-----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, KTUhllTRvb8TcSEcgS9h6FW5uXLGOyHAg53ZwPswuoabD2Z9ZAMCCGVbTpmFb/Vp +3ff3V/kDOARVYGZ05EuTQ== 0000950148-99-000663.txt : 19990402 0000950148-99-000663.hdr.sgml : 19990402 ACCESSION NUMBER: 0000950148-99-000663 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990331 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-K SEC ACT: SEC FILE NUMBER: 033-11013 FILM NUMBER: 99582390 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-K 1 FORM 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 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, (A CALIFORNIA LIMITED PARTNERSHIP) -------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) CALIFORNIA 95-4120092 ---------- ---------- State or other jurisdiction of (IRS Employer incorporation or organization Identification) 5933 WEST CENTURY BLVD., 9TH FLOOR, LOS ANGELES, CA 90045-5454 -------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (310) 670-0800 -------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered NONE NONE Securities registered pursuant to Section 12(g) of the Act: UNITS OF LIMITED PARTNERSHIP INTEREST ------------------------------------- (Title of class) Indicate by check mark whether the registrant (1) has filed all reports 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 [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ] 2 Certain statements in the Annual Report on Form 10-K, particularly under Items 1 through 8, 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 or implied by such forward-looking statements. PART I ITEM 1. BUSINESS Associated Planners Realty Income Fund (the "Partnership"), was organized in December 1986, under the California Revised Limited Partnership Act. West Coast Realty Advisors, Inc. ("WCRA"), a California corporation, and W. Thomas Maudlin Jr., an individual, are general partners (collectively referred to herein as the "General Partner"). The Partnership was organized for the purpose of investing in, holding, and managing improved, unleveraged income-producing property, such as residential properties, office buildings, commercial buildings, industrial properties, mini-warehouse facilities, and shopping centers ("Properties"), which are believed to have potential for cash flow and capital appreciation. The Partnership intended on owning and operating such Properties for investment over an anticipated holding period of approximately five to ten years. At December 31, 1998, the Partnership had no employees. The Partnership's principal investment objectives are to invest the net proceeds in real 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 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. On February 26, 1988, the Partnership attained its minimum funding requirement with the initial release of escrow funds totaling $1,272,000 and terminated its offering on September 5, 1989. As of December 31, 1989, gross proceeds from sales of Partnership units totaled $5,106,000 and $4,594,101 net of syndication costs and sales commissions. On October 25, 1988, the Partnership acquired a shopping center located in Chino, California (the "Center"). On January 9, 1990, the Partnership, together with Associated Planners Realty Growth Fund ("Growth Fund"), purchased a one-story building located in San Marcos, California. On November 1, 1996, Associated Planners Realty Income Fund ("Income Fund") purchased the remaining 10% interest in the one story building located in San Marcos, California from Growth Fund. At December 31, 1998, all of the Partnership's remaining properties were held for a sale. The General Partner is negotiating sales contract with potential buyers of the Yorba Center and San Marcos properties. The General Partner plans to liquidate the Partnership after the final property is sold. There is no assurance that the Yorba Center or San Marcos properties will be sold and the Partnership will be liquidated during 1999. The financial statements do not contain any adjustments that might result form the liquidation of the Partnership. 1 3 The ownership and operation of any income-producing real estate is subject to those risks inherent in all real estate investments. These include national and local economic conditions, the supply of and demand for similar types of real property, competitive marketing conditions, zoning changes, possible casualty losses, and increases in real estate taxes, assessments, and operating expenses, as well as others. The Partnership is subject to competitive conditions that exist in the local markets where it operates rental real estate. These conditions are discussed in ITEM 2 -- "PROPERTIES". The Partnership is operated by 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 West Coast Realty Advisors Inc. ("WCRA") - the co-General Partner. ITEM 2. PROPERTIES The properties of the Partnership are described below: YORBA CENTER On October 25, 1988, the Partnership purchased Yorba Center (the "Center"), a retail shopping center located in Chino, California. The Center, constructed in 1988, provides 12,697 rentable square feet located on a .91-acre parcel of land. As of December 31, 1998, the Center was 100% leased to nine tenants. The average monthly rent per occupied square foot was $1.15. All but two tenants are renting space on a "triple net" lease basis, i.e., each tenant being proportionately responsible for payment of all expenses including insurance, taxes, maintenance, and other operating expenses. The remaining two tenants are renting space on a "gross" basis, i.e. the landlord is responsible for payment of all expenses pertaining to these tenants. The building and improvements are depreciated over 31.5 to 40 years using a straight-line method for both financial and income tax reporting purposes. The financial and income tax basis for the property are the same. In the opinion of the General Partner, the property is adequately insured. The property is managed by West Coast Realty Management, Inc. ("WCRM"), an affiliate of the corporate General Partner. The Center is dependent upon the vitality of the consumer market in the general area. Since the City of Chino applies strict building regulations on developers, it is expected that new development will be limited, thereby preserving the Center's competitive edge during the Partnership's intended holding period. Although all areas of Southern California have occasionally been affected by the economic slowdowns, layoffs, plant closings and military cutbacks, these economic factors are not expected to significantly impact the occupancy of the shopping center. Tenants occupying 10% or more of rental square footage as of December 31, 1998: San Bernardino County Superintendent Schools: 17.11% of rental square footage; $30,488 rent per year; lease expires on June 30, 2000; Renewal Options: Lessee has one option to extend the lease for one additional year. Mels Liquor: 15.79% of rental square footage; $43,469 rent per year; lease expires on May 31, 2002; Renewal Options: Lessee has option to extend lease 5 years to May 31, 2007. Video Club: 13.69% of rental square footage; $17,730 rent per year; lease expires on August 31, 1999; Renewal Options: No renewal options. Descry Cal: 10.04% of rentable square footage; $25,245 rent per year; lease expires on May 31, 2002. 