FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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, 1996
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
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-4120092
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5933 W. CENTURY BLVD., SUITE 900
LOS ANGELES, CALIFORNIA 90045
(Address of principal executive offices)
(Zip Code)
(310) 670-0800
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
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 u No
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 1. FINANCIAL STATEMENTS
In the opinion of the General Partner of Associated Planners Realty Income
Fund (the "Partnership"), all adjustments necessary for a fair presentation of
the Partnership's results for the three and nine months ended September 30, 1996
and 1995, have been made in the following financial statements which are of
normal recurring entries in nature. However, such financial statements are
unaudited and are subject to any year-end adjustments that may be necessary.
BALANCE SHEETS
SEPTEMBER 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995
SEPTEMBER 30, DECEMBER 31, 1995
1996
ASSETS
RENTAL REAL ESTATE, net of
accumulated depreciation (Note 2) $3,999,183 $4,072,847
CASH & CASH EQUIVALENTS 245,154 261,728
OTHER ASSETS 50,898 46,443
$4,295,235 $4,381,018
LIABILITIES AND PARTNERS' EQUITY
ACCRUED LIABILITIES $14,830 $23,496
PROPERTY SECURITY DEPOSITS 26,545 26,290
TOTAL LIABILITIES 41,375 49,786
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY:
Limited Partner:
$1,000 stated value per unit;
authorized 12,000 units;
issued and outstanding - 5,096 4,218,291 4,124,520
General Partner: 35,569 206,712
TOTAL PARTNERS EQUITY 4,253,860 4,331,232
$4,295,235 $4,381,018
[FN]
See accompanying notes to financial statements.
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
LIMITED PARTNERS GENERAL
TOTAL UNITS AMOUNT PARTNER
BALANCE, DECEMBER 31, 1995 $4,331,232 5,096 $4,124,520 $206,712
Net income 123,581 --- 104,593 18,988
Reallocation of balances prior
to January 1, 1996 (Note 6) --- --- 170,030 (170,030)
Distributions to general
partners (20,101) --- --- (20,101)
Distributions to limited
partners (180,852) --- (180,852) ---
BALANCE, SEPTEMBER 30, 1996 $4,253,860 5,096 $4,218,291 $35,569
NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
LIMITED PARTNERS GENERAL
TOTAL UNITS AMOUNT PARTNER
BALANCE, DECEMBER 31, 1994 $4,380,915 5,096 $4,196,996 $183,919
Net income 97,606 --- 81,225 16,381
Distributions to limited
partners (126,289) --- (126,289) ---
BALANCE, SEPTEMBER 30, 1995 $4,352,232 5,096 $4,151,932 $200,300
[FN]
See accompanying notes to financial statements.
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER 30,
30, 1996 30, 1995 30, 1996 1995
REVENUES:
Rental $100,928 $103,082 $302,887 $287,043
Interest 2,350 3,330 13,162 8,857
103,278 106,412 316,049 295,900
COSTS AND EXPENSES:
Operating 7,946 8,660 39,802 41,999
Property taxes 17,925 5,003 34,882 14,296
Property management fees 4,963 5,167 14,476 12,595
General and administrative 9,777 21,368 29,643 58,936
Unrealized (gain) loss from
investment in government
securities --- (840) --- (3,089)
Depreciation and amortization 24,555 24,519 73,665 73,557
65,166 63,877 192,468 198,294
NET INCOME $38,112 $42,535 $123,581 $97,606
NET INCOME PER
LIMITED PARTNERSHIP UNIT $6.30 $7.08 $20.52 $15.94
[FN]
See accompanying notes to financial statements.
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
Cash flows from operating activities:
Net Income $123,581 $97,606
Adjustment to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 73,665 73,557
Proceeds from (purchases) of Investments
in government securities --- (6,192)
Unrealized (gain) from investment in
government securities --- (3,089)
Increase (decrease) from changes in:
Other assets (4,455) (28,347)
Accounts payable (8,667) (1,991)
Security deposits 255 (4,408)
Net cash provided by operating activities 184,379 127,136
Cash flows from investing activities:
Additions to rental real estate --- (10,000)
Cash (used in) investing activities --- (10,000)
Cash flows from financing activities:
Distributions to general partners (20,101) ---
Distributions to limited partners (180,852) (126,289)
Cash (used in) financing activities (200,953) (126,289)
Net (decrease) in cash and cash equivalents (16,574) (9,153)
Cash and cash equivalents at beginning of
period 261,728 85,804
CASH AND CASH EQUIVALENTS AT END OF PERIOD $245,154 $76,651
[FN]
See accompanying notes to financial statements.
