-----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, LKucdg/x8IfHsqoVKOm7F43x7AmeN0S5DnPesYhJynx49HKLvPFCo5cTmI1pheGJ lP4tPzH1JcWPjttFiR3Ksg== 0000720460-96-000013.txt : 19961113 0000720460-96-000013.hdr.sgml : 19961113 ACCESSION NUMBER: 0000720460-96-000013 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INVESTORS FIRST STAGED EQUITY L P CENTRAL INDEX KEY: 0000768834 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 363310965 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-14470 FILM NUMBER: 96659624 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT (As last amended by 34-32231, eff. 6/3/93.) U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 For the transition period.........to......... Commission file number 0-14470 INVESTORS FIRST-STAGED EQUITY L.P. (Exact name of small business issuer as specified in its charter) Delaware 36-3310965 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 8700 West Bryn Mawr Chicago, Illinois 60631 (Address of principal executive offices) (Zip Code) Issuer's telephone number (312) 399-8700 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 a) INVESTORS FIRST-STAGED EQUITY L.P. CONSOLIDATED BALANCE SHEET (in thousands, except unit data) (Unaudited) September 30, 1996 Assets Cash and cash equivalents: Unrestricted $ 2,160 Restricted-tenant security deposits 441 Accounts receivable, net of allowance for doubtful accounts of $85 72 Note receivable 130 Escrows for taxes and insurance 270 Restricted escrows 1,025 Other assets 546 Investment properties: Land $ 9,088 Buildings and related improvements 41,984 51,072 Less accumulated depreciation (23,733) 27,339 $ 31,983 Liabilities and Partners' Deficit Liabilities Accounts payable $ 28 Accrued interest 2,127 Tenant security deposits 438 Property taxes 117 Other liabilities 128 Advances from affiliates of the General Partner 825 Mortgage notes payable, including $22,405 in default 46,837 Partners' Deficit General partner $ (367) Limited partners (16,267 units issued and outstanding) (18,150) (18,517) $ 31,983 See Accompanying Notes to Consolidated Financial Statements b) INVESTORS FIRST-STAGED EQUITY L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except unit data) (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 Revenues: Rental income $ 1,648 $ 1,896 $ 5,180 $ 5,649 Other income 92 69 220 250 Total revenues 1,740 1,965 5,400 5,899 Expenses: Operating 529 534 1,488 1,570 General and administrative 63 85 211 264 Maintenance 266 225 658 587 Depreciation 478 506 1,427 1,510 Interest 1,104 1,043 2,862 3,125 Property taxes 117 109 339 313 Total expenses 2,557 2,502 6,985 7,369 Loss on disposition of investment property -- -- -- (78) Net loss $ (817) $ (537) $ (1,585) $ (1,548) Net loss allocated to general partners (1%) $ (8) $ (5) $ (16) $ (15) Net loss allocated to limited partners (99%) (809) (532) (1,569) (1,533) $ (817) $ (537) $ (1,585) $ (1,548) Net loss per limited partnership unit $ (49.73) $ (32.70) $ (96.45) $ (94.22) See Accompanying Notes to Consolidated Financial Statements
c) INVESTORS FIRST-STAGED EQUITY L.P. CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (in thousands, except unit data) (Unaudited)
Limited Partnership General Limited Units Partners Partners Total Partners' deficit at December 31, 1995 16,267 $ (351) $ (16,581) $ (16,932) Net loss for the nine months ended September 30, 1996 -- (16) (1,569) (1,585) Partners' deficit at September 30, 1996 16,267 $ (367) $ (18,150) $ (18,517) See Accompanying Notes to Consolidated Financial Statements
d) INVESTORS FIRST-STAGED EQUITY L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
Nine Months Ended September 30, 1996 1995 Cash flows from operating activities: Net loss $ (1,585) $ (1,548) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation 1,427 1,510 Amortization of loan costs and leasing commissions 64 86 Loss on disposition of investment property -- 78 Change in accounts: Restricted cash (103) (116) Accounts receivable 87 (63) Notes receivable 29 16 Escrows for taxes and insurance 256 (109) Other assets (52) (29) Accounts payable (66) 22 Accrued interest (199) 1,030 Tenant security deposit liabilities 32 (27) Property taxes 116 109 Other liabilities (476) 147 Net cash (used in) provided by operating activities (470) 1,106 Cash flows from investing activities: Property improvements and replacements (140) (315) Receipts from restricted escrows 3 71 Deposits to restricted escrows (588) (38) Net cash used in investing activities (725) (282) Cash flows from financing activities: Payment of loan costs (368) -- Payments on mortgage notes payable (507) (211) Repayment of mortgage note payable (10,577) -- Proceeds from refinance of mortgage 12,000 -- Net cash provided by (used in) financing activities 548 (211) Net (decrease) increase in cash and cash equivalents (647) 613 Cash and cash equivalents at beginning of period 2,807 1,899 Cash and cash equivalents at end of period $ 2,160 $ 2,512 Supplemental disclosure of cash flow information: Cash paid for interest $ 2,817 $ 2,024 See Accompanying Notes to Consolidated Financial Statements
