-----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, CX7mAQkrJRC4bBRuCjgKjh4NgyUhg3yg2ulA759hMa/vb+gipO+fVhOmpgVkEQm1 XqCjyNl5vVmM5AUkGs72bg== 0000797331-96-000002.txt : 19960518 0000797331-96-000002.hdr.sgml : 19960518 ACCESSION NUMBER: 0000797331-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960516 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SECURED INVESTMENT RESOURCES FUND LP II CENTRAL INDEX KEY: 0000797331 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 363451000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16798 FILM NUMBER: 96568649 BUSINESS ADDRESS: STREET 1: 5453 W 61ST PL CITY: MISSION STATE: KS ZIP: 66205 BUSINESS PHONE: 9133845700 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 1996 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 0-16798 SECURED INVESTMENT RESOURCES FUND, L.P. II (Exact name of registrant as specified in its charter) Delaware 36-3451000 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5453 W. 61st Place, Mission, Kansas 66205 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (913) 384-5700 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Interests ("Units") 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 such shorter periods 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 SECURED INVESTMENT RESOURCES FUND, L.P. II INDEX PART I. FINANCIAL INFORMATION Page Item 1. Financial Statements (Unaudited): Balance Sheets -- March 31, 1996 and December 31, 1995 3-4 Statements of Operations -- Three Months Ended March 31, 1996 and 1995 5 Statements of Partnership Capital -- Three Months Ended March 31, 1996 and the Years Ended December 31, 1995, and 1994 6 Statements of Cash Flows -- Three Months Ended March 31, 1996 and 1995 7-8 Notes to Financial Statements 9-11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12-13 PART II. OTHER INFORMATION Item 1. Legal Proceedings 14 Item 2. Changes in Securities 14 Item 3. Defaults Upon Senior Securities 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Other Information 14 Item 6. Exhibits and Reports on Form 8-K 14 SIGNATURES 15 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS SECURED INVESTMENT RESOURCES FUND, L.P. II BALANCE SHEETS March 31, 1996 December 31, (Unaudited) 1995 ASSETS INVESTMENT PROPERTIES--Note Land and buildings $ 36,232,238 $ 36,217,082 Furniture, fixtures and equipment 1,846,845 1,797,522 38,079,083 38,014,604 Less accumulated depreciation and allowance for losses 11,026,631 10,725,975 27,052,452 27,288,629 RESTRICTED DEPOSITS Bond cash reserves 1,510,000 1,510,000 Bond principal reduction reserves 430,299 429,924 1,940,299 1,939,924 OTHER ASSETS Cash 579,160 522,835 Rents and other receivables, less allowance of $42,950 in 1996 and $45,475 in 1995 74,338 12,069 Due from related parties--Note B 179,422 174,423 Prepaid expenses 140,413 111,061 Debt issuance costs, net of accumulated amortization of $140,069 in 1996 and $129,854 in 1995 113,714 89,487 Commercial commissions, deposits and other 140,069 155,700 1,227,116 1,065,575 TOTAL ASSETS $ 30,219,867 $ 30,294,128 SECURED INVESTMENT RESOURCES FUND, L.P. II BALANCE SHEETS--CONT'D. March 31, 1996 December 31, (Unaudited) 1995 LIABILITIES AND PARTNERSHIP CAPITAL Mortgage debt--Note D $ 27,553,670 $ 27,581,485 Deferred interest--Note D 1,126,213 1,126,213 Accrued interest 694,808 688,468 Accounts payable and accrued expenses 466,587 398,997 Unearned revenue 11,578 14,358 Tenant security deposits 142,827 140,325 TOTAL LIABILITIES 29,995,683 29,949,846 PARTNERSHIP CAPITAL General Partner Capital contribution 1,000 1,000 Partnership deficit (186,787) (185,586) (185,787) (184,586) Limited Partner Capital contributions 18,901,831 18,901,831 Partnership deficit (18,491,860) (18,372,963) 409,971 528,868 TOTAL PARTNERSHIP CAPITAL 224,184 344,282 $ 30,219,867 $ 30,294,128 See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, 1996 1995 REVENUES Rents $1,503,028 $1,432,728 Maintenance escalations and other 28,152 22,448 1,531,180 1,455,176 OPERATING AND ADMINISTRATIVE EXPENSES Property operating expenses 609,556 571,984 General and administrative expenses 36,132 29,594 Professional services 13,096 17,174 Management fees and reimbursed direct expenses 70,804 66,921 729,588 685,673 NET OPERATING INCOME 801,592 769,503 NON-OPERATING EXPENSES Interest 610,819 594,670 Depreciation and amortization 310,871 341,824 921,690 936,494 PARTNERSHIP INCOME (LOSS) $ (120,098) $ (166,991) Allocation of loss: General Partner (1,201) (1,670) Limited Partner (118,897) (165,321) $ (120,098) $ (166,991) Partnership loss per limited partnership unit $ (2.22) $ (3.08) See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF PARTNERSHIP CAPITAL (Unaudited) Nine Months Ended March 31, 1996 (Unaudited) and the Years Ended December 31, 1995 and 1994 General Limited Partner Partner Total Balances at January 1, 1994 $ (175,181) $1,459,936 $1,284,755 Partnership loss (8,892) (880,286) (889,178) Balances at December 31, 1994 (184,073) 579,650 395,577 Partnership loss (513) (50,782) (51,295) Balances at December 31, 1995 (184,586) 528,868 344,282 Partnership loss (1,201) (118,897) (120,098) Balances at March 31, 1996 $ (185,787) $ 409,971 $ 224,184 See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 1996 1995 OPERATING ACTIVITIES Partnership income (loss) $ (120,098) $ (166,991) Adjustments to reconcile partnership loss to net cash provided by (used in) operating activities: Depreciation and amortization 348,671 341,824 Provision for losses on rents and other receivables (2,525) 7,500 Changes in assets and liabilities: Rents and other receivables (59,744) (58,719) Prepaid expenses (29,353) (24,308) Due from related parties (5,000) (2,162) Debt issuance costs (34,440) --- Commercial commissions, deposits and other 15,631 (8,297) Accounts payable and accrued expenses 67,591 133,614 Accrued interest 6,340 101,768 Unearned revenue (2,780) 256 Tenant security deposits 2,502 432 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 186,795 324,917 INVESTING ACTIVITIES Purchases of and improvements to investment properties (64,480) (68,223) Purchase of restricted bond cash reserves (375) (4,335) NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (64,855) (72,558) SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF CASH FLOWS (Unaudited)--CONT'D. Three Months Ended March 31, 1996 1995 FINANCING ACTIVITIES Deferral of long-term interest payable $ --- $ --- Principal payments on long-term debt (65,615) (66,044) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (65,615) (66,044) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 56,325 186,315 CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 522,835 284,224 CASH AND CASH EQUIVALENTS END OF PERIOD $ 579,160 $ 470,539 See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II NOTES TO FINANCIAL STATEMENTS (Unaudited) March 31, 1996 NOTE A--BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. 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 management, 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, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the year ended December 31, 1995. NOTE B--DUE FROM RELATED PARTY Through December 31, 1994, property management services were provided by The Hoyt Group, a Kansas Corporation in which the individual General Partner had a majority interest. As of January 1, 1995, SPECS, Inc., a Kansas Corporation in which the individual General Partner has a minority interest, receives property management fees for providing property management services. SPECS, Inc. also performs various professional services for the Partnership, primarily tax accounting, audit preparation, SEC 10Q and 10K preparation, and investor services. Amounts paid by the Partnership to They Hoyt Group and SPECS, Inc. are as follows: Three Months Ended March 31, 1996 1995 Property Management Fees $ 70,804 $ 66,921 Professional services 2,500 -0- $ 73,304 $ 66,921 NOTES TO FINANCIAL STATEMENTS (Unaudited)--CONT'D. NOTE B--RELATED PARTY TRANSACTIONS--CONT'D. Amounts due from related parties consist of the following: March 31, December 31, 1996 1995 Secured Investment Resources II, Inc. $ 174,423 $ 174,423 Secured Investment Resources Fund, L.P. 5,000 --- $ 179,423 $ 174,423 The net amount due from related parties represents excess syndication costs. NOTE C--CASH DISTRIBUTIONS No cash distributions have been made since April 1990. Future distributions will only be made from excess cash flow not needed for working capital reserves. NOTE D--MORTGAGE DEBT Mortgage debt consists of the following: March 31, December 31, 1996 1995 Collateralized by Investment Property: First Mortgages: Oak Terrace Active Retirement Center and Healthcare Center $ 12,800,000 $ 12,800,000 Less bond discount (2,315,242) (2,353,042) Sunwood Village Apartments 8,102,961 8,136,792 Thomasbrook Apartments 4,984,179 4,984,179 Forest Park Shopping Ctr. 1,267,111 1,288,958 Bayberry Crossing Shopping Ctr. 831,023 831,023 Second Mortgages: Bayberry Crossing Shopping Ctr. 1,883,638 1,893,575 $ 27,553,670 $ 27,581,485 Related to the Sunwood Village Apartments purchase money note is a credit enhancement fee which is due at maturity. As of March 31, 1996 and December 31, 1995, $371,095 of credit enhancement fees have been accrued and are reflected in long-term accrued interest. NOTES TO FINANCIAL STATEMENTS (Unaudited)--CONT'D. NOTE D--MORTGAGE DEBT--CONT'D. The Partnership has the option to currently pay or defer payment of interest due on the hedged portion ($8,400,000) of the Oak Terrace Active Retirement Center and Healthcare Center bond financing. As of March 31, 1996 and December 31, 1995, $737,370 of deferred interest has been accrued and is reflected in long-term accrued interest. Interest expense totaled $610,819 and $594,670 during the first quarter of 1996 and 1995, respectively. (The remainder of this page intentionally left blank.) