-----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, CEXtWvg2UM7c1AHPDJ3Q69k3Ya7PQ+Oe3V8ZsYzePcSySyow9wILnxbjlnEbAY02 GNt+vT0CS++Du8Ngej1cqw== 0000950148-99-001783.txt : 19990812 0000950148-99-001783.hdr.sgml : 19990812 ACCESSION NUMBER: 0000950148-99-001783 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASSOCIATED PLANNERS REALTY FUND CENTRAL INDEX KEY: 0000785791 STANDARD INDUSTRIAL CLASSIFICATION: LESSORS OF REAL PROPERTY, NEC [6519] IRS NUMBER: 954036980 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-16805 FILM NUMBER: 99683959 BUSINESS ADDRESS: STREET 1: 5933 W CENTURY BLVD STREET 2: 9TH FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90045-5454 BUSINESS PHONE: 3106700800 MAIL ADDRESS: STREET 1: 5933 W CENTURY BLVD STREET 2: 9TH FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90045-5454 10-Q 1 FORM 10-Q (06/30/1999) 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to __________ Commission file number 0-16805 ASSOCIATED PLANNERS REALTY FUND (Exact name of registrant as specified in its charter) CALIFORNIA 95-4039680 (State or other Jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5933 W. CENTURY BLVD., 9TH, FLOOR LOS ANGELES, CALIFORNIA 90045 (Address of principal executive offices) (Zip Code) (310) 670-0800 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) 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 [ ] 2 PART 1. FINANCIAL INFORMATION ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS
================================================================== ============================ ============================ JUNE 30, 1999 December 31, 1998 (UNAUDITED) (Audited) - ------------------------------------------------------------------ ---------------------------- ---------------------------- ASSETS Rental real estate, less accumulated depreciation (Note 2) $4,449,176 $5,606,662 Cash and cash equivalents 30,032 257,749 Other assets 31,755 42,494 - ------------------------------------------------------------------ ---------------------------- ---------------------------- TOTAL ASSETS $4,510,963 $5,906,905 ================================================================== ============================ ============================ LIABILITIES AND PARTNERS' EQUITY LIABILITIES Accounts payable Trade $ 1,140 $ 10,914 Related Party (Note 4) 37,398 14,425 Notes payable (Note 3) 1,422,816 1,439,198 Security deposits and prepaid rent 13,983 30,020 - ------------------------------------------------------------------ ---------------------------- ---------------------------- TOTAL LIABILITIES 1,475,337 1,494,557 Minority Interest 193,782 PARTNER'S EQUITY (NOTES 5 AND 6) Limited partners: $1,000 stated value per unit - authorized 7,500 units; issued and outstanding 7,499 2,963,992 4,164,156 General partner 71,634 54,410 - ------------------------------------------------------------------ ---------------------------- ---------------------------- TOTAL PARTNERS' EQUITY 3,035,626 4,218,566 - ------------------------------------------------------------------ ---------------------------- ---------------------------- TOTAL LIABILITIES AND PARTNERS' EQUITY $4,510,963 $5,906,905 ================================================================== ============================ ============================
See accompanying notes to financial statements. 3 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF PARTNERS' EQUITY SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
LIMITED PARTNERS ---------------- GENERAL TOTAL UNITS AMOUNT PARTNER ----------- ----------- ----------- ----------- BALANCE AT DECEMBER 31, 1998 $ 4,218,566 7,499 $ 4,164,156 $ 54,410 Net income 429,933 -- 381,207 48,726 Distributions to limited partners (1,581,371) -- (1,581,371) -- Distributions to general partner (31,502) -- -- (31,502) ----------- ----------- ----------- ----------- BALANCE AT JUNE 30, 1999 $ 3,035,626 7,499 $ 2,963,992 $ 71,634 =========== =========== =========== ===========
SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
LIMITED PARTNERS ---------------- GENERAL TOTAL UNITS AMOUNT PARTNER ----------- ----------- ----------- ----------- BALANCE AT DECEMBER 31, 1997 4,356,209 7,499 $ 4,303,000 $ 53,209 Net income 42,041 -- 30,401 11,640 Distributions to limited partners (152,905) -- (152,905) -- Distributions to general partner (16,989) -- -- (16,989) ----------- ----------- ----------- ----------- BALANCE AT JUNE 30, 1998 $ 4,228,356 7,499 $ 4,180,496 $ 47,860 =========== =========== =========== ===========
See accompanying notes to financial statements. 4 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF INCOME
