on Supplementary Financial Information.................24 Real Estate and Accumulated Depreciation..............................25 Page 13 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Partners of FJS Properties Fund I, L.P. We have audited the accompanying balance sheets of FJS Properties Fund I, LP as of December 31, 1999 and 1998, and the related statements of operations, partners' capital (deficit), and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of FJS Properties Fund I, LP as of December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with generally accepted accounting principles. BUCHBINDER TUNICK & COMPANY LLP Boca Raton, Florida February 24, 2000 Page 14 FJS PROPERTIES FUND I, L.P. Balance Sheets December 31, 1999 and 1998 1999 1998 ---- ASSETS Current assets: Cash and cash equivalents $ 217,906 $ 458,782 Cash - escrow 119,379 148,617 Cash - security deposits 132,748 125,397 Other current assets 22,268 25,752 ---------- -------- Total current assets 492,301 758,548 ---------- -------- Property investment: Land 2,296,804 2,296,804 Buildings 6,569,125 6,569,125 Furniture, fixtures and improvements 2,376,165 1,953,010 ---------- --------- Totals - at cost 11,242,094 10,818,939 Less: accumulated depreciation (5,073,750) (4,772,099) ------------- ------------ Property investment - net 6,168,344 6,046,840 ------------ ----------- Other assets 250,216 271,341 ------------ ------------ Total assets $ 6,910,861 $ 7,076,729 ============ ============ LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) Current liabilities: Accounts payable $ 108,403 $ 66,582 Accrued interest 37,740 38,371 Other accrued expenses 6,755 6,826 Due to related party 16,689 19,707 Tenant security deposits payable 132,748 125,397 Mortgage payable - current portion 85,557 77,641 Deferred income - current portion 7,143 7,143 -------- -------- Total current liabilities 395,035 341,667 -------- -------- Long-term liabilities: Mortgage payable - non-current portion 4,559,381 4,644,938 Deferred income - non-current portion 17,857 25,000 --------- --------- Total long-term liabilities 4,577,238 4,669,938 ----------- ----------- Partners' capital (deficit): General partner (1,216,473) (1,215,207) Limited partners 3,155,061 3,280,331 ------------ ------------ Total partners' capital (deficit) 1,938,588 2,065,124 ------------ ------------ Total liabilities and partners' capital (deficit) $ 6,910,861 $ 7,076,729 ============ ============ See notes to financial statements. Page 15 FJS PROPERTIES FUND I, L.P. Statement of Operations For the years ended December 31, 1999, 1998 and 1997 1999 1998 1997 ---- ---- ---- Revenue: Rental $ 2,189,322 $ 2,081,901 $ 2,040,543 Interest 12,324 23,664 25,836 ----------- ----------- ----------- Total Revenue 2,201,646 2,105,565 2,066,379 ----------- ----------- ----------- Expenses: Operating 716,919 625,402 665,541 General and administrative 752,824 689,444 711,626 Interest 456,410 463,687 470,769 Depreciation and amortization 326,059 289,180 269,025 Other --- 2,900 --- ---------- ---------- -- ------- Total expenses 2,252,212 2,070,613 2,116,961 ----------- --------- --------- Net income (loss) $ (50,566) $ 34,952 $ (50,582) =========== =========== ========== Income (loss) per limited partnership unit$ (2.98) $ 2.06 $ (2.98) =========== =========== ========== Distributions per limited partnership unit$ 4.48 $ 6.23 $ 5.53 ========== =========== ========== Weighted average number of limited partnership units outstanding 16,788 16,788 16,788 ========== =========== ========== See notes to financial statements. Page 16 FJS PROPERTIES FUND I, L.P. Statements of Partners' Capital (Deficit) For the years ended December 31, 1999, 1998 and 1997 General Limited Partner Partners Total Partners' capital (deficit) - December 31, 1996 $ (1,213,057) $3,493,233 $2,280,176 Net (loss) for the year ended December 31, 1997 (506) (50,076) (50,582) Distributions to Partners (938) (92,837) (93,775) ---------- --------- -------- Partners' capital (deficit) - December 31, 1997 (1,214,501) 3,350,320 2,135,819 Net income for the year ended December 31, 1998 350 34,602 34,952 Distributions to Partners (1,056) (104,591) (105,647) ---------- --------- --------- Partners' capital (deficit) - December 31, 1998 (1,215,207) 3,280,331 2,065,124 Net (loss) for the year ended December 31, 1999 (506) (50,060) (50,566) Distributions to Partners (760) (75,210) (75,970) ---------- --------- --------- Partners' capital (deficit) - December 31, 1999 $ (1,216,473) $ 3,155,061 $ 1,938,588 ============= =========== =========== See notes to financial statements. Page 17 FJS PROPERTIES FUND I, L.P. Statements of Cash Flows For the years ended December 31, 1999, 1998 and 