-----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, DxIgqRn/qp2taOPnSFCSzeLOn9PLZGOdGI3tbALM9ew/dVgp/YQeWRrryyD5Fxh7 k3XlFzsyFQgUkytAQ5fH4Q== 0000757642-98-000007.txt : 19981118 0000757642-98-000007.hdr.sgml : 19981118 ACCESSION NUMBER: 0000757642-98-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIF CENTRAL INDEX KEY: 0000757642 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 942969720 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15756 FILM NUMBER: 98749917 BUSINESS ADDRESS: STREET 1: 155 BOVET RD STREET 2: STE 100 CITY: SAN METEO STATE: CA ZIP: 94402 BUSINESS PHONE: 4155135200 MAIL ADDRESS: STREET 1: PO BOX 130 CITY: CARBONDALE STATE: CO ZIP: 81623 FORMER COMPANY: FORMER CONFORMED NAME: LANDSING INCOME FUND DATE OF NAME CHANGE: 19900827 FORMER COMPANY: FORMER CONFORMED NAME: LANDSING REALTY PARTNERS III DATE OF NAME CHANGE: 19850617 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 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: 2-94509 LIF (Exact name of registrant as specified in its governing instruments) California 94-2969720 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) P. O. Box 130, Carbondale, Colorado 81623 (Address of principal executive offices) (970) 963-8007 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes: [X] No: [ ] PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS LIF CONSOLIDATED BALANCE SHEETS, SEPTEMBER 30, 1998 AND DECEMBER 31, 1997 (Unaudited) (Dollars in thousands)
September 30, December 31, 1998 1997 ASSETS INVESTMENTS IN REAL ESTATE: Rental properties $ 10,349 $ 10,327 Accumulated depreciation (2,869) (2,607) Rental properties - net 7,480 7,720 CASH AND CASH EQUIVALENTS (including Interest bearing deposits of $454 in 1998 and $434 in 1997) 460 570 OTHER ASSETS: Accounts receivable 147 49 Prepaid expenses and deposits 112 19 Deferred organization costs and loan costs (net of accumulated amortization of $244 in 1998 and $212 in 1997) 80 84 Notes receivable 1,892 1,851 Total other assets 2,231 2,003 TOTAL $ 10,172 $10,293 LIABILITIES AND PARTNERS' EQUITY LIABILITIES: Notes payable $ 8,021 $ 7,679 Accounts payable 7 21 Liability for future improvement 641 828 Deferred gain on sale of real estate 69 69 Other liabilities 241 217 Total liabilities 8,979 8,814 PARTNERS' EQUITY Limited Partners 1,370 1,632 General Partners (177) (153) TOTAL $ 10,172 $10,293 Equity Units Authorized - Limited Partners 12,820 12,820 - General Partners 0 0 Equity Units Outstanding - Limited Partners 12,820 12,820 - General Partners 0 0 The accompanying notes are an integral part of the consolidated financial statements.
LIF CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands except per Unit amounts)
Three Months Ended Nine Months Ended September 30 September 30 1998 1997 1998 1997 REVENUE: Rental $ 404 $ 421 $1,244 $1,297 Interest 4 49 20 50 Total revenue 408 470 1,265 1,347 EXPENSE: Interest 136 164 419 527 Operating 158 169 485 507 Depreciation and amortization 96 90 287 260 General and administrative 39 34 144 150 Total expense 429 457 1,335 1,444 Gain from property sale 0 563 1 563 NET INCOME (LOSS) - Limited Partners $ (20) $ 576 (69) 467 - General Partners 0 0 0 0 NET INCOME (LOSS) PER PARTNERSHIP UNIT - Limited Partners (2) 45 (5) 36 - General Partners 0 0 0 0 The accompanying notes are an integral part of the consolidated financial statements.
