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 JUNE 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 0-16805 ASSOCIATED PLANNERS REALTY FUND (Exact name of registrant as specified in its charter) CALIFORNIA 95-4036980 (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 X No ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 1. FINANCIAL STATEMENTS In the opinion of the General Partner of Associated Planners Realty Fund (the"Partnership"), all adjustments necessary for a fair presentation of the Partnership's results for the three and six months ended June 30, 1997 and 1996, have been made in the following financial statements which are normal and recurring in nature. However, such financial statements are unaudited and are subject to any year-end adjustments that may be necessary. BALANCE SHEETS JUNE 30, 1997 (UNAUDITED) AND DECEMBER 31, 1996 June 30, December 31, 1997 1996 ASSETS Rental real estate, less accumulated depreciation (Note 2) $5,847,594 $5,909,116 Cash and cash equivalents 186,913 206,413 Other assets 63,033 31,086 TOTAL ASSETS $6,097,540 $6,146,615 LIABILITIES AND PARTNERS' EQUITY LIABILITIES Accounts payable: Trade $13,227 $4,989 Related party (Note 3) 13,502 6,894 Notes payable (Note 4) 1,484,116 1,497,782 Security deposits and prepaid rent 24,554 31,424 TOTAL LIABILITIES 1,535,399 1,541,089 Minority interest 210,917 213,418 PARTNERS' EQUITY (NOTES 6 AND 7) Limited partners: $1,000 stated value per unit - authorized 7,500 units; issued and outstanding 7,499 4,305,937 4,350,158 General partner 45,287 41,950 TOTAL PARTNERS' EQUITY 4,351,224 4,392,108 TOTAL LIABILITIES AND PARTNERS' EQUITY $6,097,540 $6,146,615 [FN] SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF PARTNERS' EQUITY SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED) LIMITED PARTNERS GENERAL TOTAL UNITS AMOUNT PARTNER BALANCE AT DECEMBER 31, 1996 $4,392,108 7,499 $4,350,158 $41,950 Net income 112,429 -- 93,761 18,668 Distributions to limited partners (137,982) -- (137,982) -- Distributions to general partner (15,331) -- -- (15,331) BALANCE AT JUNE 30, 1997 $4,351,224 7,499 $4,305,937 $45,287 SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) LIMITED PARTNERS GENERAL TOTAL UNITS AMOUNT PARTNER BALANCE AT DECEMBER 31, 1995 $4,478,268 7,499 $4,133,882 $344,386 Net income 81,798 -- 67,887 13,911 Reallocation of balances prior to January 1, 1996 (Note 6) -- -- 305,548 (305,548) Distributions to limited partners (114,660) -- (114,660) -- Distributions to general partner (12,740) -- -- (12,740) BALANCE AT JUNE 30, 1996 $4,432,666 7,499 $4,392,657 $40,009 [FN] SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF INCOME THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED) THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS ENDED ENDED ENDED ENDED JUNE 30, JUNE 30, JUNE 30, JUNE 30, 1997 1996 1997 1996 REVENUES: Rental $209,236 $178,132 $398,192 $352,098 Interest 2,221 2,720 4,609 3,702 211,457 180,852 402,801 355,800 COSTS AND EXPENSES: Operating 36,540 43,704 69,626 91,506 Property taxes 9,410 7,965 19,056 15,596 Property management fees 10,502 8,733 19,805 17,310 General and administrative 18,797 15,238 35,601 26,675 Depreciation 41,250 31,842 82,502 63,684 Interest Expense 33,869 39,361 67,892 41,178 150,368 146,843 294,482 255,949 LESS MINORITY INTEREST IN NET (INCOME) LOSS OF JOINT VENTURE (2,752) 460 (4,110) 18,053 NET INCOME $63,841 $34,549 $112,429 $81,798 NET INCOME PER LIMITED PARTNERSHIP UNIT $7.17 $3.76 $12.50 $9.05 [FN] See accompanying notes to financial statements. ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED) SIX MONTHS SIX MONTHS ENDED ENDED JUNE 30, 1997 JUNE 30, 1996 Cash Flow from operating activities: Net income $112,429 $81,798 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 82,502 63,684 Minority interest in net income (loss) 4,110 (18,053) Increase (decrease) from changes in: Other assets (31,947) 28,394 Accounts payable 14,846 119,990 Security deposits and prepaid rents (6,870) (715) Net cash provided by operating activities 175,070 275,098 Cash flows used in investing activities: Tenant improvement additions (20,980) --- Net cash (used in) investing activities (20,980) --- Cash flows used in financing activities: Repayment of notes payable (13,666) --- Distributions to minority interest (6,611) --- Distributions to general partners (15,331) (12,740) Distributions to limited partners (137,982) (114,660) Net cash (used in) financing activities (173,590) (127,400) Net (decrease) increase in cash and cash equivalents (19,500) 147,698 Cash and cash equivalents at beginning of 206,413 103,300 period CASH AND CASH EQUIVALENTS AT END OF PERIOD $186,913 $250,998 [FN] See accompanying notes to financial statements ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) SUMMARY OF ACCOUNTING POLICIES BUSINESS Associated Planners Realty Fund (the "Partnership"), a California limited partnership, was formed on November 19, 1985 under the Revised Limited Partnership Act of the State of California. 