================================================================================================== THREE MONTHS Three Months SIX MONTHS Six Months ENDED Ended ENDED Ended JUNE 30, June 30, JUNE 30, June 30, 1999 1998 1999 1998 (UNAUDITED) (Unaudited) (UNAUDITED) (Unaudited) ================================================================================================== REVENUES Rental $ 124,586 $ 180,599 $ 275,050 $ 346,753 Gain on sale of property (Note 2) -- -- 380,849 -- Interest 425 2,149 13,676 4,956 - ------------------------------------------------------------------------------------------------- 125,011 182,748 669,575 351,709 - ------------------------------------------------------------------------------------------------- COSTS AND EXPENSE Operating 10,962 30,660 40,208 68,338 Property taxes 10,350 10,090 20,699 25,327 Property management fees (Note 4 (c)) 6,268 9,076 13,837 16,221 General and administrative 17,875 28,972 46,943 43,387 Depreciation and amortization 31,847 41,308 63,693 82,615 Interest expense (Note 3) 32,495 33,213 54,262 72,535 - ------------------------------------------------------------------------------------------------- 109,797 153,319 239,642 308,423 - ------------------------------------------------------------------------------------------------- INCOME FROM OPERATIONS 15,214 29,429 429,933 43,286 Minority interest in net loss (income) of joint ventures -- (4,461) -- 1,245 - ------------------------------------------------------------------------------------------------- NET INCOME $ 15,214 $ 33,890 $ 429,933 $ 42,041 ================================================================================================= NET INCOME PER LIMITED PARTNERSHIP UNIT (Note 5) $ 1.44 $ 3.57 $ 50.83 $ 4.05 =================================================================================================
See accompanying notes to financial statements. 5 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS
======================================================================= ============== ============ SIX MONTHS Six Months ENDED Ended JUNE 30, 1999 June 30, 1998 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (UNAUDITED) (Unaudited) - ----------------------------------------------------------------------- -------------- ------------ CASH FLOW PROVIDED BY OPERATING ACTIVITIES Net income $ 429,933 $ 42,041 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 63,693 82,615 Gain on sale of property (380,849) -- Minority interest in net income (loss) -- (1,245) Increase (decrease) from changes in: Other assets 10,740 (16,798) Accounts payable 13,199 (2,042) Security deposits and prepaid rents (16,037) 5,726 - ----------------------------------------------------------------------- -------------- ------------ NET CASH PROVIDED BY OPERATING ACTIVITIES 120,679 110,297 - ----------------------------------------------------------------------- -------------- ------------ CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES Proceeds from sale of rental real estate 1,283,129 -- Tenant improvement additions -- (7,850) - ----------------------------------------------------------------------- -------------- ------------ NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 1,283,129 (7,850) - ----------------------------------------------------------------------- -------------- ------------ CASH FLOWS USED IN FINANCING ACTIVITIES Repayment of notes payable (16,382) (14,963) Distribution of minority interest (2,270) (3,659) Distributions to limited partners (1,581,371) (152,905) Distributions to general partner (31,502) (16,989) - ----------------------------------------------------------------------- ----------- ----------- NET CASH USED IN FINANCING ACTIVITIES (1,631,525) (188,516) - ----------------------------------------------------------------------- ----------- ----------- NET CASH (DECREASE) IN CASH AND CASH EQUIVALENTS (227,717) (86,069) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 257,749 287,641 - ----------------------------------------------------------------------- ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 30,032 $ 201,572 ======================================================================= ============== ==========
See accompanying notes to financial statements. 6 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) SUMMARY OF ACCOUNTING POLICIES BUSINESS Associated Planners Realty Fund (the "Partnership"), a California limited partnership, was formed on November 19, 1985 under the Revised Limited Partnership Act of the State of California. The Partnership was formed to acquire income-producing real property throughout the United States with an emphasis on properties located in California and southwestern states. The Partnership purchased these properties on an all cash basis or on a moderately leveraged basis and intended on owning and operating such properties for investment over an anticipated holding period of approximately five to ten years. BASIS OF PRESENTATION The consolidated financial statements do not give effect to any assets that the partners may have outside of their interest in the partnership, nor to any personal obligations, including income taxes, of the partners. The consolidated financial statements include the accounts of Associated Planners Realty Fund and all joint ventures in which it has a majority interest. RENTAL REAL ESTATE AND DEPRECIATION Assets are stated at cost. Depreciation is computed using the straight-line method over estimated useful lives ranging from 5 to 35 years. In the event that facts and circumstances indicate that the cost of an asset may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the carrying amount to determine if a write-down to market value is required. RENTAL INCOME Rental revenue is recognized on a straight-line basis to the extent rental revenue is deemed collectible. 7 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) SUMMARY OF ACCOUNTING POLICIES STATEMENTS OF CASH FLOWS For the purposes of the statements of cash flows, the Partnership considers cash in the bank and all highly liquid investments purchased with original maturities of three months or less, to be cash and cash equivalents. