-----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, HkhWW218BTsSfwfGuvYZq/9H0u66DUsUeuqiVk+9AIfj/vQl1PthM331HK/zkKU7 QY2FXZK3DM9lhJMesCZKOQ== 0000808420-97-000009.txt : 19970813 0000808420-97-000009.hdr.sgml : 19970813 ACCESSION NUMBER: 0000808420-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970812 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASSOCIATED PLANNERS REALTY INCOME FUND CENTRAL INDEX KEY: 0000808420 STANDARD INDUSTRIAL CLASSIFICATION: LESSORS OF REAL PROPERTY, NEC [6519] IRS NUMBER: 954120092 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-11013 FILM NUMBER: 97656137 BUSINESS ADDRESS: STREET 1: 5933 W CENTURY BLVD STREET 2: 9TH FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90045-5454 BUSINESS PHONE: 3106700800 MAIL ADDRESS: STREET 1: 5933 W CENTURY BLVD STREET 2: 9TH FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90045-5454 FORMER COMPANY: FORMER CONFORMED NAME: ASSOCIATED PLANNERS REALTY FUND II DATE OF NAME CHANGE: 19871006 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (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, 1997 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 33-11013 ASSOCIATED PLANNERS REALTY INCOME FUND (Exact name of registrant as specified in its charter) CALIFORNIA 95-4120092 (State or other Jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5933 W. CENTURY BLVD., SUITE 900 LOS ANGELES, CALIFORNIA 90045 (Address of principal executive offices) (Zip Code) (310) 670-0800 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) 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 ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 1. FINANCIAL STATEMENTS In the opinion of the co-General Partner (West Coast Realty Advisors, Inc.) of Associated Planners Realty Income Fund (the "Partnership"), all adjustments necessary for a fair presentation of the Partnership's results for the three and six months ended June 30, 1997 and 1996, have been made in the following financial statements which are normal recurring entries in nature. However, such financial statements are unaudited and are subject to any year-end adjustments that may be necessary. BALANCE SHEETS JUNE 30, 1997 (UNAUDITED) AND DECEMBER 31, 1996 June 30, December 31, 1997 1996 ASSETS Rental real estate, less accumulated depreciation (Note 2) $4,109,415 $4,160,642 Cash and cash equivalents 96,441 72,207 Other assets 50,355 42,372 TOTAL ASSETS $4,256,211 $4,275,221 LIABILITIES AND PARTNERS' EQUITY LIABILITIES Accounts payable - Related party (Note 3) $ 8,631 $ 4,578 Security deposits 31,941 28,576 TOTAL LIABILITIES 40,572 33,154 PARTNERS' EQUITY (NOTE 6) Limited partners: $1,000 stated value per unit - authorized 12,000 units; issued and outstanding 5,096 4,176,892 4,205,288 General partners 38,747 36,779 TOTAL PARTNERS' EQUITY 4,215,639 4,242,067 TOTAL LIABILITIES AND PARTNERS' EQUITY $4,256,211 $4,275,221
[FN] See accompanying notes to financial statements. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF PARTNERS' EQUITY SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
LIMITED PARTNERS GENERAL TOTAL UNITS AMOUNT PARTNER BALANCE AT DECEMBER 31, 1996 $4,242,067 5,096 $4,205,288 $36,779 Net income 89,647 -- 76,072 13,575 Distributions to limited partners (104,468) -- (104,468) -- Distributions to general partner (11,607) -- -- (11,607) BALANCE AT JUNE 30, 1997 $4,215,639 5,096 $4,176,892 $38,747 SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) LIMITED PARTNERS GENERAL TOTAL UNITS AMOUNT PARTNER BALANCE AT DECEMBER 31, 1995 $4,331,232 5,096 $4,124,520 $206,712 Net income 85,469 -- 72,502 12,967 Reallocation of balances prior to January 1, 1996 (Note 6) -- -- 170,030 (170,030) Distributions to limited partners (129,948) -- (129,948) -- Distributions to general partner (14,439) -- -- (14,439) BALANCE AT JUNE 30, 1996 $4,272,314 5,096 $4,237,104 $35,210
[FN] SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF INCOME THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED)
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS ENDED ENDED ENDED ENDED JUNE 30, JUNE 30, JUNE 30, JUNE 30, 1997 1996 1997 1996 REVEUES: Rental $106,313 $98,579 $208,071 $201,959 Interest 805 7,905 1,064 10,812 107,118 106,484 209,135 212,771 COSTS AND EXPENSES: Operating 15,915 16,345 29,692 31,857 Property taxes 5,045 13,267 10,091 16,957 Property management fees 5,631 5,115 9,987 9,513 General and administrative 8,852 10,733 18,491 19,866 Depreciation and amortization 25,613 24,555 51,227 49,109 61,056 70,015 119,488 127,302 NET INCOME $46,062 $36,469 $89,647 $85,469 INCOME PER LIMITED PARTNERSHIP UNIT $7.68 $6.01 $14.93 $14.23