1997 1999 1998 1997 ---- ---- ---- Operating activities: Net income (loss) $(50,566) $ 34,952 $ (50,582) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 301,651 264,772 244,617 Amortization 24,408 24,408 24,408 Deferred income (7,143) (7,143) (7,143) Changes in assets and liabilities: Decrease (increase) in escrow 29,238 (50,956) 85,214 (Increase) in security deposits (7,351) (3,519) (711) Decrease (increase) in other current assets 3,484 10,219 (34,541) (Increase) in other assets (3,283) (4,954) (6,420) Increase (decrease) in accounts payable and accrued expenses 41,119 (30,888) 16,673 (Decrease) increase in due to related party (3,018) (6,431) 7,914 Increase in tenant security deposits payable 7,351 3,519 711 ------ -------- --------- Net cash provided by operating activities 335,890 233,979 280,140 -------- ------- --------- Investing activities: Capital expenditures (423,155) (134,645) (80,481) ------------------------------ Net cash (used in) investing activities (423,155) (134,645) (80,481) --------- ------------------- Financing activities: Principal payments on mortgages (77,641) (70,451) (63,935) Cash distributions to Partners (75,970) (105,647) (93,775) --------- ------------------- Net cash (used in) financing activities (153,611) (176,098) (157,710) --------- ---------- ---------- Net (decrease) increase in cash and cash equivalents (240,876) (76,764) 41,949 Cash and cash equivalents - beginning of year 458,782 535,546 493,597 --------- ------- --------- Cash and cash equivalents - end of year $217,906 $458,782 $ 535,546 ======== ======== ========= Supplemental disclosure of cash flow information: Interest paid $457,043 $464,260 $ 470,790 ======== ======== ========= See notes to financial statements. Page 18 FJS PROPERTIES FUND I, L.P. Notes to Financial Statements December 31, 1999, 1998 and 1997 Note 1 - Organization FJS Properties Fund I, LP (the "Partnership") was formed under the Delaware Revised Uniform Limited Partnership Act on October 5,1984. The Partnership owns and operates the Pavilion, a 312 unit garden apartment complex in West Palm Beach, Florida. The Partnership operates under one reportable segment. Note 2 - Significant Accounting Policies Loan Acquisition Fees The Partnership amortizes fees incurred in connection with mortgage refinancings utilizing the straight-line method over the term of the related mortgage, which is currently ten years. Income Taxes The Partnership is treated as a partnership for federal income tax purposes. The Partnership will make no provision for income taxes because all income and losses will be allocated to the Partners for inclusion in their respective tax returns. Property Investment and Depreciation Property, improvements, furniture, and equipment are carried at cost and depreciated over their estimated useful lives. The cost of maintenance and repairs are expensed as incurred, whereas significant betterments and renewals are capitalized. The Partnership depreciates buildings using the straight-line method over 30 years. Furniture and fixtures and improvements are depreciated using the straight-line method over periods from 3 to 10 years. Depreciation expense for the years ended December 31, 1999, 1998, and 1997 was $301,651, $264,772, and $244,617, respectively. For tax purposes, the Partnership depreciates residential real property using the 18 year accelerated depreciation method for property placed in service prior to May 8, 1985. In accordance with ongoing changes in the Internal Revenue Code, the Partnership will utilize the depreciation method, which, in the opinion of the Managing General Partner, will be the most beneficial to the Partnership. Revenue Recognition Rental, interest, and other income are recorded on the accrual method of accounting. Cash Equivalents The Partnership considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Page 19 FJS PROPERTIES FUND I, L.P. Notes to Financial Statements (Continued) December 31, 1999, 1998 and 1997 Concentration of Credit Risk Financial instruments that subject the Partnership to concentrations of credit risk include cash. The Partnership had amounts on deposit with financial institutions which are approximately $270,000, $454,000 and $471,000 in excess of the amounts insured for December 31, 1999, 1998 and 1997, respectively. The Partnership does not require collateral for financial instruments. Use of Estimates in the Preparation of Financial Statements ----------------------------------------------------------- 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 the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Advertising The Partnership expenses advertising cost as incurred. Advertising expense for the years