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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. NET INCOME PER LIMITED PARTNERSHIP UNIT Net income per limited partnership unit is calculated by dividing the limited partners share of net income by the weighted average number of limited partnership units outstanding for the period. 8 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 1998 NOTE 1 - PRESENTATION OF INTERIM INFORMATION In the opinion of the General Partner of Associated Planners Realty Fund (the "Partnership"), the accompanying unaudited financial statements include all normal adjustments considered necessary to present fairly the financial position as of June 30, 1999, and the results of operations and cash flows for the three and six months ended June 30, 1999 and 1998. Interim results are not necessarily indicative of results for a full year. The financial statements and notes are presented as permitted by Form 10-Q, and do not contain certain information included in the Partnership's audited consolidated financial statements and notes for the fiscal year ended December 31, 1999. NOTE 2 - RENTAL REAL ESTATE HELD FOR SALE As of June 30, 1999, the Partnership has interests in the following two rental real estate properties.
Location (Property Name) Date Purchased Cost ================================================ ================================ ================================= Clovis, California January 23, 1987 $2,854,221 Simi Valley, California November 12, 1987 2,616,522 The major categories of property are: June 30, 1999 December 31, 1998 ================================================ ================================ ================================= Land $1,631,966 $2,361,894 Building and Improvements 3,792,117 4,629,518 Furniture and Fixtures 46,660 46,660 - ------------------------------------------------ -------------------------------- --------------------------------- 5,470,743 7,038,072 Less accumulated depreciation (1,021,567) (1,431,410) - ------------------------------------------------ -------------------------------- --------------------------------- Net rental real estate held for sale $4,449,176 $5,606,662 ================================================ ================================ =================================
Two office buildings located in Encinitas, California (179 and 187 Calle Magdalena) were sold to unaffiliated buyers during January 1999 at a sales price of $775,000 and $900,000, respectively. The net proceeds received from the sale equaled $576,977 and $670,698, respectively, which was distributed to the limited partners and the General Partner in accordance with the terms of the Partnership Agreement. The Partnership also recognized a gain of $193,886 and $186,963, respectively from the sale. 9 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED) AND DECEMBER 31, 1998 (CONTINUED) NOTE 2 - RENTAL REAL ESTATE HELD FOR SALE (CONTINUED) A significant portion of the Partnership's rental revenue was earned from tenants whose individual rents represent more than 10% of total rental revenue. Specifically: Two tenants accounted for 56% and 42%, respectively, of total rental revenue for the six months ended June 30, 1999; Four tenants accounted for 41%, 22%, 18% and 13%, respectively, of total rental revenue for the six months ended June 30, 1998; NOTE 3 - NOTES PAYABLE In October 1996, the Partnership obtained permanent financing secured by a first deed of trust from a major insurance company to replace the construction loan on the Shaw Villa Shopping Center. The terms of the loan are as follows: Principal - - $1,500,000; Interest Rate of 9.1% fixed for five years, then may be adjusted to the weekly average of the five - year Treasury Note yield for the seventh week prior to the Adjustment Date (5th anniversary date) plus 250 basis points, but in no event less than the existing rate, nor to exceed the maximum rate allowed by law; Amortized over twenty years; due November 1, 2006; and current monthly payments of principal and interest of $14,919. The note payable balance is $1,422,816 and $1,454,854 at June 30, 1999 and 1998. The carrying amount of the loan is a reasonable estimate of fair value of the permanent loan payable because the interest rates approximate the borrowing rates currently available for mortgage loans with similar terms and average maturities. The aggregate annual future maturities at June 30, 1999 are as follows: 1999 .................................. $17,142 2000 .................................. 36,705 2001 .................................. 40,187 2002 .................................. 44,002 2003 .................................. 48,177 Thereafter .......................... 