-----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, CLXXVoUYTCumqgAaGCg15EQbAm2swIMk19ikCXW3IvCe5y55xmng89TCnxdqtcZk 5qdMpDeGs4NwgImmytdKRw== 0000763049-96-000004.txt : 19960517 0000763049-96-000004.hdr.sgml : 19960517 ACCESSION NUMBER: 0000763049-96-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOX STRATEGIC HOUSING INCOME PARTNERS CENTRAL INDEX KEY: 0000800080 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 943016373 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-16877 FILM NUMBER: 96565186 BUSINESS ADDRESS: STREET 1: 1 INSIGNIA FINANCIAL P O BOX 1089 STREET 2: C/O INSIGNIA FINANCIAL GROUP INC CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: 1 INSIGNIA FINANCIAL P O BOX 1089 STREET 2: C/O INSIGNIA FINANCIAL GROUP INC CITY: GREENVILLE STATE: SC ZIP: 29602 FORMER COMPANY: FORMER CONFORMED NAME: FOX STRATEGIC HOUSING PARTNERS /CA/ DATE OF NAME CHANGE: 19870402 FORMER COMPANY: FORMER CONFORMED NAME: CENTURY PROPERTIES GROWTH FUND XXVI DATE OF NAME CHANGE: 19870208 10QSB 1 FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (As last amended in Rel. No. 312905, eff. 4/26/93.) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.........to......... Commission file number 0-16877 FOX STRATEGIC HOUSING INCOME PARTNERS (Exact name of small business issuer as specified in its charter) California 94-3016373 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (864) 239-1000 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 for such shorter period 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 . PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) FOX STRATEGIC HOUSING INCOME PARTNERS CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) March 31, 1996
Assets Cash and cash equivalents $ 1,736 Investments 2,497 Receivables and other assets 314 Deferred financing costs, net 89 Investment properties: Land $ 3,119 Buildings and related personal property 17,930 21,049 Less accumulated depreciation (5,332) 15,717 $ 20,353 Liabilities and Partners' Capital (Deficit) Liabilities Notes payable $ 8,213 Accrued interest 149 Accrued expenses and other liabilities 292 Partners' Capital (Deficit) General partners $ (211) Limited partners (26,111 units outstanding) 11,910 11,699 $ 20,353 See Accompanying Notes to Consolidated Financial Statements
b) FOX STRATEGIC HOUSING INCOME PARTNERS CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per assignee unit data)
Three Months Ended March 31, 1996 1995 Revenues: Rental $ 739 $ 703 Interest 43 32 Total revenues 782 735 Expenses: Operating 349 297 Interest 228 257 Depreciation 149 185 General and administrative 86 70 Total expenses 812 809 Net loss $ (30) $ (74) Net loss allocated to general partner $ (30) $ (1) Net loss allocated to limited partners -- (73) Net loss $ (30) $ (74) Net loss per limited partnership assignee unit $ -- $ (2.80) Cash distributions per limited partnership assignee unit $ -- $(15.01) See Accompanying Notes to Consolidated Financial Statements
c) FOX STRATEGIC HOUSING INCOME PARTNERS CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT) (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Total Units Partners Partners Equity Original capital contributions 26,111 $ -- $ 26,111 $ 26,111 Partners' capital (deficit) at December 31, 1995 26,111 $ (181) $ 11,910 $ 11,729 Net loss for the three months ended March 31, 1996 -- (30) -- (30) Partners' capital (deficit) at March 31, 1996 26,111 $ (211) $ 11,910 $ 11,699 See Accompanying Notes to Consolidated Financial Statements
d) FOX STRATEGIC HOUSING INCOME PARTNERS CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 1996 1995 Cash flows from operating activities: Net loss $ (30) $ (74) Adjustments to reconcile net loss to cash provided by operating activities: Depreciation 149 185 Amortization 10 9 Interest added to note payable principal 69 79 Change in accounts: Receivables and other assets (137) 44 Accrued expenses and other liabilities 136 (34) Accrued interest 149 168 Net cash provided by operating activities 346 377 Cash flows from investing activities Property improvements and replacements (19) (5) Net cash used in investing activities (19) (5) Cash flows from financing activities Cash distributions to partners -- (400) Net cash used in financing activities -- (400) Net decrease in cash and cash equivalents 327 (28) Cash and cash equivalents at beginning of period 1,409 2,246 Cash and cash equivalents at end of period $1,736 $2,218 Supplemental disclosure of noncash investing and financing activities: Accrued interest added to note payable principal $ 425 $ 477 See Accompanying Notes to Consolidated Financial Statements