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 property throughout the United States with
emphasis on properties located in California and southwestern states. The
Partnership purchases such properties on an all cash basis and intends to own
and operate 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 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
reporting 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 vale is required.
LEASE COMMISSIONS
Lease commissions which are paid to real estate brokers for locating tenants are
capitalized and amortized over the life of the lease.
RENTAL REVENUE
Rental revenue is recognized when the amount is due and payable under the terms
of a lease agreement.
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
(CONTINUED)
INVESTMENTS
During 1994, the Partnership changed its method of accounting for Investments.
Investments which represent trading securities, are accounted for in accordance
with SFAS No. 115. The difference between historical cost and market value are
reported as unrealized gains or losses in the statement of income. The effect
of this change in accounting policy is not material to the financial statements.
STATEMENTS OF CASH FLOWS
For 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.
RECLASSIFICATIONS
For comparative purposes, certain prior year amounts have been reclassified to
conform to the current year presentation.
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1995
NOTE 1 - NATURE OF PARTNERSHIP BUSINESS
Associated Planners Realty Income Fund, a California limited partnership (the
"Fund"), was formed on December 23, 1986 under the Revised Limited Partnership
Act of the State of California for the purpose of acquiring, managing, and
operating income-producing real estate.
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. Further, the General
Partners receive acquisition fees for locating and negotiating the purchase of
rental real estate, management fees for operating the Partnership and a
commission on the sale of the partnership properties.
NOTE 2 - RENTAL REAL ESTATE
The Partnership owns two rental real estate properties. The first property is
wholly-owned and the second property is a 90% undivided interest:
Original
Location (Property Name) Date Purchased Acquisition
Cost
Chino, California
(Yorba Center) October 25, 1988 $ 1,851,147
San Marcos, California January 9, 1990 2,806,905
The major categories of rental
real estate:
September 30, 1996 December 31, 1995
Land $1,282,861 $1,282,861
Building and Improvements 3,416,326 3,416,326
4,699,187 4,699,187
Less accumulated depreciation 700,004 626,340
Net rental real estate 3,999,183 4,072,847
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1995
(CONTINUED)
NOTE 2 - RENTAL REAL ESTATE (CONTINUED)
A significant portion of the Partnership's rental revenue was earned from
tenants whose individual rents represented more than 10% of total rental
revenue:
Two tenants accounted for 54% and 10%, respectively, in 1996
Two tenants accounted for 12% and 53%, respectively, in 1995
NOTE 3 - RELATED PARTY TRANSACTIONS
(a) For Partnership management services rendered to the Partnership, the
General Partner is entitled to receive 10% of all distributions of Cash from
Operations. These amounts totaled $5,662 for the quarter ended September 30,
1996 and $5,662 for the quarter ended September 30, 1995, and $20,101 for the
nine months ended September 30, 1996 and $14,014 for the nine months ended
September 30, 1995. The amounts paid to the general partner in 1995 were
treated as an expense of the Partnership, while the amounts paid in 1996 were
treated as distributions of capital to the general partner (see Note 6).
(b) For administrative services provided to the Partnership, the General
Partner, in accordance with the partnership agreement, is entitled to
reimbursement for the cost of certain personnel and relevant expenses. These
amounts totaled $9,000 for the nine months ended September 30, 1996 and
September 30, 1995 and $3,000 for the quarters ending September 30, 1996 and
1995.
(c) Property management fees incurred in accordance with the Partnership
Agreement to West Coast Realty Management, Inc., an affiliate of the corporate
General Partner, totaled $4,963 for the quarter ended September 30, 1996, and
$5,167 for the quarter ended September 30, 1995, and $14,476 for the nine months
ended September 30, 1996 and $12,595 for the nine months ended September 30,
1995
(d) During 1990, the Partnership acquired a 90% undivided interest in
property located in San Marcos, California (Note 2). The remaining 10% interest
is owned by Associated Planners Realty Growth Fund, an affiliate (Note 7).