1,236,603 ---------- Total $1,422,816 ========== 10 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED) AND DECEMBER 31, 1998 (CONTINUED) NOTE 4 - RELATED PARTY TRANSACTIONS (a) For Partnership management services provided to the Partnership, the General Partner is entitled to receive 10% of all distributions of cash from operations. These amounts totaled $14,421 for the quarter ended June 30, 1999 and $0 for the quarter ended June 30, 1998, and $31,502 for the six months ended June 30, 1999 and $16,989 for the six months ended June 30, 1998. (b) For administrative services provided to the Partnership, the General Partner is entitled to reimbursement for the cost of certain personnel and relevant expenses. These amounts totaled $3,000 for the three months ended June 30, 1999 and June 30, 1998, and $6,000 for the six months ended June 30, 1999 and 1998. (c) Property management fees incurred, in accordance with the Partnership Agreement, to West Coast Realty Management, Inc., an affiliate of the corporate General Partner, totaled $6,268 for the quarter ended June 30, 1999, and $9,076 for the quarter ended June 30, 1998, and $13,837 for the six months ended June 30, 1999 and $16,221 for the six months ended June 30, 1998. NOTE 5 - NET INCOME AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP LIST The Net Income per Limited Partnership Unit was computed in accordance with the partnership agreement using the weighted average number of outstanding limited partnership units of 7,499 for 1999 and 1998. The Limited Partner cash distributions, computed in accordance with the Partnership Agreement, were as follows: 11 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED) AND DECEMBER 31, 1998 (CONTINUED) NOTE 5 - NET INCOME AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP LIST (CONTINUED)
Outstanding Amount Total Record Date Units Per Unit Distribution =================================== ======================= ========================= ======================= March 19, 1999 7,499 $191.03 to $188.52 $ 1,427,641 December 31, 1998 7,499 $ 20.50 153,730 - ----------------------------------- ----------------------- ------------------------- ----------------------- Total $ 1,581,371 =================================== ======================= ========================= ======================= June 30, 1998 7,499 $ 14.00 $ 104,986 December 31, 1997 7,499 20.39 152,905 - ----------------------------------- ----------------------- ------------------------- ----------------------- Total $ 257,891 =================================== ======================= ========================= =======================
The Partnership began paying distributions on a semi-annual basis with the first record date and payment date being December 31, 1997 and February 6, 1998. This change will permit the Partnership to operate more efficiently with lower Partnership operating expenses. These semi-annual distributions will include cash distributions for the previous six months of operations. NOTE 6 - REALLOCATION OF PARTNER BALANCES Per the provisions of Section 11.1 (V)(ii) of the Partnership Agreement, the General Partner determined that action was necessary to "cure the ambiguities" caused by the Agreement itself. The ambiguity involved the treatment of the partnership management fee, being paid to the General Partner, as an expense of the Partnership, when in fact, it should have been treated as a general partner withdrawal of capital. In order to properly reflect this inception to date correction, a transfer of $305,548 was made from the General Partner's capital account to the Limited Partners capital account during the quarter ended March 31, 1996. NOTE 7 - LIQUIDATION OF PARTNERSHIP At June 30, 1999, all of the Partnership's remaining properties are being held for sale. The General Partner plans to liquidate the Partnership after the final property is sold. There is no assurance that the remaining properties will be sold and the Partnership will be liquidated during 1999. The financial statements do not contain any adjustments that might result from the liquidation of the Partnership. 12 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements in the Management Discussion and Analysis constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements, expressed or implied by such forward-looking statements. INTRODUCTION Associated Planners Realty Fund (the "Partnership") was organized in November 1985, under the California Revised Limited Partnership Act. The Partnership began offering units for sale on March 28, 1986. As of December 27, 1987, the Partnership had raised $7,499,000 in gross capital contributions. The Partnership netted approximately $6,720,000 after sales commissions and syndication costs. The Partnership was organized for the purpose of investing in, holding, and managing improved, leveraged income-producing property, such as residential property, office buildings, commercial buildings, industrial properties, and shopping centers. The Partnership intended to own and operate such properties for investment over an anticipated holding period of approximately five to ten years. The Partnership's principal investment objectives are to invest in rental real estate properties which will: (1) Preserve and protect the Partnership's invested capital; (2) Provide for cash distributions from operations; (3) Provide gains through potential appreciation; and (4) Generate Federal income tax deductions so that during the early years of property operations, a portion of cash distributions may be treated as a return of capital for tax purposes and, therefore, may not represent taxable income to the limited partners. 