ended December 31, 1999, 1998, and 1997 was $36,321, $36,773, and $36,063, respectively. Impairment Certain long-term assets of the Partnership, including property and furniture and fixtures, are reviewed at least annually as to whether their carrying value has become impaired, pursuant to guidance established in Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." Management considers assets to be impaired if the carrying value exceeds the future projected cash flows from the related operations (undiscounted and without interest charges). If impairment is deemed to exist, the assets will be written down to fair value or projected discounted cash flows from related operations. Management also reevaluates the periods of amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives. Page 20 FJS PROPERTIES FUND I, L.P. Notes to Financial Statements (Continued) December 31, 1999, 1998 and 1997 Note 3 - Partnership Agreement Pursuant to the terms of the Partnership Agreement, which expires December 31, 2009, the General Partner is liable for all general obligations of the Partnership to the extent not paid by the Partnership. The Limited Partners are not liable for expenses, liabilities, or obligations of the Partnership beyond the amount of their contributed capital. In addition, adjusted cash from operations is allocated, after payment of the Partnership Management Fee to the Managing General Partner, 99% to the Limited Partners, and 1% to the General Partner. Taxable income and loss are allocated 99% to the Limited Partners and 1% to the General Partner subsequent to the release of the Limited Partners' funds to the Partnership, which occurred on May 1, 1986. Prior to the release of funds, taxable income and loss were allocated 99% to the General Partner and 1% to the Original Limited Partner. Allocations of net income or loss among the Partners in the accrual basis financial statements will be in conformity with the allocations of taxable income or loss from operations. Note 4 - Other Assets A summary of other assets is as follows: 1999 1998 Cash in escrow - replacement reserves $ 124,183 $ 120,900 Loan acquisition fees - net of amortization of $139,847, and $115,439 at December 31, 1999 and 1998, respectively 104,248 128,656 Deposits 21,785 21,785 ---------- ---------- $ 250,216 $ 217,341 Note 5 - Mortgage Payable The Partnership has a loan of $5,000,000 that is serviced by Bank United of Texas, that is collateralized by a first mortgage lien on the property and all personal property and income from the project. This loan is for a term of ten years with an interest rate of 9.75% per annum. The loan is repayable in equal monthly installments of $44,557 for principal and interest with a balloon payment due in ten years. The loan requires deposits with the lender for real estate taxes, insurance premiums, a debt service reserve of one month's payment, as well as deposits for replacement reserves for the project. These amounts are included in cash escrow and other assets on the balance sheet. Page 21 FJS PROPERTIES FUND I, L.P. Notes to Financial Statements (Continued) December 31, 1999, 1998 and 1997 At December 31, 1999 maturities of the mortgage payable are as follows: 2000 $ 85,557 2001 94,282 2002 103,897 2003 114,492 2004 4,246,710 ---------- Total mortgage payable $4,644,938 ========== The fair value of the Partnership's mortgage payable, which is determined by discounting expected cash flows based on the Partnership's projected current incremental borrowing rate, is approximately equal to the current obligation. Note 6 - Related Party Transactions The Managing General Partner, pursuant to the Partnership Agreement, has earned Property Management Fees of $107,540, $103,806, and $101,144 for the years ended December 31, 1999, 1998, and 1997, respectively, of which, $86,103, $83,045, and $80,915, respectively, was paid to an unaffiliated Florida based management company. These fees are based on a percentage of gross rental income as defined in the agreement. Also pursuant to the Partnership Agreement the Managing General Partner has earned Partnership Management Fees of $3,172, $6,673, and $3,912, for the years ended December 31, 1999, 1998, and 1997, respectively, which represents 4% of adjusted cash flow as defined in the agreement. Additionally, in accordance with provisions of the Partnership Agreement, the Partnership has agreed to pay to the Managing General Partner, administrative service fees. These fees amounted to $27,000 for the year ended December 31, 1999, and $24,000 in each of the years ended December 31, 1998 and 1997. The Managing General Partner received distributions from cash flows of $760, $1,056, and $938, during the