2 4 SAN MARCOS INDUSTRIAL BUILDING On January 9, 1990, the Partnership together with Associated Planners Growth Fund (a 90%/10% interest, respectively) purchased the San Marcos Industrial Building located in San Marcos, California. On November 1, 1996, Associated Planners Realty Income Fund ("Income Fund") purchased the remaining 10% from Associated Planners Realty Growth Fund ("Growth Fund"). This asset consisted of the remaining 10% interest that Income Fund had not already owned in an office building located in San Marcos, California. The industrial building, constructed in 1986 located on a 2.66 acre parcel of land, consists of 40,720 rentable square feet including 6,000 square feet of office area plus 1,300 square feet of mezzanine above the office area. On February 13, 1995, a triple net lease was executed with No Fear, Inc., which expired on June 30, 1998. This lease required the tenant to pay insurance, taxes, maintenance, and all other operating costs. Since the expiration of the lease on June 30, 1998, the property was leased on a month-to-month basis until September 30, 1998. The property has remained vacant from October 1, 1998 through December 31, 1998. The building is located in North San Diego County, in an area of increasing population and desirability for San Diego area professional and skilled workers and significant employers. It is expected, that the building will benefit from the projected growth in the North San Diego County area. The building and improvements are depreciated over 31.5 to 40 years using a straight-line method for both financial and income tax reporting purposes. The financial and income tax basis for the property are the same. In the opinion of the General Partner, the property is adequately insured. The property is managed by WCRM. The San Marcos property (with No Fear being the sole tenant) represented 51.6% of the Partnership's total rental revenue for 1998, 57.7% for 1997 and 53.7% for 1996. On March 24, 1999, the General Partner sold the San Marcos property to an unaffiliated buyer for $2,730,000. SUMMARY As of December 31, 1998, the combined occupancy rate for the Partnership's properties was 24%. The Yorba Shopping Center property is fully leased and is generating a level of cash flow consistent with the market conditions in which the properties operate, while the San Marcos property has been vacant from October 1, 1998 through December 31, 1998. The Partnership continues to market the San Marcos for sale through a listing agent. As of December 31, 1998, both properties were held for sale. The General Partner is negotiating sales contracts with potential buyers of the Yorba Center and San Marcos Properties. There is no assurance that the Yorba Center or San Marcos Properties will be sold during 1999. The total acquisition cost to the Partnership of each property and the date of acquisition are as follows:
ACQUISITION ACQUISITION DESCRIPTION COST DATE - ---------------------------------------------------------------------------- Yorba Center $1,532,283 10/25/88 San Marcos Industrial Building (90%) $2,816,904 01/09/90 San Marcos Industrial Building (10%) $ 188,001 11/01/96 - ----------------------------------------------------------------------------
3 5 The schedule below indicates the average occupancy rate expressed as a percentage of square feet for the last five years:
SAN MARCOS YEAR YORBA CENTER INDUSTRIAL BUILDING --------------------------------------------------------------------------- 1998 100% 80% 1997 100% 100% 1996 100% 100% 1995 90% 88% 1994 90% 100%
ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 4 6 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS At December 31, 1998, there were 5,096 limited partnership units outstanding and 431 unit holders of record. The units sold are not freely transferable and no public market for the sold units presently exists or is likely to develop. Distributions totaling $259,896, $157,976 and $231,812 were made to limited partners in 1998, 1997 and 1996, to unit holders of record at the end of the calendar quarters indicated below. These distributions constituted a return of capital of $65,909, $36,234 and $63,402, in 1998, 1997 and 1996, respectively. The general partner distributions totaled $28,877, $17,553 and $25,763 for 1998, 1997 and 1996. In addition, $142,688 ($28/limited partnership unit) in distributions were paid to unit holders subsequent to year-end on February 12, 1999. 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 permitted 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. The decrease in 1997 distributions was due to the fact that the third and fourth quarter distributions were paid in February 1998, as the partnership converted to a semi-annual distribution payment method. If the third quarter distribution for 1997 had been paid in 1997, the total distribution would have been approximately $211,484. The limited partner distribution amounts for 1998, 1997 and 1996 are summarized below:
PER UNITS TOTAL RECORD DATE DATE PAID UNIT OUTSTANDING PAID - ------------------------------------------------------------------------------------------------ 12/31/95 02/06/96 $ 12.50 5,096 $ 63,700 03/31/96 04/30/96 13.00 5,096 66,248 06/30/96 08/06/96 10.00 5,096 50,904 09/30/96 11/05/96 10.00 5,096 50,960 12/31/96 02/03/97 10.00 5,096 50,960 03/31/97 05/09/97 10.50 5,096 53,508 06/30/97 08/05/97 10.50 5,096 53,508 12/31/97 02/06/98 21.00 5,096 107,016 06/30/98 08/10/98 30.00 5,096 152,880 12/31/98 02/12/99 28.00 5,096 142,688
Distributions are made out of the income from operations, before depreciation and amortization, available as a result of the previous six months of operations. 5 7 ITEM 6. SELECTED FINANCIAL DATA The selected financial data should be read in conjunction with the financial statements and related notes and ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS appearing elsewhere in this report.