13 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) INTRODUCTION (CONTINUED) The ownership and operation of any income-producing real estate is subject to those risks inherent in all real estate investments, including national and local economic conditions, the supply and demand for similar types of properties, competitive marketing conditions, zoning changes, possible casualty losses, increases in real estate taxes, assessments, and operating expenses, as well as others. The Partnership is operated by the General Partner subject to the terms of the Amended and Restated Agreement of Limited Partnership. The Partnership has no employees, and all administrative services are provided by West Coast Realty Advisors, Inc., the General Partner. RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1999 VS. SIX MONTHS ENDED JUNE 30, 1998 Operations for the six months ended June 30, 1999, reflect an entire period of operations for the Partnership's properties, except for the two properties located in Encinitas, California which were sold in January 1999. Net income for the six months ended June 30, 1999 of $429,933 was higher than the net income for the six months ended June 30, 1998 of $42,041 due primarily to a $380,849 gain recognized from the sale of the Encinitas, California property. Rental revenue decreased $71,703 (20.7%) due primarily to the sale of the two properties located in Encinitas, California and the vacancy of the Simi Valley property since May 31, 1999. Interest income increased $8,720 (176.0%) during the six months ended June 30, 1999 as compared to the six months ended June 30, 1998 due primarily to a large amount of funds held from approximately January 8, 1999 to March 19, 1999 as a result of proceeds received from the sale of the two properties located in Encinitas, California. 14 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1999 VS. SIX MONTHS ENDED JUNE 30, 1998 (CONTINUED) Interest expense decreased $18,273 (25.2%) as a result of larger amounts being allocated to principal as the loan on the Shaw Villa Shopping Center approaches maturity. Operating expenses decreased $28,130 (41.2%) from the six months ended June 30, 1998 to June 30, 1999 primarily due to the January 1999 sale of two properties located in Encinitas, California. General and administrative expenses increased $3,556 (8.2%) due to higher legal and accounting expenses, and disposition fees related to the sale of the two Encinitas, California properties. Depreciation expense decreased $18,922 (22.9%) during the six months ended June 30, 1999 compared to the six months ended June 30, 1998 primarily due to the sale of the Encinitas properties during January 1999. During the six months ended June 30, 1999, the Partnership distributed $1,612,873 to the general and limited partners and $2,270 to the minority interest partner, as compared to the six months ended June 30, 1998 when the Partnership distributed $169,894 to the general and limited partners and $3,659 to the minority interest partner. This increase was primarily due to the Partnership selling the two properties located in Encinitas, California in January 1999. Cash basis income for the six months ended June 30, 1999 was $112,777. This was derived by adding depreciation and amortization expense to net income, less the gain on sale of properties. In contrast, cash basis income for the six months ended June 30, 1998 was $124,656. Overall the Partnership generated $112,777 in cash basis net income from operations before depreciation expense of $63,693 and $380,849 gain from the sale of the Encinitas, California properties for the six months ended June 30, 1999. In contrast, for the six months ended June 30, 1998, the Partnership generated cash basis net income of $124,656 before depreciation expense of $42,041. Net income per limited partnership unit increased from $4.05 in 1998 to $50.83 in 1999. The weighted average number of limited partnership units outstanding remained unchanged at 7,499. Operations for the quarter ended June 30, 1999 reflect an entire period of operations for the two remaining properties owned by the Partnership. In contrast, the quarter ended June 30, 1998 reflected operations for the four properties owned for the period. This change can be attributed to the sale in January 1999 of the two properties located in Encinitas, Calfornia. 15 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1999 VS. THREE MONTHS ENDED JUNE 30, 1998 Rental revenue decreased $56,013 (31.0%) due to the sale of the two properties located in Encinitas, California and due to the vacancy of the Simi Valley property since May 31, 1999. Interest income decreased $1,724 (80.2%) during the quarter ended June 30, 1999 as compared to the quarter ended June 30, 1998 due to lower cash balances maintained in money market accounts. Interest expense decreased $718 (2.2%) as a result of larger amounts being allocated to principal as the loan on the Shaw Villa Shopping Center approaches maturity. Operating expenses decreased $19,698 (64.3%) from the quarter ended June 30, 1998 to June 30, 1999 primarily due to the January 1999 sale of two properties located in Encinitas, California. General and administrative expenses decreased $11,097 (38.3%) due to lower legal and accounting expenses and partnership business insurance expenses during the quarter ended June 30, 1999 compared to the quarter ended