years ended December 31, 1999, 1998, and 1997, respectively. In addition, the Managing General Partner received $9,000 in 1998 for additional administrative services. Page 22 FJS PROPERTIES FUND I, L.P. Notes to Financial Statements (Continued) December 31, 1999, 1998 and 1997 Note 7 - Income Taxes The reconciliation of net income (loss) as reported in the statements of operations and as would be reported for tax purposes for the years ended December 31, 1999, 1998, and 1997, are as follows: December 31, ------------ 1999 1998 1997 ------ ------ ----- Net income (loss) - statement of operations $ (50,566) $ 34,952 $ (50,582) Tax depreciation in excess of book depreciation (67,099) (71,010) (60,049) ------------ ---------- ---------- Net (loss) for tax purposes $ (117,665) $ (36,058) $ (110,631) =========== ========== ========== Page 23 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON SUPPLEMENTARY FINANCIAL INFORMATION To the Partners of FJS Properties Fund I, LP We have audited the financial statements of FJS Properties Fund I, LP as of December 31, 1999 and 1998, and for each of the three years in the period ended December 31, 1999, and have issued our report thereon dated February 24, 2000. Our audits also included the financial statement Schedule III of FJS Properties Fund I. LP. This financial statement schedule is the responsibility of the Partnership's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. BUCHBINDER TUNICK & COMPANY LLP Boca Raton, Florida February 24, 2000 Page 24 FJS PROPERTIES FUND I, LP Schedule III - Real Estate and Accumulated Depreciation Initial Cost to Partnership Costs Buildings, Capitalized Furniture, Subsequent Fixtures, to Acquisition and Description Encumbrances Land Improvements Improvements - ------------------- -------------- ------------ ------------- ------------- Pavilion Apartments West Palm Beach, Florida $ 4,644,938 $ 2,296,804 $ 7,196,789 $ 1,748,501 =========== =========== =========== =========== Gross Amount at Which Carried at Close of Period ---------- Life on Which Depreciation Buildings, Year in Latest Furniture, of Income Fixtures, and (1) (2) Accumulated Construc- Date Statement is Description Land Improvements Total Depreciation tion Acquired Computed - ------------------ ---------- ----------------------- ----------- ------------------ ----------- Pavilion Apartments West Palm Beach, Florida $2,296,804 $8,945,290$11,242,094 $5,073,750 1972 1/85 3-30 yrs ========== ========== (1) The aggregate cost for federal income tax purposes is $9,333,351. (2) A reconciliation of the carrying amount of land, buildings and improvements as of December 31, 1999, 1998, and 1997 is as follows:
Cost as of December 31, 1999 1998 1997 ---------------------------- ------------- Balance at beginning of year $ 10,818,939 $ 10,684,294 $ 10,603,813 Improvements 423,155 134,645 80,481 ------------ ------------ ------------ Balance at end of year $ 11,242,094 $ 10,818,939 $ 10,684,294 ============ ============ ============ (3) A reconciliation of accumulated depreciation for the years ended December 31, 1999, 1998, and 1997 is as follows: Cost as of December 31, 1999 1998 1997 ---------------------------- ------------- Balance at beginning of year $ 4,772,099 $ 4,507,327 $ 4,262,710 Expense 301,651 264,772 244,617 ----------- ----------- ----------- Balance at end of year $ 5,073,750 $ 4,772,099 $ 4,507,327 =========== =========== =========== See independent accountants' report on supplementary financial information. Page 25 Item 9. Changes In and Disagreements With Accountants on Accounting and --------------------------------------------------------------- Financial Disclosure -------------------- On December 13, 1999, by mutual agreement, Registrant and Moore Stephens P.C. ("Moore Stephens") agreed to the replacement of Moore Stephens as Registrant's independent accountants for the audit of Registrant's financial statements. Registrant was previously advised by the staff of the Securities and Exchange Commission (the "Commission") that in the staff's opinion, Moore Stephens may not be independent of the Partnership, as required by law, in that a member of the audit firm had a relationship with an entity which is a holder of Registrant's Limited Partnership Interests. Neither the Staff letter, nor any other information available to Registrant indicated that there was any inaccuracy in the "audited" financial statements. The staff further advised that for this reason, Registrant's financial statements for the three years ended December 31, 1998, are considered by the staff to be unaudited. Moore Stephens had advised Registrant that it disagrees with the staff's position and believes that it was at all times