UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ---
ACT OF 1934
For the quarter period ended February 29, 2004
-----------------
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 000-11023
MAXUS REAL PROPERTY INVESTORS-FOUR, L.P.
----------------------------------------
(Exact name of small business issuer as specified in its charter)
Missouri 43-1250566
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
104 Armour Road, North Kansas City, Missouri 64116
(Address of principal executive offices)
(816) 303-4500
(Issuer's telephone number, including area code)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
1
INDEX
Page
PART - I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION 7
ITEM 3. CONTROLS AND PROCEDURES 8
PART - II OTHER INFORMATION 9
ITEM 1. LEGAL PROCEEDINGS 9
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 9
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 9
ITEM 5. OTHER INFORMATION 9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9
SIGNATURES 10
EXHIBIT INDEX 11
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MAXUS REAL PROPERTY INVESTORS - FOUR, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
February 29, November 30,
2004 2003
(Unaudited)
ASSETS:
Investment property
Land $ 1,014,000 1,014,000
Buildings and improvements 16,399,000 16,273,000
----------- -----------
17,413,000 17,287,000
Less accumulated depreciation 11,237,000 11,080,000
----------- -----------
Total investment property 6,176,000 6,207,000
Cash and cash equivalents 477,000 651,000
Prepaid expenses 47,000 60,000
Deferred expenses, less accumulated amortization 70,000 72,000
Accounts receivable 1,000 ---
Income tax deposit 14,000 14,000
----------- -----------
Total assets $ 6,785,000 7,004,000
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT:
Liabilities:
Mortgage notes payable $ 9,900,000 9,900,000
Accounts payable and accrued expenses 247,000 228,000
Real estate taxes payable 46,000 144,000
Refundable tenant deposits 60,000 60,000
----------- -----------
Total liabilities 10,253,000 10,332,000
Partners' deficit (3,468,000) (3,328,000)
----------- -----------
Total liabilities and partners' deficit $ 6,785,000 7,004,000
=========== ===========
3
MAXUS REAL PROPERTY INVESTORS - FOUR, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
February 29, February 28,
2004 2003
Revenues:
Rental $ 653,000 682,000
Other 48,000 50,000
--------- ---------
Total revenues 701,000 732,000
--------- ---------
Expenses:
Depreciation and amortization 160,000 156,000
Repairs and maintenance 69,000 72,000
Real estate taxes 69,000 37,000
Professional fees 23,000 28,000
Utilities 44,000 28,000
Property management fees - related parties 45,000 43,000
Other 94,000 104,000
--------- ---------
Total operating expenses 504,000 468,000
--------- ---------
Net operating income 197,000 264,000
--------- ---------
Interest
Interest income (1,000) (3,000)
Interest expense 184,000 184,000
--------- ---------
Net income $ 14,000 83,000
========= =========
Net income allocation:
General partner $ --- 1,000
Limited partners 14,000 82,000
--------- ---------
$ 14,000 83,000
========= =========
Limited partners' data:
Net income per unit $ 1.22 6.97
========= =========
Weighted average limited partnership
units outstanding 11,430 11,764
========= =========
4
MAXUS REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
February 29, February 28,
2004 2003
Cash flows from operating activities:
Net income $ 14,000 83,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 160,000 156,000
Changes in accounts affecting operations:
Accounts receivable (1,000) ---
Prepaid expenses 13,000 13,000
Accounts payable and accrued expenses 19,000 (54,000)
Real estate taxes payable (98,000) (103,000)
Refundable tenant deposits --- (1,000)
Deferred expenses (1,000) ---
--------- ---------
Net cash provided by operating activities 106,000 94,000
--------- ---------
Cash flows from investing activities:
Capital expenditures (126,000) (27,000)
--------- ---------
Cash flows from financing activities:
Distributions (114,000) (118,000)
Repurchase of Partnership Units (40,000) (142,000)
--------- ---------
Net cash used in financing activities (154,000) (260,000)
--------- ---------
Net decrease in cash
and cash equivalents (174,000) (193,000)
Cash and cash equivalents, beginning of period 651,000 911,000
--------- ---------
Cash and cash equivalents, end of period $ 477,000 718,000
========= =========
Supplemental disclosure of cash flow information -
cash paid during the period for interest $ 184,000 184,000
========= =========
5
MAXUS REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