1998 1997 1996 1995 1994 - ---------------------------------------------------------------------------------------------------------------------------- Operations for the years ended December 31: Revenues $ 397,796 $ 421,630 $ 424,537 $ 378,489 $ 474,562 Net income (loss) (156,013) 194,210 168,410 139,678 222,525 Net income per Limited Partner Unit* (25.74) 32.49 27.97 22.94 37.57 Distributions per Limited Partner Unit* 51.00 31.00 45.50 37.16 43.75 Financial position at December 31, Total assets $ 3,885,374 $ 4,303,178 $ 4,275,221 $ 4,381,018 $ 4,435,929 Partners' equity 3,815,961 4,260,748 4,242,067 4,331,232 4,380,915
*Net income and distributions per limited partner unit were based on the weighted average number of outstanding units. ITEM 7. MANAGEMENT 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 or implied by such forward-looking statements. RESULTS OF OPERATIONS - 1998 VS. 1997 Operations for the year ended December 31, 1998 represented a full year of rental operations for all of the Partnership properties. The net loss for the year ended December 31, 1998 was $156,013 as compared to net income of $194,210, for the year ended December 31, 1997. The Partnership incurred a $350,000 impairment loss on the Yorba Center property which negatively impacted the net loss during the year ended December 31, 1998. All properties owned by the Partnership have operated at levels equal to current expectations with the exception of the San Marcos property which was vacant from October 1, 1998 through December 31, 1998. All tenants were current on their lease obligations. Rental revenue decreased by $30,323 (7%) primarily due to the vacancy of the San Marcos property from October 1, 1998 through December 31, 1998. Operating expenses decreased by $24,576 (27%), primarily due to reductions in leasing commissions, property taxes and common area maintenance fees related to the San Marcos property. General and administrative costs increased by $947 (3%) due to an increase in consulting fees offset by a decrease in general business insurance. Interest income increased by $6,489 (137%) due to the change in mid 1997 from quarterly to semi-annual distributions to limited and general partners. Hence, additional funds were deposited in interest bearing accounts during 1998 as compared to 1997. Depreciation and amortization expense was consistent between 1997 and 1998. An impairment loss of $350,000 was incurred during the year ended December 31, 1998 on the Yorba Center property, due to the fair value being below carrying value. The fair value was determined based on a negotiated sales contract with an unrelated buyer of the property. During escrow, the buyer revoked the offer and the contact was cancelled. 6 8 ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.) Net income per limited partnership unit decreased from $32.49 in 1997 to a net loss per limited partnership unit of $25.74 in 1998. The number of limited partnership units outstanding in both years was 5,096. During the year ended December 31, 1998, the Partnership distributed $259,897 to the limited partners and $28,877 to the General Partner, as compared to the year ended December 31, 1997 when the Partnership distributed $157,976 to the limited partners and $17,553 to the General Partner. Cash basis income for the year ended December 31, 1998 was $296,458. Cash basis income was derived by adding depreciation and amortization expense and the impairment loss to net income. Cash distributions during 1998 were $288,774 which is favorable based on cash basis net income of $296,458. The record dates for the cash distributions are December 31, and June 30 with payment dates being February and August, respectively. This is comparable to 1997 when cash basis income totaled $296,663 before depreciation of $102,453. RESULTS OF OPERATIONS - 1997 VS. 1996 Operations for the year ended December 31, 1997 represented a full year of rental operations for all of the Partnership properties. However, operations for the year ended December 31, 1996 represented a full year of rental operations for all properties expect the San Marcos property which was wholly owned for only two months, and 90% owned for the other ten months of 1996. The net income for the year ended December 31, 1997, $194,210 was higher than the year ended December 31, 1996, $168,410 due to the acquisition of the remaining 10% interest in the San Marcos property in November 1996, as well as a decrease in a one-time prior year property tax assessment imposed by the County of San Bernardino for the Yorba Center property. The Partnership did not have any adverse events that significantly impacted net income during the year ended December 31, 1997, and all properties that have been purchased by the Partnership have operated at levels equal to current expectations. All tenants were current on their lease obligations. Rental revenue increased by $6,901 (1.7%) due to the purchase of the remaining 10% of the San Marcos property on November 2, 1996. The purchase generated additional rental revenue of approximately $3,800 a year and $815 per month during the year ended December 31, 1997. Operating expenses decreased by $25,011 (22%) 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 costs decreased by $5,943 (15%) due to lower accounting, and general insurance expense. Interest income decreased by $9,808 (67%) due to lower cash reserve balances maintained during the year ended December 31, 1997 as compared to year ended December 31, 1996. Depreciation and amortization expense increased by $2,247 (2%) a result of the purchase of the remaining 10% in the San Marcos property during 1996. Net income per limited partnership unit increased from $27.97 in 1996 to $32.49 in 1997. The number of limited partnership units outstanding in each year was 5,096. During the year ended December 31, 1997, the Partnership distributed $157,976 to the limited partners and $17,553 to the general partners, as compared to the year ended December 31, 1996 when the Partnership distributed $231,812 to the limited partners and $25,763 to the general partners. Cash basis income for the year ended December 31, 1997 was $296,663. Cash basis income was derived by adding depreciation and amortization expense to net income. Cash distributions during 1997 were less ($121,134) than cash basis net income. In contrast, distributions in 1996 were less than cash basis income of $11,041. This compares favorably to 1996 when cash basis income totaled $268,616 before depreciation of $100,206. 