-----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, OHoXaGVwvgkEtGT4ob4NRDcPWN4A6ArUbXowRbC86yxsugN//bwDYBqZm1TrfveU 7aQjnC4HZDDs/jFnbRttXg== 0000892569-97-003237.txt : 19971117 0000892569-97-003237.hdr.sgml : 19971117 ACCESSION NUMBER: 0000892569-97-003237 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: SEC FILE NUMBER: 033-30084 FILM NUMBER: 97720256 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 QUARTERLY REPORT FOR THE PERIOD ENDED 9/30/97 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 SEPTEMBER 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ___________ COMMISSION FILE NUMBER: 0-26470 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 COSTA MESA, CA 92626 - --------------------------------------- ---------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE) 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 (In thousands except unit data)
ASSETS September 30, December 31, 1997 1996 ------------- ------------ (Unaudited) Properties, at cost Land $ 4,674 $ 4,674 Building and improvements, less accumulated depreciation of $3,824 at September 30, 1997 and $3,373 in December 31, 1996 22,460 18,921 Furniture, fixtures and equipment, less accumulated depreciation of $480 at September 30, 1997 and $498 at December 31, 1996 262 322 -------- -------- Net properties 27,396 23,917 -------- -------- Cash 1,201 893 Restricted cash 149 137 Loan fees, net 79 105 Other assets 431 248 -------- -------- $ 29,256 $ 25,300 ======== ======== LIABILITIES AND PARTNERS' CAPITAL Notes payable $ 19,386 $ 16,023 Accounts payable and accrued expenses 1,368 734 Amounts payable to affiliates 86 138 Distributions payable to Partners 61 46 -------- -------- Total liabilities 20,901 16,941 -------- -------- Minority interest 65 41 -------- -------- Partners' capital (deficit): General partners (76) (76) Limited partners, 18,666 and 18,652 units outstanding at September 30, 1997 and December 31, 1996, respectively 8,366 8,394 -------- -------- Total partners' capital 8,290 8,318 -------- -------- $ 29,256 $ 25,300 ======== ========
See accompanying notes to the unaudited financial statements. 2 3 American Retirement Villas Properties III, L.P. (a California limited partnership) Statements of Operations (Unaudited) (in thousands except per unit data)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, -------------------------------- ------------------------------- 1997 1996 1997 1996 ------- ------- ------ ------- REVENUES: Rent.............................. $1,399 $1,395 $4,164 $ 4,029 Assisted living................... 155 110 429 300 Interest.......................... 3 84 11 282 Other............................. 16 24 50 76 ------- ------ ------ ------- Total revenues........... 1,573 1,613 4,654 4,687 ------- ------ ------ ------- COSTS AND EXPENSES: Rental property operations ....... 731 669 2,105 1,953 Assisted living .................. 60 53 167 147 Depreciation and amortization..... 221 299 677 896 Interest ......................... 357 472 1,076 1,425 General and administrative ....... 102 105 346 296 Property taxes.................... 64 73 195 235 Advertising....................... 32 6 55 21 Minority interest in operations .. 23 21 61 39 ------- ------ ------- ------- Total costs and expenses. 1,590 1,698 4,682 5,012 ------- ------ ------- ------- Net loss.......................... $ (17) $ (85) $ (28) $ (325) ======= ====== ======= ======= Net loss to General Partner....... $ -- $ (1) $ -- $ (3) ======= ====== ======= ======= Net loss to Limited Partner ...... $ (17) $ (84) $ (28) $ (322) ======= ====== ======= ======= Net loss per Limited Partner unit. $ (.91) $(4.50) $ (1.50) $(17.26) ======= ====== ======= =======
See accompanying notes to the unaudited financial statements. 3 4 American Retirement Villas Properties III, L.P. (a California limited partnership) Statements of Cash Flow (Unaudited) (In thousands)
For the nine months ended September 30, --------------------------------- 1997 1996 ---------- ----------- Cash flows from operating activities: Net loss $ (28) $ (325) Adjustment to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 677 896 Minority interest in operations 61 39 CHANGE IN ASSETS AND LIABILITIES: Increase in other assets (183) (58) Increase in accounts payable and accrued expenses 633 376 Decrease in amounts payable to affiliates (52) (61) -------- -------- Net cash provided by operating activities 1,108 867 -------- -------- Cash flows from investing activities: Increase in restricted cash (12) (86) Capital expenditures (55) (76) Construction of building (4,074) (867) Increase in deposit on property under contract for sale -- 1,474 -------- -------- Net cash provided by (used in) investing activities (4,141) 445 -------- -------- Cash flows from financing activities: Proceeds from construction loan 3,573 -- Principal repayments on long-term debt (210) (198) Distributions paid (22) (652) -------- -------- Net cash provided by (used in) financing activities 3,341 (850) -------- -------- Net increase in cash 308 462 Cash at beginning of period 893 478 -------- -------- Cash at end of period $ 1,201 $ 940 ======== ======== Supplemental disclosure of cash flow information - Cash paid during the period for interest $ 1,053 $ 1,425 ======== ========