[FN] SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED)
SIX SIX MONTHS MONTHS ENDED ENDED JUNE 30, JUNE 30, INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES Net income $89,647 $85,469 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 51,227 49,109 Increase (decrease) from changes in: Other assets (7,983) (31,191) Accounts payable 4,053 (21,833) Security deposits and prepaid rents 3,365 1,078 NET CASH PROVIDED BY OPERATING ACTIVITIES 140,309 82,632 CASH FLOWS FROM FINANCING ACTIVITIES Distributions to limited partners (104,468) (129,948) Distributions to general partners (11,607) (14,439) NET CASH (USED IN) FINANCING ACTIVITIES (116,075) (144,387) NET INCREASE (DECREASE) IN CASH AND CASH 24,234 (61,755) EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 72,207 261,728 CASH AND CASH EQUIVALENTS, END OF PERIOD $96,441 $199,973
[FN] See accompanying notes to financial statements. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) SUMMARY OF ACCOUNTING POLICIES BUSINESS Associated Planners Realty Income Fund (the "Partnership), a California limited partnership, was formed on December 23, 1986 under the Revised Limited Partnership Act of the State of California for the purpose of developing or acquiring, managing and operating unleveraged income producing real estate. The Partnership met its minimum funding of $1,200,000 on February 26, 1988 and terminated its offering on September 5, 1989. The Partnership was formed to acquire income-producing real property throughout the United States with emphasis on properties located in California and southwestern states. The Partnership purchases such properties on an all cash basis and originally intended to own and operate such properties for investment over an anticipated holding period of approximately five to ten years. BASIS OF PRESENTATION The financial statements do not give effect to any assets that the partners may have outside of their interest in the partnership, nor to any personal obligations, including income taxes, of the partners. RENTAL REAL ESTATE AND ESTATE AND DEPRECIATION Assets are stated at cost. Depreciation is computed using the straight-line method over estimated useful lives ranging from 31.5 to 40 years for financial reporting and income tax reporting purposes. In the event that facts and circumstances indicate that the cost of an asset may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the carrying amount to determine if a write- down to market value is required. LEASE COMMISSIONS Lease commissions which are paid to real estate brokers for locating tenants are capitalized and amortized over the life of the lease. RENTAL REVENUE Rental revenue is recognized when the amount is due and payable under the terms of a lease agreement. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) SUMMARY OF ACCOUNTING POLICIES (CONTINUED) INVESTMENTS The difference between historical cost and market value are reported as unrealized gains or losses in the statement of income. STATEMENTS OF CASH FLOWS For purposes of the statements of cash flows, the Partnership considers cash in the bank and all highly-liquid investments purchased with original maturities of three months or less to be cash and cash equivalents. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NEW ACCOUNTING PRONOUNCEMENTS Statement of Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" (SFAS No. 125) issued by the Financial Accounting Standards Board (FASB) is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after December 31, 1996, and is to be applied prospectively. Earlier or retroactive application is not permitted. The new standard provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities. The Partnership does not expect adoption to have a material effect on its financial position or results of operations. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 1996 NOTE 1 - NATURE OF PARTNERSHIP BUSINESS Associated Planners Realty Income Fund, a California limited partnership (the "Fund"), was formed on December 23, 1986 under the Revised Limited Partnership Act of the State of California for the purpose of acquiring, managing, and operating income-producing real estate. The Partnership began accepting subscriptions in October 1987 and closed the offering on September 5, 1989. The Partnership began operations in March 1988. Under the terms of the partnership agreement, the General Partners (West Coast Realty Advisors, Inc. and W. Thomas Maudlin Jr.) are entitled to cash distributions from 10% to 15%. The General Partners are also entitled to net income (loss) allocations varying from 1% to 15% and 1% of depreciation and amortization in accordance with the