June 30, 1998. Depreciation expense decreased $9,461 (23.0%) during the quarter ended June 30, 1999 compared to the quarter ended June 30, 1998 primarily due to the sale of the Encinitas properties during January 1999. During the quarter ended June 30, 1999, the Partnership distributed $14,421 to the general partner, as compared to the quarter months ended June 30, 1998 when the Partnership paid no distributions to the general, limited and minority interest partners. This was primarily due to the Partnership paying distributions on a semi-annual basis. This change has permitted the Partnership to operate more efficiently with lower Partnership operating expenses. These semi-annual distributions will include cash distributions for the previous six months of operations. Overall the Partnership generated $47,061 in cash basis net income from operations before depreciation expense of $31,847 for the quarter ended June 30, 1999. In contrast, for the quarter ended June 30, 1998, the Partnership generated cash basis net income of $75,198 before depreciation expense of $41,308. Net income per limited partnership unit decreased from $3.57 in 1998 to $1.44 in 1999. The weighted average number of limited partnership units outstanding remained unchanged at 7,499. 16 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES During the six months ended June 30, 1999 the Partnership made distributions to the general and limited partners totaling $1,612,873, of which approximately $1,506,012 constituted a return of capital, primarily due to the proceeds distributed of $1,427,641 related to the sale of the two properties located in Encinitas, California. The remaining distribution of $153,730 or $20.50 per limited partnership unit compares unfavorably to the $190,529 in cash generated from property operations (net income plus depreciation expense) for the six months ended December 31, 1998 on which such distributions were based. Additionally, the partnership distributed $31,502 to the general partner and $2,270 to the minority interest partner during the six months ended June 30, 1999. Management uses cash as its primary measure of a Partnership's liquidity. The amount of cash that represents adequate liquidity for a real estate limited partnership, in the short-term and long-term, depends on several factors. Among them are: 1. Relative risk of the partnership; 2. Condition of the partnership's properties; 3. Stage in the partnership's life cycle (e.g., money-raising, acquisition, operating or disposition phase); and 4. Distribution to partners. The Partnership believes that it has the ability to generate sufficient cash to meet both short-term and long-term liquidity needs, based upon the above four factors. The first factor refers to the risk of Partnership's investments. The Partnership's investments in properties were paid for in cash or on a moderately leveraged basis. The second factor relates to the condition of the Partnership's properties. All Partnership properties are in good condition, except for the Simi Valley property that is vacant as of August 1999. This property may require tenant improvements for a prospective new tenant in the near future. Therefore, the Partnership could withhold payment of all or a portion of distributions, if necessary, in order to rebuild cash reserve balances. 17 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) The third factor relates to life cycle. The Partnership completed its funding, acquisition and operating stages of properties in previous years. Thus, the Partnership is in the disposition stage. As part of the disposition stage, the Partnership has attempted to list each property for sale. Additionally, in January 1999 the Partnership sold the two properties located in Encinitas, California to unaffiliated buyers for sales price of $775,000 and $900,000, respectively. The proceeds from these property sales were distributed to the limited and general partners in March 1999 in accordance with the Partnership Agreement. The fourth factor relates to Partnership distributions. The Partnership is currently making semi-annual distributions from operations. Such distributions are subject to payments of Partnership expenses and reasonable reserves for expenses, maintenance, and replacements. In addition, at least six months of cash profits are left in the Partnership's balance sheet at each quarter end, since the Partnership makes distributions to the limited partners one month after each record date of June 30, and December 31. The General Partner believes that the Partnership will have the ability to meet its cash requirements in both the short-term and long-term. During the six months ended June 30, 1999, the General Partner earned partnership management fees of $31,502. Partnership management fees were paid and calculated in accordance with the partnership agreement. Slowdowns in the economy, inflation and changing prices have had a nominal effect on the Partnership's revenues and income from continuing operations. During the thirteen years of the Partnership's existence, inflationary pressures in the U.S. economy have been minimal, and this has been consistent with the experience of the Partnership in operating rental real estate in California. The Partnership has several lease clauses with its tenants that will help alleviate much of the negative impact of inflation. Among these are: A. Triple net leases at the Shaw Villa Shopping Center which give the Partnership an ability to pass on higher operating costs to its tenants. 