-----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, LMFs10u4NtLMsaVJ2tWWeHuO+mQUiimj2dfONR/h8tp07rAfpNmGJpZSADDeDZ+j dKvJVtmajU/SYsZUJDJOtw== 0000797331-02-000002.txt : 20020413 0000797331-02-000002.hdr.sgml : 20020413 ACCESSION NUMBER: 0000797331-02-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 20020110 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: 2505834 BUSINESS ADDRESS: STREET 1: 5453 W 61ST PL CITY: MISSION STATE: KS ZIP: 66205 BUSINESS PHONE: 9133845700 10-Q 1 sir2qjun.txt 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 June 30, 1999 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.) 4200 Blue Ridge Blvd., Ste LH-06, K.C., MO 664133 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (816) 353-6500 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 -- June 30, 1999 and December 31, 1998 3-4 Statements of Operations -- Three and Six Months Ended June 30, 1999 and 1998 5 Statements of Partnership Capital -- Six Months Ended June 30, 1999 and the Year Ended December 31, 1998 6 Statements of Cash Flows -- Six Months Ended June 30, 1999 and 1998 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 June 30, 1999 December 31, (Unaudited) 1998 ASSETS INVESTMENT PROPERTIES Land and buildings $ 30,458,599 $ 30,458,599 Furniture, fixtures and equipment 1,885,024 1,695,055 32,343,623 32,153,654 Less accumulated depreciation and allowance for losses 12,367,030 11,856,495 19,976,593 20,297,159 RESTRICTED DEPOSITS Bond cash reserves 1,510,000 1,510,000 Bond principal reduction reserves 456,343 582,668 Restricted Deposits 28,750 28,750 1,995,093 2,121,418 OTHER ASSETS Cash 713,273 550,176 Rents and other receivables, less allowance of $127,764 in 1999 and $113,963 in 1998 139,398 37,613 Due from related parties (Note C) 269,046 269,046 Prepaid expenses 157,911 224,996 Debt issuance costs, net of accumulated amortization of $444,019 in 1999 and $406,256 in 1998 290,829 178,158 Commercial commissions, deposits and other 85,886 69,699 1,656,343 1,329,557 TOTAL ASSETS $ 23,628,029 $ 23,748,135 SECURED INVESTMENT RESOURCES FUND, L.P. II BALANCE SHEETS--CONT'D. June 30, 1999 December 31, (Unaudited) 1998 LIABILITIES AND PARTNERSHIP CAPITAL Mortgage debt (Note B) $ 22,416,638 22,415,582 Deferred interest (Note B) 737,370 737,370 Accrued interest 75,936 58,398 Accounts payable and accrued expenses 490,182 271,425 Unearned revenue 8,270 32,415 Tenant security deposits 100,537 110,315 TOTAL LIABILITIES 23,828,933 23,625,505 PARTNERSHIP CAPITAL General Partner Capital contribution 1,000 1,000 Partnership deficit (187,852) (184,615) (186,852) (183,615) Limited Partner Capital contributions 18,901,831 18,901,831 Partnership deficit (18,916,062) (8,595,586) (14,052) (306,245) TOTAL PARTNERSHIP CAPITAL (200,902) 122,630 $ 23,628,029 $ 23,748,135 See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF OPERATIONS (Unaudited) Six Months Ended Three Months Ended June 30, June 30, 1999 1998 1999 1998 REVENUES Rents $2,575,277 $2,535,562 $1,316,741 $1,293,183 Maintenance escalations and other 43,653 51,665 15,461 29,949 2,618,930 2,587,227 1,332,201 1,138,141 OPERATING AND ADMINISTRATIVE EXPENSES Property operating expenses 1,084,104 1,044,801 557,985 522,366 General and administrative expenses 47,824 66,805 23,247 36,837 Professional services 127,074 82,443 55,497 50,154 Management fees 121,451 110,176 63,180 55,445 Depreciation and amortization 548,299 544,289 274,235 272,145 1,928,752 1,848,514 974,194 936,947 NET OPERATING INCOME 690,178 738,713 358,007 201,194 NON-OPERATING EXPENSES Interest 1,013,710 991,075 518,749 512,895 PARTNERSHIP INCOME (LOSS) $ (323,532) $ (252,361) $ (160,742) $ (311,701) Allocation of income (loss): General Partner (3,235) (2,524) (1,609) (3,117) Limited Partner (320,297) (249,837) (159,313) (308,584) $ (323,532) $ (252,361) $ (160,742) $ (311,701) Partnership income (loss) per limited partnership unit $ (6.03) $ (4.70) $ (3.00) $ (5.75) See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF PARTNERSHIP CAPITAL (Unaudited) Six Months Ended June 30, 1999 (Unaudited) and the Years Ended December 31, 1998 and 1997 General Limited Partner Partner Total Balances at December 31, 1997 $ (194,875) $ (489,741) $ (684,616) Partnership profit 11,290 1,117,742 1,129,032 Distribution 0 (321,786) (321,786) Balances at December 31, 1998 (183,585) 306,245 122,630 Partnership Loss (3,235) (320,297) (323,532) Balances at June 30, 1999 $ (186,820) $ (14,052) $ (200,902) See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II, STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 1999 1998 OPERATING ACTIVITIES Partnership income $ (323,532) $ (252,361) Adjustments to reconcile partnership loss to net cash provided by operating activities: Depreciation