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 purchased such properties on an all cash basis, or operated them on a moderately leveraged basis, and intended to own and operate such properties for investment over an anticipated holding period of approximately five to ten years. BASIS OF PRESENTATION The consolidated 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. The consolidated financial statements include the accounts of Associated Planners Realty Fund and all joint ventures in which it has a majority interest. RENTAL REAL ESTATE AND DEPRECIATION Assets are stated at cost. Depreciation is computed using the straight-line method over estimated useful lives ranging from five to 35 years. 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 value is required. RENTAL INCOME Rental revenue is recognized on a straight-line basis to the extent that rental revenue is deemed collectible. ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) SUMMARY OF ACCOUNTING POLICIES STATEMENTS OF CASH FLOWS For the purpose 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. NEW ACCOUNTING PRONOUNCEMENTS Statement of Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" (SFAS No. 125) issued by the Financial Accounting Standards Board (FASB) is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after December 31, 1996, and is to be applied prospectively. Earlier or retroactive application is not permitted. The new standard provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities. The Partnership does not expect adoption to have a material effect on its financial position or results of operations. ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 1996 NOTE 1- NATURE OF PARTNERSHIP The Partnership began accepting subscriptions in March 1986 and completed its funding in December 1987. Under the terms of the partnership agreement, the General Partner, West Coast Realty Advisors, is entitled to cash distributions ranging from 10% to 15%. The General Partner is also entitled to net income or loss allocations varying from 1% to 15% and 1% depreciation and amortization allocations in accordance with the partnership agreement. NOTE 2- RENTAL REAL ESTATE The Partnership currently has interests in the following four rental real estate properties. Two are wholly-owned and two are jointly owned by the Partnership (81.2%) and an affiliate (18.8%): Location (Property Name) Date Purchased Cost Encinitas, California (179 Calle Magdalena) December 31, 1986 $ 705,918 Encinitas, California (187 Calle Magdalena) December 31, 1986 853,560 Clovis, California January 23, 1987 2,854,221 Simi Valley, California November 12, 1987 2,616,523 The major categories of property are: June 30, 1997 December 31, 1996 Land $2,361,894 $2,361,894 Building and Improvements 4,621,668 4,600,688 Furniture and Fixtures 46,660 46,660 7,030,222 7,009,242 Less accumulated depreciation 1,182,628 1,100,126 Net rental real estate $5,847,594 $5,909,116 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 1996 (Continued) NOTE 2- RENTAL REAL ESTATE (CONTINUED) A significant portion of the Partnership's rental revenue was earned from a tenant whose individual rent represented more than 10% of total rental revenue. Specifically: Two tenants accounted for 29% and 20% in 1997; Two tenants accounted for 34% and 18% in 1996; 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 $7,666 for the quarter ended June 30, 1997 and $6,791 for the quarter ended June 30, 1996, and $15,331 for the six months ended June 30, 1997 and $12,740 for the six months ended June 30, 1996. (b) For administrative services provided to the Partnership, the General Partner is entitled to reimbursement for the cost of certain personnel and relevant expenses. These amounts totaled $3,000 for the three months ended June 30, 1997 and June 30, 1996, and $6,000 for the six months ended June 30, 1997 and 1996. (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 $10,502 for the quarter ended June 30, 1997, and $8,733 for the quarter ended June 30, 1996, and $19,805 for the six months ended June 30, 1997 and $17,310 for the six months ended June 30, 1996. ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 1996 (Continued) NOTE 4- NOTES PAYABLE In January 1995, the Partnership closed escrow on a parcel of land adjacent to the Shaw Villa Shopping Center. The purchase price of the land was $206,749, including a $13,102 acquisition fee paid to the Advisor. The purchase was financed using $23,602 in cash, and the remainder by a one year construction loan from Valliwide Bank of Fresno. The total construction loan commitment was for $1,365,000 that matured on October 5, 1996. Borrowings on the construction loan totaled $1,225,950 as of December 31, 1995. The construction was completed during 1995 and total construction costs of $1,372,900 was allocated to land, building and improvements. Included in construction costs is $87,838 in construction loan interest that was capitalized. In October 1996, the Partnership obtained permanent financing from a major insurance company to replace the construction loan with a twenty year loan. The terms of the loan are as follows: Principal - $1,500,000; Interest Rate of 9.1% fixed for five