THREE MONTHS ENDED FEBRUARY 29, 2004 AND FEBRUARY 28, 2003
(1) Summary of Significant Accounting Policies
Refer to the financial statements of Maxus Real Property Investors - Four, L.P.,
formerly known as Nooney Real Property Investors - Four, L.P. (the "Partnership"
or the "Registrant"), for the year ended November 30, 2003, which are contained
in the Partnership's Annual Report on Form 10-KSB, for a description of the
accounting policies which have been continued without change. Also, refer to the
footnotes to those statements for additional details of the Partnership's
financial condition and results of operations. The details in those notes have
not changed except as a result of normal transactions in the interim. In the
opinion of the general partner, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows at February 29, 2004 and for all periods
presented have been made. The results for the three-month period ended February
29, 2004 are not necessarily indicative of the results that may be expected for
the entire year.
Certain reclassifications have been made to the prior period amounts to conform
to the current period presentation.
(a) Description of Business
The Partnership is a limited partnership organized under the laws of the State
of Missouri on February 9, 1982. The Partnership was organized to invest
primarily in income-producing real properties such as shopping centers, office
buildings and other commercial properties, apartment buildings, warehouses, and
light industrial properties. The Partnership's portfolio is comprised of a
402-unit apartment building located in West St. Louis County, Missouri
(Woodhollow Apartments).
(b) Basis of Accounting
The financial statements include only those assets, liabilities, and results of
operations of the partners which relate to the business of Maxus Real Property
Investors-Four, L.P. The statements do not include assets, liabilities, revenues
or expenses attributable to the partners' individual activities. No provision
has been made for federal and state income taxes since these taxes are the
responsibility of the partners.
(2) Repurchase of Partnership Interests
On November 25, 2003, the Partnership commenced an odd-lot offer to purchase up
to 3,887 of the Registrant's limited partnership units from limited partners
holding 15 units or fewer (the "Offer"). The Offer expired on December 26, 2003.
In connection with the Offer, the Registrant redeemed 90 limited partnership
units of the Registrant at $450 per unit. The redemptions of units held by 2
limited partners, totaling 10 units, are being held pending receipt of all
necessary documents to satisfy the Registrant's redemption requirements. As a
result, as of April 9, 2004, there are 11,371 outstanding limited partnership
units.
6
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This 10-QSB contains forward-looking information (as defined in the Private
Securities Litigation Reform Act of 1995) that involves risk and uncertainty,
including trends in the real estate investment market, general market
conditions, projected leasing and sales, and future prospects for the
Partnership. Actual results could differ materially from those contemplated by
such statements.
CRITICAL ACCOUNTING POLICIES
Refer to the Financial Statements of the Partnership for the year ended November
30, 2003, which are contained in the Partnership's Annual Report in Form 10-KSB,
for a description of the accounting policies, which have been continued without
change, unless otherwise noted herein.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect amounts reported in the accompanying financial
statements. The most significant assumptions and estimates relate to revenue
recognition for leases, treatment of capital expenditures, depreciable lives of
investment property, capital expenditures and the valuation of investment
property. Application of these assumptions requires the exercise of judgment as
to future uncertainties and, as a result, actual results could differ from these
estimates.
Revenue Recognition
The Partnership leases its property pursuant to operating leases with terms
generally of six or twelve months. Rental income is recognized when received;
this method approximates recognition using the straight-line method over the
related lease term.
Investment Property Useful Lives
The Partnership is required to make subjective assessments as to the useful
lives of its property for the purposes of determining the amount of depreciation
to reflect on an annual basis with respect to the property. These assessments
have a direct impact on the Partnership's net income.
