-----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, NGqpteduY/7lpDyiCUwGF0yE5jXjPt98q8n56Ax7bGCQGzCI031/wUcWY+XNlfaQ Kwkg0jeFJqFXL1Xo+1yOww== 0000797331-96-000003.txt : 19960816 0000797331-96-000003.hdr.sgml : 19960816 ACCESSION NUMBER: 0000797331-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 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: 96613011 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 June 30, 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 -- June 30, 1996 and December 31, 1995 3-4 Statements of Operations -- Three and Six Months Ended June 30, 1996 and 1995 5 Statements of Partnership Capital -- Six Months Ended June 30, 1996 and the Years Ended December 31, 1995, and 1994 6 Statements of Cash Flows -- Six Months Ended June 30, 1996 and 1995 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, 1996 December 31, (Unaudited) 1995 ASSETS INVESTMENT PROPERTIES Land and buildings $ 36,333,451 $ 36,217,082 Furniture, fixtures and equipment 1,896,773 1,797,522 __________ __________ 38,230,224 38,014,604 Less accumulated depreciation and allowance for losses 11,327,217 10,725,975 __________ __________ 26,903,007 27,288,629 __________ __________ RESTRICTED DEPOSITS Bond cash reserves 1,510,000 1,510,000 Bond principal reduction reserves 459,424 429,924 __________ __________ 1,969,424 1,939,924 OTHER ASSETS Cash 407,049 522,835 Rents and other receivables, less allowance of $40,245 in 1996 and $45,475 in 1995 16,043 12,069 Due from related parties--Note B 179,423 174,423 Prepaid expenses 113,787 111,061 Debt issuance costs, net of accumulated amortization of $150,283 in 1996 and $129,854 in 1995 421,408 89,487 Commercial commissions, deposits and other 109,315 155,700 __________ __________ 1,247,025 1,065,575 __________ __________ TOTAL ASSETS $ 30,119,456 $ 30,294,128 __________ __________ SECURED INVESTMENT RESOURCES FUND, L.P. II BALANCE SHEETS--CONT'D. June 30, 1996 December 31, (Unaudited) 1995 LIABILITIES AND PARTNERSHIP CAPITAL Mortgage debt--Note B $ 27,556,918 $ 27,581,485 Deferred interest--Note B 755,118 1,126,213 Accrued interest 685,255 688,468 Accounts payable and accrued expenses 524,224 398,997 Unearned revenue 17,942 14,358 Tenant security deposits 145,158 140,325 __________ __________ TOTAL LIABILITIES 29,684,615 29,949,846 __________ __________ PARTNERSHIP CAPITAL General Partner Capital contribution 1,000 1,000 Partnership deficit (184,680) (185,586) __________ __________ (183,680) (184,586) __________ __________ Limited Partner Capital contributions 18,901,831 18,901,831 Partnership deficit (18,283,310) (18,372,963) __________ __________ 618,521 528,868 __________ __________ TOTAL PARTNERSHIP CAPITAL 434,841 344,282 __________ __________ $ 30,119,456 $ 30,294,128 __________ __________ 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, 1996 1995 1996 1995 REVENUES Rents $3,022,151 $2,841,141 $1,519,123 $1,408,413 Maintenance escalations and other 53,490 64,162 25,338 41,714 ________ _________ _______ _______ 3,075,641 2,905,303 1,544,461 1,450,127 ________ _________ _______ _______ OPERATING AND ADMINISTRATIVE EXPENSES Property operating expenses 1,255,014 1,173,099 645,458 601,115 General and administrative expenses 72,123 63,712 35,991 34,118 Professional services 45,883 34,101 32,787 16,927 Management fees 141,900 135,163 71,096 68,242 ________ _________ _______ _______ 1,514,920 1,406,075 785,332 720,402 ________ _________ _______ _______ NET OPERATING INCOME 1,560,721 1,499,228 759,129 729,725 NON-OPERATING EXPENSES Interest 1,200,718 1,194,846 589,899 675,776 Depreciation and amortization 621,671 683,647 310,800 266,223 ________ _________ _______ _______ 1,822,389 1,878,493 900,699 941,999 ________ _________ _______ _______ Partnership Loss before extra ordinary item (261,668) (379,265) (141,570) (212,274) Extraordinary Gain on debt restructuring-- Note B 352,227 890,366 352,227 890,366 ________ _________ _______ _______ PARTNERSHIP INCOME $ 90,559 $ 511,101 $ 210,657 $ 678,092 ________ _________ _______ _______ Allocation of income: General Partner 906 5,111 2,107 6,781 Limited Partner 89,653 505,990 208,550 671,311 ________ _________ _______ _______ $ 90,559 $ 511,101 $ 210,657 $ 678,092 ________ _________ _______ _______ Partnership income per limited partnership unit $ 1.67 $ 9.43 $ 3.89 $ 12.51 ________ _________ _______ _______ See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF PARTNERSHIP CAPITAL (Unaudited) Six Months Ended June 30, 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 Income 906 89,653 90,559 ________ _________ __________ Balances at June 30, 1996 $ (183,680) $ 618,521 $ 434,841 ________ _________ __________ See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II, STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 1996 1995 OPERATING ACTIVITIES Partnership income $ 90,559 $ 511,101 Adjustments to reconcile partnership loss to net cash provided by operating activities: Depreciation and amortization 631,002 615,427 Amortization of bond discount 75,600 75,600 Gain on debt restructuring (352,227) (890,366) Provision for losses on rents and other receivables (5,230) (193,129) Changes in assets and liabilities: Rents and other receivables 1,256 194,136 Prepaid expenses (2,726) 21,101 Due from related parties (5,000) 4,520 Debt issuance costs (352,348) --- Commercial commissions, deposits and other 18,185 (13,896) Accounts payable and accrued expenses 125,227 219,004 Accrued interest (3,213) 134,830 Unearned revenue 3,583 2,203 Tenant security deposits 4,833 2,133 ________ _________ NET CASH PROVIDED BY OPERATING ACTIVITIES 229,501 682,664 ________ _________ INVESTING ACTIVITIES Purchases of and improvements to investment properties (215,620) (166,229) Purchase of restricted bond cash reserves (29,500) (4,710) ________ _________ NET CASH USED IN INVESTING ACTIVITIES (245,120) (170,939) ________ _________ SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF CASH FLOWS (Unaudited)--CONT'D. Six Months Ended June 30, 1996 1995 FINANCING ACTIVITIES Principal payments on long-term debt (100,167) (221,033) ________ _________ NET CASH USED IN FINANCING ACTIVITIES (100,167) (221,033) ________ _________ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (115,786) 290,692 CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 522,835 284,224 ________ _________ CASH AND CASH EQUIVALENTS END OF PERIOD $ 407,049 $ 574,916 ________ _________ See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II NOTES TO FINANCIAL STATEMENTS (Unaudited) June 30, 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 six month period ended June 30, 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--MORTGAGE DEBT Mortgage debt consists of the following: June 30, 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 (2,277,442) (2,353,042) Sunwood Village Apartments 8,100,000 8,136,792 Thomasbrook Apartments 4,984,179 4,984,179 Forest Park Shopping Ctr. 1,245,264 1,288,958 Bayberry Crossing Shopping Ctr. 831,023 831,023 Second Mortgages: Bayberry Crossing Shopping Ctr. 1,873,893 1,893,575 __________ __________ $ 27,556,917 $ 27,581,485 __________ __________ Interest expense totaled $1,200,718 and $1,194,846 during the first half of 1996 and 1995, 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, 2000 (5 years). NOTES TO FINANCIAL STATEMENTS (Unaudited)--CONT'D. NOTE B--MORTGAGE DEBT--CONT'D. The Partnership incurred 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, 1996 and December 31, 1995, $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, 1996 1995 Property Management Fees $ 141,900 $ 135,163 _________ ________ Amounts due from related parties consist of the following: June 30, 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 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 six months of 1996 increased by $170,000 (5.9%) 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 at Forest Park Center in St Louis remained strong, the rental income at Bayberry Center increased due to current tenants rental rate increases. 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 $90,300 (6.8%) when comparing the first six months of 1996 with the same period of 1995. Higher property operating expenses are primarily due to higher resident turnover. Interest expense for the first six months increased $5,900 (0.5%) over the 1995 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 $229,500 of cash was provided by operating activities, $245,100 was used for investing activities and $100,200 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 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 June 30, 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: August 15, 1996 By: Secured Investment Resources II, Inc. as Corporate General Partner By: James R. Hoyt, President Date: August 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: August 15, 1996 By: Secured Investment Resources II, Inc. as Corporate General Partner By: /s/ James R. Hoyt James R. Hoyt, President Date: August 15, 1996 13 EX-27 2
5 Unaudited. 1 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 407,049 1,969,424 56,288 40,245 0 1,247,025 38,230,224 11,327,217 30,119,456 2,127,697 27,556,918 0 0 0 0 30,119,456 0 3,075,641 0 1,514,920 621,671 0 1,200,718 0 0 0 0 0 0 90,559 1.67 0
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