-----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, D57oRMJGxxxKJSVYdMq2i77QidGvFj5Uy1CE9SFX6i4IcR/FPIixn0K2but+j34c SIKMPSdO6cJE1Btiv2rHSw== 0000797331-97-000004.txt : 19971224 0000797331-97-000004.hdr.sgml : 19971224 ACCESSION NUMBER: 0000797331-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971223 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: SEC FILE NUMBER: 000-16798 FILM NUMBER: 97742871 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 September 30, 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 0-16798 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 --September 30, 1997 and December 31, 1996 3-4 Statements of Operations -- Three and Nine Months Ended September 30, 1997 and 1996 5 Statements of Partnership Capital -- Nine Months Ended September 30, 1997 and the Years Ended December 31, 1996, and 1995 6 Statements of Cash Flows -- Nine Months Ended September 30, 1997 and 1996 7-8 Notes to Financial Statements 9-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings 12 Item 2. Changes in Securities 12 Item 3. Defaults Upon Senior Securities 12 Item 4. Submission of Matters to a Vote of Security Holders 12 Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 13 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS SECURED INVESTMENT RESOURCES FUND, L.P. II BALANCE SHEETS September 30, 1997 December 31, (Unaudited) 1996 ASSETS INVESTMENT PROPERTIES Land and buildings $ 36,366,077 $ 36,354,615 Furniture, fixtures and equipment 2,074,291 1,983,816 38,440,368 38,338,431 Less accumulated depreciation and allowance for losses 12,867,914 11,946,482 25,572,454 26,391,949 RESTRICTED DEPOSITS Bond cash reserves 1,510,000 1,510,000 Bond principal reduction reserves 504,490 455,125 Restricted Deposits 28,750 28,750 2,043,240 1,993,875 OTHER ASSETS Cash 910,742 561,667 Rents and other receivables, less allowance of $103,900 in 1997 and $54,600 in 1996 78,937 14,431 Due from related parties (Note C) 179,423 179,423 Prepaid expenses 115,057 96,982 Debt issuance costs, net of accumulated amortization of $305,372 in 1997 and $218,729 in 1996 295,442 365,585 Commercial commissions, deposits and other 67,782 98,307 1,647,383 1,316,395 TOTAL ASSETS $ 29,263,077 $ 29,702,219 SECURED INVESTMENT RESOURCES FUND, L.P. II BALANCE SHEETS--CONT'D. September 30, 1997 December 31, (Unaudited) 1996 LIABILITIES AND PARTNERSHIP CAPITAL Mortgage debt (Note B) $ 27,450,997 $ 27,473,556 Deferred interest (Note B) 737,370 737,370 Accrued interest 790,010 684,139 Accounts payable and accrued expenses 617,322 471,568 Unearned revenue 7,279 36,302 Tenant security deposits 146,550 148,462 TOTAL LIABILITIES 29,749,528 29,551,397 PARTNERSHIP CAPITAL General Partner Capital contribution 1,000 1,000 Partnership deficit (193,894) (187,521) (192,894) (186,521) Limited Partner Capital contributions 18,901,831 18,901,831 Partnership deficit (19,195,388) (18,564,488) (293,557) 337,343 TOTAL PARTNERSHIP CAPITAL (486,451) 150,822 $ 29,263,077 $ 29,702,219 See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF OPERATIONS (Unaudited) Nine Months Ended Three Months Ended September 30, September 30, 1997 1996 1997 1996 REVENUES Rents $4,462,368 $4,559,968 $1,503,785 $1,537,817 Maintenance escalations and other 101,315 86,660 41,833 33,170 4,563,683 4,646,628 1,545,618 1,570,987 OPERATING AND ADMINISTRATIVE EXPENSES Property operating expenses 1,962,135 1,897,995 666,650 642,981 General and administrative expenses 107,401 104,976 31,424 32,853 Professional services 89,114 54,966 37,512 9,083 Management fees 197,467 210,200 67,379 68,300 2,356,117 2,268,137 802,965 753,217 NET OPERATING INCOME 2,207,566 2,378,491 742,653 817,770 NON-OPERATING EXPENSES Interest 1,836,763 1,792,476 614,909 591,758 Depreciation and amortization 1,008,076 950,548 336,026 328,877 2,844,839 2,743,024 950,935 920,635 Partnership Loss before extra ordinary item $ (637,273) (364,533) (208,282) (102,865) Extraordinary Gain on debt restructuring-- (Note B) --- 352,227 --- --- PARTNERSHIP INCOME (LOSS) $ (637,273) $ (12,306) $ (208,282) $ (102,865) Allocation of income (loss): General Partner (6,373) (123) (2,083) (1,029) Limited Partner (630,900) (12,183) (206,199) (101,836) $ (637,273) $ (12,306) $ (208,282) $ (102,865) Partnership income (loss) per limited partnership unit $ (11.76) $ (.23) $ (3.84) $ (1.90) See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF PARTNERSHIP CAPITAL (Unaudited) Nine Months Ended September 30, 1997 (Unaudited) and the Years Ended December 31, 1996 and 1995 General Limited Partner Partner Total Balances at January 1, 1995 $ (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 (1,935) (191,525) (193,460) Balances at December 31, 1996 (186,521) 337,343 150,822 Partnership loss (6,373) (630,900) (637,273) Balances at September 30, 1997 $ (192,894) $ (293,557) $ (486,451) See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II, STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, 1997 1996 OPERATING ACTIVITIES Partnership income $ (637,273) $ (12,306) Adjustments to reconcile partnership loss to net cash provided by operating activities: Depreciation and amortization 1,008,076 963,595 Amortization of bond discount 113,400 113,400 Gain on debt restructuring 0 (352,227) Provision for losses on rents and other receivables 49,300 675 Changes in assets and liabilities: Rents and other receivables (113,807) (14,128) Prepaid expenses (18,075) 20,236 Commercial commissions, deposits and other 30,526 24,300 Accounts payable and accrued expenses 145,754 38,811 Accrued interest 105,871 