-----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, EIeSrJPj/7x9OZOC20XvowXEC70bfszXo+CqMTXGtP5ndfLT2ymrbj1Hjm/AulEC ZvNqm3tT2hpazyb4yitqMA== 0000892569-97-001486.txt : 19970522 0000892569-97-001486.hdr.sgml : 19970522 ACCESSION NUMBER: 0000892569-97-001486 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970521 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN RETIREMENT VILLAS PROPERTIES III LTD PARTNERSHIP CENTRAL INDEX KEY: 0000853274 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330365417 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-30084 FILM NUMBER: 97612446 BUSINESS ADDRESS: STREET 1: 245 FISCHER AVE STE D 1 CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 7147517400 MAIL ADDRESS: STREET 2: 245 FISCHER AVE STE D1 CITY: COSTA MESA STATE: CA ZIP: 92626 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN RETIREMENT VILLAS PROPERTIES III L P DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q FOR PERIOD ENDED MARCH 31, 1997 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ------------ (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ___________ COMMISSION FILE NUMBER: 33-30084 AMERICAN RETIREMENT VILLAS PROPERTIES III, L.P. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ------------ CALIFORNIA 33-365417 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 245 FISCHER AVENUE, D-1 92626 COSTA MESA, CA (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 751-7400 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 ----- ----- 2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS American Retirement Villas Properties III, L.P. (a California limited partnership) Balance Sheets
MAR. 31, 1997 DEC. 31, 1996 ------------- ------------- (Unaudited) (Audited) (In thousands except per unit data) ASSETS Properties, at cost Land $ 4,674 4,674 Building and improvements, less accumulated depreciation of $3.6 million in 1997 and $3.4 million in 1996 19,653 18,921 Furniture, fixtures and equipment, less accumulated depreciation of $517,000 in 1997 and $498,000 in 1996 315 322 -------- -------- Net properties 24,642 23,917 Cash 1,073 893 Restricted cash 137 137 Loan fees, net 97 105 Other assets 369 248 -------- -------- $ 26,318 25,300 ======== ======== LIABILITIES AND PARTNERS' CAPITAL Notes payable $ 16,615 16,023 Accounts payable and accrued expenses 1,073 734 Amounts payable to affiliates 203 138 Distributions payable to Partners 59 46 -------- -------- Total liabilities 17,950 16,941 Minority interest 50 41 -------- -------- Partners' capital (deficit) : General partners (76) (76) Limited partners, 18,652 units outstanding at March 31, 1997 and December 31, 1996, respectively 8,394 8,394 -------- -------- Total partners' capital 8,318 8,318 $ 26,318 25,300 ======== ========
3 American Retirement Villas Properties III, L.P. (a California limited partnership) Statements of Operations (Unaudited)
FOR THE THREE MONTHS ENDED -------------------------- 1997 1996 ---------- ---------- (In thousands except per unit data) Revenues: Rent $ 1,377 1,305 Assisted living 137 90 Interest 2 105 Other 25 29 ------- ------- Total operating revenues 1,541 1,529 ------- ------- Costs and expenses: Rental property 691 641 Assisted living 55 44 Depreciation and amortization 228 299 Interest 361 477 General and administrative 111 94 Property taxes 65 76 Advertising 9 10 Minority interest in operations 22 (3) ------- ------- Total operating costs and expenses 1,542 1,638 ------- ------- Net loss $ (1) (109) ======= ======= Net loss to General Partner 0 (1) Net loss to Limited Partner (1) (108) Net income (loss) per limited partner unit $ (0.05) (5.83) ======= =======
4 American Retirement Villas Properties III, L.P. (a California limited partnership) Statements of Cash Flow (Unaudited) (In thousands)
FOR THE THREE MONTHS ENDED MARCH 31, -------------------------- 1997 1996 ----------- --------- Cash flows from operating activities: Net loss $ (1) (109) Adjustment to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 228 299 Change in minority interest 9 0 Change in assets and liabilities: (Increase) decrease in restricted cash (1) 0 (Increase) decrease in other assets (118) 35 Increase in accounts payable and accrued expenses 353 52 (Increase) decrease in amounts receivable from affiliates 0 (27) Increase in amounts payable to affiliates 65 12 ------- ------- Net cash provided by operating activities 535 262 ------- ------- Cash flows from investing activities: (Increase) decrease in restricted cash 0 (2) Construction on land/building (915) (40) Additions to furniture, fixtures and equipment, net (32) (36) ------- ------- Net cash used in investing activities (947) (78) ------- ------- Cash flows from financing activities: Proceeds from construction loan 662 0 Principal repayments on long-term debt (70) (55) Distributions paid 0 (141) ------- ------- Net cash provided by (used in) financing activities 592 (196) ------- ------- Net increase (decrease) in cash and cash equivalents 180 (12) Cash at beginning of year 893 478 ------- ------- Cash at end of year $ 1,073 466 ======= =======