years, then may be adjusted to the weekly average of the five - year Treasury Note yield for the seventh week prior to the Adjustment Date (5th anniversary date) plus 250 basis points, but in no event less than the existing rate, nor to exceed the maximum rate allowed by law; Amortized over twenty years; due November 1, 2006; and current monthly payments of principal and interest of $14,919. The note payable balance is $1,484,116 at June 30, 1997. The carrying amount is a reasonable estimate of fair value of the construction loan payable because the interest rates approximate the borrowing rates currently available for mortgage loans with similar terms and average maturities. The aggregate annual future maturities at June 30, 1997 are as follows: 1997 ..................................$12,064 1998 .................................. 30,619 1999 .................................. 33,524 2000 .................................. 36,706 2001 .................................. 40,189 Thereafter ..........................1,331,014 Total $1,484,116 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 1996 (Continued) NOTE 5- NET INCOME AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP LIST The Net Income per Limited Partnership Unit was computed in accordance with the partnership agreement using the weighted average number of outstanding limited partnership units of 7,499 for 1997 and 1996. The Limited Partner cash distributions, computed in accordance with the Partnership Agreement, were as follows: Outstanding Amount Total Record Date Units Per Unit Distribution March 31, 1997 7,499 9.20 68,991 December 31, 1996 7,499 9.20 68,991 Total $137,982 March 31, 1996 7,499 8.15 61,117 December 31, 1995 7,499 7.14 53,543 Total $114,660 Distributions were paid in the fiscal quarter following the record date. 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 should have been treated as a general partner withdrawal of capital. In order to properly reflect this inception to date correction, a transfer of $305,548 was made from the General Partner's capital account to the Limited Partners capital account during the quarter ended March 31, 1996. ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 1996 NOTE 7 - SUBSEQUENT EVENTS The Partnership distributed $76,499 ($10.20 per unit) on August 5, 1997 to Limited Partners of record as of June 30, 1997. ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION Associated Planners Realty Fund (the "Partnership") was organized in November 1985, under the California Revised Limited Partnership Act. The Partnership began offering units for sale on March 28, 1986. As of December 27, 1987, the Partnership had raised $7,499,000 in gross capital contributions. The Partnership netted approximately $6,720,000 after sales commissions and syndication costs. 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 intended 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. 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. ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) The Partnership is operated by 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 West Coast Realty Advisors, Inc., the General Partner. LIQUIDITY AND CAPITAL RESOURCES During the six months ended June 30, 1997 the Partnership made distributions to the general and limited partners totaling $153,313, of which $40,884 constituted a return of capital. The $153,313 in distributions compared favorably to the $194,931 in cash generated from property operations (net income plus depreciation expense). On February 3, 1997 and May 9, 1997 the Partnership made distributions of $9.20 to units holders of record as of December 31, 1996 and March 31, 1997, 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 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 with the use of no debt financing or moderate 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 June 30, 1997. 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 November 1987 purchase of the Simi Valley property, the Partnership had effectively 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 six months ended June 30, 1997 the Partnership paid the General Partner a partnership management fee of $15,331 and distributed $137,982 to the limited partners of which $40,884 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, 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 FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) CASH FLOWS - SIX MONTHS ENDED JUNE 30, 1997 VS. SIX MONTHS ENDED JUNE 30, 1996 Cash resources decreased $19,500 during the six months ended June 30, 1997 compared to a $147,698 increase in cash resources for the six months ended June 30, 1996. During the six months ended June 30, 1997, $175,070 in cash was provided by operating activities. This resulted primarily from net cash basis income of $194,931 from operations (net income plus depreciation expense) plus a $14,846 increase in accounts payable, offset by a $31,947 increase in other assets (primarily due to an increase in a property tax impound account) and a $6,870 decrease in security deposits and prepaid