7 9 ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.) LIQUIDITY AND CAPITAL RESOURCES During the year ended December 31, 1998, the Partnership made distributions to the limited partners totaling $259,897, of which $65,910 constituted a return of capital. On February 12, 1999, the Partnership made distributions of $28 per unit to unit holders of record as of December 31, 1998. Distributions are determined by the General Partner based on cash flow and the liquidity position of the Partnership and anticipated occupancy of the properties. It is the intention of the General Partner to make semi-annual distributions of cash, subject to maintaining a reasonable reserve. 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 permitted 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. The General Partner uses cash as its primary measure of a partnership's liquidity. Cash representing 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. Distributions 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 December 31, 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. The restricted cash of $50,000 received as a deposit from an unaffiliated buyer of the San Marcos property (Note 3), was forfeited in February 1999 due to non-performance of the buyer. On March 24, 1999, the General Partner sold the San Marcos property to a new unaffiliated buyer for $2,730,000. In February 1999, the General Partner placed the Yorba Center property in escrow with an unaffiliated buyer. The closure of escrow is dependent upon the buyer resolving all pending contingencies. During the year ended December 31, 1998 the Partnership paid the General Partner a partnership management fee of $28,877 and distributed $259,897 to the limited partners, of which $65,910 constituted a return of capital. In February 1999, the Partnership paid the General Partner a partnership management fee of $15,854 and distributed $142,688 to the limited partners. Partnership management fees were calculated and paid in accordance with the Partnership Agreement. 8 10 ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (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 tenants that would help alleviate much of the negative impact of inflation. CASH FLOWS 1998 VS. 1997 Cash resources decreased by $6,995 during 1998 as compared to the $158,296 increase in 1997. The decrease in 1998 was primarily due to distributions to limited partners increasing by approximately $113,000. In contrast, the increase in cash resources during 1997, was the result of the Partnership electing to begin paying distributions semi-annually instead of quarterly beginning with the first record and payment dates being December 31, 1997 and February 6, 1998, respectively. Cash provided by operating activities for the year ended December 31, 1998 was $331,779, with the largest contributor being the $452,471 of cash basis income. In contrast, cash provided by operating activities in 1997 were $333,825 due primarily to $296,663 in cash basis income. The sole use of cash in investing activities during 1998 was due to a deposit of $50,000 received from an unaffiliated buyer for the purchase of the San Marcos property. In contrast, there were no investing activities during 1997. During 1998, cash used in financing activities was $288,774 due to cash distributions to the limited and general partners. In contrast, cash used for financing activities in 1997 was $175,529 which represented distributions to the limited and general partners. CASH FLOWS 1997 VS. 1996 Cash resources increased by $158,296 during 1997 compared to the $189,521 decrease in 1996. The increase was primarily due to the Partnership electing to begin paying distributions semi-annually instead of quarterly beginning with the first record and payment dates being December 31, 1997 and February 6, 1998, respectively. This change represented approximately $107,000 of the increase in cash resources for the year ended December 31, 1997. In contrast, the decrease in cash resources during 1996 was the result of the investing activity involving the acquisition of the 10% interest in San Marcos. Cash provided by operating activities increased by $333,825 with the largest contributor being $296,663 in cash basis income. In contrast, cash provided by operating activities in 1996 was $256,054 due primarily to $268,616 in cash basis income. During 1997, cash used in financing activities was $175,529 which represented distributions to the limited and general partners. In contrast, cash used for financing activities in 1996 was $257,575 due to distributions to the limited and general partners. There were no investing activities during 1997. In contrast, the sole use of cash in investing activities in 1996 was the $188,001 expended for the acquisition of the remaining 10% in San Marcos property. NEW ACCOUNTING PRONOUNCEMENTS Statement of Financial Accounting Standard No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging Activities," issued by the Financial Accounting Standards Board is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. The Partnership does not expect adoption to have any effect on its financial position, results of operations and cash flows. 9 11 ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.) 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 General Partner 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 General Partner 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 General Partner'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 General Partner. However, despite the General Partner's efforts to address the year 2000 impact on its internal systems, the General Partner 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 General Partner are not materially affected by the year 2000 issue, the General Partner could be affected through disruption in the operations of the enterprises with which the General Partner interacts. 10 12 ITEM 8. FINANCIAL STATEMENTS AND SCHEDULE
PAGE Report of Independent Certified Public Accountants ...........................12 Balance Sheets - December 31, 1998 and 1997 ..................................13 Statements of Operations for the years ended December 31, 1998, 1997 and 1996 ....................................14 Statements of Partners' Equity for the years ended December 31, 1998, 1997 and 1996.....................................15 Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996 ....................................16 Summary of Accounting Policies ............................................17-18 Notes to Financial Statements .............................................19-22 Financial Statement Schedule Schedule III-Real Estate and Accumulated Depreciation ...............28