5 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS (CONTINUED) American Retirement Villas Properties III, L.P. (a California limited partnership) Notes to Financial Statements (Unaudited) (Continued) March 31, 1997 (1) SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10K is incorporated by this reference. BASIS OF ACCOUNTING Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10-K is incorporated by this reference. CARRYING VALUE OF REAL ESTATE Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10-K is incorporated by this reference. ORGANIZATION COSTS Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10-K is incorporated by this reference. PRE-OPENING COSTS Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10-K is incorporated by this reference. LOAN FEES Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10-K is incorporated by this reference. RENTAL INCOME Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10-K is incorporated by this reference. INCOME TAXES Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10-K is incorporated by this reference. 6 NET INCOME (LOSS) PER LIMITED PARTNER UNIT Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10-K is incorporated by this reference. CASH AND CASH EQUIVALENTS Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10-K is incorporated by this reference. RECLASSIFICATIONS Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10-K is incorporated by this reference. (2) ORGANIZATION AND PARTNERSHIP AGREEMENT Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10-K is incorporated by this reference. (3) TRANSACTIONS WITH AFFILIATES Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10-K is incorporated by this reference, except for the following additional comments. For the three months ended March 31, 1997, property management fees and partnership administration fees of $77,000 and $34,000, respectively, were paid or accrued to the Managing General Partner. (4) PROPERTIES Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10-K is incorporated by this reference. (5) NOTES PAYABLE Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10-K is incorporated by this reference. (6) GRANT INCOME Pursuant to Regulation S-X Rule 10-1(5), the material stated in the December 31, 1996 Form 10-K is incorporated by this reference. 7 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (1) LIQUIDITY The General Partners expect that the cash to be generated from operations of all the Registrant's properties will be adequate to pay operating expenses, make necessary capital improvements, make required principal reductions, and provide distributions to the Partners. On a long-term basis, the Registrant's liquidity is sustained primarily from cash flow provided by operating activities. During the three months ended March 31, 1997, cash provided by operating activities was $535,000 compared to cash provided by operating activities of $262,000 for the three months ended March 31, 1996. During the three months ended March 31, 1997, the Registrant used net cash in investing activities of $947,000 compared to net cash provided by investing activities of $78,000 for the three months ended March 31, 1996. The Registrant's investing activities consisted of capital improvements made on its five operating properties and construction on its property in development. During the three months ended March 31, 1997, financing activities provided net cash of $592,000 compared to using net cash in financing activities of $196,000 for the three months ended March 31, 1996. The Registrant's financing activities consisted of borrowings from its construction loan, principal reduction on notes payable and distributions paid to the Partners. The General Partners are not aware of any trends, other than national economic conditions which have had, or which may be reasonably expected to have, a material favorable or unfavorable impact on the revenues or income from the operations or sale of properties. The General Partners believe that if the inflation rate increases they will be able to pass the subsequent increase in operating expenses onto the residents of the facilities by way of higher rental and assisted living rates. On March 12, 1997, ARVP III obtained a $7.7 construction loan from Bank United of Texas for financing the construction of the assisted living facility known as Villa Las Posas located in Camarillo, California. The terms of the construction loan provide for the interest rate to be equal to 30 day LIBOR rate plus 2.75%. In addition, the Registrant has long term debt of $16.0 million as of March 31, 1997, comprised of $4.8 million due January 1, 2007, $3.0 million due February 1, 2017, $4.0 million due February 1, 2019 and $4.2 million due November 1, 2017. The remaining balance of $62,000 consists of notes secured by equipment. (2) CAPITAL RESOURCES The Registrant contemplates spending approximately $130,000 for capital expenditures during 1997 for physical improvements at its five facilities and $7.7 million for construction costs for its Villa las Posas assisted living facility. The funds for these improvements should be available from operations and cash reserves while the funds for construction of the Villa las Posas facility should be available from the construction loan with Bank United of Texas. There are no known material trends, favorable or unfavorable, in the Registrant's capital resources, and there is no expected change in the mix of such resources. 