LIF CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND THE YEAR ENDED DECEMBER 31, 1997 (Unaudited)(Dollars in thousands)
..LIMITED PARTNERS.. NUMBER OF GENERAL TOTAL PARTNERSHIP PARTNER PARTNERS' UNITS AMOUNT AMOUNT DEFICIT BALANCE, JANUARY 1, 1997 12,820 $1,759 $ (153) $1,606 Net Loss - 1997 (127) 0 (127) BALANCE, DECEMBER 31, 1997 12,820 $1,632 $ (153) $1,479 Net loss (69) 0 (69) Distribution (192) (24) (216) BALANCE, SEPTEMBER 30, 1998 12,820 $1,370 $ (177) $1,193 The accompanying notes are an integral part of the consolidated financial statements.
LIF CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 31, 1998 AND 1997 (Unaudited) (Dollars in thousands)
1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (69) $ (97) Adjustments to reconcile net increase to net cash provided by operating activities: Depreciation and amortization 287 238 Change in operating assets and liabilities: Increase (decrease) in other liabilities 27 835 Increase (decrease) in accounts payable (2) (1) Increase in accounts receivable (98) (837) (Increase) decrease in deferred expenses (20) 21 Increase in prepaid expenses (94) (93) Net provided by operating activities 31 66 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (82) (470) Sale of property 18 790 Net cash used in investing activities (64) 320 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Financing 244 48 Payment on notes payable (105) (350) Net (distribution) contribution (216) 0 Net cash provided by financing activities (77) (302) Decrease in cash and cash equivalents (110) 84 Cash and cash equivalents at beginning of period 570 387 Cash and cash equivalents at end of period $ 460 $ 471 The accompanying notes are an integral part of the consolidated financial statements.
LIF FINANCIAL NOTES (Dollars in thousands) The accompanying unaudited financial statements should be read in conjunction with the Partnership's 1997 Annual Report. These statements have been prepared in accordance with the instructions to the Securities and Exchange Commission form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the general partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the nine months ended September 30, 1998 and 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. Organization - LIF (the "Partnership") is a limited partnership organized under the laws of the state of California for the purpose of investing in income properties and making short-term loan and capital contributions to operating entities formed to acquire or develop and operate one or more income producing real properties. The General Partner is Partners '85 (the "General Partner"), a California limited partnership, whose General Partner is Landsing Equities Corporation. LIF was formed in June 1984, and shall continue until December 31, 2034, unless sooner terminated. Investment In Real Estate Partnership - At September 30, 1998 and 1997, the Partnership was invested in Landsing Private Fund ("P-21"), a 99%-owned real estate partnership. In 1997, Cattle Creek Development Partners (CCDP) was liquidated into the Partnership. CCDP was originally formed in 1994. For a portion of 1996, the Partnership was invested in Prince Creek Partners ("PCP") and Thompson Creek Partners ("TCP"). In 1996, the properties owned by these partnerships were sold and the partnerships terminated. During 1996, the Partnership invested into 95% of a new entity - Alpine Center Partners ("ACP"). ACP acquired rental real estate in Colorado in 1996. The Partnership interest in ACP was sold in 1998. Consolidation of Investment in Real Estate Partnerships - For financial reporting purposes, the Partnership consolidates the operations of it's investment in real estate partnerships with that of the Partnership. All significant intercompany transactions, including notes payable/receivable and short-term loans/receivables, and balances have been eliminated. Rental Property - Rental property is stated at cost. Depreciation is computed by the straight-line method over estimated useful lives ranging from five to forty years. Major additions and betterments are capitalized at cost, while maintenance and repairs which do not improve or extend the life of the respective assets are expensed currently. When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any gain or loss on disposal is included in the results of operations. Deferred Loan Costs - Loan fees are deferred and amortized over the life of the related note payable. Cash and Cash Equivalents - The Partnership considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Short-Term Investments - The Partnership invests in short-term federally insured certificates of deposits which mature on a date in excess of three months from the date of purchase. The cost of these investments approximate market value. Income Taxes - No provision for federal or state income taxes has been made in the consolidated financial statements because these taxes are the obligation of the partners. Net Income (Loss) Per Partnership Unit - Net Income (Loss) per partnership unit is based on weighted average units outstanding of 12,820 in 1998 and 1997, after giving effect to net income (loss) allocated to the General Partner. Cash distributions of $15 per unit were paid to holders in 1998. No cash distributions were paid in 1997. Concentrations of Credit Risk - The Partnership's financial instruments that are exposed to concentrations of credit risk consist primarily of its cash and cash equivalents. The Partnership's cash and cash equivalents are maintained in various accounts in FDIC insured institutions. This investment policy limits the Partnership's exposure to concentrations of credit risk. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Impairment of Long-Lived Assets - The Partnership adopted 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" during 1996. SFAS No. 121 requires that long-lived assets and certain identifiable intangibles to be held and used or disposed of by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. During 1998 and 1997, the Partnership determined that no impairment loss need be recognized for applicable assets of continuing operations. Accounting Pronouncements - In June 1996, the Financial Accounting Standards Board issued Statement No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities" (SFAS No.125). This Statement is effective for transactions occurring after December 31, 1996. However, transactions such as securities lending, repurchase agreements, dollar rolls, and similar secured financing arrangements are not subject to the provisions of SFAS No. 125 until January 1, 1998. The standard provides that, following a transfer of financial assets, an entity is to recognize the financial and servicing assets it controls and the liabilities it has incurred, derecognize financial assets when control has been surrendered and derecognize liabilities when extinguished. The adoption of SFAS No. 125 had no impact on the Partnership's consolidated financial statements. The impact of the delayed provisions is also not expected to be material. In June 1997, the FASB issued Statement No. 130, "Reporting Comprehensive Income" (SFAS No. 130) and Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS No. 131). Each of the new statements is effective for periods beginning after December 15, 1997, and requires that certain additional information be reported in the financial statements and related notes. The Partnership will adopt these in 1998 but does not expect an impact on its 1998 consolidated financial statements. Year 2000 - The Partnership is aware of the Year 2000 conversion issue. It is Management's assertion that the current accounting system utilized by the Partnership has the capability to accommodate the Year 2000 issue. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION The Partnership was organized to acquire real properties, including commercial, residential and agricultural properties, located primarily within the western portion of the United States, and to make short-term loans and capital contributions to other limited partnerships formed to acquire or develop and operate one or more income-producing real properties. The Partnership currently has a 99% investment in Landsing Private Fund-21 ("P-21") which owns one multi-family rental property. The partnership also owns two retail rental properties, which were formerly owned by CCDP. For financial reporting purposes the Partnership's investments are presented on a consolidated basis. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 1998, the Partnership's consolidated cash balance totaled $460,000. Cash not required for current operations is placed in federally insured financial instruments, certificates of deposit, and money market funds which can be liquidated as needed. It is the Partnership's intention to maintain adequate cash reserves for its operations. Through the first three quarters of 1998, the Partnership experienced a net decrease in cash and cash equivalents of $110,000. As of September 30, 1998, cash and cash equivalents totaled $460,000 versus $570,000 at December 31, 1997. The Short-Term Loan made to Cattle Creek Development Partners, a Colorado limited partnership ("CCDP"), was partially repaid in December 1996. The remaining loan balance, including accrued and unpaid interest, as of December 31, 1996 was $550,000. The loan was past due and was thus in default as of December 31, 1997. In 1997, per the terms of the loan agreement between LIF and CCDP, the properties securing the loan, Valley View Business Park and 701 Cooper, became 100% owned by LIF. These inter-company transactions were eliminated in consolidation. The balance of the short-term loan, and the related interest income and expense, between LIF and CCDP was eliminated in the consolidation of the Partnership's financial statements. On June 3, 1996, the Partnership made a Short-Term Loan in the principal amount of $550,000 to Alpine Center Partners, a Colorado limited partnership ("ACP"). ACP was organized to acquire one commercial property located in Carbondale, Colorado. The Partnership also