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Revenues for the first three months of 1996 increased by $76,000 (5.2%) compared to the same period of last year. The stronger apartment markets allowed the Partnership to continue increasing rental rates, discontinue rent concessions and maintain high occupancy levels. The commercial property remained strong at Forest Park Center in St Louis, the rental income at Bayberry Center increased due to new leases. The Partnership has also increased the rental rates at Oak Terrace, resulting in higher revenue, but also higher vacancy rates. The Partnership feels that the strong apartment market will continue through 1996 into 1997. Operating and Administrative expenses increased $44,000 (7.3%) when comparing the first three months of 1996 with the same period of 1995. Higher property operating expenses are primarily due to higher resident turnover. Professional services declined $4,000 (23.7%) from the same period in 1995. Interest expense for the first three months increased $16,000 (2.7%) over the 1995 first three months expense. This is due primarily to higher interest rates, and increased bond collateral fees. The Partnership anticipates that operating results for the first three months will be representative of the results for the remainder of the year. Liquidity and Capital Reserves During the three months $187,000 of cash was provided by operating activities, $65,000 was used for investing activities and $66,000 was used to reduce long term debt. Although the cash position has improved, the Partnership is past due on the Thomasbrook Apartment first mortgage. The General Partner believes that working capital will be available during the remainder of the year to reduce this past due balance and fund known, on-going operating and capital requirements. The General Partner also anticipates that 1996 cash flow from operations will continue to improve because of strong occupancy and continued rental rate increases. It is the General Partner's intent to evaluate the Partnership's portfolio to determine if it is prudent to offer one or more Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.-- Cont'd. Liquidity & Capital Reserves -- Cont'd. properties for sale or possible restructure of the related financing packages. Any unleveraged portion of the net sale proceeds or favorable refinancing terms could generate additional working capital. The General Partner has determined it prudent to discontinue cash distributions until such time that adequate working capital and capital improvement reserves are in place. (The remainder of this page intentionally left blank.) PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS None. Item 2. CHANGES IN SECURITIES Inapplicable. Item 3. DEFAULTS UPON SENIOR SECURITIES None. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Inapplicable. Item 5. OTHER INFORMATION Inapplicable. Item 6. EXHIBIT AND REPORTS ON FORM 8-K (a) Exhibits None. (b) Reports on Form 8-K There were no reports on Form 8-K filed during the quarter ended March 31, 1996. 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. SECURED INVESTMENT RESOURCES FUND, L.P. II A Delaware Limited Partnership (Registrant) By: James R. Hoyt as Individual General Partner Date: May 15, 1996 By: Secured Investment Resources II, Inc. as Corporate General Partner By: James R. Hoyt, President Date: May 15, 1996 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. SECURED INVESTMENT RESOURCES FUND, L.P. II A Delaware Limited Partnership (Registrant) By: /s/ James R. Hoyt James R. Hoyt as Individual General Partner Date: May 15, 1996 By: Secured Investment Resources II, Inc. as Corporate General Partner By: /s/ James R. Hoyt James R. Hoyt, President Date: May 15, 1996 EX-27 2
5 Unaudited. 1 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 579,160 1,940,299 117,288 42,950 0 1,227,116 38,079,083 11,026,631 30,219,867 2,442,013 27,553,670 0 0 0 0 30,219,867 0 1,531,180 0 729,588 310,871 0 610,819 0 0 0 0 0 0 (120,098) (2.22) 0
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