11 13 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Associated Planners Realty Income Fund (a California limited partnership) Los Angeles, California We have audited the accompanying balance sheets of Associated Planners Realty Income Fund (a California limited partnership) as of December 31, 1998 and 1997 and the related statements of operations, partners' equity, and cash flows for each of the three years in the period ended December 31, 1998. We have also audited the schedule listed in the accompanying index. These financial statements and schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and schedule are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and schedule. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As discussed in Note 8, all of the Partnership's remaining properties are held for sale as of December 31, 1998. The General Partner plans to liquidate the Partnership after the final property is sold. The financial statements do not contain any adjustments that might result from the liquidation of the Partnership. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Associated Planners Realty Income Fund (a California limited partnership), at December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998 in conformity with generally accepted accounting principles. Also, in our opinion, the schedule presents fairly, in all material respects, the information set forth therein. BDO SEIDMAN, LLP Los Angeles, California January 22, 1999 (except for Note 9, as to which the date is March 24, 1999) 12 14 ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS
December 31, 1998 1997 - ---------------------------------------------------------------------------------------------------- ASSETS Rental real estate held for sale, less accumulated depreciation (Notes 2 and 8) $ 3,605,718 $ 4,058,189 Cash and cash equivalents 223,508 230,503 Restricted cash (Note 3) 50,000 -- Other assets 6,148 14,486 - ---------------------------------------------------------------------------------------------------- Total assets $ 3,885,374 $ 4,303,178 ==================================================================================================== LIABILITIES AND PARTNERS' EQUITY LIABILITIES Accounts payable: Trade $ -- $ 4,609 Related party (Note 5(d)) 5,837 8,421 Security deposits 63,576 29,400 - ---------------------------------------------------------------------------------------------------- Total liabilities 69,413 42,430 - ---------------------------------------------------------------------------------------------------- Contingencies (Note 8) PARTNERS' EQUITY (Notes 6 and 7): Limited partners: $1,000 stated value per unit - authorized 12,000 units; issued and outstanding 5,096 3,821,794 4,212,880 General partners (5,833) 47,868 - ---------------------------------------------------------------------------------------------------- Total partners' equity 3,815,961 4,260,748 - ---------------------------------------------------------------------------------------------------- Total liabilities and partners' equity $ 3,885,374 $ 4,303,178 ====================================================================================================
See accompanying summary of accounting policies and notes to financial statements. 13 15 ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF OPERATIONS
Years ended December 31, 1998 1997 1996 - -------------------------------------------------------------------------------------------------- REVENUES Rental (Notes 2 and 4) $ 386,573 $ 416,896 $ 409,995 Interest 11,223 4,734 14,542 - -------------------------------------------------------------------------------------------------- 397,796 421,630 424,537 - -------------------------------------------------------------------------------------------------- COST AND EXPENSES Operating 66,681 91,257 116,268 General and administrative (Note 5) 34,657 33,710 39,653 Depreciation and amortization 102,471 102,453 100,206 Impairment loss (Note 2) 350,000 -- -- - -------------------------------------------------------------------------------------------------- 553,809 227,420 256,127 - -------------------------------------------------------------------------------------------------- NET INCOME (LOSS) $(156,013) $ 194,210 $ 168,410 ================================================================================================== NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT (Note 6) $ (25.74) $ 32.49 $ 27.97 ==================================================================================================
See accompanying summary of accounting policies and notes to financial statements. 14 16 ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF PARTNERS' EQUITY YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Limited Partners ---------------------------- General Units Amount Partner Total - --------------------------------------------------------------------------------------------------------- BALANCE, January 1, 1996 5,096 $ 4,124,520 $ 206,712 $ 4,331,232 Net income for the year -- 142,550 25,860 168,410 Distribution to limited partners (Note 6) -- (231,812) -- (231,812) Distribution to general partners -- -- (25,763) (25,763) Reallocation of capital (Note 7) -- 170,030 (170,030) -- - --------------------------------------------------------------------------------------------------------- BALANCE, December 31, 1996 5,096 4,205,288 36,779 4,242,067 Net income for the year -- 165,568 28,642 194,210 Distribution to limited partners (Note 6) -- (157,976) -- (157,976) Distribution to general partners -- -- (17,553) (17,553) - --------------------------------------------------------------------------------------------------------- BALANCE, December 31, 1997 5,096 4,212,880 47,868 4,260,748 Net loss for the year -- (131,189) (24,824) (156,013) Distribution to limited partners (Note 6) -- (259,897) -- (259,897) Distribution to general partners -- -- (28,877) (28,877) - --------------------------------------------------------------------------------------------------------- BALANCE, December 31, 1998 5,096 $ 3,821,794 $ (5,833) $ 3,815,961 =========================================================================================================
See accompanying summary of accounting policies and notes to financial statements. 15 17 ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash and Cash Equivalents
Years ended December 31, 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $(156,013) $ 194,210 $ 168,410 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 102,471 102,453 100,206 Impairment loss 350,000 -- -- Increase (decrease) from changes in operating assets and liabilities: Other assets 8,338 27,886 4,071 Accounts payable (7,193) 8,452 (18,918) Security deposits 34,176 824 2,286 - ------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 331,779 333,825 256,055 - ------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to rental real estate -- -- (188,001) Deposit on sale of San Marcos property (50,000) -- -- - ------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (50,000) -- (188,001) - ------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Distributions to limited partners (259,897) (157,976) (231,812) Distributions to general partners (28,877) (17,553) (25,763) - ------------------------------------------------------------------------------------------------------------- Net cash used in financing activities (288,774) (175,529) (257,575) - ------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (6,995) 158,296 (189,521) CASH AND CASH EQUIVALENTS, beginning of year 230,503 72,207 261,728 - ------------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, end of year $ 223,508 $ 230,503 $ 72,207 =============================================================================================================