partnership agreement. Further, the General Partners receive acquisition fees for locating and negotiating the purchase of rental real estate, management fees for operating the Partnership and a commission on the sale of the partnership properties. NOTE 2 - RENTAL REAL ESTATE The Partnership owns the following two rental real estate properties: Acquisition Location (Property Name) Date Purchased Cost Chino, California (Yorba Center) October 25, 1988 $ 1,881,147 San Marcos, California (90%) January 9, 1990 2,816,904 San Marcos, California (10%) November 1, 1996 188,001 The major categories of rental real estate: June 30, 1997 December 31, 1996 Land $1,332,861 $1,332,861 Building and improvements 3,554,327 3,554,327 4,887,188 4,887,188 Less accumulated depreciation 777,773 726,546 Net rental real estate 4,109,415 4,160,642 ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 1996 (CONTINUED) NOTE 2 - RENTAL REAL ESTATE (CONTINUED) A significant portion of the Partnership's rental revenue was earned from tenants whose individual rents represented more than 10% of total rental revenue. Specifically: Two tenants accounted for 65% and 12% in 1997 One tenant accounted for 58% in 1996 On November 1, 1996, Associated Planners Realty Income Fund ("Income Fund") purchased the remaining real estate asset from Associated Planners Realty Growth Fund ("Growth Fund"). This asset consisted of the 10 % interest that Income Fund had not already owned in an office building located in San Marcos, California. Income Fund paid $185,968 on November 2, 1996 for the 10% interest in the San Marcos property. This amount consisted of $188,000 for the property itself, less $2,032 for the share of a cash security deposit from the current tenant that Growth Fund retained. There is no debt in connection with the property. NOTE 3 - RELATED PARTY TRANSACTIONS (a) For Partnership management services rendered to the Partnership, the General Partner is entitled to receive 10% of all distributions of Cash from Operations. These amounts totaled $5,945 for the quarter ended June 30, 1997 and $7,613 for the quarter ended June 30, 1996, and $11,607 for the six months ended June 30, 1997 and $14,439 for the six months ended June 30, 1996. (b) For administrative services provided to the Partnership, the General Partner, in accordance with the partnership agreement, is entitled to reimbursement for the cost of certain personnel and relevant expenses. These amounts totaled $6,000 for the six months ended June 30, 1997 and June 30, 1996 and $3,000 for the quarters ending June 30, 1997 and 1996. (c) Property management fees incurred in accordance with the Partnership Agreement to West Coast Realty Management, Inc., an affiliate of the corporate General Partner, totaled $5,631 for the quarter ended June 30, 1997, and $5,115 for the quarter ended June 30, 1996, and $9,987 for the six months ended June 30, 1997 and $9,513 for the six months ended June 30, 1996. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 1996 (CONTINUED) NOTE 4 - NET INCOME AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT The Net Income per Limited Partnership Unit was computed in accordance with the partnership agreement on the basis of the weighted average number of outstanding Limited Partnership Units of 5,096 for 1997 and 1996. The Limited Partner cash distributions, computed in accordance with the Partnership Agreement, were as follows: Record Date Outstanding Amount Total Units Per Unit Distribution March 31, 1997 5,096 $10.50 $53,508 December 31, 1996 5,096 10.00 50,960 Total $104,468 March 31, 1996 5,096 $13.00 $66,248 December 31, 1995 5,096 12.50 63,700 Total $129,948 Distributions were paid in the fiscal quarter following the record date. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 1996 (CONTINUED) NOTE 5 - NEW ACCOUNTING PRONOUNCEMENTS Statement of Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" (SFAS No. 125) issued by the Financial Accounting Standards Board (FASB) is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after December 31, 1996, and is to be applied prospectively. Earlier or retroactive application is not permitted. The new standard provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities. The Partnership does not expect adoption to have a material effect on its financial position or results of operations. NOTE 6 - REALLOCATION OF PARTNER BALANCES Per the provisions of Section 11.1 (V)(ii) of the Partnership Agreement, the General Partner determined that action was necessary to "cure the ambiguities" within the Agreement. The ambiguity involved the treatment of the partnership management fee, being paid to the General Partner, as an expense of the Partnership, as opposed to a general partner withdrawal of capital. It was determined that the partnership management fee shall be treated as a withdrawal of capital in 1996 and beyond with a retroactive reallocation of capital for partnership management fees paid prior to 1996. In order to properly reflect this reallocation, a transfer of $170,030 was made from the General Partner's capital account to the Limited Partners capital account during the quarter ended March 31, 1996. NOTE 7 - SUBSEQUENT EVENTS The Partnership distributed $53,508 ($10.50 per unit) on August 6, 1997 to Limited Partners as of June 30, 1997. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION The Partnership began offering for sale limited partnership units on October 20, 1987. On February 26, 1988, the Partnership reached its minimum offer level of $1,200,000. The Partnership sold units throughout the remainder of the year, and had raised $3,891,000 in gross proceeds or $3,483,788 net of syndication costs and sales commissions as of December 31, 1988. During 1989, the Partnership continued to raise funds through the sale of Units and had raised $5,106,000 in gross proceeds or $4,594,101 net of syndication costs and sales commissions as of September 5, 1989, the day the Partnership terminated its offering of limited partnership units. The Partnership was organized for the purpose of investing in, holding, and managing improved, leveraged income-producing property, such as residential property, office buildings, commercial buildings, industrial properties, and shopping centers. The Partnership intends to own and operate such properties for investment over an anticipated holding period of approximately five to ten years. The Partnership's principal investment objectives are to invest in rental real estate properties which will: (1) Preserve and protect the Partnership's invested capital; (2) Provide for cash distributions from operations; (3) Provide gains through potential appreciation; and (4) Generate Federal income tax deductions so that during the early years of property operations, a portion of cash distributions may be treated as a return of capital for tax purposes and, therefore, may not represent taxable income to the limited partners. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) The ownership and operation of any income-producing real estate is subject to those risks inherent in all real estate investments, including national and local economic conditions, the supply and demand for similar types of properties, competitive marketing conditions, zoning changes, possible casualty losses, increases in real estate taxes, assessments, and operating expenses, as well as others. The Partnership is operated by West Coast Realty Advisors, Inc. ("WCRA") (the corporate General Partner) and Mr. W. Thomas Maudlin Jr. (an individual General Partner), collectively the "General Partner," subject to the terms of the Amended and Restated Agreement of Limited Partnership. The Partnership has no employees, and all administrative services are provided by WCRA, the corporate General Partner. LIQUIDITY AND CAPITAL RESOURCES During the six months ended June 30, 1997, the Partnership made distributions to the general and limited partners totaling $116,075, of which $26,428 constituted a return of capital. The $116,075 in distributions compared favorably to the $140,874 in cash generated from property operations (net income plus depreciation expense). On February 3, 1997 and May 9, 1997, the Partnership made distributions to the limited partners totaling $50,960 and $53,508, ($10.00 and $10.50 per unit), of which approximately $7,374 and $7,446 constituted a return of capital to the unit holders of record at March 31, 1997 and June 30, 1997, respectively. Distributions are determined by management based on cash flow and the liquidity position of the Partnership and anticipated occupancy of the properties. It is the intention of management to make quarterly distributions of cash, subject to maintenance of reasonable reserves. Management uses cash as its primary measure of a partnership's liquidity. The amount of cash that represents adequate liquidity for a real estate limited partnership depends on several factors. Among them are: 1. Relative risk of the partnership; 2. Condition of the partnership's properties; 3. Stage in the partnership's life cycle (e.g., money-raising, acquisition, operating or disposition phase); and 4. Distribution to partners ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) The Partnership has adequate liquidity based upon the above four points. The first point