FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period to
Commission file number 0-14542
SECURED INVESTMENT RESOURCES FUND, L.P.
(Exact name of registrant as specified in its charter)
Kansas 48-0979566
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5453 W. 61st Place, Mission, Kansas 66205
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number,
including area code) (913) 384-5700
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests ("Units")
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 such shorter periods 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
SECURED INVESTMENT RESOURCES FUND, L.P.
Index
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheets --
June 30, 1997 and December 31, 1996 3-4
Consolidated Statements of Operations --
Three and Six Months Ended June 30,
1997 and 1996 5
Consolidated Statements of Partnership
Capital -- Six Months Ended June 30, 1997
and the Years Ended December 31, 1996,
and 1995 6
Consolidated Statements of Cash Flows --
Six Months Ended June 30, 1997 and 1996 7-8
Notes to Consolidated Financial Statements 9-10
Item 2. Managements Discussion and Analysis
of Financial Condition and Results
of Operations 11-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of
Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED BALANCE SHEETS
June 30,
1997 December 31,
(Unaudited) 1996
ASSETS
INVESTMENT PROPERTIES
Land and buildings $ 16,538,383 $ 16,523,135
Furniture, fixtures and equipment 1,732,509 1,714,939
18,270,892 18,238,074
Less accumulated depreciation
and allowance for losses 6,960,221 6,667,531
11,310,671 11,570,543
OTHER ASSETS
Cash 257,612 206,974
Rents and other receivables, less
allowance of $33,850 in 1997
$42,350 in 1996 14,951 10,236
Prepaid expenses 34,611 368
Debt issuance costs, net of
accumulated amortization of
$66,934 in 1997 and $63,135
in 1996 143,320 141,488
Commercial commissions,
deposits and other 20,780 17,015
Restricted deposits 19,588 15,105
490,862 391,186
TOTAL ASSETS $ 11,801,533 $ 11,961,729
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED BALANCE SHEETS--CONT'D.
June 30,
1996 December 31,
(Unaudited) 1995
LIABILITIES AND PARTNERSHIP CAPITAL
Mortgage debt (Note B) $ 11,866,304 $ 11,952,227
Accrued interest 174,658 128,096
Accounts payable and accrued
expenses 204,283 106,926
Due to related parties (Note C) 59,941 57,416
Unearned revenue 103,604 110,733
Tenant security deposits 79,422 75,485
TOTAL LIABILITIES 12,488,212 12,430,883
PARTNERSHIP CAPITAL
General Partners
Capital contribution 1,000 1,000
Partnership deficit (62,964) (60,789)
(61,964) (59,789)
Limited Partners
Capital contributions 5,608,838 5,608,838
Partnership deficit (6,233,553) (6,018,203)
(624,715) (409,365)
TOTAL PARTNERSHIP CAPITAL (686,679) (469,154)
$ 11,801,533 $ 11,961,729
See notes to consolidated financial statements.
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Six months Ended Three Months Ended
June 30, June 30,
1997 1996 1997 1996
REVENUES
Rents $1,109,730 $1,082,812 $ 571,929 $ 541,189
Interest 1,738 2,453 901 1,211
Maintenance
escalations 34,728 37,013 17,031 17,578
1,146,196 1,122,278 589,861 559,978
OPERATING AND
ADMINISTRATIVE EXPENSES
Property operating
expenses 383,543 379,028 201,890 191,169
General and
administrative
expenses 22,326 25,990 11,621 14,091
Professional services 45,527 46,725 22,550 35,328
Management Fees 56,673 49,051 29,524 24,748
508,069 500,794 265,585 265,336
NET OPERATING INCOME 638,127 621,484 324,276 294,642
NON-OPERATING EXPENSES
Interest 559,163 648,688 282,576 327,636
Depreciation and
amortization 296,489 299,394 148,245 148,692
855,652 948,082 430,821 476,328
PARTNERSHIP LOSS $ (217,525) $ (326,598) $ (106,545) $(181,686)
Allocation of loss:
General Partners (2,175) (3,266) (1,065) (1,817)
Limited Partners (215,350) (323,332) (105,480) (179,869)
$ (217,525) $ (326,598) $ (106,545) $ (181,686)
Partnership loss per
limited partnership
unit $ (8.66) $ (13.00) $ (4.24) $ (7.23)
See notes to consolidated financial statements.