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1995
(CONTINUED)
NOTE 4 - NET INCOME AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT
The Net Income per Limited Partnership Unit was computed in accordance with the
partnership agreement on the basis of the weighted average number of outstanding
Limited Partnership Units of 5,096 for 1996 and 1995.
The Limited Partner cash distributions, computed in accordance with the
Partnership Agreement, were as follows:
Record Date Outstanding Amount Total
Units Per Unit Distribution
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 $180,852
June 30, 1995 5,096 $10.00 50,960
March 31, 1995 5,096 8.50 43,479
December 31, 1994 5,096 6.25 31,850
Total $126,289
Distributions were paid in the fiscal quarter following the record date.
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1995
(CONTINUED)
NOTE 5 - NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 121. "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of"
(SFAS No. 121) issued by the Financial Accounting Standards Board (FASB) is
effective for financial statements for fiscal years beginning after December 15,
1995. The new standard establishes new guidelines regarding when impairment
losses on long-lived assets, which include plant and equipment, and certain
identifiable intangible assets, should be recognized and how impairment losses
should be measured. The Partnership elected adoption of SFAS No. 121 on January
1, 1996. This adoption had no effect on the statement of income for the nine
months ended September 30, 1996 as there were no impairment amounts recorded
during the period.
NOTE 6 - 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"
caused by the Agreement itself. The ambiguity involved the treatment of the
partnership management fee, being paid to the General Partner, as an expense of
the Partnership, when in fact, it was recently determined, that these fees
should have been treated as a general partner withdrawal of capital. In order
to properly reflect this inception to date correction, 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 7 - SUBSEQUENT EVENTS
The Partnership distributed $50,960 ($10.00 per unit) on November 5, 1996 to
Limited Partners as of September 30, 1996.
On November 1, 1996, Associated Planners Realty Income Fund ("Income Fund")
purchased the remaining real estate asset from Associated Planners Realty Growth
Fund ("Growth Fund"). This asset consisted of the 10% interest that Income Fund
had not already owned in an office building located in San Marcos, California.
This purchase was done to increase the level of cash distributions to the
limited partners in 1997, and ultimately, increase the value of their investment
in the Partnership.
Income Fund paid $185,968 on November 2, 1996 for the 10% interest in the San
Marcos property. This amount consisted of $188,000 for the property itself,
less $2,032 for the share of a cash security deposit from the current tenant
that Growth Fund retained. There is no debt in connection with the property.
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Partnership began offering for sale limited partnership units on October 20,
1987. On February 26, 1988, the Partnership reached its minimum offer level of
$1,200,000. The Partnership sold units throughout the remainder of the year,
and had raised $3,891,000 in gross proceeds or $3,483,788 net of syndication
costs and sales commissions as of December 31, 1988. During 1989, the
Partnership continued to raise funds through the sale of Units and had raised
$5,106,000 in gross proceeds or $4,594,101 net of syndication costs and sales
commissions as of September 5, 1989, the day the Partnership terminated its
offering of limited partnership units.
The Partnership was organized for the purpose of investing in, holding, and
managing improved, leveraged income-producing property, such as residential
property, office buildings, commercial buildings, industrial properties, and
shopping centers. The Partnership intends to own and operate such properties
for investment over an anticipated holding period of approximately five to ten
years.
The Partnership's principal investment objectives are to invest in rental real
estate 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 during the early years
of property operations, 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.
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
The ownership and operation of any income-producing real estate is subject to
those risks inherent in all real estate investments, including national and
local economic conditions, the supply and demand for similar types of
properties, competitive marketing conditions, zoning changes, possible casualty
losses, increases in real estate taxes, assessments, and operating expenses, as
well as others.
The Partnership is operated by West Coast Realty Advisors, Inc. ("WCRA") (the
corporate General Partner) and Mr. W. Thomas Maudlin Jr. (an individual General
Partner), collectively 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 WCRA, the corporate
General Partner.