Investment property is depreciated over its estimated useful life of 30 years
using the straight-line method. Furnishings and appliances are depreciated from
5 to 7 years using the straight-line method.
Capital Expenditures
For reporting purposes, the Partnership capitalizes all carpet, vinyl,
appliance, and HVAC replacements. The Partnership expenses all other
expenditures that total less than $10,000. Expenditures over $10,000 and
expenditures related to contracts over $10,000 are evaluated individually for
capitalization.
Impairment of Investment Property Values
The Partnership is required to make subjective assessments as to whether there
are impairments in the value of its investment property. Management's estimates
of impairment in the value of the investment property have a direct impact on
the Partnership's net income.
The Partnership follows the provisions of Statement of Financial Accounting
Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets". The Partnership assesses the carrying value of its
long-lived asset whenever events or changes in circumstances indicate that the
carrying amount of the underlying asset may not be recoverable. Certain factors
that may occur and indicate that an impairment exists include, but are not
limited to: significant underperformance relative to projected future operating
results; significant changes in the manner of the use of the asset; and
significant adverse industry or market economic trends. If the carrying value of
the property may not be recoverable based upon the existence of one or more of
the above indicators of impairment, management measures the impairment based on
projected discounted cash flows using a discount rate determined by management
to be commensurate with the risk inherent in the Partnership, compared to the
property's current carrying value.
7
LIQUIDITY AND CAPITAL RESOURCES
Cash as of February 29, 2004 was $477,000, a decrease of $174,000 from November
30, 2003. Cash provided from operating activities for the three months ended
February 29, 2004 was $106,000, which is comparable to results from the same
period in 2003. Investing activities used $126,000 primarily due to a renovation
of the clubhouse for $96,000 along with other investments in property
improvements including carpet, flooring, HVAC and appliance replacements. Cash
used in financing activities was $154,000, comprised of $114,000 of
distributions of $10 per limited partner unit, which were paid in January 2004,
and $40,000 to repurchase 90 limited partner units.
Contractual Obligations
The mortgage note payable is secured by Woodhollow Apartments and calls for
monthly interest payments of $61,000, with interest fixed at 7.45%. The
principal balance is due December 1, 2010. In the event of prepayment by the
Partnership, the note requires a substantial prepayment penalty.
Management believes the Partnership's current cash position and the property's
ability to provide operating cash flow should enable the Partnership to fund
anticipated capital expenditures and meet debt obligations.
RESULTS OF OPERATIONS
For the three-month period ended February 29, 2004, the Partnership's revenues
were $701,000. Revenues decreased by $31,000 (4.2%) for the three-month period
ended February 29, 2004 as compared to the same period in 2003. This decrease
was due primarily to an increase in net concessions and vacancy loss of $26,000.
For the three-month period ended February 29, 2004, the Partnership's operating
expenses were $504,000. Expenses increased by $36,000 (7.7%) for the three-month
period ended February 29, 2004 as compared to the same period in 2003. The
increase in expenses was primarily due to an increase in real estate taxes of
$32,000.
Woodhollow was 93% occupied at February 29, 2004, as compared to 94% as of
February 28, 2003. Based on industry information, the average occupancy of the
sub-market Woodhollow competes with is in the low to mid 90% range. Interest
rates remain low, which normally increases losses of tenants who move out of
apartments when they purchase homes.
INFLATION
The effects of inflation did not have a material impact upon the Registrant's
operations in fiscal 2003 or the three months ended February 29, 2004 and are
not expected to materially affect the Registrant's operations in the remainder
of 2004.
OFF-BALANCE SHEET ARRANGEMENTS
The Partnership does not have any "off-balance sheet arrangements" as defined in
Item 303 (c) of Regulations S-B promulgated under the Securities Exchange Act of
1934, as amended.