e) INVESTORS FIRST-STAGED EQUITY L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they 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. Operating results for the three and nine month periods ended September 30, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the fiscal year ended December 31, 1995. Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. NOTE B - GOING CONCERN The unaudited consolidated financial statements have been prepared assuming that the Partnership will continue as a going concern. The unaudited consolidated financial statements do not include any adjustments that might result from the outcome of the uncertainties described below, however, such uncertainties raise substantial doubt about the Partnership's ability to continue as a going concern. The Partnership's properties historically experienced operating deficits after debt service payments. As a means of funding the Partnership's deficits, the Partnership previously drew upon working capital reserves, which were exhausted as of December 31, 1989, and had taken cash advances from affiliates of the General Partner. The General Partner and affiliates are not obligated to, and do not intend to, further fund any such cash flow deficits. In addition, the partners deficit at September 30, 1996, was $18,517,000. Also, since December 31, 1989, the Partnership has typically deferred repayment of these advances and other accrued expenses with the consent of the General Partner and its affiliates. During 1994, the General Partner and its affiliates assigned a portion of the advances to an affiliate of Insignia Financial Group, Inc.("Insignia"). The willingness of the affiliates of the General Partner and other related parties to continue to defer repayment of the advances could adversely affect the Partnership's financial condition. In addition, the General Partner and its affiliates have incurred serious financial difficulties that may affect the ability of the General Partner to function in that capacity. The administration and management of the Partnership is dependent on the General Partner and its affiliates. The pending replacement of the General Partner as discussed in "Note D" will not necessarily have a positive impact on the financial condition of the Partnership. NOTE B - GOING CONCERN (CONTINUED) Due to cash flow deficiencies at Rivercrest Village Apartments and Richardson Highlands Apartments, the Partnership stopped making the required monthly payments on the second mortgage loans for these properties in October 1990 and September 1991, respectively. The Registrant negotiated with the subordinate debt holder for Rivercrest Village and Richardson Highlands and finalized a debt restructure on June 22, 1994. During the third quarter, the Partnership was in default of certain provisions of the restructured subordinate loans (on both Richardson Highlands and Rivercrest Village) due to the failure to make the required debt service payments of surplus cash amounts as provided by The Department of Housing and Urban Development ("HUD") Regulatory Agreements. The failure to make such payments was due to the disbursements questioned by HUD as discussed below. Sub-tier partnerships, which are consolidated by the Partnership, own direct title to the Rivercrest and Richardson properties. The partnership interests in these sub-tier partnerships are pledged as collateral under the terms of the security agreements for the second mortgage loans. During the third quarter, the Partnership received default notices from the subordinated debt holders which indicated the debt holder's intentions to pursue its available remedies under the security agreements if the defaults were not cured. Such remedies include proceeding with a foreclosure on the partnership interests securing the second mortgage loans. Such an action would effectively force the Partnership to relinquish the related properties to the debt holder. The General Partner negotiated a default cure with the subordinated debt holder on Rivercrest Village whereby the sub-tier partnership owning the property paid approximately $678,000 to the subordinated debt holder to bring the partnership current on its interest payments under the terms of the debt agreement which allows interest payments to be limited to the extent of Surplus Cash as determined under the HUD Regulatory Agreement. Accordingly, at the date of this filing, the Rivercrest Village default was cured. The General Partner is currently negotiating a final settlement with the subordinated debt holder on the Richardson Highlands default. The sub-tier partnership owning the Richardson property made a payment of approximately $662,000 for accrued interest to the subordinated debt holder during the third quarter, however, this payment was not adequate to cure the default. While the General Partner continues to negotiate for a settlement to cure the remaining default, there can be no assurance that this effort will prove successful. The Partnership, VMS Realty Management, Inc., and HUD are engaged in discussions covering the appropriateness of certain Richardson Highlands and Rivercrest Village disbursements totalling approximately $2,168,000 and $1,608,000, respectively, made during the years 1987 through 1991. The parties are attempting to resolve this issue, but the ultimate outcome cannot presently be determined. The General Partner is vigorously defending its past actions and does not believe the eventual outcome of these discussions will have a material adverse effect on the operations of the Partnership. Given the General Partner's beliefs and the uncertainty regarding the eventual resolution of the amounts in question, the responsible parties and their ability to make repayment if deemed necessary, no adjustment has been made to the Partnership's unaudited consolidated financial statements concerning this matter. NOTE B - GOING CONCERN (CONTINUED) The unaudited consolidated financial statements do not include any adjustments relating to the recoverability