LIQUIDITY AND CAPITAL RESOURCES
On February 6, May 6, and August 6, 1996, the Partnership made distributions to
the limited partners totaling $63,700, $66,248 and $50,904 ($12.50, $13.00 and
$10.00 per unit), of which approximately $14,700, $17,248 and $14,491
constituted a return of capital to the unit holders of record at December 31,
1995, March 31, 1996 and June 30, 1996 respectively. Distributions are
determined by management based on cash flow and the liquidity position of the
Partnership and anticipated occupancy of the properties. It is the intention of
management to make quarterly distributions of cash, subject to maintenance of
reasonable reserves.
Management uses cash as its primary measure of a partnership's liquidity. The
amount of cash that represents 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. Distribution to partners
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Partnership has adequate liquidity based upon the above four points. The
first point 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. This is a minimum guideline that is
disclosed in the Partnership's prospectus; the Partnership had more than enough
funds to meet this requirement as of September 30, 1996. Related to the
property reserve requirement is the second point - the condition of the
Partnership's properties. Since the properties are in good condition, no
unusual maintenance and repair expenditures are anticipated. The third point is
relevant to the Partnership because after the January 1990 purchase of the San
Marcos property, the Partnership had completed its acquisition phase, and
entered the operating phase. The fourth point relates to partner distributions.
The Partnership makes distributions from operations quarterly. Such
distributions are subject to payment of Partnership expenses and reasonable
reserves for expenses, maintenance, and replacements.
During the nine months ended September 30, 1996 the Partnership paid the General
Partner a partnership management fee of $14,476 and distributed $180,852 to the
limited partners of which $57,271 constituted a return of capital. The
partnership management fee distribution to the general partner was calculated
and paid in accordance with the Partnership Agreement.
The Tax Reform Acts of 1986 and 1987 and the Revenue Reconciliation Acts of 1990
and 1993 did not have a material impact on the Partnership's operations.
The effects of the slowdown in the economy's growth, 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
properties' tenants that would help alleviate much of the negative impact of
inflation.
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS
Statements of Financial Accounting Standards No.121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of"
(SFAS No. 121) issued by the Financial Accounting Standards Board (FASB) is
effective for financial statements for fiscal years beginning after December 15,
1995. The new standard establishes new guidelines regarding when impairment
losses on long-lived assets, which include plant and equipment, and certain
identifiable intangible assets, should be recognized and how impairment losses
should be measured. The Partnership elected adoption of SFAS No.121 on January
1, 1996. This adoption had no effect on the statement of income for the nine
months ended September 30, 1996 as there were no impairment amounts recorded
during the period.
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
RESULTS OF OPERATIONS
Operations for the nine months ended September 30, 1996 and 1995 reflect full
quarters of rental activities for the Partnership's properties. However, the
San Marcos property was not leased from January 8 to February 12, 1995. This
was due to vacancy at the property between the time that the Professional Care
Products (previous tenant) lease terminated and the No Fear (current tenant)
lease began. In addition to the vacancy at the property, the lease rate that No
Fear entered into was approximately 30% less than the rate that Professional
Care Products was paying during its tenancy. The occupancy rate at the Yorba
Center Shopping Center was at 100% as of September 30, 1996 (as compared to 90%
at September 30, 1995). The increased occupancy at the Yorba Center Shopping
Center, offset by the drop in rental rates at the San Marcos property, was
responsible for a 5.5% ($15,844) increase in rental revenue for the nine months
ended September 30, 1996 as compared to the nine months ended September 30,
1995.
Operating expenses decreased 5.2% ($2,197) as the result of less repairs and
maintenance costs at the Yorba Center Shopping Center property. The Partnership
also experienced a 49.7% decrease in general and administrative costs ($29,293)
due to lower insurance costs and lower legal & accounting expenses. Interest
income increased $4,305 due to larger cash reserve balances maintained during
the first nine months of 1996 as compared to the first nine months of 1995.
Overall, the Partnership generated $197,246 in income from operations before
depreciation expense of $73,665 for the nine months ended September 30, 1996.