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF PARTNERSHIP CAPITAL
Six months Ended June 30, 1997 (Unaudited) and
the Years Ended December 31, 1996 and 1995
General Limited
Partners Partners Total
Balances at January 1, 1995 $ (49,692) $ 590,244 $ 540,552
Partnership loss (4,853) (480,426) (485,279)
Balances at December 31, 1995 (54,545) 109,818 55,273
Partnership loss (5,244) (519,183) (524,427)
Balances at December 31, 1996 (59,789) (409,365) (469,154)
Patnership loss (2,175) (215,350) (217,525)
Balances at June 30, 1997 $ (61,964) $ (624,715) $ (686,679)
See notes to consolidated financial statements.
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended
June 30,
1997 1996
OPERATING ACTIVITIES
Partnership loss $ (217,525) $ (326,598)
Adjustments to reconcile
partnership loss to net cash
provided by (used in) operating
activities:
Depreciation and amortization 303,015 305,734
Provision for losses on rents
and other receivables (8,500) (2,800)
Changes in assets and liabilities:
Rents and other receivables 3,785 1,676
Prepaid expenses (34,244) (25,885)
Commercial commission, deposits
and other (10,291) (646)
Account payable and
accrued expenses 97,357 (49,282)
Accrued interest 46,563 17,465
Unearned revenue (7,129) (5,159)
Tenant security deposits 3,937 5,429
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 176,968 (80,066)
INVESTING ACTIVITIES
Purchase of and improvements
to investment property (32,818) (99,235)
Restricted deposits (4,482) 45,292
NET CASH USED IN
INVESTING ACTIVITIES (37,300) (53,943)
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)--CONT'D.
Six Months Ended
June 30,
1997 1996
FINANCING ACTIVITIES
Mortgage Proceeds $ 0 $ 410,000
Due To (From) Related Parties 2,525 1,492
Principal payments on
long-term debt (85,923) (219,018)
Debt Issuance Cost (5,632) (2,999)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (89,030) 189,475
INCREASE IN CASH
AND CASH EQUIVALENTS 50,638 55,466
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 206,974 161,414
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 257,612 $ 216,880
See notes to consolidated financial statements.
SECURED INVESTMENT RESOURCES FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
June 30, 1997
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the six
month period ended June 30, 1997 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1997. For further
information, refer to the financial statements and footnotes thereto included
in the Partnership's annual report on Form 10-K for the year ended December
31, 1996.
NOTE B--MORTGAGE DEBT
Mortgage debt consists of the following:
June 30, December 31,
1997 1996
Collateralized by Investment
Property:
First Mortgages:
The Colony Apartments $ 3,641,057 $ 3,661,657
Foothills Village S.C. 2,593,695 2,621,779
Cascade Apartments 1,853,926 1,875,173
The Market S.C./Hidden Valley
Exchange S.C. 1,589,367 1,601,745
Hidden Valley Exchange S.C. 810,014 813,628
Second Mortgages:
Foothills Village, S.C. 968,245 968,245
The Market S.C./Hidden Valley
Exchange S.C. 410,000 410,000
$ 11,866,304 $ 11,952,227
Interest expense totaled $559,163 and $648,688 for the six months
ending June 30, 1997 and 1996, respectively.
SECURED INVESTMENT RESOURCES FUND, L.P.
NOTES TO FINANCIAL STATEMENTS--CONT'D.
NOTE B--MORTGAGE DEBT--CONT'D.
The mortgage for Cascade Apartments matured March 1, 1995. The present
mortgage holder has agreed to temporarily extend the mortgage on a
month-to-month basis and the Partnership continues to make principal
and interest payments of $18,900 to said mortgage holder.