See accompanying notes to the unaudited financial statements. 4 5 American Retirement Villas Properties III, L.P. (a California limited partnership) Notes to Financial Statements (Unaudited) September 30, 1997 (1) SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING All adjustments, including recurring accruals, have been made that are necessary to present fairly the financial position and results of operations for the periods covered by this report. The results of operations for the nine months ended September 30, 1997, are not necessarily indicative of the operating results for the full year. Pursuant to Regulation S-X Rule 10-1(5), American Retirement Villas Properties III, L.P.'s (the "Partnership") significant accounting policies are described in the Partnership's December 31, 1996 Form 10-K filed with the Securities and Exchange Commission. The Partnership follows the same accounting policies for interim reporting purposes. This quarterly report should be read in conjunction with such financial statements. Certain prior period amounts have been reclassified to conform to the current period financial statement presentation. (2) TRANSACTIONS WITH AFFILIATES The Partnership has an agreement with ARV Assisted Living, the Partnership's Managing General Partner, providing for a property management fee of 5 percent of gross revenues and a partnership management fee of 10 percent of cash flow before distribution, as defined in the Partnership Agreement. Property management fees and partnership administration fees were $77,000 and $32,000 for the three months ended September 30, 1997, respectively, and $232,000 and $81,000 for the nine month ended September 30, 1997, respectively. 5 6 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenue Revenue includes rental income, assisted living income, interest earned on cash balances and other revenue. Revenue decreased $40,000 and $33,000 for the three month and nine month periods ended September 30, 1997, respectively, compared with the corresponding periods of 1996. The decreases resulted primarily from lower interest income as a result of lower average cash balances over the periods, partially offset by additional residents using assisted living services during 1997. Costs and Expenses Total costs and expenses includes rental property operations (consisting of, but not limited to, property management costs, payroll related expenses, utilities, food, and maintenance expenses), assisted living expenses, general and administrative (comprised of, but not limited to, costs for accounting, partnership administration, bad debt, data processing, investor relations, insurance and professional services), facilities rent, depreciation and amortization, property taxes, advertising and interest. Costs and expenses deceased $108,000 and $330,000 for the three month and nine month periods ended September 30, 1997, respectively, compared with the corresponding periods of 1996. The decreases resulted primarily from decreases in interest expense, property taxes, depreciation and amortization. These decreases were partially offset by increases in assisted living services. Interest expense, property taxes and depreciation and amortization decreased as a result of a reduction of property and related debt upon the sale of Heritage Pointe Claremont in 1996. The increase in assisted living services is due to additional residents using assisted living services during 1997. Liquidity and Capital Resources The General Partners expect that the cash to be generated from operations of all the Partnership's properties will be adequate to pay operating expenses, make necessary capital improvements and make required principal reductions of debt. Cash currently generated by operations is being reserved by the Partnership to fund start-up costs to be incurred by the Villa Las Posas facility which is expected to commence operations in the late 1997. On a long-term basis, the Partnership's liquidity is sustained primarily from cash flow provided by operating activities. During the nine months ended September 30, 1997, cash provided by operating activities increased to $1.2 million compared to $0.9 million for the corresponding period in 1996. During the nine months ended September 30, 1997, the Partnership's net cash used in investing activities increased to $4.2 million compared to net cash provided by investing activities of $0.4 million for the corresponding period in 1996. The Partnership's investing activities consisted of capital improvements made on its five operating properties and continued construction of its assisted living facility in development (Villa Las Posas). During the nine months ended September 30, 1997, the Partnership's net cash provided by financing activities was $3.3 million compared to net cash used in financing activities of $0.9 million for the corresponding period in 1996. The Partnership's financing activities consisted of borrowings from its construction loan, principal reduction on its 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. 6 7 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 percent. As of September 30, 1997, the Partnership had $3.6 million outstanding under this construction loan. In addition, the Partnership has long-term notes payable of $15.8 million as of September 30, 1997, comprised of $0.1 million due in 2000, $4.8 million due in 2007, $7.1 million due in 2017 and $3.8 million due in 2019. The Partnership 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 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 Partnership's capital resources, and there is no expected change in the mix of such resources. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A. Exhibit 27 - Financial Data Schedule B. None 7 8 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/ John A. Booty ---------------------------------- John A. Booty President Date: November 14, 1997 By: /s/ Graham P. Espley-Jones ---------------------------------- Graham P. Espley-Jones Chief Financial Officer Date: November 14, 1997 8 9 EXHIBIT INDEX Exhibit Description - ------- ----------- 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1997 JUL-01-1997 SEP-30-1997 1,201 0 0 0 0 1,201 27,026 (4,304) 29,256 1,515 19,386 0 0 0 8,290 29,256 0 1,573 0 1,233 0 0 357 0 0 0 0 0 0 (17) 0 0
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