independent with respect to Registrant's audits. Excluding this issue, the staff has not alleged any inaccuracies in Registrant's financial statements. Registrant filed a Form 8-K on December 13, 1999, and a Form 8-K/A on December 23, 1999 - both with reference to the Registrant's change of independent accountants/independent auditors. Reference is hereby made to these Forms 8-K and 8-K/A for further information regarding this change. PART III Item 10. Directors and Executive Officers of the Registrant Registrant has no officers or directors. FJS Properties, Inc., the General Partner, manages and controls the Registrant's affairs and has general responsibility and ultimate authority in all matters affecting its business. The names and ages of, as well as the positions held by, the officers and directors of the General Partner are as follows: NAME AGE OFFICES HELD SERVED AS AN OFFICER AND/OR DIRECTOR SINCE A Andrew C. Alson 54 President and Director 1/85 Lawrence E. Bathgate II 60 Director 10/84 There are no family relationships between any executive officer or director and any other executive officer or director of the General Partner. Andrew C. Alson is a director and President of the General Partner. Until May, 1995, Mr. Alson was a Director of and until January 1, 1993, was President and Chief Executive Officer of PriMedex Health Systems, Inc. ("PMDX"), a public company which is principally engaged through its wholly-owned subsidiary, RadNet Management, Inc. in the healthcare services industry. Until June 16, 1994, Mr. Alson, as a designee of PMDX, also served as a director of ImmunoTherapeutics, Inc. ("IMNO"). IMNO is a publicly owned development stage Minnesota based company which is engaged in the research and development of immunotherapeutic drugs, primarily for the treatment of cancer. Mr. Alson is an attorney admitted to the bar of the State of New York, and is a graduate of the University of Pennsylvania and the Fordham University School of Law. Lawrence E. Bathgate, II is a director of the General Partner. Mr. Bathgate is the senior partner of Bathgate, Wegener & Wolf, P.A., a law firm in Lakewood, New Jersey. Mr. Page 26 Bathgate is a graduate of Villanova University, Villanova, Pennsylvania and Rutgers Law School, Newark, New Jersey. Mr. Bathgate also engages in extensive real estate and other investment activities. Mr. Bathgate owns 20% of the common stock of the General Partner. Mr. Bathgate is a director of Carson, Inc., a publicly held company listed on the New York Stock Exchange. All of the directors will hold office until the next annual meeting of the stockholders of the General Partner and until their successors are elected and qualified. Other controlling individuals: On August 7, 1995, Robert E. Brennan, the owner of 80% of the common stock of the General Partner filed a voluntary petition for relief in the United States Bankruptcy Court for the District of New Jersey under Chapter 11 of the Bankruptcy Code. On June 10, 1997, United States Bankruptcy Judge Kathryn C. Ferguson appointed Donald F. Conway, C.P.A. as the Trustee in the Chapter 11 Bankruptcy Proceeding involving Robert E. Brennan as Debtor, pending in the United States Bankruptcy Court for the District of New Jersey (Case No 95-35502). By virtue of his appointment as Trustee, Mr. Conway is empowered to vote (and with the approval of the Court), to sell Mr. Brennan's Common Stock and to direct the disposition of the sale proceeds. As a result Mr. Conway, in his capacity as Trustee, may be deemed the beneficial owner of such shares and a controlling person of FJS Properties, Inc. and Registrant. Mr. Conway, age 59, is currently and since 1995 has been a principal of Druker, Rahl & Fein, Business Consultants and Certified Public Accountants, with offices in Princeton, New Jersey. From 1988 until 1995, Mr. Conway was the Senior Manager of the Insolvency and Reorganization and Sports and Entertainment practice of Withum, Smith & Brown, a Princeton, New Jersey certified public accounting firm. Compliance with Section 16(a) of the Exchange Act Based solely upon a review of Forms 3 and 4 (17 CFR 249.103 and 249.104) and any amendments thereto furnished to Registrant under Rule 16a-3(d) (17 CFR 240.16a-3(e) or written representations received by Registrant that no Forms 5 were required, Registrant believes that other than as hereinafter noted there were no officers, directors or beneficial owners of more than 10% of any class of equity securities of Registrant registered pursuant to Section 12, that failed to file on a timely basis any reports required by Section 16(a) during the most recent fiscal years. As noted above, as of June 10, 1997, Donald F. Conway may