of the recorded asset accounts or the amount of liabilities that might be necessary should the Partnership be unable to continue as a going concern. NOTE C - LEGAL PROCEEDINGS Certain affiliates of the Partnership, including the General Partner and certain officers and directors of such affiliates are parties to certain pending legal proceedings. The adverse outcome of any one or more legal proceedings against these affiliates who provide financial support or services to the Partnership could have a materially adverse effect on the present and future operations of the Partnership. However, the inclusion of this discussion is not intended as a representation by the Partnership that any particular proceeding is material. There can be no assurance as to the outcome of any of these legal proceedings. NOTE D - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES The Partnership has no employees and is dependent on the General Partner or its affiliates for the management and administration of all partnership activities. The General Partner or its affiliates may be reimbursed for direct expenses relating to the Partnership's administration and other costs charged on behalf of the Partnership. The General Partner or its affiliates received approximately $1,000 during the first nine months of 1996 as reimbursement of such advances and out of pocket expenses. No reimbursements were paid during the first nine months of 1995. Pursuant to an agreement dated July 14, 1994, a transaction is pending in which the current General Partner would be replaced by MAERIL, Inc., an affiliate of Insignia. The substitution of MAERIL, Inc. as the General Partner is expected, but there is no assurance that the transaction will be consummated. The Partnership has engaged affiliates of Insignia to provide day-to-day management of the Partnership's properties. These affiliates received approximately $283,000 and $346,000 of management fees for such services for the nine months ended September 30, 1996 and 1995, respectively. An affiliate of Insignia also provided partnership administration and management services for the Partnership. Reimbursements for direct expenses relating to these services totaled $108,000 for the nine months ended September 30, 1996, and $181,000 for the nine months ended September 30, 1995. Approximately $549,000 was paid during the second quarter of 1996 for accrued expense reimbursements which had been accruing since 1994 and were included in other liabilities. Approximately $36,000 remains unpaid and is included in other liabilities at September 30, 1996. NOTE E - SALE OF PROPERTY On December 12, 1995, Serramonte Plaza, Ltd. sold a building at Serramonte Plaza to an unaffiliated party for approximately $6,000,000. This building, the Breuner building, had a net book value of $2,592,000. The Partnership received net proceeds of $5,670,000 after payment of closing costs. The gain on the sale was $3,078,000 and was allocated to the partners in accordance with the Restated Limited Partnership Agreement. Approximately $3,861,000 of the proceeds were applied to the mortgage note payable and $1,500,000 of the proceeds were used to repay advances from the General Partner. NOTE F - REFINANCING OF SERRAMONTE PLAZA MORTGAGE The Serramonte Plaza first mortgage matured in November 1995. Prior to maturity, a 30 day extension was granted during which time an additional monthly payment was made. On December 15, 1995, the debt was purchased by ALI, INC. ("ALI") with an additional extension being granted through March 22, 1996. A payment of $3,861,000 was made in conjunction with the sale of the Bruener building at Serramonte Plaza as discussed in "Note E" of the Notes to Consolidated Financial Statements. On June 28, 1996, the first mortgage note was refinanced by Lehman Brothers Holdings, Inc. ("LBHI") with the outstanding principal balance being increased to $12,000,000. The old mortgage note in the amount of $10,577,000 was repaid from loan proceeds received from the refinancing. The new mortgage note matures on June 28, 1999, and requires monthly interest-only payments. The interest rate is a variable rate equal to the sum of the greater of LIBOR or 3.75% plus 5.0%, or, from and after the date that Insignia or any other entity under common control with Insignia acquires the general partnership interest of VMS Realty Investment II in the Partnership, the sum of the greator of LIBOR or 4.625% plus 4.125%. Also, commencing on the fifteenth day of July, 1996, and continuing on the fifteenth day of each calendar month thereafter until the new mortgage is paid in full, one hundred percent of the Excess Cash Flow for the calendar month immediately preceding the payment due date shall be paid to LBHI and applied in reduction of the then outstanding principal balance. As of September 30, 1996, approximately $164,000 of excess cash flow payments had been made and applied to the principal balance. On the maturity date, in addition to all other sums, including, without limitation, all principal, interest and other amounts now or hereafter owed, additional interest equal to $1,680,000 is owed to the lender and becomes a part of the indebtedness. This additional interest is being accrued over the term of the loan and increases the effective interest rate of the new debt to 15.99%. Under the terms of the new mortgage, a capital reserve escrow account in the amount of $500,000 was required by LBHI to fund any capital improvements needed at the property. In addition, a mechanic's-lien escrow in the amount of $45,000 was required by LBHI relating to tenant litigation. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The Partnership's investment properties consist of two apartment complexes and one commercial property. The following table sets forth the average occupancy for these properties for the nine months ended September 30, 1996 and 1995: Average Occupancy 1996 1995 Richardson Highlands Apartments Marin City, California 98% 95% Rivercrest Village Apartments Sacramento, California 89% 94% Serramonte Plaza Daly City, California 88% 93% The increase in occupancy at Richardson Highlands was due to overall improved market conditions and increases in the level of qualified applicants visiting the property since September 1995. The decrease in occupancy at Rivercrest Village was primarily due to college students vacating the property during the semester break for the summer. Occupancy has started to increase at Rivercrest Village as students have returned for the fall semester. The decrease in occupancy at Serramonte Plaza is primarily due to the move-out of a major tenant occupying approximately 21,000 square feet of the property. The tenants lease expired during the third quarter of 1996. The Partnership is pursuing the possible sale of the parcel containing this vacant space and has entered into a sale agreement contingent upon the potential buyer obtaining local governmental approval for the proposed redevelopment and consummating the sale after successful completion of his inspection period. The partnership realized a net loss of $1,585,000 for the nine months ended September 30, 1996, compared to a net loss of $1,548,000 for the nine months ended September 30, 1995. The Partnership realized a net loss of $817,000 for the three months ended September 30, 1996, compared to a net loss of $537,000 for the three months ended September 30, 1995. The decrease in rental income for the three months ended September 30, 1996, was due to the decline in occupancy at Rivercrest Village and Serramonte Plaza as discussed above. Other income decreased for the nine months ended September 30, 1996, primarily due to decreases in deposit forfeitures, late charges and other miscellaneous income at Serramonte Plaza. Other income increased for the three months ended September 30, 1996, due to increased interest income on tenant security deposits, application fees and laundry income at all properties. The decrease in general and administrative expenses for the three and nine months ended September 30, 1996, was primarily due to decreases in expense reimbursements. This decrease was partially offset by increases in legal costs at Serramonte Plaza relating to tenant litigation issues regarding collections of past due rents. Maintenance expense increased for the three and nine months ended September 30, 1996, primarily due to increases in exterior building improvements including roof repairs and painting projects at Richardson Highlands during the second and third quarters of 1996. The decrease in interest expense is due to the payment of approximately $3,860,000 towards the principal balance of the Serramonte Plaza mortgage in December of 1995. The loss on disposal of property for the nine months ended September 30, 1995, related to roof replacements at Richardson Highlands. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the General Partner will be able to maintain such a plan. LIQUIDITY AND CAPITAL RESOURCES The Partnership held unrestricted cash and cash equivalents of $2,160,000 at September 30, 1996, compared to unrestricted cash and cash equivalents of $2,512,000 at September 30, 1995. Net cash used in operating activities increased primarily due to the payment of approximately $549,000 of accrued expense reimbursements, included in other liabilities, to affiliates of Insignia during the second quarter of 1996. These expense reimbursements had been accrued from January 1994 to the date of payment. Additionally, net cash used in operating activities increased due to interest payments of approximately $1,300,000 relating to accrued interest on the second mortgages of Richardson Highlands and Rivercrest Village. These payments were slightly offset by decreased operating and interest expenses and the receipt of tax and insurance escrows related to the Bruener building sale in late 1995 (See "Note E" of the Notes to Consolidated Financial Statements). Net cash used in investing activities increased due to deposits of $545,000 to restricted escrows required by the refinancing of the Serramonte Plaza mortgage (See "Note F" of the Notes to Consolidated Financial Statements), offset by reductions in property improvements and replacements after significant additions during 1995. Net cash provided by financing activities increased due to net proceeds received from the refinancing of the Serramonte Plaza mortgage during the second quarter of 1996. Loan costs of $368,000 relating to the Serramonte Plaza refinancing were paid during 1996. The consolidated financial statements have been prepared assuming that the Partnership will continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of the uncertainties described below, however, such uncertainties raise substantial doubt about the Partnership's ability to continue as a going concern. The Partnership's properties historically experienced operating deficits after debt service payments. As a means of funding the Partnership's deficits, the Partnership previously drew upon working capital reserves, which were exhausted as of December 31, 1989, and had taken cash advances from