-----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, Gvb3E6AOCQl2Kk0oyuGeHDrvJJ1ahq3hkRM4LrbOYuo2yopRdYgmjqn0kM4fyHiY 6dlvosfvbaRvZeCOMVCgiQ== 0000812564-97-000002.txt : 19970520 0000812564-97-000002.hdr.sgml : 19970520 ACCESSION NUMBER: 0000812564-97-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 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: 97607093 BUSINESS ADDRESS: STREET 1: 630 DUNDEE ROAD STREET 2: SUITE 220 CITY: NORTHBROOK STATE: IL ZIP: 60062 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 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 March 31, 1997 or [ ] 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.) 630 Dundee Road, Suite 220 Northbrook, Illinois 60062 (Address of principal executive offices) (Zip Code) Issuer's telephone number (847) 714-9600 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) March 31, 1997 Assets Cash and cash equivalents: Unrestricted $ 2,006 Restricted-tenant security deposits 447 Accounts receivable, net of allowance for doubtful accounts of $47 52 Note receivable 109 Escrows for taxes and insurance 239 Restricted escrows 910 Other assets 674 Investment properties: Land $ 9,088 Buildings and related improvements 42,099 51,187 Less accumulated depreciation (24,690) 26,497 $ 30,934 Liabilities and Partners' Deficit Liabilities Accounts payable $ 93 Accrued interest 2,421 Tenant security deposits 436 Accrued property taxes 39 Other liabilities 376 Advances from affiliates of the General Partner 479 Mortgage notes payable 46,619 Partners' Deficit General partner $ (377) Limited partners (16,267 units issued and outstanding) (19,152) (19,529) $ 30,934 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 March 31, 1997 1996 Revenues: Rental income $ 1,840 $ 1,829 Other income 73 60 Total revenues 1,913 1,889 Expenses: Operating 486 426 General and administrative 53 54 Maintenance 176 171 Depreciation 476 473 Interest 1,076 869 Property taxes 125 119 Total expenses 2,392 2,112 Net loss $ (479) $ (223) Net loss allocated to general partner (1%) $ (5) $ (2) Net loss allocated to limited partners (99%) (474) (221) $ (479) $ (223) Net loss per limited partnership unit $(29.14) $(13.59) 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 Partner Partners Total Partners' deficit at December 31, 1996 16,267 $ (372) $ (18,678) $ (19,050) Net loss for the three months ended March 31, 1997 -- (5) (474) (479) Partners' deficit at March 31, 1997 16,267 $ (377) $ (19,152) $ (19,529) See Accompanying Notes to Consolidated Financial Statements
d) INVESTORS FIRST-STAGED EQUITY L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
Three Months Ended March 31, 1997 1996 Cash flows from operating activities: Net loss $ (479) $ (223) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 476 473 Amortization of loan costs and leasing commissions 40 11 Change in accounts: Restricted cash -- (68) Note receivable 11 10 Accounts receivable 15 (41) Escrows for taxes and insurance (2) 317 Other assets (134) (82) Accounts payable 15 (50) Accrued interest 487 497 Tenant security deposit liabilities (10) (5) Property taxes 39 23 Other liabilities 162 5 Net cash provided by operating activities 620 867 Cash flows from investing activities: Property improvements and replacements (62) (22) Receipts from restricted escrows 5 -- Deposits to restricted escrows (18) (13) Net cash used in investing activities (75) (35) Cash flows from financing activities: Payments on mortgage notes payable (96) (168) Net cash used in financing activities (96) (168) Net increase in cash and cash equivalents 449 664 Cash and cash equivalents at beginning of period 1,557 2,807 Cash and cash equivalents at end of period $ 2,006 $ 3,471 Supplemental disclosure of cash flow information: Cash paid for interest $ 542 $ 356 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 of Investors First- Staged Equity L.P. (the "Partnership") 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 VMS Realty Investment II ("General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1997. 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, 1996. Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation. NOTE B - 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. 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 Financial Group, Inc. ("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 $99,000 and $98,000 of such fees for the three months ended March 31, 1997 and 1996, respectively. An affiliate of Insignia also provided partnership administration and management services for the Partnership. Reimbursements for direct expenses relating to these services totaled approximately $38,000 for the three months ended March 31, 1997, and $36,000 for the three months ended March 31, 1996. At March 31, 1997, approximately $120,000 of the 1996 and 1997 reimbursements remain unpaid and are included in other liabilities. NOTE C - SUBSEQUENT EVENTS On April 10, 1997, the Partnership sold three buildings and two parcels of land associated with Serramonte Plaza located in Daly City, California to an unaffiliated party, Daly City Partners, LLC, a California limited liability company. The property was sold in an effort to maximize the Partnership's return on its investment. Total cash received for the three buildings and two parcels of land was approximately $4,778,000 and was determined primarily by reference to appraised values. 