be deemed a beneficial owner of 80% of the general partner of Registrant and a controlling person of FJS Properties, Inc. and Registrant. Mr. Conway has advised that no filings were required for a one year period after such appointment, and it would appear that a filing was required to have been made in June 1998. Registrant has not been advised of any filings by Mr. Conway as of March 15, 2000. Item 11. Executive Compensation The Registrant is not required to pay and did not pay any remuneration to the officers and directors of the General Partner. See Item 12, "Certain Relationships and Related Transactions." Page 27 Item 12. Security Ownership of Certain Beneficial Owners and Management -------------------------------------------------------------- The Family Trust, a New Jersey trust, which was established by Robert Brennan, but as to which Mr. Brennan is neither a Trustee nor a Beneficiary, owns 1,558 Units (9.28%). No other person was known by Registrant to own beneficially more than 5% of the outstanding Units of Registrant. No directors, officers or partners of the General Partner own Units of Registrant except for the five Units owned by Mr. Bathgate, as the initial limited partner. Ownership of more than 5% of Registrant: (1) Title of Class (2) Name and (3) Amount and (4) Percent of Class Address of nature of Beneficial Beneficial Owner Ownership ---------------- --------- ------------ Units of Limited The Family Trust 1,558 Units - legal 9.28% Partnership 340 North Avenue and beneficial Cranford, NJ 07016 owner As of March 1, 2000, Robert E. Brennan, Chapter 11 Debtor and Lawrence E. Bathgate, II were the sole shareholders of the common stock of the General Partner, owning 80% and 20% respectively. As described above under Item 10, Donald F. Conway, CPA, has been appointed as Trustee in the Chapter 11 Bankruptcy Proceeding involving Robert E. Brennan as Debtor. Mr. Conway is empowered to vote (and with the approval of the Court), to sell Mr. Brennan's Common Stock and to direct the disposition of the sale proceeds. As a result Mr. Conway, in his capacity as Trustee, may be deemed a beneficial owner of such shares and a controlling person of FJS Properties, Inc. and Registrant. Page 28 Item 13. Certain Relationships and Related Transactions During Registrant's fiscal years ended December 31, 1999, 1998 and, 1997, the General Partner and certain affiliated entities have earned or received compensation or payments for services from Registrant or its General Partner as follows: Reimbursement/Compensation Name of Recipient Capacity in Which served or 1999 1998 1997 - ----------------- Payment Received ---------------- ---- ---- ---- FJS Properties, Inc.General Partner3 $760 $1,056 $938 Partnership Management Fee $3,172 $6,673 $3,912 Property Management Fee4 $21,508 $20,760 $20,229 Administrative Expenses5 $27,000 $24,000 $24,000 Tender Offer Administrative Fees6 $0 $9,000 $0 -------- --------- --------- Table Continued on next Page. - -------- 3 Represents the General Partner's interest in Adjusted Cash From Operations. Under Registrant's Partnership Agreement 99% of the Net Income and Net Loss of Registrant was allocated to the Limited Partners and 1% was allocated to the General Partner. Pursuant thereto, for the years ended December 31, 1999, 1998, and 1997, ($1,177), $360, and ($1,106) of the Registrant's taxable income (loss) was allocated to FJS Properties, Inc. For further information, reference is made to the material contained in the Prospectus under the heading "MANAGEMENT COMPENSATION." 4 The following property management fees were applicable to the years 1999, 1998 and 1997: YEAR Aggregate ManagementRetained by General Paid to local Fee Partner unaffiliated management company 1999 $107,540 $21,508 $86,032 1998 $103,805 $20,760 $83,045 1997 $101,144 $20,229 $80,915 - --------- ------------------- ----------------- ------------------ In addition, the local unaffiliated management company received construction supervision fees of $8,068 during 1999, and $2,748 during 1998, for supervision of outside construction work at the Pavilion Apartments. 5 Represents administrative fees for the respective years for preparation of the annual Forms 10K, quarterly Forms 10Q, and the Form 8-K of December, 1999, for Registrant for filing with the Securities and Exchange Commission. Such charges are in accordance with and pursuant to ss.10.1.3(b) of the Partnership Agreement of Registrant and do not exceed 90% of the amount Registrant would be required to pay to independent parties for comparable administrative services in the same geographic location. 