18 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) The General Partner is attempting to sell the remaining two properties owned by the Partnership. Once the sale of the Shaw Villa Shopping Center and Pacific Bell Building properties are sold, the net proceeds will be distributed to the limited and general partners in accordance with the partnership agreement, and the partnership will then be terminated and dissolved. CASH FLOWS - SIX MONTHS ENDED JUNE 30, 1999 VS. SIX MONTHS ENDED JUNE 30, 1998 Cash and cash equivalents decreased $227,717 for the six months ended June 30, 1999 compared to a $86,069 decrease for the six months ended June 30, 1998. The continued decrease in cash resources is primarily due to distributions in excess of current earnings and the distribution of proceeds from the sale of the two properties located in Encinitas, California. Cash provided from operating activities increased by $120,679 for the six months ended June 30, 1999, with the largest contributor being $366,240 in cash basis net income, offset by $380,849, resulting from the gain on the sale of the Encinitas, California, for the six months ended June 30, 1999. In contrast, during the six months ended June 30, 1998, cash provided from operating activities amounted to $110,297 with the largest contributor being $124,656 in cash basis net income. Investing activities resulted in a $1,283,129 increase in cash resources during the six months ended June 30, 1999 due to proceeds from the sale of the two properties located in Encinitas, California. In contrast, the six months ended June 30, 1998 resulted in a $7,850 decrease in investing activities due to tenant improvements relating to the Santa Fe Business Park property. Cash from financing activities decreased $1,631,525 during the six months ended June 30, 1999 due to $1,615,143 being distributed to the limited, general and minority interest and $16,382 used as payments on notes payable. In contrast, cash used in financing activities for the six months ended June 30, 1998 decreased $188,516 due to $173,553 being distributed to the limited, general and minority interest partners and $14,963 used as payments on notes payable. 19 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) IMPACT OF YEAR 2000 Many existing computer systems and applications, and other control devices, use only two digits to identify a year in the date field, without considering the impact of the upcoming change in the century. As a result, such systems and applications could fail or create erroneous results unless corrected so that they can process data related to the Year 2000. The Partnership relies on its systems, applications and devices in operating and monitoring all major aspects of its business, including financial systems (such as general ledger, accounts receivable, accounts payable and unitholder servicing), and embedded computer chips, networks and telecommunications equipment and end products. The Partnership also relies, directly and indirectly, on external systems of business enterprises such as its advisor, lessees, suppliers, creditors, financial organizations, and of governmental entities for accurate exchange of data. The Partnership's current estimate is that the costs associated with the Year 2000 issue will not have a material adverse effect on the results of operations or financial position of the Partnership. However, despite the Partnership's efforts to address the Year 2000 impact on its internal systems, the Partnership may not have fully identified such impact or whether it can resolve it without disruption of its business and without incurring significant expense. In addition, even if the internal systems of the Partnership are not materially affected by the Year 2000 issue, the Partnership could be affected through disruption in the operations of the enterprises with which the Partnership interacts. 20 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) PART II OTHER INFORMATION ITEM 1.LEGAL PROCEEDINGS None ITEM 2.CHANGES IN SECURITIES None ITEM 3.DEFAULTS UPON SENIOR SECURITIES None ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5.OTHER INFORMATION None ITEM 6.EXHIBIT AND REPORTS ON FORM 8-K (a) Information required under this section has been included in the financial statements. (b) Reports on Form 8-K None 21 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ASSOCIATED PLANNERS REALTY FUND A California Limited Partnership (Registrant) By: WEST COAST REALTY ADVISORS, INC. A California Corporation, General Partner August 10, 1999 /s/ JOHN R. LINDSEY ------------------------- John R. Lindsey Vice President/Treasurer August 10, 1999 /s/ W. THOMAS MAUDLIN JR. ------------------------- W. Thomas Maudlin Jr. President of General Partner EX-27 2 FINANCIAL DATA SCHEDULE
5 0000785791 ASSOCIATED PLANNERS REALTY FUND, L.P. 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 30,032 0 0 0 0 55,305 5,470,743 (1,021,567) 4,510,963 52,521 1,422,816 0 0 0 3,035,626 4,510,963 275,050 669,575 185,380 185,380 0 0 54,262 429,933 0 0 0 0 0 429,933 50.83 50.83
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