-----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, EmtgwLDEVF9Dzh0m9wTL3lGJpEAC5O89rkEUalTO+Opasz/uR0Jsq7xmOxWeKajo W+M0yJSEl9Gog4F5J2TjIg== 0000769129-96-000008.txt : 19960814 0000769129-96-000008.hdr.sgml : 19960814 ACCESSION NUMBER: 0000769129-96-000008 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 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: 96609590 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 Quarterly or Transitional Report (As last amended in Rel. No. 312905, eff. 4/26/93.) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period 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 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) June 30, 1996
Assets Cash and cash equivalents $ 4,515 Receivables and other assets 238 Deferred financing costs, net 85 Investment properties: Land $ 3,119 Buildings and related personal property 18,022 21,141 Less accumulated depreciation (5,485) 15,656 $ 20,494 Liabilities and Partners' Capital (Deficit) Liabilities Accrued expenses and other liabilities $ 330 Accrued interest 373 Notes payable 8,213 Partners' Capital (Deficit) General partner's $ (228) Limited partners' (26,111 units outstanding) 11,806 11,578 $ 20,494 See Accompanying Notes to Consolidated Financial Statements
b) FOX STRATEGIC HOUSING INCOME PARTNERS CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 Revenues: Rental income $ 707 $ 698 $ 1,421 $ 1,384 Other income 83 106 151 155 Total revenues 790 804 1,572 1,539 Expenses: Operating 447 323 796 620 Interest 229 261 457 518 Depreciation 152 149 301 334 General and administrative 83 76 169 146 Total expenses 911 809 1,723 1,618 Net loss $ (121) $ (5) $ (151) $ (79) Net loss allocated to general partner $ (17) $ (5) $ (47) $ (79) Net loss allocated to limited partners (104) -- (104) -- $ (121) $ (5) $ (151) $ (79) Net loss per limited partnership assignee unit $ (3.98) $ -- $ (3.98) $ -- Cash distribution per limited partnership assignee unit $ -- $ 15 $ -- $ 30 See Accompanying Notes to Consolidated Financial Statements
c) FOX STRATEGIC HOUSING INCOME PARTNERS CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner's Partners' Total 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 six months ended June 30, 1996 -- (47) (104) (151) Partners' capital (deficit) at June 30, 1996 26,111 $ (228) $ 11,806 $ 11,578 See Accompanying Notes to Consolidated Financial Statements
d) FOX STRATEGIC HOUSING INCOME PARTNERS CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 1996 1995 Cash flows from operating activities: Net loss $ (151) $ (79) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 315 354 Interest added to note payable principal 69 79 Change in accounts: Receivables and other assets (194) 114 Accrued interest, accrued expenses and other liabilities 548 444 Net cash provided by operating activities 587 912 Cash flows from investing activities: Property improvements and replacements (111) (38) Proceeds from cash investments 2,630 3,004 Purchase of cash investments -- (2,497) Net cash provided by investing activities 2,519 469 Cash flows from financing activities: Cash distributions to partners -- (799) Net cash used in financing activities -- (799) Net increase in cash and cash equivalents 3,106 582 Cash and cash equivalents at beginning of period 1,409 2,246 Cash and cash equivalents at end of period $ 4,515 $ 2,828 Supplemental disclosure of noncash investing and financing activities: Accrued interest added to note payable principal $ 425 $ 398 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 of Fox Strategic Housing Income Partners (the "Partnership") 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 Fox Capital Management Corporation ("FCMC" or 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 and six month periods ended June 30, 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 The Partnership has no employees and is dependent on 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 affiliates of Insignia Financial Group, Inc. ("Insignia"), National Property Investors, Inc. ("NPI"), and affiliates of NPI were charged to expense in 1996 and 1995:
For the Six Months Ended June 30, 1996 1995 Property management fees (included in operating expenses) $ 73,000 $ 69,000 Reimbursement for services of affiliates (included in general and administrative expenses) 96,000 50,000 Partnership management fees (included in general and administrative expenses) -- 26,000