6 Represents administrative fees for review of tender offer filings, preparation, filing and mailings of required responsive Securities and Exchange Commission Filings and materials for mailings to Limited Partners. As provided in the Partnership Agreement of Registrant such fees do not exceed 90% of the amount Registrant would be required to pay to independent parties for comparable administrative services in the same geographic location. Page 29 Name of Recipient Capacity in Which served or 1999 1998 1997 - ----------------- --------------------------- ---- ---- ---- Payment Received ---------------- Lawrence E. Bathgate II Initial Limited Partner7 $22 $31 $28 Other Officers/Directors Officer/Director of General $0 $0 $0 of General Partner Partner In addition, certain officers and directors of the General Partner receive compensation from the General Partner and/or its affiliates (but not from Registrant) for services performed for various affiliated entities, which may include services performed for Registrant. - -------- 7 Represents distribution of Adjusted Cash From Operations attributable to the five Units Owned by Mr. Bathgate. For the years ended December 31, 1999, 1998, and 1997, ($34.69), $10.63, and ($32.62) of the Registrant's taxable income (loss) was allocated to his Units. Page 30 PART IV Item 14. Exhibits Financial Statement Schedules, and Reports On Form 8-K --------------------------------------------------------------- (a) 1&2 Financial Statements: See Index to Financial Statements in Item 8. (a) 3 Exhibits: 3.4 (a) Agreement of Limited Partnership, dated as of April 30, 1985, incorporated by reference to Exhibit A to the Prospectus of Registrant dated June 10, 1985 included in Registrant's Registration Statement on Form S-11 (Reg. No. 2-93980). (b) Amendment to Agreement of Limited Partnership dated as of October 22, 1985 incorporated by reference to Exhibit 3A.1 to Registrant's Registration Statement on Form S-11 (Reg. No. 2-93980). (c) Amendment to Agreement of Limited Partnership dated as of October 22, 1985, incorporated by reference to Exhibit 3.4(c) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1986 (File No 2-93980). (d) Amendment to Agreement of Limited Partnership, dated as of March 24, 1987, incorporated by reference to Exhibit 3.4(d) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987 (File No 2-93980). (e) Amendment No. 1 to Amended and Restated Certificate of Limited Partnership, dated as of August 17, 1987, incorporated by reference to Exhibit 3.4(e) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987 (File No 2-93980). 10. (a) Acquisition and Disposition Agreement dated as of May 2, 1986 between Registrant and FJS Properties, Inc., incorpo rated by reference to Exhibit 10A to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1986 (File No. 2- 93980). (b) Management Services Agreement dated as of May 2, 1986 between Registrant and FJS Properties, Inc., incorporated by reference to Exhibit 10B to Registrant's Annual Report on Form Page 31 10-K for the fiscal year ended December 31,1986 (File No.2-93980). (c) Contract for Sale and Purchase dated December 17, 1984, between Rockwell Investments, Ltd. and Registrant, incorpo rated by reference to Exhibit 10D to Registrant's Registration Statement on Form S-11 (Reg. No. 2-93980.) (d) Contract for Sale and Purchase dated December 17, 1984, between Vinsteve Investments Inc., Jimstein Investments, Ltd., Barwell Corporation, N.W. and Registrant, incorporated by ref erence to Exhibit 10E to Registrant's Registration Statement on Form S-11 (Reg. No. 2-93980.) (e) Mortgage and Security Agreement dated September 9, 1987, by FJS Properties Fund I, L.P., as mortgagor, and The Bank of Tokyo, Ltd., Miami Agency, as mortgagee, incorporated by ref erence to Exhibit 10(g) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987 (File No 2- 93980). (f) Mortgage Note, dated September 9, 1987, by FJS Properties Fund I, L.P. as maker to The Bank of Tokyo, Ltd., Miami Agency, as payee in the principal amount of $5,000,000, incor porated by reference to Exhibit 10(h) to Registrant's Annual Re port on Form 10-K for the fiscal year ended December 31, 1987 (File No 2-93980). (g) Modification of Note, Mortgage and Assignment Agreement, dated as of September 9, 1992, between FJS Properties Fund I, L.P. as Mortgagor, and The Bank Of Tokyo, Ltd., Miami Agency, as Mortgagee incorporated by reference to Exhibit 10(g) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987 (File No 0-15755). (h) Modification of Note, Mortgage and Assignment Agreement, dated as of November 10, 1992, between FJS Properties Fund I, L.P. as Mortgagor, and The Bank Of Tokyo, Ltd., Miami Agency, as Mortgagee incorporated by reference to Exhibit 10(h) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987 (File No 0-15755). (i) Modification of Note, Mortgage and Assignment Agreement, dated as of March 31, 1993, between FJS Properties Fund I, L.P. as Mortgagor, and The Bank of Tokyo, Ltd., Miami Agency, as Mortgagee incorporated by reference to Exhibit 10(i) Page 32 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987 (File No 0-15755). (j) Renewal Note, dated March 31, 1993, made by FJS Properties Fund I, L.P. to the Bank of Tokyo, Ltd incorporated by reference to Exhibit 10(j) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987 (File No 0-15755). (k) Property Management Agreement made as of December 1993, between FJS Properties Fund I, L.P., Owner, and M.L. Property Management, Inc., Managing Agent, incorporated by reference to Exhibit 10(k) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No 0-15755). (l) Third Modification of Note, Mortgage and Assignment Agreement dated as of February 28, 1994, between FJS Properties Fund I, L.P. and The Bank of Tokyo, Ltd., incor porated by reference to Exhibit 10(l) to Registrant's Annual Re port on Form 10-K for the fiscal year ended December 31, 1993 (File No 0-15755). (m) Multifamily Note, dated March 29, 1994, made by FJS Properties Fund I, L.P. to Long Beach Bank, FSB, in the principal amount of $5,000,000, incorporated by reference to Exhibit 10(m) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No 0-15755). (n) Multifamily Mortgage, Assignment of Rents and Security Agreement and Fixture Filing, dated March 29, 1994, made by FJS Properties Fund I, L.P. to Long Beach Bank, FSB, incor porated by reference to Exhibit 10(n) to Registrant's Annual Re port on Form 10-K for the fiscal year ended December 31, 1993 (File No 0-15755). (o) Assignment of Leases, dated March 29, 1994, made by FJS Properties Fund I, L.P. to Long Beach Bank, FSB, incorporated by reference to Exhibit 10(o) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No 0-15755). (p) Operations and Maintenance Agreement dated March 29, 1994, between FJS Properties Fund I, L.P. and Long Beach Bank, FSB, incorporated by reference to Exhibit 10(p) to Page 33 Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No 0-15755). (q) Debt Service Reserve Fund Security Agreement, dated March 29, 1994, between FJS Properties Fund I, L.P. and Long Beach Bank, FSB, incorporated by reference to Exhibit 10(q) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No 0-15755). (r) Replacement Reserve and Security Agreement, dated March 29, 1994, between FJS Properties Fund I, L.P. and Long Beach Bank, FSB, incorporated by reference to Exhibit 10(r) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No 0-15755). (s) Completion/Repair and Security Agreement, dated March 29, 1994, between FJS Properties Fund I, L.P. and Long Beach Bank, FSB, incorporated by reference to Exhibit 10(s) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No 0-15755). (t) Extension of Property Management Agreement dated as of January 1, 1999, by and between FJS Properties Fund I, L.P. and ML Property Management Inc., incorporated by reference to Exhibit 10(t) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (File No 0-15755). (b) Reports on Form 8-K filed during the last quarter of the fiscal year: Form 8-K filed December 13, 1999, and Form 8-K/A filed December 23, 1999 - both with reference to the Registrant's change of independent accountants/independent auditors on December 13, 1999. Financial Statement Schedules Filed Pursuant to Item 13(B) See Index to Financial Statements in Item 8. Page 34 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. FJS PROPERTIES FUND I, L.P. FJS PROPERTIES, INC. General Partner Dated: March 15, 2000 By: Andrew C. Alson ------------------------- Andrew C. Alson, President Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities (with respect to the General Partner) and on the dates indicated. Dated: March 14, 2000 By: Lawrence E. Bathgate, II ------------------------------- Lawrence E. Bathgate, II Director of the General Partner Dated: March 15, 2000 By: Andrew C. Alson ------------------------------- Andrew C. Alson, President and Director of the General Partner (Principal Executive Officer and Principal Financial Officer) Page 35 EX-27 2 FDS --
5 This schedule contains summary financial information extracted from the consolidated balance sheet and the consolidated statement of operations and is qualified in its entirety by reference to said statements. YEAR DEC-31-1999 Dec-31-1999 217,906 0 0 0 0 492,301 11,242,094 5,073,750 6,910,861 395,035 0 0 0 0 1,938,588 6,910,861 0 2,189,322 716,919 1,078,883 0 0 456,410 (50,566) 0 (50,566) 0 0 0 (50,566) (2.98) (2.98)
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