and amortization 548,166 544,289 Amortization of bond discount 75,600 75,600 Provision for losses on rents and other receivables 13,801 19,367 Changes in assets and liabilities: Rents and other receivables (115,586) (20,812) Prepaid expenses 67,085 (99,012) Commercial commissions, deposits and other (16,187) (327) Accounts payable and accrued expenses 218,757 105,306 Accrued interest 17,538 0 Unearned revenue (24,144) (7,768) Tenant security deposits (9,778) 4,422 NET CASH PROVIDED BY OPERATING ACTIVITIES 451,719 121,139 INVESTING ACTIVITIES Purchases of and improvements to investment properties (189,969) (183,916) Release(Purchase) of restricted bond cash reserves 126,325 (31,120) NET CASH USED IN INVESTING ACTIVITIES (63,644) (215,036) SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF CASH FLOWS (Unaudited)--CONT'D. Six Months Ended June 30, 1999 1998 FINANCING ACTIVITIES Principal payments on long-term debt $ (74,544) $ (19,030) Debt Issuance Costs (150,434) 0 Due (to) from related parties 0 75,000 NET CASH USED IN FINANCING ACTIVITIES (224,978) (55,970) INCREASE DECREASE IN CASH AND CASH EQUIVALENTS 163,097 (142,184) CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 550,176 867,658 CASH AND CASH EQUIVALENTS END OF PERIOD $ 713,273 $ 679,731 See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II NOTES TO FINANCIAL STATEMENTS (Unaudited) June 30, 1999 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 six month period ended June 30, 1999 are not necessarily indicative of the results that may be expected for the year ended December 31, 1999. 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, 1998. NOTE B--MORTGAGE DEBT Mortgage debt consists of the following: June 30, December 31, 1999 1998 Collateralized by Investment Property First Mortgages: Oak Terrace Active Retirement Center and Healthcare Center $ 12,800,000 $ 12,800,000 less bond discount (1,823,842) (1,899,442) Sunwood Village Apartments 7,904,312 7,940,528 Forest Park Shopping Ctr. 1,004,950 1,025,797 Bayberry Crossing Shopping Ctr. 2,531,218 2,547,699 $ 22,416,638 $ 22,415,582 Interest expense totaled $1,013,710 and $991,075 during the first half of 1999 and 1998, respectively. SECURED INVESTMENT RESOURCES FUND, L.P. II NOTES TO FINANCIAL STATEMENTS (Unaudited)--CONT'D. NOTE B--MORTGAGE DEBT--CONT'D. The Partnership has the option to currently pay or defer payment of interest due on the hedged portion ($10,700,000) of the Oak Terrace Active Retirement Center financing. As of June 30, 1999 and December 31, 1998, $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: Six Months Ended June 30, 1999 1998 Property Management Fees $ 121,451 $ 110,176 Amounts due from related parties consist of the following: June 30, December 31, 1999 1998 Secured Investment Resources II, Inc. $ 174,423 $ 174,423 Secured Investment Resources Fund, L.P. 94,623 94,623 $ 269,046 $ 269,046 The amount due from SIR II, Inc. represents excess syndication costs. NOTE D--CASH DISTRIBUTIONS No cash distributions have been made since October, 1998. 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 six months of 1999 increased by $31,703 (1.2%) 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. The Partnership feels that the strong market at Oak Terrace will continue through 1999. Operating and Administrative expenses increased $20,322 (2.0%) when comparing the first six months of 1999 with the same period of 1998. Higher property operating expenses are primarily due to higher resident turnover. Professional services increased $44,628 over the same period in the prior year due primarily to legal expenses incurred in connection with planned refinancing of the loan on the Oak Terrace properties. Interest expense for the first six months increased $22,635 (2.3%) over the 1998 first six months expense. The Partnership anticipates that operating results for the first six months will be representative of the results for the remainder of the year. Liquidity and Capital Reserves During the first six months $451,719 of cash was provided by operating activities, $63,644 was used for investing activities and $224,978 was used to reduce long term debt and incur loan fees. 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 Inapplicable. 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 June 30, 1999. 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: January 10, 2002 By: Secured Investment Resources II, Inc. as Corporate General Partner By: James R. Hoyt, President Date: January 10, 2002 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: January 10, 2002 By: Secured Investment Resources II, Inc. as Corporate General Partner By: James R. Hoyt, President Date: January 10, 2002 -----END PRIVACY-ENHANCED MESSAGE-----