made a capital contribution to ACP in the amount of $10,000 and became a Co-General Partner of ACP. On September 30, 1997, the Partnership's investment in ACP sold 40.20% of the Alpine Center Building to Gary K. Barr (GKB). GKB is the president of the General Partner of LIF. This sale resulted in cash to ACP of $370,000. On September 30, 1997, ACP also sold 45.90% of the Alpine Center Building to Open World Investors (OWI), of which Gary K. Barr is a General Partner. This sale generated cash to ACP of $420,000. ACP deferred a gain on sale from these two transactions of $69,000. ACP provided seller financing to GKB and OWI in the amounts of $864,300 and $986,850 respectively. The partnership's investment in ACP owned 1.96% of the Alpine Center Building on December 31, 1997. ACP reduced its short-term note payable to LIF by $358,000. The balance of the note payable at December 31, 1997 was $227,000. ACP repaid the balance of this note to LIF in June 1998. On June 29, 1998, ACP sold its remaining 1.96% interest in the Alpine Center Building to Gary K. Barr for $59,000. Cash received in this transaction was $18,000 and ACP provided seller financing in the amount of $41,000 to Mr. Barr. For financial reporting purposes, results of operations for P21 and ACP have been shown on a consolidated basis. RESULTS OF OPERATIONS Rental revenues were $1,244,000 for the nine months ended September 30, 1998, a decrease of $53,000 compared to the same period in 1997. The decline in rental revenues in 1998 versus 1997 was the result of a decrease in rent payments at 701 cooper, and the sale of the Alpine Center Building. Operating expenses were $485,000 for the period ended September 30, 1998, a decrease of $22,000 compared to the same period in 1997. Net operating income of properties (rental revenue less operating expenses) was $780,000 in 1998, a decrease of $60,000 from 1997. Management believes net operating income is the best indication of the properties' performance. Interest expense decreased by $108,000 for the first three quarters of 1998, compared to the same period in 1997. Interest income and interest expense on loans by and between LIF and its investments were eliminated in the consolidation of the Company's financial statements. Entity level general and administrative expenses, exclusive of that at the property level, decreased $6,000 in 1998 compared to 1997. Portfolio management fees remained unchanged. PROPERTY OPERATIONS Residential Property - The remaining residential property, Whistler Point Apartments, continues to operate at a profit. In 1997, the Partnership continued to make capital improvements to the property to allow it to compete effectively with new competition. The Partnership is continuing this program in 1998 with an expected cost of $150,000. Specific capital expenditures are for new washers and dryers in all units, new microwaves, new carpet and vinyl flooring, carports, and exterior deck improvements. Whistler Point Apartments are currently under contract for sale. The sale is scheduled to occur in early 1999. There is no guarantee that such sale will take place. Proceeds from such sale will be distributed. Commercial Property - The 701 Cooper Building and the Valley View Business Center had stable occupancy during 1997. However, at the end of the year, the sole tenant of 701 Cooper and CCDP agreed to cancel the remaining term of the lease for a payment of $61,000. Both properties, Valley View Business Center and 701 Cooper are currently listed for sale on the market. OCCUPANCY Occupancy at all of the Partnership's properties remain high during the first three quarters of 1998. As of September 30, 1998, occupancy at Whistler Point Apartments was 96%. This occupancy level is expected to be achieved through 1998. Occupancy at properties formerly owned by CCDP averaged 70% as of September 30, 1998. It is expected that all Partnership properties will maintain stable to improved occupancy during 1998. DISTRIBUTIONS In March 1998, the Partnership paid a cash distribution of $15 per unit to unit holders of record on February 28, 1998. INFLATION The effect of inflation on the Partnership's operations have been no greater than the effect on the economy as a whole. Because of competitive conditions, market rate rents may increase or decrease disproportionately with inflation while property operating costs continue to follow inflationary trends. Inflationary conditions are not expected to have a major impact on the Partnership during 1998. PART II. OTHER INFORMATION All items in Part II have been omitted since they are inapplicable or the answer is negative. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. L I F Date: November 15, 1998 /s/ Gary K. Barr Gary K. Barr, President & Director Landsing Equities Corporation Managing Partner of the General Partner, Partners '85 EX-27 2 ART. 5 FDS SEP-30-98
5 1000 9-MOS DEC-31-1998 SEP-30-1998 460 0 147 0 0 112 10,349 2,869 10,172 248 0 0 0 0 1,193 10,172 0 1,265 0 0 916 0 419 0 0 0 0 0 0 (69) 0 0
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