8 (3) RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THE THREE MONTHS ENDED MARCH 31, 1996. Revenue for the three month periods ended March 31, 1997 and March 31, 1996 includes rental income, assisted living income, interest earned on cash balances and other revenue. Total revenues for the each of the three month periods ended March 31, 1997 and March 31, 1996 were $1.5 million. The largest component of revenue, rent, increased by over 5% from the three months ended March 31, 1997 to the three months ended March 31, 1996. The increase in rent was due to an increase in rental rates. Revenue from assisted living increased more than 52% from $90,000 for the three months ended March 31, 1996 to $137,000 for the three months ended March 31, 1997. The increase in assisted living revenue was due to the full implementation of an assisted living services program in the Partnership facilities. Interest and other revenue decreased approximately 80% from the three months ended March 31, 1996 to the three months ended March 31, 1997. Interest income results from interest earned on cash deposits. Other revenue generally includes processing fees, and beauty shop revenue. In 1996, ARVP III received interest income related to Heritage Pointe Claremont which was sold at the end of 1996. According to FASB 66, interest income is recorded to the extent that interest expense related to Heritage Point Claremont is incurred. Since the debt related to Heritage Point Claremont has been eliminated from the financial statements of ARVP III in conjunction with the sale of the property, interest income has declined significantly. Sources of revenue for the three months ended March 31, 1997 and March 31, 1996 are summarized as follows:
THREE MONTHS ENDED ------------------ MARCH 31, 1997 MARCH 31, 1996 -------------- -------------- (in thousands) Rent $1,377 $1,305 Assisted Living 137 90 Interest 2 105 Other 25 29 ------ ------ Total Revenue 1,541 1,529 ====== ======
Total costs and expenses for the three months ended March 31, 1997 were $1.5 million, a decrease of almost 6% over costs and expenses of $1.6 million for the three months ended March 31, 1996. The largest component of expenses, rental property operations, consists primarily of property management costs, payroll related expenses, utilities, food expenses and maintenance and supplies. Rental property operations expenses for the three months ended March 31, 1997 increased approximately 8% over the comparable three months ended March 31, 1996. The increase in rental property operations is primarily due to increased payroll expenses. Assisted living expenses consist primarily of related payroll expense. Assisted living expenses increased by approximately 25% from the three months ended March 31, 1996 to the three months ended March 31, 1997. Assisted living expenses increased due to increased levels of staffing required to providing assisted living services commensurate with the increase in assisted living revenue. General and administrative expenses are comprised of, but not limited to, costs for accounting, partnership administration, bad debt, data processing, investor relations, insurance and professional services. General and administrative expenses increased 18% from the three months ended March 31, 1996 to the three 9 months ended March 31 1997. The general and administrative expenses increase is due to increased partnership administration fees. Depreciation and amortization expense incurred during the three months ended March 31, 1997 decreased by $71,000 (approximately 24%) compared to the three months ended March 31, 1996. The decrease is due to a portion of fixed assets becoming fully depreciated. Interest expense decreased approximately 24% to $361,000 for the three months ended March 31, 1997 from interest expense of $477,000 incurred during the three months ended March 31, 1996. Because the sale of Heritage Pointe Claremont was properly recorded under the cost recovery method before the end of 1996, the property and related debt were eliminated from the financial statements of ARVP III. Therefore, the decrease in debt led to the decrease in interest expense. Selected costs and expenses for the three months ended March 31, 1997 and March 31, 1996 are summarized as follows:
THREE MONTHS ENDED ------------------ MARCH 31, 1997 MARCH 31, 1996 -------------- -------------- (in thousands) Rental Property Operations 691 641 Assisted Living 55 44 General and Administrative 111 94 Depreciation and amortization 228 299 Property Taxes 65 76 Interest Expense 361 477
PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGE 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. EXHIBITS AND REPORTS ON FORM 8-K A. Exhibit 27 - Financial Data Schedule B. None 10 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. AMERICAN RETIREMENT VILLAS PROPERTIES III A CALIFORNIA LIMITED PARTNERSHIP By: ARV Assisted Living, Inc. (Managing General Partner) By: /s/ Gary L. Davidson ----------------------------- Gary L. Davidson Chairman of the Board Date: May 21, 1997 By: /s/ Graham P. Espley-Jones ----------------------------- Graham P. Espley-Jones Chief Financial Officer Date: May 21, 1997 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1996 JAN-01-1997 MAR-31-1997 1,073 0 0 0 0 1,676 28,712 14,070 26,318 1,335 0 0 0 0 0 26,318 0 1,541 0 1,542 0 0 361 (1) 0 0 0 0 0 (1) 0 0
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