For the period from January 19, 1996, to June 30, 1996, the Partnership insured its properties 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. Note B - Transactions with Affiliated Parties - continued For the period ended June 30, 1995, an affiliate of NPI was paid a fee of $4,000 relating to a successful real estate tax appeal on the Partnership's Wood View Apartments. This fee is included in operating expenses. The general partner received cash distributions of $16,000 during the six months ended June 30, 1995. Fox Partners VIII, a California general partnership, is the general partner. The general partners of Fox Partners VIII are FCMC, a California corporation, and Fox Realty Investors ("FRI"), a California general partnership. Pursuant to a series of transactions which closed during the first half of 1996, affiliates of Insignia acquired (i) control of NPI Equity Investments II, Inc. ("NPI Equity"), the managing general partner of FRI, and (ii) all of the issued and outstanding shares of stock of FCMC. In connection with these transactions, affiliates of Insignia appointed new officers and directors of NPI Equity and FCMC. 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 six months ended June 30, 1996 and 1995: Average Occupancy Property 1996 1995 Barrington Place Apartments Westlake, Ohio 95% 97% Wood View Apartments Atlanta, Georgia 95% 96% The Partnership's net loss for the six months ended June 30, 1996, was approximately $151,000 versus approximately $79,000 net loss for the same period of 1995. The net loss for the three months ended June 30, 1996, was approximately $121,000 compared to a net loss of approximately $5,000 for the three months ended June 30, 1995. The increase in net loss is primarily attributable to increases in operating expenses and general and administrative expenses. Operating expenses increased mostly due to increased maintenance expenses at both of the Partnership's properties. During the second quarter of 1996, Wood View began a property improvement project which includes repainting the entire property and making any necessary repairs to the buildings. All repairs are expected to be completed by the end of the third quarter. The increase in general and administrative expenses is related to increased expense reimbursements related to the transition of the partnership administration offices in 1996. Partially offsetting these expense increases was a decrease in interest expense as a result of a principal payment made in August 1995. 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 expense. 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 June 30, 1996, the Partnership had unrestricted cash of approximately $4,515,000 as compared to approximately $2,828,000 at June 30, 1995. Net cash provided by operating activities decreased primarily as a result of the timing of property tax payments and increases in escrow funding. The increase in cash provided by investing activities is the result of proceeds from maturing cash investments in 1996. This increase is only partially offset by 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 six months of 1995 compared to no distributions being made 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 June 30, 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). In August 1996, the Partnership paid $782,000, which is 20 percent of the then outstanding original principal balance (no additional payment of accrued interest was required). 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 properties 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. The mortgage indebtedness and accrued interest mature August 1, 1998, at which time the properties will either be refinanced or sold. Future cash distributions will depend on the levels of net cash generated from operations, property sales, and the availability of cash reserves. In addition, distributions may be limited by the debt repayments discussed above. Cash distributions paid in 1995 totalled approximately $799,000. No cash distributions were paid during the six months ended June 30, 1996. Cash distributions are anticipated to remain suspended as a result of the pending debt maturity, which is discussed above. At this time it appears that the original investment objective of capital growth will not be attained and that investors 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) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended June 30, 1996. 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 By: FOX PARTNERS VIII Its General Partner By: FOX CAPITAL MANAGEMENT CORPORATION Its Managing General Partner By: /s/William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/Ronald Uretta Ronald Uretta Principal Financial Officer and Principal Accounting Officer Date: August 13, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Fox Strategic Housing Income Parnters 1996 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000800080 FOX STRATEGIC HOUSING INCOME PARTNERS 1,000 6-MOS DEC-31-1996 JUN-30-1996 4,515 0 0 0 0 0 21,141 5,485 20,494 0 8,213 0 0 0 11,578 20,494 0 1,572 0 0 1,723 0 457 0 0 0 0 0 0 (151) (3.98) 0 The Registrant has an unclassified balance sheet. Multipler is 1.
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