-----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, JEpl6IR36hMNUqdvReLK3wdTICAb1J28dmhyazs06c/jSsJag6jD/Nzz3Per7Szm NNFHBflqmI83YOGkXx0dSw== 0000789282-96-000007.txt : 19961106 0000789282-96-000007.hdr.sgml : 19961106 ACCESSION NUMBER: 0000789282-96-000007 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961105 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: 96654280 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: 8032391513 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 September 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) September 30, 1996 Assets Cash and cash equivalents $ 3,970 Receivables and other assets 284 Deferred financing costs, net 74 Investment properties: Land $ 3,119 Buildings and related personal property 18,055 21,174 Less accumulated depreciation (5,637) 15,537 $ 19,865 Liabilities and Partners' Capital (Deficit) Liabilities Accrued expenses and other liabilities $ 340 Accrued interest 143 Notes payable 7,878 Partners' Capital (Deficit) General partner's $ (228) Limited partners' (26,111 units outstanding) 11,732 11,504 $ 19,865 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 Nine Months Ended September 30, September 30, 1996 1995 1996 1995 Revenues: Rental income $ 742 $ 696 $ 2,163 $ 2,080 Other income 91 89 242 244 Total revenues 833 785 2,405 2,324 Expenses: Operating 443 359 1,239 979 Interest 228 253 685 771 Depreciation 152 162 453 496 General and administrative 84 76 253 222 Total expenses 907 850 2,630 2,468 Net loss $ (74) $ (65) $ (225) $ (144) Net loss allocated to general partner $ -- $ (65) $ (47) $ (144) Net loss allocated to limited partners (74) -- (178) -- $ (74) $ (65) $ (225) $ (144) Net loss per limited partnership assignee unit $ (2.84) $ -- $ (6.82) $ -- Cash distribution per limited partnership assignee unit $ -- $ -- $ -- $ 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 nine months ended September 30, 1996 -- (47) (178) (225) Partners' capital (deficit) at September 30, 1996 26,111 $ (228) $ 11,732 $ 11,504 See Accompanying Notes to Consolidated Financial Statements
d) FOX STRATEGIC HOUSING INCOME PARTNERS CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, 1996 1995 Cash flows from operating activities: Net loss $ (225) $ (144) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 478 525 Interest added to note payable principal 517 582 Change in accounts: Receivables and other assets (240) 13 Accrued interest, accrued expenses and other liabilities 327 176 Net cash provided by operating activities 857 1,152 Cash flows from investing activities: Property improvements and replacements (144) (35) Proceeds from cash investments 2,630 3,004 Purchase of cash investments -- (2,497) Net cash provided by investing activities 2,486 472 Cash flows from financing activities: Repayment of note payable principal (782) (1,946) Cash distributions to partners -- (799) Net cash used in financing activities (782) (2,745) Net increase (decrease) in cash and cash equivalents 2,561 (1,121) Cash and cash equivalents at beginning of period 1,409 2,246 Cash and cash equivalents at end of period $ 3,970 $ 1,125 Supplemental disclosure of noncash investing and financing activities: Accrued interest added to note payable principal $ 872 $ 978 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"), a California corporation, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 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. Fox Partners VIII, a California general partnership, is the general partner. The general partners of Fox Partners VIII are FCMC 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 Financial Group, Inc. ("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. NPI Equity is a wholly-owned subsidiary of National Property Investors, Inc. ("NPI"). In connection with these transactions, affiliates of Insignia appointed new officers and directors of NPI Equity and FCMC. NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES - (continued) The following transactions with affiliates of Insignia, NPI, and affiliates of NPI were charged to expense in 1996 and 1995: For the Nine Months Ended September 30, 1996 1995 Property management fees (included in operating expenses) $ 112,000 $ 104,000 Reimbursement for services of affiliates (included in general and administrative and operating expenses) 138,000 72,000 Partnership management fees (included in general and administrative expenses) -- 26,000 For the period from January 19, 1996, to September 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. For the period ended September 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 nine months ended September 30, 1995. 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 nine months ended September 30, 1996 and 1995: Average Occupancy Property 1996 1995 Barrington Place Apartments Westlake, Ohio 96% 98% Wood View Apartments Atlanta, Georgia 95% 97% The Partnership's net loss for the nine months ended September 30, 1996, was approximately $225,000 versus a net loss of approximately $144,000 for the same period of 1995. The net loss for the three months ended September 30, 1996, was approximately $74,000 compared to a net loss of approximately $65,000 for the three months ended September 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 expense and tax expense at the properties. The increase in maintenance expense is primarily the result of exterior painting and wood repairs to all of the buildings at Wood View during the second and third quarters of 1996. Tax expense increased at both properties in 1996 due to tax rate increases, which are currently under appeal. The increase in general and administrative expenses is due to increased expense reimbursements. As noted in "Item 1, Note B - Transactions with Affiliated Parties," the Partnership reimburses the Managing General Partner and its affiliates for its costs involved in the management and administration of all partnership activities. While overall expense reimbursements have increased during the three and nine month periods ended September 30, 1996, the recurring expenses subsequent to the transition efforts to the new administration are expected to more closely approximate historical levels. The increase in expense reimbursements during the three and nine month periods ended September 30, 1996, is directly attributable to the combined transition efforts of the Greenville, South Carolina, and Atlanta, Georgia, administrative offices during the year-end close, preparation of the 1995 10-K and tax return (including the limited partner K-1's), filing of the first two quarterly reports and transition of asset management responsibilities to the new administration. Partially offsetting these expense increases was a decrease in interest expense as a result of principal payments made in August 1995 and 1996. 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 market conditions, there is no guarantee that the Managing General Partner will be able to sustain such a plan. At September 30, 1996, the Partnership had unrestricted cash of approximately $3,970,000 as compared to approximately $1,125,000 at September 30, 1995. Net cash provided by operating activities decreased primarily due to the increase in expenses as discussed above, and increases in escrow funding. The increase in cash provided by investing activities is the result of proceeds from a maturing investment in 1996. This increase is partially offset by an increase in property improvements and replacements. The decrease in cash used in financing activities is partially due to the reduction in the payment of the notes payable in 1996 compared to 1995. Also contributing to the decrease are cash distributions of $799,000 made during the first nine 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 September 30, 1996, approximately $4,750,000 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 totaled approximately $799,000, which represents a partial return of capital. No cash distributions were paid during the nine months ended September 30, 1996. Cash distributions are expected to remain suspended as a result of the pending debt maturity which is discussed above. 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 September 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: November 5, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Fox Strategic Housing Income Partners 1996 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000800080 FOX STRATEGIC HOUSING INCOME PARTNERS 1,000 9-MOS DEC-31-1996 SEP-30-1996 3,970 0 0 0 0 0 21,174 5,637 19,865 0 7,878 0 0 0 11,504 19,865 0 2,405 0 0 2,630 0 685 0 0 0 0 0 0 (225) (6.82) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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