e) FOX STRATEGIC HOUSING INCOME PARTNERS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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-QSB and Item 310(b) of Regulation S-B. 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 the Managing General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ending 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. Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. Note B - Transactions with Affiliated Parties Fox Strategic Housing Income Partners (the "Partnership") has no employees and is dependent on NPI Equity Investments II, Inc. ("NPI Equity" or the "Managing General Partner") and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following transactions with Insignia Financial Group, Inc. ("Insignia"), National Property Investors, Inc. ("NPI, Inc."), and affiliates were charged to expense in 1996 and 1995:
For the Three Months Ended March 31, 1996 1995 Property management fees (included in operating expenses) $ 37,000 $ 34,000 Reimbursement for services of affiliates (included in general and administrative expenses) 46,000 24,000
For the period from January 19, 1996, to March 31, 1996, the Partnership insured its property under a master policy through an agency and insurer unaffiliated with the Managing General Partner. An affiliate of the Managing General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. The current agent assumed the financial obligations to the affiliate of the Managing General Partner who received payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Managing General Partner by virtue of the agent's obligations is not significant. The general partner received cash distributions of $8,000 during the three months ended March 31, 1995. An affiliate of NPI, Inc. was paid a fee of $4,000 relating to a successful real estate tax appeal on the Partnership's Wood View Apartments during the three months ended March 31, 1995. This fee is included in operating expenses. Fox Partners VIII, a California general partnership, is the general partner. The general partners of Fox Partners VIII are Fox Capital Management Corporation ("FCMC"), a California corporation, and Fox Realty Investors ("FRI"), a California general partnership. On December 6, 1993, the shareholders of FCMC entered into a Voting Trust Agreement with NPI Equity pursuant to which NPI Equity was granted the right to vote 100 percent of the outstanding stock of FCMC and NPI Equity became the managing general partner of FRI. As a result, NPI Equity became responsible for the operation and management of the business and affairs of the Partnership and the other investment partnerships originally sponsored by FCMC and/or FRI. NPI Equity is a wholly-owned subsidiary of NPI, Inc. The shareholders of FCMC and the partners in FRI retain indirect economic interests in the Partnership and such other investment limited partnerships, but have ceased to be responsible for the operation and management of the Partnership and such other partnerships. On August 17, 1995, the stockholders of NPI, Inc. entered into an agreement to sell to IFGP Corporation, a Delaware corporation, an affiliate of Insignia, a Delaware corporation, all of the issued and outstanding common stock of NPI, Inc. for an aggregate purchase price of $1,000,000. The closing of the transactions contemplated by the above mentioned agreement (the "Closing") occurred on January 19, 1996. Upon the Closing, the officers and directors of NPI, Inc., FCMC and the Managing General Partner resigned and IFGP Corporation caused new officers and directors of each of those entities to be elected. Note C - Investments Securities held-to-maturity and available-for-sale: The Managing General Partner determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. Debt securities are classified as held-to-maturity when the Partnership has the positive intent and ability to hold the securities to maturity. Held-to- maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in investment income. Interest on securities classified as held-to-maturity is included in investment income. Marketable equity securities and debt securities not classified as held-to- maturity are classified as available-for-sale. Presently, all of the Partnership's investments are classified as held-to-maturity. Available-for- sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in a separate component of partner's capital. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in investment income. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in investment income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in investment income. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of two apartment complexes. The following table sets forth the average occupancy of the properties for the three months ended March 31, 1996 and 1995: Average Occupancy Property 1996 1995 Barrington Place Apartments Westlake, Ohio 96% 97% Wood View Apartments Atlanta, Georgia 95% 96% The Partnership's net loss for the three months ended March 31, 1996, was approximately $30,000 versus approximately $74,000 net loss for the same period of 1995. The decrease in the net loss is primarily attributable to a decrease in depreciation expense due to approximately $851,000 of fixed assets becoming fully depreciated in 1995. Also contributing to this change is a decrease in interest expense resulting from a lower principal balance due to the principal payment in 1995. Partially offsetting these decreases in net loss was an increase in operating expenses due to an increase in property tax expense. Property tax expense increased due to additional payments which were required when the properties lost their tax appeals. In addition, general and administrative expenses increased due to increased costs in connection with personnel in Greenville and Atlanta during the transition of the Managing General Partner. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening conditions, there is no guarantee that the Managing General Partner will be able to sustain such a plan. At March 31, 1996, the Partnership had unrestricted cash of approximately $1,736,000 as compared to approximately $2,218,000 at March 31, 1995. Net cash provided by operating activities decreased primarily as a result of an increase in receivables and other assets. Offsetting this change is an increase in accrued expenses and other liabilities due to the prepayment of rent. The increase in cash used in investing activities is due to an increase in property improvements and replacements. The decrease in cash used in financing activities is the result of the Partnership making distributions in the first quarter of 1995 with no such activity in 1996. The Partnership's properties are cross-collateralized by a zero coupon first mortgage which secures the entire amount of the note payable. Interest accrues on the amount borrowed at a contract rate of 10.9 percent per annum, with the interest accrued added to principal each January and July. As of March 31, 1996, approximately $4,303,000 in accrued interest has been added to the principal of this note. The Partnership is required to repay a specified percentage of the then outstanding original principal amount of the loan as follows: 20 percent in August 1995, 20 percent in August 1996, and 30 percent in August 1997. In addition, provided that the Partnership has generated income in an amount as defined in the note agreement, it will be required to repay a specified percentage of the then outstanding accrued interest added to principal as follows: 20 percent in August 1995, 20 percent in August 1996, and 30 percent in August 1997. The remaining principal balance plus all accrued and unpaid interest is due in August 1998. In August 1995, the Partnership paid approximately $1,947,000 (which included $970,000 of accrued interest added to principal.) The Partnership anticipates having funds available for the August 1996 payment. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the property to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. Future cash distributions will depend on the levels of cash generated from operations, a property sale, and the availability of cash reserves. In addition, distributions may be limited by the debt repayment discussed above. Cash distributions paid in 1995 totalled approximately $799,000 with approximately $400,000 paid in the three months ended March 31, 1995. No cash distributions were paid during the three months ended March 31, 1996. At this time it appears that the initial investment objective of capital growth will not be attained and that limited partners will not receive a return of all of their invested capital. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: A Form 8-K dated January 19, 1996, was filed reporting the change in control of the registrant. SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FOX STRATEGIC HOUSING INCOME PARTNERS (a California Limited Partnership) By: FOX PARTNERS VIII Its General Partner By: FOX CAPITAL MANAGEMENT CORPORATION A General Partner /s/William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director /s/Ronald Uretta Ronald Uretta Principal Financial Officer and Principal Accounting Officer Date: May 14, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Fox Strategic Housing Income Partners 1996 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000800080 FOX STRATEGIC HOUSING INCOME PARTNERS 1,000 3-MOS DEC-31-1996 MAR-31-1996 1,736 0 0 0 0 0 21,049 5,332 20,353 0 8,213 0 0 0 11,699 20,353 0 782 0 0 812 0 228 0 0 (30) 0 0 0 (30) 0 0 The Registrant has an unclassified balance sheet.
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