This compares favorably to 1995 when income from operations totaled $174,252
before depreciation of $73,557 and gain on government securities of $3,089. Net
income per limited partnership unit rose from $15.94 in 1995 to $20.52 in 1996.
The number of limited partnership units outstanding in each period was 5,096.
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
RESULTS OF OPERATIONS (CONT.)
In 1994, the Partnership purposely started reducing the amount of distributions
to investors in anticipation of lower rental revenues from the San Marcos
property. Up until January 1995, it was not clear to the General Partner as to
what rent, if any, could be realized on an ongoing basis from the San Marcos
Property. Distributions to limited partners fell from a high of $47.50 per unit
in 1993, to $43.75 in 1994, to $37.16 in 1995. With the placement of a tenant
in the San Marcos Building (No Fear, Inc.) and the build-up of a track record of
rent collections from the tenant, the general partner now feels it would be
prudent to make cash distributions to limited partners so that a large portion
of the large cash balance is gradually paid out (contingent upon maintenance of
reasonable reserve levels). Therefore, distributions are expected to total
between $40.00 and $45.00 per unit for 1996.
In addition, the Partnership was planning to purchase the 10% portion of the San
Marcos Building that it does not already own. This purchase was contemplated in
order to increase the level of cash distributions to the limited partners in
1997, and ultimately, increase the value of their investment in the Partnership.
This purchase did take place in November 1996, and $185,968 in cash was used to
purchase the 10% interest. In order to facilitate the purchase , the general
partner anticipates that cash distributions will remain at a lower level of
$10.00 per unit through February 1997.
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
RESULTS OF OPERATIONS (CONT.)
During the nine months ended September 30, 1996, $184,379 in cash was provided
by operating activities. This resulted primarily from a net cash basis income
of $197,246 from operations (net income plus depreciation expense). These
amounts were offset by a $4,455 increase in other assets (primarily due to a
increase in rent receivable), and a $8,667 decrease in accounts payable
(primarily due to a decrease in the amount of trade payables). In contrast,
during the nine months ended September 30, 1995, $127,136 in cash was provided
by operating activities. This resulted from a cash basis income of $171,163
(net income with depreciation expense added back). These operating cash flow
additions were offset by a $28,347 increase in other assets (due to prepaid
leasing costs paid in connection with the new tenant, No Fear, Inc.) a $1,991
decrease in accounts payable (attributable to a normal decrease in trade
accounts payable), a $6,192 increase in an investment in government securities
(due to re-invested interest from government securities holdings), a $3,089
unrealized gain in government securities and $4,408 decrease in security
deposits (due to a lower security deposit received from the new tenant, No Fear,
Inc. compared to the previous tenant, Professional Care Product). There were no
investing activities for the nine months ended September 30, 1996. In
contrast, $10,000 in investing activities was used for tenant improvements on
the San Marcos property during the nine months ended September 30, 1995. Cash
used in financing activities totaled $200,953 due to $180,852 distributed to the
limited partners and $20,101 distributed to the general partner for partnership
management fees during the nine months ended September 30, 1996. In contrast,
$126,289 in financing activities was used for distributions to limited partners
during the nine months ended September 30, 1995.
The area in which Yorba Center operates continues to experience a relatively
high level of economic vitality, and the General Partner does not foresee
significant challenges in keeping the center occupied by various small retailers
and service businesses.
The Partnership anticipates continuing to operate properties during 1996 for the
purpose of generating the maximum amount of cash available for distribution to
the limited partners, while maintaining a reasonable level of cash reserves.
There are currently no plans to dispose of either of the two properties.
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
PART II
O T H E R I N F O R M A T I O N
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES 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. EXHIBIT AND REPORTS ON FORM 8-K
(a) Information required under this section has been included in
the financial statements.
(b) Reports on Form 8-K
None
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
S I G N A T U R E S
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.
ASSOCIATED PLANNERS REALTY INCOME FUND
A California Limited Partnership
(Registrant)
November 13, 1996 By: WEST COAST REALTY ADVISORS, INC.
A California Corporation,
A General Partner
Neal E. Nakagiri
Vice President / Secretary
November 13, 1996
Michael G. Clark
Vice President/Treasurer