rents (due to a decrease in tenants prepaying subsequent months rent). In contrast, during the six months ended June 30, 1996, $275,098 in cash was provided by operating activities. This resulted primarily from net cash basis income of $145,482 plus a $119,990 increase in accounts payable (primarily attributable to a $165,440 liability to reimburse a tenant in improvement costs incurred in connection with construction move-in costs). The sole use of cash in investing activities for the six months ended June 30, 1997 was $20,980 expended for tenant improvements to an existing tenant at the Shaw Villa Shopping Center. In contrast, the six months ended June 30, 1996 did not have any investing activities. For the six months ended June 30, 1997, financing activities used $173,590 via distributions to limited, general and minority interest partners totaling $159,924 and repayments on notes payable of $13,666. In contrast, the six months ended June 30, 1996, financing activities used an additional $127,400 via distributions to these same parties. NEW ACCOUNTING PRONOUNCEMENTS Statement of Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" (SFAS No. 125) issued by the Financial Accounting Standards Board (FASB) is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after December 31, 1996, and is to be applied prospectively. Earlier or retroactive application is not permitted. The new standard provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities. The Company does not expect adoption to have a material effect on its financial position or results of operations. ASSOCIATED PLANNERS REALTY 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 six months ended June 30, 1997, reflect an entire period of operations for the Partnership's properties. Rental revenue for the three and six months ended June 30, 1997 increased from that for the three and six months ended June 30, 1996 by $31,104 and $46,094, respectively, due to increased occupancy at the Shaw Villa Shopping Center, which pertains to the completion of the construction-in-progress in 1995 and subsequent leasing of the additional 8,000 square feet of rentable space, and additionally improved occupancy at the multi-tenant Santa Fe Business Park Building. Interest income increased $907 (24%) during the six months ended June 30, 1997 when compared to the six months ended June 30, 1996. This increase is due to larger amounts of cash held in interest bearing accounts during the six months ended June 30, 1997 as opposed to June 30, 1996. The Partnership generated $194,931 in income from operations before depreciation of $82,502 for the six months ended June 30, 1997 compared to $145,482 in income from operations before depreciation of $63,684 for the six months ended June 30, 1996 Depreciation expense increased $18,818 for the six months ended June 30, 1997 as compared to June 30, 1996 due to the completion of construction-in- progress of the Clovis property. The completion was completed during 1995 and total construction costs of $1,372,000 was allocated to land, building and improvements. Interest expense increased $26,714 for the six months ended June 30, 1997 compared to the six months ended June 30, 1996 due primarily to interest expense incurred after the construction was completed at the Shaw Villa Shopping Center and the permanent financing which was obtained in November 1996. ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Operating expenses decreased $21,880 as a result of lower repairs and maintenance costs for the six months ended June 30, 1997 compared to the six months ended June 30, 1996. General and administrative expenses increased $8,926 due primarily to an increase in legal and accounting expenses and an adjustment to the 1995 minority interest account balance which was adjusted in January 1996. During the six months ended June 30, 1997, the Partnership distributed $137,982 to the limited partners and $15,331 to the general partner, as opposed to the six months ended June 30, 1996 when the Partnership distributed $114,660 to the limited partners and $12,740 to the general partners. Cash basis income for the six months ended June 30, 1997 was $194,931. This was derived by adding depreciation and amortization to net income. Thus cash distributions during the six months ended June 30, 1997 were ($41,618) less than cash basis income. In contrast, distributions during the six months ended June 30, 1996 were ($18,082) less than cash basis income. Net income per limited partner unit increased from $9.05 for the six months ended June 30, 1996 to $12.50 for the six months ended June 30, 1997, primarily due to the increase in rental income as a result of the expansion of the Shaw Villa Shopping Center. ASSOCIATED PLANNERS REALTY 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 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 FUND A California Limited Partnership (Registrant) August 12, 1997 By: WEST COAST REALTY ADVISORS, INC. A California Corporation, General Partner Neal E. Nakagiri Vice President/Secretary August 12, 1997 Michael G. Clark Vice President/Treasurer