-----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, Jp6LHxikSQ2Rd/zFqgEsCjhu6FXVbwJXb6Lkbm801JmNWyYg0u5tMppm2ZPHEME+ PX8jk16hhBk7F4+fTrH4TA== 0000808420-98-000012.txt : 19980817 0000808420-98-000012.hdr.sgml : 19980817 ACCESSION NUMBER: 0000808420-98-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 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: SEC FILE NUMBER: 033-11013 FILM NUMBER: 98686898 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, 1998 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) dentification 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, 1998 and 1997, 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, 1998 (UNAUDITED) AND DECEMBER 31, 1997
JUNE 30, 1998 December 31, 1997 ASSETS Rental real estate, less accumulated depreciation (Note 2) $4,006,953 $4,058,189 Cash and cash equivalents 274,098 230,503 Other assets 14,371 14,486 TOTAL ASSETS $4,295,422 $4,303,178 LIABILITIES AND PARTNERS' EQUITY LIABILITIES Accounts payable: Trade $ 3,173 $ 4,609 Related party (Note 3) 8,675 8,421 Security deposits 31,941 29,400 TOTAL LIABILITIES 43,789 42,430 PARTNERS' EQUITY (NOTE 6) Limited partners: $1,000 stated value per unit - authorized 12,000 units; issued and outstanding 5,096 units 4,200,066 4,212,880 General partners 51,567 47,868 TOTAL PARTNERS' EQUITY 4,251,633 4,260,748 TOTAL LIABILITIES AND PARTNERS' EQUITY $4,295,422 $4,303,178
[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, 1998 (UNAUDITED)
LIMITED PARTNERS GENERAL TOTAL UNITS AMOUNT PARTNER BALANCE AT DECEMBER 31, 1997 $4,260,748 5,096 $4,212,880 $47,868 Net income 109,792 -- 94,202 15,590 Distributions to limited partners (107,016) -- (107,016) -- Distributions to generalpartner(Note 3 (a)) (11,891) -- -- (11,891) BALANCE AT JUNE 30, 1998 $4,251,633 5,096 $4,200,066 $51,567
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 (Note 3 (a)) (11,607) -- -- (11,607) BALANCE AT JUNE 30, 1997 $4,215,639 5,096 $4,176,892 $38,747
[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, 1998 AND 1997 (UNAUDITED)
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS ENDED ENDED ENDED ENDED JUNE 30, JUNE 30, JUNE 30, JUNE 30, 1998 1997 1998 1997 REVENUES: Rental $121,713 $106,313 $206,718 $208,071 Interest 2,795 805 5,390 1,064 124,508 107,118 212,108 209,135 COSTS AND EXPENSES: Operating 8,697 15,915 17,210 29,692 Property taxes 1,506 5,045 1,488 10,091 Property management fees 5,674 5,631 9,859 9,987 General and administrative 7,189 8,852 22,523 18,491 Depreciation and amortization 25,618 25,613 51,236 51,227 48,684 61,056 102,316 119,488 NET INCOME $75,824 $46,062 $109,792 $89,647 INCOME PER LIMITED PARTNERSHIP UNIT $12.94 $7.68 $18.49 $14.93
[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, 1998 AND 1997 (UNAUDITED)
SIX Six MONTHS Months ENDED Ended JUNE 30, 1998 June 30, 1997 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash flows from operating activities Net income $109,792 $89,647 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 51,236 51,227 Increase (decrease) from changes in: Other assets 115 (7,983) Accounts payable (1,182) 4,053 Security deposits and prepaid rents 2,541 3,365 NET CASH PROVIDED BY OPERATING ACTIVITIES 162,502 140,309 CASH FLOWS FROM FINANCING ACTIVITIES Distributions to limited partners (107,016) (104,468) Distributions to general partners (11,891) (11,607) NET CASH (USED IN) FINANCING ACTIVITIES (118,907) (116,075) NET INCREASE IN CASH AND CASH EQUIVALENTS 43,595 24,234 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 230,503 72,207 CASH AND CASH EQUIVALENTS, END OF PERIOD $274,098 $96,441
[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 purchased such properties on an all cash basis and originally intended on owning and operating 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 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 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) STATEMENTS OF CASH FLOWS For purposes of the statements of cash flows, the Partnership considers cash in 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. EARNINGS (LOSS) PER UNIT On March 3, 1997, the FASB issued Statement of Financial Accounting Standards No. 128, "Earnings Per Unit" (SFAS 128). This pronouncement provides a different method of calculating earnings per unit than is currently used in accordance with APB 15, "Earnings Per Unit". SFAS 128 provides for the calculation of Basic and Diluted earnings per unit. Basic earnings per unit includes no dilution and is computed by dividing income available to common unitholders by the weighted average number of common units outstanding for the period. Diluted earnings per unit reflects the potential dilution of securities that could unit in the earnings of the entity, similar to fully diluted earnings per unit. Except where the provisions of the Securities and Exchange Commission's Staff Accounting Bulletin No. 98 are applicable, common unit equivalents have been excluded in all years presented in the Statements of Operations when the effect of their inclusion would be anti-dillutive. SFAS 128 is effective for fiscal years and interim periods after December 15, 1997. The Partnership has adopted this pronouncement during the fiscal year ended December 31, 1997. The adoption of SFAS 128 did not effect earnings per unit for fiscal year ended December 31, 1997 and prior years. NEW ACCOUNTING PRONOUNCEMENTS Statement of Financial Accounting Standards No. 130 (SFAS No. 130) "Reporting Comprehensive Income," issued by the Financial Accounting Standards Board is effective for financial statements with fiscal years beginning after December 15, 1997. Earlier application is permitted. SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. The Partnership has not determined the effect on its financial position or results of operations, is any, from the adoption of this statement. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) SUMMARY OF ACCOUNTING POLICIES (CONTINUED) NEW ACCOUNTING PRONOUNCEMENTS (CONT.) Statement of Financial Accounting Standards No. 131 (SFAS No. 131), "Disclosure about Segments of an Enterprise and Related Information," issued by the Financial Accounting Standards Board is effective for financial statements with fiscal years beginning after December 15, 1997. The new standard requires that public business enterprises report certain information about operating segments in complete sets of financial statements of the enterprises and in condensed financial statements of interim periods issued to shareholders. It also requires that public business enterprises report certain information about their products and services, the geographic areas in which they operate and their major customers. The Partnership has not determined the effect on its financial position or results of operations, if any, from the adoption of this statement. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 1997 NOTE 1 - NATURE OF PARTNERSHIP BUSINESS Associated Planners Realty Income Fund, 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 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's 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 $ 1,882,283 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, 1998 December 31, 1997 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 880,235 828,999 Net rental real estate 4,006,953 4,058,189 ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 1997 (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: One tenant accounted for 58% of total rental revenue in 1998 One tenant accounted for 58% of total rental revenue in 1997 One tenant accounted for 48% of total rental revenue 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 -0- for the quarter ended June 30, 1998 and $5,945 for the quarter ended June 30, 1997, and $11,891 for the six months ended June 30, 1998 and $11,607 for the six months ended June 30, 1997. (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, 1998 and June 30, 1997 and $3,000 for the quarters ending June 30, 1998 and 1997. (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 $5,674 for the quarter ended June 30, 1998, and $5,631 for the quarter ended June 30, 1997, and $9,859 for the six months ended June 30, 1998 and $9,987 for the six months ended June 30, 1997. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 1997 (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 1998 and 1997. The Limited Partner cash distributions, computed in accordance with the Partnership Agreement, were as follows: Record Date Outstanding Amount Total Units Per Unit Distribution December 31, 1997 5,096 $ 21.000 $ 107,016 June 30, 1997 5,096 10.500 53,508 March 31, 1997 5,096 10.500 53,508 December 31, 1996 5,096 10.000 50,960 Total $ 264,992 September 30, 1996 5,096 $ 10.000 $50,960 June 30, 1996 5,096 10.000 50,904 March 31, 1996 5,096 13.000 66,248 December 31, 1995 5,096 12.500 63,700 Total $ 231,812 The Partnership began paying distributions on a semi-annual basis with the first record date and payment date being December 31, 1997 and February 6, 1998, respectively. This change will permit the Partnership to operate more efficiently with lower Partnership operating expenses. These semi-annual distributions will include cash distributions for the previous six months of operations. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 1997 (CONTINUED) NOTE 5 - REALLOCATION OF PARTNER BALANCES In accordance with 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 6 - SUBSEQUENT EVENTS The Partnership distributed $152,880 ($30.00 per unit) on August 10, 1998 to Limited Partners as of June 30, 1998. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements in the Management Discussion and Analysis constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements, expressed of implied by such forward-looking statements. 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 intended 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) INTRODUCTION (CONT.) 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 Partners," 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. RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1998 VS. SIX MONTHS ENDED JUNE 30, 1997 Operations for the six months ended June 30, 1998 reflect an entire period of operations for the two properties owned by the Partnership. Rental revenue decreased $1,353 (.7%) during the six months ended June 30, 1998 compared to the six months ended June 30, 1998 due primarily to lower deferred rent recognized from the San Marcos property. Interest income increased $4,326 (407%) for the six months ended June 30, 1998 as compared to the six months ended June 30, 1997. This increase is primarily due to a large amount of funds held from approximately January 1, 1998 to June 30, 1998 as a result of the Partnership electing to pay distributions semiannually instead of quarterly. 