On May 28, 1996, the Partnership signed a note, collateralized by a second
mortgage on The Market and Hidden Valley Exchange, in the amount of $410,000
at 7% interest. The Partnership will make consolidated monthly principal
and interest payments on this and the first mortgage in the amount of
$11,426 per month until June 25, 1998 when the entire amount becomes due and
payable. The proceeds of this note were used to pay delinquent real estate
taxes for The Market and Hidden Valley Exchange as well as accrued interest
and related loan costs.
NOTE C--RELATED PARTY TRANSACTIONS
SPECS, Inc., a Kansas Corporation in which the individual General Partner has
a minority interest, receives property management fees for providing property
management services. SPECS, Inc. also performs various professional services
for the Partnership, primarily tax accounting, audit preparation, SEC 10Q and
10K preparation, and investor services. Property management fees paid by the
Partnership to SPECS, Inc. are as follows:
Six Months Ended
June 30,
1997 1996
Property management fees $ 56,673 $ 49,051
Amounts due (to) from related parties consist of the following:
June 30, June 31,
1997 1996
Secured Investment Resources
Fund, L.P. III $ (81,937) (78,345)
Secured Investment Resources
Fund, L.P. II (5,000) (5,000)
SIR, Inc. 26,996 25,929
$ (59,941) $ (57,416)
SECURED INVESTMENT RESOURCES FUND, L.P.
NOTE D--CASH DISTRIBUTIONS
No distributions have been made since January 1990. Future distributions
will be made only from excess cash flow not needed for working capital
reserves.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Results of Operations
Revenues for the first six months of 1997 increased by $24,000 (2.1%)
compared with the same period last year. Apartment rentals decreased
$12,000 and commercial properties accounted for increases of $36,000.
The apartment market has not allowed the Partnership to increase rental
rates. Several smaller leases have been negotiated at Foothills
Shopping Center which has raised occupancy.
Total operating and administrative expenses increased $900 (0.2%) when
comparing the first six months of 1997 to the first six months of 1996.
The Partnership anticipates that operating results for the year ending
December 31, 1997 will show a continued increase in revenues due to new
leases signed on the commercial properties.
Liquidity and Capital Resources
During the first six months of 1997 $177,000 of cash was provided by
operating activities, $37,300 was used for investing activities and
$89,000 was used in financing activities.
In May 1996, a $410,000 note, collateralized by Hidden Valley and The
Market, was signed. This loan matures June 25, 1998 and the interest
rate is 7%.
The mortgage for Cascade Apartments matured in March, 1995. The existing
mortgage holder has agreed to extend this note on a month-to-month basis
and the Partnership makes monthly principal and interest payments of
$18,900.
The General Partners also anticipate that 1997 cash flow from operations
will continue to improve because of strong occupancy, rental rate
increases, stabilized expenses, and new leases signed on commercial
properties.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.--Cont'd.
The General Partners have the option of offering one or more properties
for sale. Any net proceeds in excess of the outstanding mortgage
balance could be used to generate additional additional working capital.
The General Partners have determined it prudent to discontinue cash
distributions until such time that adequate working capital and capital
improvement reserves are in place.
(The remainder of this page intentionally left blank.)
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
Inapplicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Inapplicable.
Item 5. OTHER INFORMATION
Inapplicable.
Item 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during
the quarter ended June 30, 1997.
SIGNATURES
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.
SECURED INVESTMENT RESOURCES FUND, L.P.
A Kansas Limited Partnership
(Registrant)
By:
James R. Hoyt
as Individual General Partner
Date: August 15, 1997
By: Secured Investment Resources, Inc.
as Corporate General Partner
By:
James R. Hoyt, President
Date: August 15, 1997
SIGNATURES
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.
SECURED INVESTMENT RESOURCES FUND, L.P.
A Kansas Limited Partnership
(Registrant)
By: /s/ James R. Hoyt
James R. Hoyt
as Individual General Partner
Date: August 15, 1997
By: Secured Investment Resources, Inc.
as Corporate General Partner
By: /s/ James R. Hoyt
James R. Hoyt, President
Date: August 15, 1997