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 three months ended March 31, 1997 and 1996: Average Occupancy 1997 1996 Rivercrest Village Apartments 95% 93% Sacramento, California Richardson Highlands Apartments Marin City, California 98% 97% Serramonte Plaza Daly City, California 79% 90% The decrease in occupancy at Serramonte Plaza was primarily due to the vacancy of one building accounting for approximately 8% of the property. This building was sold in April of 1997. RESULTS OF OPERATIONS The Partnership realized a net loss of approximately $479,000 for the three months ended March 31, 1997, compared to a net loss of approximately $223,000 for the three months ended March 31, 1996. The increase in net loss is primarily attributable to an increase in interest expense. Interest expense increased as a result of the accrual of the additional interest which is related to the June 1996 refinancing of the Serramonte Plaza first mortgage. This additional interest is being accrued over the term of the loan and at the maturity date of the loan will equal approximately $1,680,000. Also, net loss increased due to increased operating expenses resulting from increased utility costs at Rivercrest Apartments. Subsequent to March 31, 1997, the Partnership sold three buildings and two parcels of land associated with Serramonte Plaza located in Daly City, California to an unaffiliated party, Daly City Partners, LLC, a California limited liability company. The property was sold in an effort to maximize the Partnership's return on its investment. Total cash received for the three buildings and two parcels of land was approximately $4,778,000 and was determined primarily by reference to appraised values. 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 sustain such a plan. LIQUIDITY AND CAPITAL RESOURCES The Partnership held cash and cash equivalents of approximately $2,006,000 at March 31, 1997, compared to cash and cash equivalents of approximately $3,471,000 at March 31, 1996. Net cash provided by operating activities decreased primarily due to the increased net loss as described above and a decrease of approximately $315,000 in receipts from tax and insurance escrows. The receipts from tax and insurance escrows at March 31, 1996, were related to the Breuner building sale in late 1995. Partially offsetting the decreases in cash flows provided by operating activities was the receipt of a $150,000 advance on the purchase price from the buyer of the three buildings and two parcels of land at Serramonte Plaza to perform maintenance work on one of the buildings prior to the consummation of the sale on April 10, 1997. Approximately, $90,000 of this advance remains at March 31, 1997, and is included in other liabilities. The remaining advance was spent on readying the property for sale in April of 1997. Net cash used in investing activities increased due to increased property improvements and replacements related to tenant improvements at Serramonte Plaza used as incentives for prospective tenants. Net cash used in financing activities decreased due to decreased mortgage principal payments on the Serramonte Plaza first mortgage. As a result of the refinancing of the Serramonte Plaza first mortgage in 1996, principal payments became a function of cash flow of the property. Serramonte Plaza did not generate the necessary cash flow throughout the three months ended March 31, 1997 to allow monthly principal payments. When sufficient cash flows are not achieved to provide for the monthly principal payment, interest only payments are made. 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, 1996. 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 three months ended March 31, 1997. 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 March 31, 1997. 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: May 15, 1997 By: /s/ Joel A. Stone Joel A. Stone President Date: May 15, 1997 By: /s/ Thomas A. Gatti Thomas A. Gatti, Senior Vice-President and Principal Accounting Officer EX-27 2
5 This schedule contains summary financial information extracted from Investors First Staged Equity L.P. 1997 First 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 3-MOS DEC-31-1997 MAR-31-1997 2,006 0 99 47 0 0 51,187 24,690 30,934 0 46,619 0 0 0 (19,529) 30,934 0 1,913 0 2,392 0 0 1,076 0 0 0 0 0 0 (479) (29.14) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
-----END PRIVACY-ENHANCED MESSAGE-----