See accompanying summary of accounting policies and notes to financial statements. 16 18 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 estate throughout the United States with an emphasis on properties located in California and the southwestern states. The Partnership purchased properties on an all cash basis and 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 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. RENTAL REVENUE Rental revenue is recognized when the amount is due and payable under the terms of a lease agreement and collection is probable. STATEMENTS OF CASH FLOWS For the 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. 17 19 ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) SUMMARY OF ACCOUNTING POLICIES NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT Net income (loss) per limited partnership unit is calculated by dividing the limited partners' share of net income (loss) by the weighted average number of limited partnership units outstanding for the period. NEW ACCOUNTING PRONOUNCEMENTS Statement of Financial Accounting Standard No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging Activities," issued by the Financial Accounting Standards Board is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. The Partnership does not expect adoption to have any effect on its financial position, results of operations and cash flows. 18 20 ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS NOTE 1--NATURE OF PARTNERSHIP 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. NOTE 2--RENTAL REAL ESTATE The Partnership owns the following two rental real estate properties:
Location (Property Name) Date Purchased Cost ----------------------------------------------------------------------------- Chino, California (Yorba Center) October 25, 1988 $ 1,532,283 San Marcos, California (90%) January 9, 1990 2,816,904 San Marcos, California (10%) November 1, 1996 188,001
During 1998, the General Partner decided to list both properties for sale with a commercial real estate broker. Both properties are in escrow pending the resolution of buyer contingencies. (See Note 9) The major categories of rental real estate are:
December 31, 1998 1997 - -------------------------------------------------------------------------------- Land $1,237,407 $1,332,861 Buildings and improvements 3,299,781 3,554,327 - -------------------------------------------------------------------------------- 4,537,188 4,887,188 Less accumulated depreciation 931,470 828,999 - -------------------------------------------------------------------------------- Rental real estate, net $3,605,718 $4,058,189 ================================================================================
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 55% and 11% in 1998; One tenant accounted for 58% in 1997; One tenant accounted for 48% in 1996; During the quarter ended September 30, 1998, the Partnership determined that the total expected future cash flows from the disposition of the Yorba Center Property are less than the carrying value of the property. As a result, an impairment loss of $350,000 was recorded, measured as the amount by which the carrying amount of the asset exceeded its fair value less cost to sell. The fair value was determined based on a negotiated sales contract with an unrelated buyer of the property. During escrow, the buyer of the property revoked the offer and the contract was cancelled. The Partnership has negotiated other sale offers from potential buyers to purchase the property. However, there is no assurance that such a sale will ultimately close escrow. NOTE 3--RESTRICTED CASH Restricted cash of $50,000 was received as a deposit from an unaffiliated prospective buyer of the San Marcos property as discussed in Notes 8 and 9. 19 21 ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) SUMMARY OF ACCOUNTING POLICIES NOTE 4--FUTURE MINIMUM RENTAL INCOME As of December 31, 1998, future minimum rental income under existing leases, excluding month to month rental agreements, that have remaining noncancelable terms in excess of one year are as follows:
Years ending December 31, Amount ------------------------------------------------------------------------ 1999 $142,517 2000 113,885 2001 92,840 2002 56,222 ----------------------------------------------------------------------- Total $405,464 =======================================================================
Future minimum rental income does not include lease renewals or new leases that may result after a noncancelable-lease expires. NOTE 5--RELATED PARTY TRANSACTIONS (a) In accordance with the partnership agreement, compensation earned by or services reimbursed to the General Partner consisted of the following:
Year ended December 31, 1998 1997 1996 - -------------------------------------------------------------------------------- Partnership management fees $28,877 $17,553 $25,860 Administrative services: Data processing 4,800 4,851 4,805 Postage 2,550 2,363 2,387 Investor processing 1,950 1,961 1,999 Duplication 850 833 898 Investor Communications 1,400 1,497 1,405 Miscellaneous 450 495 506 - -------------------------------------------------------------------------------- $40,877 $29,553 $37,860 ================================================================================
(b) On November 1, 1996, the Partnership purchased the remaining real estate asset from Associated Planners Realty Growth Fund ("Growth Fund"). This asset consisted of the 10% interest in an office building located in San Marcos, California that was not already owned. The Partnership paid $185,968 in cash on November 2, 1996 which consisted of $188,001 for the property less $2,033 for the share of a cash security deposit from the current tenant. (c) Property management fees incurred in accordance with the partnership agreement with West Coast Realty Management, Inc., an affiliate of the corporate General Partner, totaled $19,182, $21,068 and $20,054 for 1998, 1997 and 1996. (d) Related party accounts payable are as follows:
December 31, 1998 1997 --------------------------------------------------------------------------- West Coast Realty Advisors, Inc. $3,000 $3,000 West Coast Realty Management, Inc. 2,837 5,421 --------------------------------------------------------------------------- $5,837 $8,421 ===========================================================================
20 22 ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) SUMMARY OF ACCOUNTING POLICIES NOTE 6--NET INCOME AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT The Limited Partner cash distributions, computed in accordance with the Partnership Agreement, were as follows:
Outstanding Amount Record Date Distribution Units Per Unit Total - -------------------------------------------------------------------------------- June 30, 1998 5,096 30.00 $152,880 December 31, 1997 5,096 21.00 107,017 -------- Total $259,897 ======== June 30, 1997 5,096 $ 10.50 $ 53,508 March 31, 1997 5,096 10.50 53,508 December 31, 1996 5,096 10.00 50,960 -------- Total $157,976 ======== September 30, 1996 5,096 $ 10.00 $ 50,960 June 30, 1996 5,096 10.00 50,904 March 31, 1996 5,096 13.00 66,248 December 31, 1995 5,096 12.50 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 permitted 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. NOTE 7--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 8--LIQUIDATION OF PARTNERSHIP At December 31, 1998, all of the Partnership's remaining properties were held for sale. The General Partner is negotiating sales contracts with potential buyers of the Yorba Center. The General Partner plans to liquidate the Partnership after the final property is sold. There is no assurance that the Yorba Center property will be sold and the Partnership will be liquidated during 1999. The financial statements do not contain any adjustments that might result from the liquidation of the Partnership. 21 23 ASSOCIATED PLANNERS REALTY INCOME FUND (A CALIFORNIA LIMITED PARTNERSHIP) SUMMARY OF ACCOUNTING POLICIES NOTE 9--SUBSEQUENT EVENTS (a) The restricted cash of $50,000 received as a deposit from an unaffiliated potential buyer of the San Marcos property (Note 3), was forfeited in February 1999 due to non-performance of the buyer. On March 24, 1999, the General Partner sold the San Marcos property to a new unaffiliated buyer for $2,730,000. (b) In February 1999, the General Partner placed the Yorba Center property in escrow with an unaffiliated buyer. The closure of escrow is dependent upon the buyer resolving all pending contingencies. (c) On February 12, 1999, the Partnership distributed $142,688 to the unit holders of record as of December 31, 1998. This represented the operating results of the Partnership for the six months ending December 31, 1998. 22 24 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 23 25 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The Partnership is managed by the General Partners and the Limited Partners have no right to participate in the management of the Partnership or its business. Resumes of the General Partners' principal officers and directors and a description of the General Partners are set forth in the following paragraphs. See description below. WEST COAST REALTY ADVISORS, INC. West Coast Realty Advisors, Inc. ("WCRA") is a California corporation formed on May 10, 1983 for the purpose of structuring real estate programs and to act as general partner of such programs. It is a subsidiary of Associated Financial Group, Inc. PHILIP N. GAINSBOROUGH (Born 1938) is Chairman and a Director of West Coast Realty Advisors, Inc. Mr. Gainsborough is also currently the President of Associated Financial Group, Inc., Associated Securities Corp., Associated Planners Insurance Services, Inc., and Associated Planners Investment Advisory, Inc. In addition, from January 1981 to the present, he has served as President of Gainsborough Financial Consultants, Inc., a financial planning firm located in Los Angeles, California. From January 1981 to December 1982, Mr. Gainsborough served as a Registered Principal of Private Ledger Financial Services, Inc. From January 1977 to December 1980, he was employed by E.F. Hutton & Co. as a Registered Representative. W. THOMAS MAUDLIN, JR. (Born 1936) is a Director and President of West Coast Realty Advisors, Inc. ("WCRA"). He is also co-General Partner (with WCRA) of the Partnership. Mr. Maudlin has been active in the real estate area for over 30 years, serving as co-developer of high-rise office buildings and condominiums. He has structured transactions for syndicators in apartment housing, including sale leasebacks, all-inclusive trust deeds, buying and restructuring transactions to suit a particular buyer, and as a buyer acting as a principal. Mr. Maudlin was co-developer of the Gateway Los Angeles office building, a 165,000 square foot, fourteen-story office building located in West Los Angeles. From 1980 to 1985, in partnership with the Muller Company, he developed eleven acres in San Bernardino which included a 42,000 square-foot office building, a six-plex movie theater and two restaurants. From 1980 to 1985, Mr. Maudlin was involved in building a 134-unit condominium development in San Bernardino, California, a shopping center, and a restaurant in Ventura. He is a graduate of the University of Southern California. NEAL NAKAGIRI (Born 1954) serves as Executive Vice President, General Counsel, Chief Operating Officer and Secretary of Associated Financial Group, Inc. He is Vice President for two subsidiaries, Associated Securities Corp. and Associated Planners Investment Advisory, Inc. He joined the "Associated" group of companies in March 1985. He was Vice President of Compliance with Morgan, Olmstead, Kennedy & Gardner from 1984 to 1985. He was First Vice President and Director of Compliance with Jefferies and Co., Inc. from 1981 to 1984. He was Vice President and Director of Compliance at W & D Securities, Inc. from 1980 to 1983. He was an Investigator with the National Association of Securities Dealers, Inc. from 1976 to 1980. He has a B.A. degree in Economics from UCLA (1976) and a J.D. from Loyola Law School of Los Angeles (1991). He is a member of the California Bar and the Compliance and Legal Division of the Securities Industry Association. JOHN R. LINDSEY (Born 1946) serves as Senior Vice President/Treasurer. He is responsible for all facets of financial management of the Associated Financial Group. Previously, Mr. Lindsey was a consultant specializing in financial services, worked for a large financial institution and performed audits and consulting assignments for Price Waterhouse. He is a Certified Public Accountant and a member of the California Society of CPAs and the American Institute of CPAs. He received a BS in Business Administration and Accounting from the University of Southern California in 1968. 