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 - SIX MONTHS ENDED JUNE 30, 1998 VS. SIX MONTHS ENDED JUNE 30, 1997 (CONT.) The Partnership's overall costs and expenses decreased for the six months ended June 30, 1998 compared to the six months ended June 30, 1997. Total expenses decreased from $119,488 as of June 30, 1997 to $102,316 as of June 30, 1998, a $17,172 (14.4%) decrease. This decrease was the result of decreases in three major expense categories, offset by increases in general and administrative costs and depreciation expense. Operating expenses decreased $12,482 (42%) as a result lower leasing commissions, common area maintenance, utilities and property insurance during the six months ended June 30, 1998 compared to the six months ended June 30, 1997. Property taxes decreased $8,603 (85%) primarily as a result of the elimination of a one-time prior year property tax assessment imposed by the County of San Bernardino for the Yorba Center property. Property management fees decreased $128 (1.3%) as a result of lower rental revenue collected during the six months ended June 30, 1998 compared to the six months ended June 30, 1997. General and administrative expenses increased $4,032 (21.8%) primarily due to higher legal and accounting fees paid during the six months ended June 30, 1998 compared to the six months ended June 30, 1997. Depreciation expense increased $9 as a result of timing differences from the six months ended June 30, 1997. Net income for the six months ended June 30, 1998 was $109,792 or $20,145 (22.5%) higher than the six months ended June 30, 1997. This increase in net income can be attributed to lower overall costs and expenses and a significant increase in interest income. RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1998 VS. THREE MONTHS ENDED JUNE 30, 1997 Operations for the quarter ended June 30, 1998 reflect an entire period of operations for the two properties owned by the Partnership. Rental revenue increased $15,400 (14.5%) during the quarter ended June 30, 1998 compared to the quarter ended June 30, 1998 due primarily to higher deferred rent recognized from the San Marcos property. Interest income increased $1,990 (247%) for the quarter June 30, 1998 as compared to the quarter ended June 30, 1997. This increase is primarily due to a large amount of funds held from approximately January 1, 1998 to June 30, 1998 as a result of the Partnership electing to pay distributions semiannually instead of quarterly. 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 - THREE MONTHS ENDED JUNE 30, 1998 VS. THREE MONTHS ENDED JUNE 30, 1997 (CONT.) The Partnership's overall costs and expenses decreased for the quarter ended June 30, 1998 compared to the quarter ended June 30, 1997. Total expenses decreased from $61,056 as of June 30, 1997 to $48,684 as of June 30, 1998, a $12,372 (20.3%) decrease. This decrease was the result of decreases in three major expense categories, offset by increases in property management fees and depreciation expense. Operating expenses decreased 7,218 (45%) as a result lower leasing commissions, common area maintenance, utilities and property insurance during the quarter June 30, 1998 compared to the quarter June 30, 1997. Property taxes decreased $3,539 (70%) primarily as a result of the elimination of a one-time prior year property tax assessment imposed by the County of San Bernardino for the Yorba Center property. General and administrative expenses decreased $1,663 (18.8%) due primarily to lower legal and accounting and general business insurance. Property management fees increased $43 (1.3%) as a result of higher rental revenue collected during the quarter June 30, 1998 compared to the quarter ended June 30, 1997. Depreciation expense increased $5 as a result of timing differences from the quarter ended June 30, 1997. Net income for the quarter ended June 30, 1998 was $75,824, or $29,762 ($64.6%) higher than the quarter ended June 30, 1997. This increase in net income can be attributed to lower overall costs and expenses and a increase in total rental revenue and interest income. LIQUIDITY AND CAPITAL RESOURCES During the six months ended June 30, 1998, the Partnership made distributions to the general and limited partners totaling $118,907 (for the record date of December 31, 1997), of which approximately $14,300 constituted a return of capital. Distributions of $118,907 compared favorably to the $155,789 in cash generated from property operations (net income plus depreciation expense) for the six months ended December 31, 1997 on which such distributions were based. On February 6, 1997, the Partnership made distributions to the limited partners totaling $107,016. Additionally, the partnership distributed $11,891 to the general partner during the six months ended June 30, 1998. The record date for these distributions was December 31, 1997. 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 semi-annual distributions of cash, subject to maintenance of reasonable reserves. 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 (CONT.) 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 The Partnership has adequate liquidity based upon the above four factors. The first factor 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. The 1% property reserve requirement is the 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, 1998. The second factor relates to the condition of the Partnership's properties. Since the properties are in good condition, no unusual maintenance and repair expenditures are anticipated. The third factor 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 factor relates to partner distributions. The Partnership makes semi-annual distributions from the results of operations. Such distributions are subject to payments of Partnership expenses and reasonable reserves for expenses, maintenance, and replacements. During the six months ended June 30, 1998, the Partnership paid the General Partner a partnership management fee of $11,891. 