4,251 Unearned revenue (29,024) (4,059) Tenant security deposits (1,911) 9,281 NET CASH PROVIDED BY OPERATING ACTIVITIES 652,837 791,829 INVESTING ACTIVITIES Purchases of and improvements to investment properties (101,937) (266,203) Purchase of restricted bond cash reserves (49,365) (39,351) NET CASH USED IN INVESTING ACTIVITIES (151,302) (305,554) SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF CASH FLOWS (Unaudited)--CONT'D. Nine Months Ended September 30, 1997 1996 FINANCING ACTIVITIES Principal payments on long-term debt $ (135,960) $ (146,419) Debt Issuance Costs (16,500) (356,509) Due (to) from related parties 0 (5,000) NET CASH USED IN FINANCING ACTIVITIES (152,460) (507,928) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 349,075 (21,653) CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 561,667 522,835 CASH AND CASH EQUIVALENTS END OF PERIOD $ 910,742 $ 501,182 See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II NOTES TO FINANCIAL STATEMENTS (Unaudited) September 30, 1997 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 nine month period ended September 30, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. 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, 1996. NOTE B--MORTGAGE DEBT Mortgage debt consists of the following: September 30, December 31, 1997 1996 Collateralized by Investment Property First Mortgages: Oak Terrace Active Retirement Center and Healthcare Center $ 12,800,000 $ 12,800,000 less bond discount (2,088,442) (2,201,842) Sunwood Village Apartments 8,024,543 8,070,786 Thomasbrook Apartments 4,984,179 4,984,179 Forest Park Shopping Ctr. 1,136,031 1,201,571 Bayberry Crossing Shopping Ctr. 2,594,686 2,618,862 $ 27,450,997 $ 27,473,556 Interest expense totaled $1,836,763 and $1,792,476 during the first nine months of 1997 and 1996, respectively. On May 17, 1996 the Partnership refinanced the matured first mortgage on Sunwood Village Apartments. The terms of the new mortgage are $8,100,000 at 8.625% interest with monthly principal and interest payments in the amount of $63,000 through the loan maturity date of June 1, 2001 (5 years). SECURED INVESTMENT RESOURCES FUND, L.P. II NOTES TO FINANCIAL STATEMENTS (Unaudited)--CONT'D. NOTE B--MORTGAGE DEBT--CONT'D. The Partnership recognized a gain of $352,227 upon payment of the refinanced note due the forgiveness of all the deferred interest relating to the original note. 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 financing. As of June 30, 1997 and December 31, 1996, $737,370 of deferred interest has been accrued and is reflected in long-term accrued interest. NOTE C--RELATED PARTY TRANSACTIONS 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. Property management fees paid by the Partnership to SPECS, Inc. are as follows: Nine Months Ended September 30, 1997 1996 Property Management Fees $ 197,467 $ 210,200 Amounts due from related parties consist of the following: September 30, December 31, 1997 1996 Secured Investment Resources II, Inc. $ 174,423 $ 174,423 Secured Investment Resources Fund, L.P. 5,000 5,000 $ 179,423 $ 179,423 The amount due from SIR II, Inc. represents excess syndication costs. NOTE D--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. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Revenues for the first nine months of 1997 decreased by $82,900 (1.8%) compared to the same period of last year. The commercial property at Forest Park Center in St Louis remained strong, the rental income at Bayberry Center decreased due to vacancy and bad debt. The Partnership has increased the rental rates at Oak Terrace, resulting in increased revenue of $92,700. The Partnership feels that the strong market at Oak Terrace will continue through 1997. The weaker apartment market has caused a decrease in rental income of $165,100 when comparing the first nine months of 1997 to the same period of 1996. Operating and Administrative expenses increased $66,600 (3.3%) when comparing the first nine months of 1997 with the same period of 1996. Higher property operating expenses are primarily due to higher resident turnover. Interest expense for the first nine months increased $44,300 (2.5%) over the 1996 first nine months expense. The Partnership anticipates that operating results for the first nine months will be representative of the results for the remainder of the year. Liquidity and Capital Reserves During the first nine months $652,900 of cash was provided by operating activities, $151,300 was used for investing activities and $152,500 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 1997 cash flow from operations will improve because of stronger occupancy and 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 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. 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 September 30, 1997. 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: November 15, 1997 By: Secured Investment Resources II, Inc. as Corporate General Partner By: James R. Hoyt, President Date: November 15, 1997 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: November 15, 1997 By: Secured Investment Resources II, Inc. as Corporate General Partner By: /s/ James R. Hoyt James R. Hoyt, President Date: November 15, 1997 EX-27 2
5 1 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 910,742 2,043,240 182,837 (103,900) 0 1,647,383 38,440,368 12,867,914 29,263,077 2,298,531 27,450,997 0 0 0 0 29,263,077 0 4,563,683 0 2,356,117 1,008,076 0 1,836,763 0 0 0 0 0 0 (637,273) (11.76) 0
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