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 March 31, 1999
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 0-16798
SECURED INVESTMENT RESOURCES FUND, L.P. II
(Exact name of registrant as specified in its charter)
Delaware 36-3451000
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4200 Blue Ridge Blvd., Ste LH-06, K.C., MO 64133
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number,
including area code) (816) 353-6500
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. II
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (Unaudited):
Balance Sheets -- March 31, 1999 and
December 31, 1998 3-4
Statements of Operations -- Three Months
Ended March 31, 1999 and 1998 5
Statements of Partnership Capital --
Three Months Ended March 31, 1999
and the Year Ended December 31, 1998. 6
Statements of Cash Flows -- Three Months
Ended March 31, 1999 and 1998 7-8
Notes to Financial Statements 9-10
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of
Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
SECURED INVESTMENT RESOURCES FUND, L.P. II
BALANCE SHEETS March 31,
1999 December 31,
(Unaudited) 1998
ASSETS
INVESTMENT PROPERTIES
Land and buildings $ 30,458,599 $30,458,599
Furniture, fixtures and equipment 1,741,724 1,695,055
32,200,323 32,153,654
Less accumulated depreciation
and allowance for losses 12,111,676 11,856,495
20,088,647 20,297,159
RESTRICTED DEPOSITS
Bond cash reserves 1,510,000 1,510,000
Bond principal reduction reserves 599,174 582,668
Restricted Deposits 28,750 28,750
2,137,924 2,121,418
OTHER ASSETS
Cash 651,727 550,176
Rents and other receivables,
less allowance of $111,190
in 1999 and $113,963 in 1998 147,389 37,613
Due from related parties (Note C) 269,046 269,046
Prepaid expenses 205,305 224,996
Debt issuance costs, net of
accumulated amortization of
$425,137 in 1999 and $406,256
in 1998 186,677 178,058
Commercial commissions, deposits
and other 47,872 69,699
1,508,016 1,329,557
TOTAL ASSETS $ 23,734,587 $ 23,748,135
SECURED INVESTMENT RESOURCES FUND, L.P. II
BALANCE SHEETS--CONT'D.
March 31,
1999 December 31,
(Unaudited) 1998
LIABILITIES AND PARTNERSHIP CAPITAL
Mortgage debt (Note B) $ 22,406,291 $ 22,415,582
Deferred interest (Note B) 737,370 737,370
Accrued interest 58,398 58,398
Accounts payable and accrued
expense 455,189 271,425
Unearned revenue 14,404 32,415
Tenant security deposits 103,095 110,315
TOTAL LIABILITIES 23,774,747 23,625,505
PARTNERSHIP CAPITAL
General Partner
Capital contribution 1,000 1,000
Partnership deficit (198,710) (184,615)
(197,710) (183,615)
Limited Partner
Capital contributions 18,901,831 18,901,831
Partnership deficit (19,672,188) (18,595,586)
(770,357) 306,245
TOTAL PARTNERSHIP CAPITAL (40,160) 122,630
$ 23,734,587 $ 23,748,135
See notes to financial statements.
SECURED INVESTMENT RESOURCES FUND, L.P. II
STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended
March 31,
1999 1998
REVENUES
Rents $1,258,537 $1,242,370
Maintenance escalations
and other 28,192 26,716
1,286,729 1,269,086
OPERATING AND
ADMINISTRATIVE EXPENSES
Property operating
expenses 526,119 522,435
General and
administrative
expenses 24,527 29,968
Professional services 71,577 32,289
Management fees 58,271 54,731
Depreciation and amortization 274,064 272,144
954,558 911,567
NET OPERATING INCOME 332,171 357,519
NON-OPERATING EXPENSES
Interest 494,961 478,180
PARTNERSHIP LOSS $ (162,790) $ (120,661)
Allocation of loss:
General Partner (1,628) (1,207)
Limited Partner (161,162) (119,454)
$ (162,790) $ (120,661)
Partnership loss per
limited partnership
unit $ (3.00) $ (2.23)
See notes to financial statements.
SECURED INVESTMENT RESOURCES FUND, L.P. II
STATEMENTS OF PARTNERSHIP CAPITAL (Deficit)(Unaudited)
Three Months Ended March 31, 1999(Unaudited) and
the Year Ended December 31, 1998
General Limited
Partner Partner Total
Balances at December 31, 1997 $ (194,875) $ (489,741) $ (684,616)
Partnership profit 11,290 1,117,742 1,129,032
Distributions - (321,786) (321,786)
Balances a December 31, 1998 (183,585) 306,215 122,630
Partnership loss (1,628) (161,162) (162,790)
Balances at March 31, 1999 $ (185,213) $ (145,053) $ (40,160)
See notes to financial statements.