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. 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 (CONT.) 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. CASH FLOWS - SIX MONTHS ENDED JUNE 30, 1998 VS. SIX MONTHS ENDED JUNE 30, 1997 Cash and cash equivalents increased $43,595 for the six months ended June 30, 1998 compared to a $24,234 increase for the six months ended June 30, 1997. The continued increase in cash resources is primarily due to the Partnership electing to begin paying distribution semiannually instead of quarterly beginning with the first record date and payment date being December 31, 1997 and February 6, 1998. Cash provided from operating activities amounted to $162,502 for the six months ended June 30, 1998, with the largest contributor being $161,028 in cash basis net income. In contrast, during the six months ended June 30, 1997, cash provided from operating activities amounted to $140,309 with the largest contributor being $140,874 in cash basis net income. There were no investing activities during the six months ended June 30, 1998 and June 30, 1997. Cash used for financing activities amounted to $118,907 during the six months ended June 30, 1998 due to distributions to the limited and general partners. In contrast, cash used for financing activities for the six months ended June 30, 1997 amounted to $116,075 due to distributions to the limited and general partners. NEW ACCOUNTING PRONOUNCEMENTS Statement of Financial Accounting Standards No. 130 (SFAS No. 130) "Reporting Comprehensive Income," issued by the Financial Accounting Standards Board is effective for financial statements with fiscal years beginning after December 15, 1997. Earlier application is permitted. SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. The Partnership has not determined the effect on its financial position or results of operations, is any, from the adoption of this statement. ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) NEW ACCOUNTING PRONOUNCEMENTS (CONT.) Statement of Financial Accounting Standards No. 131 (SFAS No. 131), "Disclosure about Segments of an Enterprise and Related Information," issued by the Financial Accounting Standards Board is effective for financial statements with fiscal years beginning after December 15, 1997. The new standard requires that public business enterprises report certain information about operating segments in complete sets of financial statements of the enterprises and in condensed financial statements of interim periods issued to shareholders. It also requires that public business enterprises report certain information about their products and services, the geographic areas in which they operate and their major customers. The Partnership has not determined the effect on its financial position or results of operations, if any, from the adoption of this statement. IMPACT OF YEAR 2000 Many existing computer systems and applications, and other control devices, use only two digits to identify a year in the date field, without considering the impact of the upcoming change in the century. As a result, such systems and applications could fail or create erroneous results unless corrected so that they can process data related to the Year 2000. The Partnership relies on its systems, applications and devices in operating and monitoring all major aspects of its business, including financial systems (such as general ledger, accounts receivable, accounts payable and shareholder servicing), and embedded computer chips, networks and telecommunications equipment and end products. The Partnership also relies, directly and indirectly, on external systems of business enterprises such as its advisor, lessees, suppliers, creditors, financial organizations, and of governmental entities for accurate exchange of data. The Partnership's current estimate is that the costs associated with the Year 2000 issue will not have a material adverse effect on the results of operations or financial position of the Partnership. However, despite the Partnership's efforts to address the Year 2000 impact on its internal systems, the Partnership may not have fully identified such impact or whether it can resolve it without disruption of its business and without incurring significant expense. In addition, even if the internal systems of the Partnership are not materially affected by the Year 2000 issue, the Partnership could be affected through disruption in the operations of the enterprises with which the Partnership interacts. 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 13, 1998 By: WEST COAST REALTY ADVISORS, INC. A California Corporation, A General Partner W. Thomas Maudlin, Jr. President August 13, 1998 John R. Lindsey Vice President/Treasurer EX-27 2
5 0000808420 ASSOCIATED PLANNERS REALTY INCOME FUND L.P. 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 274,098 0 3,652 0 0 285,772 4,887,188 (880,235) 4,295,422 43,789 0 0 0 0 4,251,633 4,295,422 206,718 212,108 102,316 102,316 0 0 0 109,792 0 0 0 0 0 109,792 18.49 18.49
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