24 26 ITEM 11. EXECUTIVE COMPENSATION During its last calendar year, the Registrant paid no direct or indirect compensation to directors or officers. The Registrant has no annuity, pension or retirement plans, or existing plan or arrangement pursuant to which compensatory payments are proposed to be made in the future to directors or officers. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The Registrant is a limited partnership and has no officers or directors. The Registrant has no outstanding securities possessing general voting rights. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Registrant was organized in December 1986 as a California Limited Partnership. Its General Partners (collectively referred to herein as the "General Partner") are West Coast Realty Advisors, Inc. and W. Thomas Maudlin Jr., an individual. The Registrant has no executive officers or directors. Philip N. Gainsborough, an officer of the General Partner, made an original limited partnership contribution to the Partnership in March 1987, which was subsequently paid back to him in March 1988 when the Partnership met its minimum funding requirement. The General Partner and its affiliates are entitled to compensation from the Partnership for the following services: 1. For Partnership management services rendered to the Partnership, the General Partner is entitled to receive up to 10% of all distributions of cash from operations. For the year ended December 31, 1998, the amount paid the General Partner was $28,877. In addition, the General Partner is entitled to reimbursement for certain public offering expenses, the cost of certain personnel employed in the organization of the Partnership, and certain administrative services performed by the General Partner. For the year ended December 31, 1998, the Partnership reimbursed approximately $12,000 to the General Partner for these expenditures. 2. For property management services, the General Partner engaged West Coast Realty Management, Inc. ("WCRM") an affiliate of the General Partner. For the year ended December 31, 1998, the Partnership incurred property management fees of $36,671 with WCRM. 3. The General Partner received a 10% allocation of net income before depreciation and amortization and 1% of depreciation and amortization. For the year ended December 31, 1998 this resulted in a $25,849 allocation of net loss before depreciation and amortization and a $1,025 allocation of depreciation and amortization, or a net loss allocation of $24,824. 4. On December 31, 1998 the Partnership was indebted to WCRM for $2,837 and to WCRA for $3,000, both of which were paid subsequent to year-end. 25 27 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) 1. FINANCIAL STATEMENTS The following financial statements of Associated Planners Realty Income Fund, a California Limited Partnership, are included in PART II, ITEM 8:
PAGE Report of Independent Certified Public Accountants ..........12 Balance Sheets - December 31, 1998 and 1997 .................13 Statements of Operations for the years ended December 31, 1998, 1997 and 1996 .....................14 Statements of Partners' Equity for the years ended December 31, 1998, 1997 and 1996......................15 Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996 .....................16 Summary of Accounting Policies ...........................17-18 Notes to Financial Statements ............................19-22 2. FINANCIAL STATEMENT SCHEDULE Schedule III-Real Estate and Accumulated Depreciation .......28
All other schedules have been omitted because they are either not required, not applicable or the information has been otherwise supplied. (b) REPORTS ON FORM 8-K NONE (c) EXHIBITS FINANCIAL DATA SCHEDULE 26 28 SIGNATURES Pursuant to the requirements of the 13 or 15(d) 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) /s/ W. THOMAS MAUDLIN JR. -------------------------------------- W. THOMAS MAUDLIN JR. (A General Partner) By: WEST COAST REALTY ADVISORS, INC. (A General Partner) /s/ JOHN R. LINDSEY --------------------------------------- JOHN R. LINDSEY (Vice President/Treasurer) Date: March 30, 1999 27 29 SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998 INFORMATION REQUIRED BY RULE 12-28 IS AS FOLLOWS
Cost Initial Cost Capitalized Gross Amount at which Carried at Close of Period ------------------------- Subsequent to ----------------------------------------------------- Building and Acquisition Building and Impairment Total Description Land Improvements Improvements Land Improvements Loss Cost - ------------------------------------------------------------------------------------------------------------------------ Yorba Center-Chino, California $ 555,344 $1,295,803 $ 31,136 $ 555,344 $1,326,939 $ (350,000) $1,532,283 San Marcos Industrial Building-San Marcos, California 727,517 2,079,388 198,000 777,517 2,227,388 -- 3,004,905 - ------------------------------------------------------------------------------------------------------------------------ Total $1,282,861 $3,375,191 $ 229,136 $1,332,861 $3,554,327 $ (350,000) $4,537,188 ========================================================================================================================
Life (Years) on which Depreciation is Computed Year ------------- Accumulated Construction Date Building and Description Depreciation Completed Acquired Improvements - --------------------------------------------------------------------------------- Yorba Center-Chino, California $ 384,507 1987 10-88 31.5-40 San Marcos Industrial Building-San Marcos, California 546,963 1986 1-90 31.5-40 - --------------------------------------------------------------------------------- Total $ 931,470 =================================================================================
There were no mortgage notes payable on the properties at December 31, 1998. A reconciliation of accumulated depreciation A reconciliation of the total cost is as is as follows: follows: Balance at January 1, 1996 $626,340 Balance at January 1, 1996 $ 4,699,187 1996 Depreciation 100,206 1996 Additions 188,001 -------- ----------- Balance at December 31, 1996 726,546 Balance at December 31, 1996 4,887,188 1997 Depreciation 102,453 1997 Additions -- -------- ----------- Balance at December 31, 1997 828,999 Balance at December 31, 1997 4,887,188 1998 Depreciation 102,471 1998 Additions -- -------- 1998 Impairment Loss (350,000) ----------- Balance at December 31, 1998 $931,470 Balance at December 31, 1998 $ 4,537,188 ======== ===========
28 EX-27 2 FINANCIAL DATA SCHEDULE
5 YEAR DEC-31-1998 JAN-01-1998 DEC-31-1998 273,509 0 0 0 0 279,658 4,537,188 (931,471) 3,885,374 69,413 0 0 0 0 3,815,961 3,885,374 386,573 397,796 203,809 203,809 350,000 0 0 (156,013) 0 0 0 0 0 (156,013) (25.74) (25.74)
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