refers to the approximately 1% property reserve requirement of capital funds raised that the Partnership currently has; this relatively low reserve level is appropriate since all Partnership properties are acquired without the use of debt financing. This is a minimum guideline that is disclosed in the Partnership's prospectus; the Partnership had more than enough funds to meet this requirement as of June 30, 1997. Related to the property reserve requirement is the second point - the condition of the Partnership's properties. Since the properties are in good condition, no unusual maintenance and repair expenditures are anticipated. The third point is relevant to the Partnership because after the January 1990 purchase of the San Marcos property, the Partnership had effectively completed its acquisition phase, and entered the operating phase. The subsequent purchase of the remaining 10% interest in San Marcos property was achieved utilizing a combination of reserves and, undistributed operating profits that were held back for the purpose of facilitating the acquisition. The fourth point relates to partner distributions. The Partnership makes distributions from operations quarterly. Such distributions are subject to payment of Partnership expenses and reasonable reserves for expenses, maintenance, and replacements. During the six months ended June 30, 1997, the Partnership paid the General Partner a partnership management fee of $11,607 and distributed $104,468 to the limited partners, of which $26,428 constituted a return of capital. The partnership management fee distribution to the general partner was calculated and paid in accordance with the Partnership Agreement. The Tax Reform Acts of 1986 and 1987 and the Revenue Reconciliation Acts of 1990 and 1993 did not have a material impact on the Partnership's operations. The effects of the slowdown in the economy, inflation and changing prices have not had a material impact on the Partnership's revenues and income from operations. During the years of the Partnership's existence, inflationary pressures in the U.S. economy have been minimal, and this has been consistent with the experience of the Partnership in operating rental real estate in California. The Partnership has several clauses in the leases with its properties' tenants that would help alleviate much of the negative impact of inflation. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) CASH FLOWS - SIX MONTHS ENDED JUNE 30, 1997 VS. SIX MONTHS ENDED JUNE 30, 1996 Cash resources increased $24,234 during the six months ended June 30, 1997 compared to a $61,755 decrease in cash resources for the six ended June 30, 1996. Cash provided by operating activities increased by $140,309 with the largest contributor being $140,874 in cash basis income for the six months ended June 30, 1997. In contrast, the six months ended June 30, 1996 provided $82,632 in cash from operating activities due primarily to $134,578 in cash basis income offset by a $31,198 increase in other assets (primarily due to a increase in prepaid assets and deferred rent receivable due to free tenant rent for January 1996), and a $21,833 decrease in accounts payable (primarily due to a decrease in the amount of trade payables). There were no investing activities for the six months ended June 30, 1997 or June 30, 1996. Cash used in financing activities totaled $116,075 due to $104,468 distributed to the limited partners and $11,607 distributed to the general partner for partnership management fees during the six months ended June 30, 1997. In contrast, cash used for financing activities totaled $144,387 due to $129,948 distributed to the limited partners and $14,439 distributed to the general partner for the six months ended June 30, 1996. NEW ACCOUNTING PRONOUNCEMENTS Statement of Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" (SFAS No. 125) issued by the Financial Accounting Standards Board (FASB) is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after December 31, 1996, and is to be applied prospectively. Earlier or retroactive application is not permitted. The new standard provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities. The Partnership does not expect adoption to have a material effect on its financial position or results of operations. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) RESULTS OF OPERATIONS Operations for the six months ended June 30, 1997 represented six months of rental operations for the Partnership's two properties. The net income for the six months ended June 30, 1997 ($89,647) was higher than the six months ended June 30, 1996 ($85,469) due to increased rent, resulting from the acquisition of the remaining 10% interest of the San Marcos property in November 1996, offset by lower rents collected from the Yorba Center property,. The Partnership did not have any adverse events that significantly impacted net income during the six months ended June 30, 1997, and all properties that have been purchased by the Partnership have operated at levels equal to current expectations. All tenants are current on their lease obligations. Rental revenue increased $6,112 (3%) for the six months ended June 30, 1997 as compared to the six months ended June 30, 1996, due to increased rent resulting from the acquisition of the remaining 10% interest of the San Marcos property in November 1996, offset by lower rents collected from the Yorba Center property. Interest income decreased $9,748 (90%) for the six months ended June 30, 1997 as compared to the six months ended June 30, 1996 due to $188,000 in cash reserves being used to purchase the remaining 10% of the San Marcos property in November 1996. This $188,000 was earning interest during the first six months of 1996. Operating expenses decreased $2,165 (7%) as a result of lower property insurance, consulting fees and repairs and maintenance costs during the six months ended June 30, 1997 compared to the six months ended June 30, 1996. General and administrative expenses decreased $1,375 (7%) due primarily to lower errors and omissions (E&O) insurance premiums paid during the six months ended June 30, 1997 compared to the six months ended June 30, 1996. Depreciation expense increased $2,118 (4%) as a result of the ownership of the remaining 10% in the San Marcos property. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) RESULTS OF OPERATIONS (CONT.) During the six months ended June 30, 1997, the Partnership distributed $104,468 to the limited partners and $11,607 to the general partners, as compared to the six months ended June 30, 1996 when the Partnership distributed $129,948 to the limited partners and $14,439 to the general partners. Cash basis income for the six months ended June 30, 1997 was $140,874. This was derived by adding depreciation and amortization expense to net income. Thus, cash distributions this period were ($24,799) less than cash basis net income. In contrast, distributions during the six months ending June 30, 1996 were ($9,809) greater than cash basis net income. Cash distributions were significantly less than cash available for distribution for the six months ended June 30, 1997 in anticipation of lower rental income at the Yorba Center property, as tenants' leases come up for renewal at rental rates that are expected to be slightly lower than current rates. Overall, the Partnership generated $140,874 in income from operations before depreciation expense of $51,227 for the six months ended June 30, 1997. This compares favorably to the six months ending June 30, 1996 when income from operations totaled $134,578 before depreciation of $49,109. Net income per limited partnership unit increased from $14.23 in 1996 to $14.93 in 1997. The number of limited partnership units outstanding in each quarter was 5,096. The Partnership anticipates continuing to operate properties during 1996 for the purpose of generating the maximum amount of cash available for distribution to the limited partners, while maintaining a reasonable level of cash reserves. There are currently no plans to dispose of either of the two properties. In summary then, the operating performance of the Partnership continued to improve and all properties were operating profitably. There are currently no plans to dispose of either of the two properties. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) PART II O T H E R I N F O R M A T I O N ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K (a) Information required under this section has been included in the financial statements. (b) Reports on Form 8-K None ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) S I G N A T U R E S 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. ASSOCIATED PLANNERS REALTY INCOME FUND A California Limited Partnership (Registrant) August 12, 1997 By: WEST COAST REALTY ADVISORS, INC. A California Corporation, A General Partner Neal E. Nakagiri Vice President / Secretary August 12, 1997 Michael G. Clark Vice President/Treasurer EX-27 2
5 0000808420 ASSOCIATED PLANNERS REALTY INCOME FUND 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 96,441 0 5,933 0 0 146,796 4,887,188 (777,773) 4,256,211 40,572 0 0 0 0 4,215,639 4,256,211 208,071 209,135 119,488 119,488 0 0 0 89,647 0 0 0 0 0 89,647 14.93 14.93
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