ITEM 3: CONTROLS AND PROCEDURES
Under the supervision and with the participation of the management of Maxus
Capital Corp., including the Partnership's Chief Executive Officer and Chief
Financial Officer, the Partnership has established a system of controls and
other procedures designed to ensure that information required to be disclosed in
its periodic reports filed under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms. These disclosure controls and procedures have been evaluated under the
direction of the Chief Executive Officer and Chief Financial Officer as of
February 29, 2004. Based on such evaluations, the Chief Executive Officer and
Chief Financial Officer have concluded that the disclosure controls and
procedures (as defined in the Exchange Act Rule 13a-15(e) and Rule 15d-15(e))
are effective. There have been no significant changes in the system of internal
controls or in other factors that could significantly affect internal controls
subsequent to the evaluation by the Chief Executive Officer and Chief Financial
Officer.
8
PART II. OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On November 25, 2003, the Partnership commenced an odd-lot offer to purchase up
to 3,887 of the Registrant's limited partnership units from limited partners
holding 15 units or fewer (the "Offer"). The Offer expired on
December 26, 2003. In connection with the Offer, the Registrant redeemed 90
limited partnership units of the Registrant at $450 per unit. The redemptions of
units held by 2 limited partners, totaling 10 units, are being held pending
receipt of all necessary documents to satisfy the Registrant's redemption
requirements. As a result, as of April 9, 2004, there are 11,371 outstanding
limited partnership units.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
The Board of Directors of the Partnership's general partner (Maxus Capital
Corp.) declared cash distributions of $10 per limited partnership unit, payable
to holders of record as of January 1, 2004, April 1, 2004, that were paid on
January 10, 2004 and April 9, 2004 respectively. The Partnership anticipates,
subject to continued performance and availability of funds, continuing such
quarterly distributions, at least in the near future.
On March 29, 2004, Everest Properties II, LLC a California limited liability
company ("Everest"), commenced a tender offer to purchase up to 570 units of
limited partnership interests ("Units") of the Registrant at a cash purchase
price of $500 per Unit, less the amount of distributions made to limited
partners after the date of the offer and less any transfer fees imposed by the
Registrant for each transfer, upon the terms and subject to the conditions set
forth in Everest's Offer to Purchase for Cash dated March 29, 2004. On April 9,
2004, the Registrant filed a response on Schedule 14D-9 with the Securities and
Exchange Commission ("SEC") and sent a letter to the Registrant's limited
partners in which the Registrant expressed no opinion and is remaining neutral
toward Everest's tender offer. For more information regarding Everest's tender
offer or the Registrant's response, the SEC maintains a world wide web site at
http://www.sec.gov that includes Everest's and the Registrant's electronic
filings with respect to the tender offer.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See Exhibit Index on Page 12
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the
first quarter of 2004.
9
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MAXUS REAL PROPERTY INVESTORS-FOUR, L.P.
By: MAXUS CAPITAL CORP.
General Partner
Dated: April 9, 2004 By: /s/ Danley K. Sheldon
------------------------------
Danley K. Sheldon
President and Chief Executive Officer
(Principal Executive Officer)
Dated: April 9, 2004 By: /s/ John W. Alvey
------------------------------
John W. Alvey
Vice President, Treasurer and
Chief Financial Officer
(Principal Financial and Accounting Officer)
10
EXHIBIT INDEX
Exhibit Number Description
3.1 Amended and Restated Agreement and Certificate of Limited Partnership
dated April 7, 1982 is incorporated by reference from Exhibit 3.1 to
the Form 10-K for the fiscal year ended November 30, 1999 filed by the
Registrant (File No. 000-11023).
3.2 Amendment of Certificate of Limited Partnership dated December 21, 1999
is incorporated by reference to the Form 8-K filed by the Registrant on
January 21, 2000 under the Securities Act of 1933 (File No. 000-11023).
31.1 Certification of the Chief Executive Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
31.2 Certification of the Chief Financial Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
32.1 Certification of the Chief Executive Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
32.2 Certification of the Chief Financial Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
11