affiliates of the General Partner. The General Partner and affiliates are not obligated to, and do not intend to, fund any further such cash flow deficits. In addition, the partners' deficit at September 30, 1996, was $18,517,000. Also, since December 31, 1989, the Partnership has typically deferred repayment of these advances and other accrued expenses with the consent of the General Partner and its affiliates. During 1994, the General Partner and its affiliates assigned a portion of the advances to an affiliate of Insignia Financial Group, Inc. ("Insignia"). The willingness of the General Partner and its affiliates to continue to defer repayment of these amounts could adversely affect the Partnership's financial condition. Due to cash flow deficiencies at Rivercrest Village Apartments and Richardson Highlands Apartments, the Partnership stopped making the required monthly payments on the second mortgage loans for these properties in October 1990 and September 1991, respectively. The Registrant negotiated with the subordinated debt holder for Rivercrest Village and Richardson Highlands and finalized a debt restructure on June 22, 1994. During the third quarter, the Partnership was in default of certain provisions of these restructured subordinate loans due to the failure to make the required debt service payments of surplus cash amounts as provided by The Department of Housing and Urban Development ("HUD") Regulatory Agreements. The failure to make such payments was due to the disbursements questioned by HUD as discussed below. Sub-tier partnerships, which are consolidated by the Partnership, own direct title to the Rivercrest and Richardson properties. The partnership interests in these sub-tier partnerships are pledged as collaterial under the terms of the security agreements for the second mortgage loans. During the third quarter, the Partnership received default notices from the subordinated debt holders which indicated their intention to pursue their available remedies under the security agreements if the defaults were not cured. Such remedies include proceeding with a foreclosure on the partnership interests securing the second mortgage loans. Such an action would effectively force the Partnership to relinquish the related properties to the debt holder. The General Partner negotiated a default cure with the subordinated debt holder on Rivercrest Village whereby the sub-tier partnership owning the property paid approximately $678,000 to the subordinated debt holder to bring the partnership current on its interest payments under the terms of the debt agreement which allows interest payments to be limited to the extent of Surplus Cash as determined under the HUD Regulatory Agreement. Accordingly, at the date of this filing, the Rivercrest Village default was cured. The General Partner is currently negotiating a final settlement with the subordinated debt holder on the Richardson Highlands default. The sub-tier partnership owning the Richardson property made a payment of approximately $662,000 for accrued interest to the subordinated debt holder during the third quarter, however this payment was not adequate to cure the default. While the General Partner continues to negotiate for a settlement to cure the remaining default, there can be no assurance that this effort will prove successful. The Partnership, VMS Realty Management, Inc., and HUD are engaged in discussions covering the appropriations of certain Richardson Highlands and Rivercrest Village disbursements totalling approximately $2,168,000 and $1,608,000, respectively, made during the years 1987 through 1991. The parties are attempting to resolve this issue, but the ultimate outcome cannot presently be determined. The General Partner is vigorously defending its past actions and does not believe the eventual outcome of these discussions will have a material adverse effect on the operations of the Partnership. No adjustment has been made to the Partnership's financial statements concerning this matter given the General Partner's beliefs, the uncertainty regarding the eventual resolution of the amounts in question, and the responsible parties' ability to make repayment if deemed necessary. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There have been no new material developments or changes from "Part I, Item 3" of the Partnership's report on the Form 10-KSB for the year ended December 31, 1995. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Partnership did not submit any matter to a vote of its holders of Limited Partnership Interests during the nine months ended September 30, 1996. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended September 30, 1995. SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INVESTORS FIRST-STAGED EQUITY L.P. (Registrant) By: VMS Realty Investment II, General Partner By: JAS Realty Corporation Date: November 12, 1996 By: /s/ Joel A. Stone Joel A. Stone President Date: November 12, 1996 By: /s/ Thomas A. Gatti Thomas A. Gatti, Senior Vice-President and Principal Accounting Officer Date: November 12,1996 EX-27 2
5 This schedule contains summary financial information extracted from Investors First Staged Equity L.P. 1996 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000768834 INVESTORS FIRST STAGED EQUITY L.P. 1,000 9-MOS DEC-31-1996 SEP-30-1996 2,160 0 157 (85) 0 0 51,072 (23,733) 31,983 0 46,837 0 0 0 (18,517) 31,983 0 5,400 0 0 6,985 0 2,862 0 0 0 0 0 0 (1,585) (96.45) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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