-----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, H9R6f/tnrer7agdElffivTltNsdkFDjVYShEMwDyGobxWnTANZzITUofMc/mV2VJ UVmR0fQife6U8NBwlmpOhA== 0000797331-96-000004.txt : 19961111 0000797331-96-000004.hdr.sgml : 19961111 ACCESSION NUMBER: 0000797331-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961108 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: 96656725 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, 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 -- September 30, 1996 and December 31, 1995 3-4 Statements of Operations -- Three and Nine Months Ended September 30, 1996 and 1995 5 Statements of Partnership Capital -- Nine Months Ended September 30, 1996 and the Years Ended December 31, 1995, and 1994 6 Statements of Cash Flows -- Nine Months Ended September 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 September 30, 1996 December 31, (Unaudited) 1995 ASSETS INVESTMENT PROPERTIES Land and buildings $ 36,352,565 $ 36,217,082 Furniture, fixtures and equipment 1,928,241 1,797,522 __________ __________ 38,280,806 38,014,604 Less accumulated depreciation and allowance for losses 11,627,704 10,725,975 __________ __________ 26,653,102 27,288,629 RESTRICTED DEPOSITS Bond cash reserves 1,510,000 1,510,000 Bond principal reduction reserves 440,525 429,924 Restricted Deposits 28,750 --- __________ __________ 1,979,275 1,939,924 OTHER ASSETS Cash 501,181 522,835 Rents and other receivables, less allowance of $46,150 in 1996 and $45,475 in 1995 25,522 12,069 Due from related parties--Note C 179,423 174,423 Prepaid expenses 90,825 111,061 Debt issuance costs, net of accumulated amortization of $178,673 in 1996 and $129,854 in 1995 397,179 89,487 Commercial commissions, deposits and other 99,485 155,700 __________ __________ 1,293,615 1,065,575 TOTAL ASSETS $ 29,925,992 $ 30,294,128 __________ __________ SECURED INVESTMENT RESOURCES FUND, L.P. II BALANCE SHEETS--CONT'D. September 30, 1996 December 31, (Unaudited) 1995 LIABILITIES AND PARTNERSHIP CAPITAL Mortgage debt--Note B $ 27,548,466 $ 27,581,485 Deferred interest--Note B 755,118 1,126,213 Accrued interest 692,719 688,468 Accounts payable and accrued expenses 437,808 398,997 Unearned revenue 10,299 14,358 Tenant security deposits 149,606 140,325 __________ __________ TOTAL LIABILITIES 29,594,016 29,949,846 __________ __________ PARTNERSHIP CAPITAL General Partner Capital contribution 1,000 1,000 Partnership deficit (185,709) (185,586) __________ __________ (184,709) (184,586) __________ __________ Limited Partner Capital contributions 18,901,831 18,901,831 Partnership deficit (18,385,146) (18,372,963) __________ __________ 516,685 528,868 __________ __________ TOTAL PARTNERSHIP CAPITAL 331,976 344,282 __________ __________ $ 29,925,992 $ 30,294,128 __________ __________ 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, 1996 1995 1996 1995 REVENUES Rents $4,559,968 $4,297,759 $1,537,817 $1,456,618 Maintenance escalations and other 86,660 92,786 33,170 28,624 __________ __________ _________ _________ 4,646,628 4,390,545 1,570,987 1,485,242 __________ __________ _________ _________ OPERATING AND ADMINISTRATIVE EXPENSES Property operating expenses 1,897,995 1,800,462 642,981 627,363 General and administrative expenses 104,976 95,413 32,853 31,701 Professional services 54,966 67,178 9,083 33,077 Management fees 210,200 203,298 68,300 68,135 __________ __________ _________ _________ 2,268,137 2,166,351 753,217 760,276 __________ __________ _________ _________ NET OPERATING INCOME 2,378,491 2,224,194 817,770 724,966 NON-OPERATING EXPENSES Interest 1,792,476 1,879,903 591,758 685,057 Depreciation and amortization 950,548 912,071 328,877 228,424 2,743,024 2,791,974 920,635 913,481 Partnership Loss before extra ordinary item (364,533) (567,780) (102,865) (188,515) Extraordinary Gain on debt restructuring-- Note B 352,227 890,366 --- --- __________ __________ _________ _________ PARTNERSHIP INCOME $ (12,306) $ 322,586 $ (102,865) $ (188,515) __________ __________ _________ _________ Allocation of income: General Partner (123) 3,226 (1,029) (1,885) Limited Partner (12,183) 319,360 (101,836) (186,630) __________ __________ _________ _________ $ (12,306) $ 322,586 $ (102,865) $ (188,515) __________ __________ _________ _________ Partnership income per limited partnership unit $ (.23) $ 5.95 $ (1.90) $ (3.48) __________ __________ _________ _________ See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF PARTNERSHIP CAPITAL (Unaudited) Nine Months Ended September 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 (123) (12,183) (12,306) __________ _________ _________ Balances at September 30, 1996 $ (184,709) $ 516,685 $ 331,976 __________ _________ _________ See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II, STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, 1996 1995 OPERATING ACTIVITIES Partnership income $ (12,306) $ 322,586 Adjustments to reconcile partnership loss to net cash provided by operating activities: Depreciation and amortization 963,595 923,488 Amortization of bond discount 113,400 113,400 Gain on debt restructuring (352,227) (890,366) Provision for losses on rents and other receivables 675 (188,879) Changes in assets and liabilities: Rents and other receivables (14,128) 156,283 Prepaid expenses 20,236 26,210 Due from related parties (5,000) 2,863 Debt issuance costs (356,509) (965) Commercial commissions, deposits and other 24,300 (6,876) Accounts payable and accrued expenses 38,811 51,028 Accrued interest 4,251 283,462 Unearned revenue (4,059) (3,860) Tenant security deposits 9,281 9,035 _________ _________ NET CASH PROVIDED BY OPERATING ACTIVITIES 430,320 797,409 _________ _________ INVESTING ACTIVITIES Purchases of and improvements to investment properties (266,203) (298,242) Purchase of restricted bond cash reserves (39,351) (5,085) _________ _________ NET CASH USED IN INVESTING ACTIVITIES (305,554) (303,327) _________ _________ SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF CASH FLOWS (Unaudited)--CONT'D. Nine Months Ended September 30, 1996 1995 FINANCING ACTIVITIES Principal payments on long-term debt (146,419) (294,662) _________ _________ NET CASH USED IN FINANCING ACTIVITIES (146,419) (294,662) _________ _________ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (21,653) 199,420 CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 522,835 284,224 _________ _________ CASH AND CASH EQUIVALENTS END OF PERIOD $ 501,182 $ 483,644 _________ _________ See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II NOTES TO FINANCIAL STATEMENTS (Unaudited) September 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 nine month period ended September 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: September 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 (2,239,642) (2,353,042) Sunwood Village Apartments 8,085,550 8,136,792 Thomasbrook Apartments 4,984,179 4,984,179 Forest Park Shopping Ctr. 1,223,418 1,288,958 Bayberry Crossing Shopping Ctr. 831,023 831,023 Second Mortgages: Bayberry Crossing Shopping Ctr. 1,863,938 1,893,575 __________ __________ $ 27,548,466 $ 27,581,485 __________ __________ Interest expense totaled $1,792,476 and $1,879,903 during the first three quarters 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, 2001 (5 years). 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 September 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: Nine Months Ended September 30, 1996 1995 Property Management Fees $ 210,200 $ 203,298 __________ __________ Amounts due from related parties consist of the following: September 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 nine months of 1996 increased by $256,000 (5.8%) 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 $107,100 (5.6%) when comparing the first nine 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 nine months decreased $87,400 (4.7%) over the 1995 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 $430,300 of cash was provided by operating activities, $305,500 was used for investing activities and $146,400 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 September 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: November 15, 1996 By: Secured Investment Resources II, Inc. as Corporate General Partner By: James R. Hoyt, President Date: November 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: November 15, 1996 By: Secured Investment Resources II, Inc. as Corporate General Partner By: /s/ James R. Hoyt James R. Hoyt, President Date: November 15, 1996 EX-27 2
5 Unaudited. 1 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 501,181 1,979,275 71,672 (46,150) 0 1,293,615 38,280,806 11,627,704 29,925,992 2,045,550 27,548,466 0 0 0 0 29,925,992 0 4,646,628 0 2,268,137 950,548 0 1,792,476 0 0 0 0 0 0 (12,306) (0.23) 0
-----END PRIVACY-ENHANCED MESSAGE-----