SECURED INVESTMENT RESOURCES FUND, L.P. II,
STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended
March 31,
1999 1998
OPERATING ACTIVITIES
Partnership income $ (162,790) $ (120,661)
Adjustments to reconcile
partnership loss to net cash
provided by operating
activities:
Depreciation and amortization 273,358 272,145
Amortization of bond discount 37,800 37,800
Provision for losses on rents
and other receivables (2,773) 20,017
Changes in assets and liabilities:
Rents and other receivables (107,003) (8,210)
Prepaid expenses 19,691 (55,833)
Commercial commissions, deposits
and other 21,800 452
Accounts payable
and accrued expenses 183,764 40,156
Accrued interest 0 0
Unearned revenue (18,014) (3,873)
Tenant security deposits (7,221) 3,398
NET CASH PROVIDED BY
OPERATING ACTIVITIES 238,612 185,391
INVESTING ACTIVITIES
Purchases of and improvements
to investment properties (46,669) (56,332)
Purchase of restricted bond
cash reserve (16,506) (15,478)
NET CASH USED IN
INVESTING ACTIVITIES (63,175) (71,810)
SECURED INVESTMENT RESOURCES FUND, L.P. II
STATEMENTS OF CASH FLOWS (Unaudited)--CONT'D.
Three Months Ended
March 31,
1999 1998
FINANCING ACTIVITIES
Principal payments on
long-term debt $ (47,091) $ (47,645)
Debt Issuance Costs (26,795) 0
NET CASH USED IN
FINANCING ACTIVITIES (73,886) (47,645)
INCREASE IN CASH
AND CASH EQUIVALENTS 101,551 65,936
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD 550,176 867,657
CASH AND CASH EQUIVALENTS
END OF PERIOD $ 651,727 $ 933,593
See notes to financial statements.
SECURED INVESTMENT RESOURCES FUND, L.P. II
NOTES TO FINANCIAL STATEMENTS (Unaudited)
March 31, 1999
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 three month period
ended March 31, 1998 are not necessarily indicative of the results that may
be expected for the year ended December 31, 1998. 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, 1998.
NOTE B--MORTGAGE DEBT
Mortgage debt consists of the following:
March 31, December 31,
1999 1998
Collateralized by Investment
Property
First Mortgages:
Oak Terrace Active Retirement
Center and Healthcare Center $ 12,800,000 $ 12,800,000
less bond discount (1,861,642) (1,899,442)
Sunwood Village Apartments 7,922,614 7,940,528
Forest Park Shopping Ctr. 1,004,950 1,025,797
Bayberry Crossing Shopping Ctr. 2,540,369 2,547,699
$ 22,406,291 $ 22,415,582
Interest expense totaled $494,961 and $478,180 during the first quarter of
1999 and 1998, respectively.
On May 17, 1996 the Partnership refinanced the matured first mortgage on
Sunwood Village Apartments. The terms of the new mortgage are $8,100,000
at 8.625% interest with monthly principal and interest payments in the amount
of $63,000 through the loan maturity date of June 1, 2001 (5 years).
SECURED INVESTMENT RESOURCES FUND, L.P. II
NOTES TO FINANCIAL STATEMENTS (Unaudited)--CONT'D.
NOTE B--MORTGAGE DEBT--CONT'D.
The Partnership has the option to currently pay or defer payment of interest
due on the hedged portion ($10,700,000) of the Oak Terrace Active Retirement
Center financing. As of March 31, 1999 and December 31, 1998, $737,370 of
deferred interest has been accrued and is reflected in long-term accrued
interest.
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:
Three Months Ended
March 31,
1999 1998
Property Management Fees $ 58,271 $ 54,731
Amounts due from related parties consist of the following:
March 31, December 31,
1999 1998
Secured Investment Resources
II, Inc. $ 174,723 $ 174,423
Secured Investment Resources
Fund, L.P. 94,623 94,623
$ 269,046 $ 269,046
The amount due from SIR II, Inc. represents excess syndication costs.
NOTE D--CASH DISTRIBUTIONS
No cash distributions have been made since October 1998. Future distributions
will only be made 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 three months of 1999 increased by $17,643 (1.3%)
compared to the same period of the prior year. This increase is attributable
to planned rental rate increases in the residential properties.
Operating and administrative expenses increased by $1,757 as compared to the
same period as the prior year. Management fees have increased in connection
with revenue increases. Professional services increased $39,288 over the same
period in the prior year due primarily to legal expenses incurred in
connection with planned refinancing of the loans on the loan on the Oak
Terrace properties.
Interest expense for the first three months increased $16,781 (3.5%) over the
1998 first three months expense.
The Partnership anticipates that operating results for the first three months
will be representative of the results for the remainder of the year.
Liquidity and Capital Reserves
During the first three months $238,612 of cash was provided by operating
activities, $63,175 was used for investing activities and $73,886 was used
to reduce long term debt and to incur loan fees.
It is the General Partner's intent to evaluate the Partnership's portfolio to
determine if it is prudent to offer one or more properties for sale or
possible restructure of the related financing packages. Any unleveraged
portion of the net sale proceeds or favorable refinancing terms could
generate additional working capital.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Inapplicable.
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 March 31, 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. II
A Delaware Limited Partnership
(Registrant)
By:
James R. Hoyt
as Individual General Partner
Date: January 10, 2002
By: Secured Investment Resources II, Inc.
as Corporate General Partner
By:
James R. Hoyt, President
Date: January 10, 2002
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. II
A Delaware Limited Partnership
(Registrant)
By:
James R. Hoyt
as Individual General Partner
Date: January 10, 2002
By: Secured Investment Resources II, Inc.
as Corporate General Partner
By:
James R. Hoyt, President
Date: January 10, 2002