-----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, RVwYUp3u2BUerK2JiP/GhtmJIvF+wzl9bKUcNReWmxtQUIBKvr6SE9+IWEP6h1Cc oeX0KdM+eLQ8KiNkC8IdAg== 0000797331-99-000008.txt : 19990802 0000797331-99-000008.hdr.sgml : 19990802 ACCESSION NUMBER: 0000797331-99-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19990730 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: 99674301 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, 1998 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, 1998 and December 31, 1997 3-4 Statements of Operations -- Three and Nine Months Ended September 30, 1998 and 1997 5 Statements of Partnership Capital -- Nine Months Ended September 30, 1998 and the Years Ended December 31, 1997, and 1996 6 Statements of Cash Flows -- Nine Months Ended September 30, 1998 and 1997 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, 1998 December 31, (Unaudited) 1997 ASSETS INVESTMENT PROPERTIES Land and buildings $ 30,454,750 $ 36,499,895 Furniture, fixtures and equipment 1,665,985 2,095,962 32,120,735 38,595,857 Less accumulated depreciation and allowance for losses 11,586,803 13,184,260 20,533,932 25,411,597 RESTRICTED DEPOSITS Bond cash reserves 1,510,000 1,510,000 Bond principal reduction reserves 566,742 519,567 Restricted Deposits 28,750 28,750 2,105,492 2,058,517 OTHER ASSETS Cash 847,464 867,658 Rents and other receivables, less allowance of $145,067 in 1998 and $122,350 in 1997 158,274 55,968 Due from related parties (Note C) 179,423 179,423 Prepaid expenses 207,702 117,532 Debt issuance costs, net of accumulated amortization of $387,374 in 1998 and $330,728 in 1997 196,940 253,586 Commercial commissions, deposits and other 58,915 60,679 1,648,718 1,534,846 TOTAL ASSETS $ 24,288,142 $ 29,004,960 SECURED INVESTMENT RESOURCES FUND, L.P. II BALANCE SHEETS--CONT'D. September 30, 1998 December 31, (Unaudited) 1997 LIABILITIES AND PARTNERSHIP CAPITAL Mortgage debt (Note B) $ 22,429,287 $ 27,442,267 Deferred interest (Note B) 737,370 737,370 Accrued interest 76,518 799,278 Accounts payable and accrued expenses 516,051 548,265 Unearned revenue 9,380 12,736 Tenant security deposits 117,103 149,662 TOTAL LIABILITIES 23,885,709 29,689,578 PARTNERSHIP CAPITAL General Partner Capital contribution 1,000 1,000 Partnership deficit (180,817) (195,875) (180,816) (194,875) Limited Partner Capital contributions 18,901,831 18,901,831 Partnership deficit (18,318,582) (19,391,572) 583,249 (489,741) TOTAL PARTNERSHIP CAPITAL 402,433 (684,618) $ 24,288,142 $ 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, 1998 1997 1998 1997 REVENUES Rents $4,583,500 $4,462,368 $2,047,938 $1,503,785 Maintenance escalations and other 69,347 101,315 17,682 41,833 4,652,847 4,563,683 2,065,620 1,545,618 OPERATING AND ADMINISTRATIVE EXPENSES Property operating expenses 2,097,814 1,962,135 1,053,013 666,650 General and administrative expenses 102,222 107,401 35,417 31,424 Professional services 145,684 89,114 63,241 37,512 Management fees 194,112 197,467 83,926 67,379 2,539,832 2,356,117 1,235,607 802,965 NET OPERATING INCOME 2,113,015 2,207,566 830,013 742,653 NON-OPERATING EXPENSES Interest 1,457,997 1,836,763 466,922 614,909 Depreciation and amortization 816,433 1,008,076 272,144 336,026 2,274,430 2,844,839 739,066 950,935 Partnership Loss before extra ordinary item $ (161,415) (637,273) 90,947 (208,282) Extraordinary Gain on debt restructuring-- (Note B) 1,567,326 0 1,567,326 0 PARTNERSHIP INCOME (LOSS) $1,405,911 $ (637,273) $ 1,658,273 $ (208,282) Allocation of income (loss): General Partner 14,059 (6,373) 16,583 (2,083) Limited Partner 1,391,852 (630,900) 1,641,690 (206,199) $1,405,911 $ (637,273) $ 1,658,273 $ (208,282) Partnership income (loss) per limited partnership unit $ 25.96 $ (11.76) $ 30.61 $ (3.84) See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF PARTNERSHIP CAPITAL (Unaudited) Nine Months Ended September 30, 1998 (Unaudited) and the Years Ended December 31, 1997 and 1996 General Limited Partner Partner Total Balances at January 1, 1996 $ (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 (8,354) (827,084) (835,438) Balances at December 31, 1997 (194,875) (489,741) (684,616) Partnership profit 14,059 1,391,852 1,405,911 Distribution 0 (318,862) (318,862) Balances at September 30, 1998 $ (180,816) $ 583,249 $ 402,433 See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II, STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, 1998 1997 OPERATING ACTIVITIES Partnership income $ 1,405,911 $ (637,273) Adjustments to reconcile partnership income to net cash provided by operating activities: Depreciation and amortization 816,433 1,008,076 Amortization of bond discount 113,400 113,400 Gain on debt restructuring 0 0 Provision for losses on rents and other receivables 22,717 49,300 Changes in assets and liabilities: Rents and other receivables (125,023) (113,807) Prepaid expenses (85,489) (18,075) Commercial commissions, deposits and other (2,915) 30,526 Accounts payable and accrued expenses (32,214) 145,754 Accrued interest (722,760) 105,871 Unearned revenue (3,356) (29,024) Tenant security deposits (32,559) (1,911) NET CASH PROVIDED BY OPERATING ACTIVITIES 1,354,145 652,837 INVESTING ACTIVITIES Purchases of and improvements to investment properties (213,734) (101,937) Purchase of restricted bond cash reserves (46,975) (49,365) NET CASH USED IN INVESTING ACTIVITIES (260,709) (151,302) SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF CASH FLOWS (Unaudited)--CONT'D. Nine Months Ended September 30, 1998 1997 FINANCING ACTIVITIES Principal payments on long-term debt $ (851,414) $ (135,960) Debt Issuance Costs 56,646 (16,500) Due (to) from related parties 0 0 NET CASH USED IN FINANCING ACTIVITIES (794,768) (152,460) DISTRIBUTIONS OT LIMITED PARTNERS (318,862) 0 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (20,194) 349,075 CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 867,658 561,667 CASH AND CASH EQUIVALENTS END OF PERIOD $ 847,464 $ 910,742 See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II NOTES TO FINANCIAL STATEMENTS (Unaudited) September 30, 1998 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, 1998 are not necessarily indicative of the results that may be expected for the year ended December 31, 1998. 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, 1997. NOTE B--MORTGAGE DEBT Mortgage debt consists of the following: September 30, December 31, 1998 1997 Collateralized by Investment Property First Mortgages: Oak Terrace Active Retirement Center and Healthcare Center $ 12,800,000 $ 12,800,000 less bond discount (1,937,242) (2,050,642) Sunwood Village Apartments 7,958,101 8,008,454 Thomasbrook Apartments 4,984,179 Forest Park Shopping Ctr. 1,048,644 1,114,184 Bayberry Crossing Shopping Ctr. 2,559,785 2,586,092 $ 22,429,287 $ 27,442,267 Interest expense totaled $1,457,997 and $1,836,763 during the first nine months of 1998 and 1997, 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, 1998 1997 Property Management Fees $ 194,122 $ 197,467 Amounts due from related parties consist of the following: September 30, December 31, 1998 1997 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 In May, 1998, the Partnership made a distribution of $321,966 to limited partners only. Prior to May, 1998, no distributions had been made since April, 1990. The General Partners determined that adequate cash flow and working capital is available to fund the operations, and as a result, were able to approve the cash distribution. 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 1998 increased by $89,164 (1.9%) 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. Operating and Administrative expenses increased $183,716 (7.7%) when comparing the first nine months of 1998 with the same period of 1997. Higher property operating expenses are primarily due to higher resident turnover. Interest expense for the first nine months decreased $378,766 (10.8%) over the 1997 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 $1,354,145 of cash was provided by operating activities, $260,709 was used for investing activities and $851,414 was used to reduce long term debt. During the quarter ended September 30, 1998, the Partnership completed the sale of the Thomasbrook Apartments. The sale occurred during a foreclosure action and the third party buyer paid cash to the partnership and assumed the outstanding indebtedness against the property. 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: July 30, 1999 By: Secured Investment Resources II, Inc. as Corporate General Partner By: James R. Hoyt, President Date: July 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: /s/ James R. Hoyt James R. Hoyt as Individual General Partner Date: July 30, 1999 By: Secured Investment Resources II, Inc. as Corporate General Partner By: /s/ James R. Hoyt James R. Hoyt, President Date: July 30, 1999 EX-27 2
5 Unaudited. 1 9-MOS DEC-31-1998 JAN-1-1998 SEP-30-1998 847,464 2,105,492 303,341 145,067 0 642,980 32,120,735 11,586,803 24,288,142 1,456,422 22,429,287 0 0 0 402,433 24,288,142 0 6,220,173 0 2,539,832 816,433 0 1,457,997 1,405,911 0 0 0 0 0 1,405,911 (25.96) 0
-----END PRIVACY-ENHANCED MESSAGE-----