SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
/ / 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 0-19123
FOGELMAN MORTGAGE L.P. I
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Tennessee 62-1317805
- --------------------------------------------------------------------------------
(State or other jurisdiction
of incorporation or organization) (I.R.S. Employer Identification No.)
One Seaport Plaza, New York, New York 10292-0116
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-1016
N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check CK 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 _CK_ No __
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
March 31, December 31,
1997 1996
- ---------------------------------------------------------------------------------------------------
ASSETS
Investments in mortgage loans $26,090,818 $26,123,955
Cash and cash equivalents 1,446,185 1,708,313
Deferred General Partner's fees (net of accumulated
amortization of $2,000,813 and $1,949,939 at
March 31, 1997 and December 31, 1996, respectively) 438,187 489,061
----------- ------------
Total assets $27,975,190 $28,321,329
----------- ------------
----------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Deposits held for tax obligations of underlying properties $ 243,323 $ 88,550
Due to affiliates 81,704 71,794
Accrued expenses 46,389 45,362
----------- ------------
Total liabilities 371,416 205,706
----------- ------------
Partners' capital
Unitholders (54,200 units issued and outstanding) 27,821,980 28,328,711
General Partner (218,206) (213,088 )
----------- ------------
Total partners' capital 27,603,774 28,115,623
----------- ------------
Total liabilities and partners' capital $27,975,190 $28,321,329
----------- ------------
----------- ------------
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
2
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
---------------------
1997 1996
- --------------------------------------------------------------------------------------------------
REVENUES
Equity income from the underlying properties $466,777 $764,790
Interest income 15,444 22,546
-------- --------
482,221 787,336
-------- --------
EXPENSES
General and administrative 29,912 35,159
Amortization of deferred General Partner's fees 50,874 50,874
-------- --------
80,786 86,033
-------- --------
Net income $401,435 $701,303
-------- --------
-------- --------
ALLOCATION OF NET INCOME
Unitholders $340,415 $637,285
-------- --------
-------- --------
General Partner:
Special distribution $ 57,581 $ 57,581
Other 3,439 6,437
-------- --------
$ 61,020 $ 64,018
-------- --------
-------- --------
Net income per depositary unit $ 6.28 $ 11.76
-------- --------
-------- --------
- --------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
GENERAL
UNITHOLDERS PARTNER TOTAL
- ----------------------------------------------------------------------------------------------------
Partners' capital (deficit)--December 31, 1996 $28,328,711 $(213,088) $28,115,623
Net income 340,415 61,020 401,435
Distributions (847,146) (66,138) (913,284)
----------- --------- -----------
Partners' capital (deficit)--March 31, 1997 $27,821,980 $(218,206) $27,603,774
----------- --------- -----------
----------- --------- -----------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
3
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
-------------------------
1997 1996
- ---------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received from mortgage loans $ 499,914 $1,076,409
Interest received from cash equivalents 15,444 22,546
Cash received for tax obligations of underlying properties 154,773 155,334
General and administrative expenses paid (18,975) (42,273)
---------- ----------
Net cash provided by operating activities 651,156 1,212,016
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (913,284) (878,753)
---------- ----------
Net increase (decrease) in cash and cash equivalents (262,128) 333,263
Cash and cash equivalents at beginning of period 1,708,313 1,963,643
---------- ----------
Cash and cash equivalents at end of period $1,446,185 $2,296,906
---------- ----------
---------- ----------
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net income $ 401,435 $ 701,303
---------- ----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred General Partner's fees 50,874 50,874
Equity income from the underlying properties (466,777) (764,790)
Interest received from mortgage loans 499,914 1,076,409
Changes in:
Deposits held for tax obligations of underlying properties 154,773 155,334
Accrued expenses 1,027 (4,567)
Due to affiliates 9,910 (2,547)
---------- ----------
Total adjustments 249,721 510,713
---------- ----------
Net cash provided by operating activities $ 651,156 $1,212,016
---------- ----------
---------- ----------
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
4
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
A. General
These financial statements have been prepared without audit. In the opinion
of management, the financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the financial
position of Fogelman Mortgage L.P. I (the 'Partnership') as of March 31, 1997,
the results of its operations for the three months ended March 31, 1997 and 1996
and its cash flows for the three months ended March 31, 1997 and 1996. However,
the operating results for the interim periods may not be indicative of the
results expected for the full year.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1996.
B. Related Parties
Prudential-Bache Properties, Inc. ('PBP' or the 'General Partner') and its
affiliates perform services for the Partnership which include, but are not
limited to: accounting and financial management; registrar, transfer and
assignment functions; asset management; investor communications; printing and
other administrative services. The General Partner and its affiliates receive
reimbursements for costs incurred in connection with these services, the amount
of which is limited by the provisions of the Partnership Agreement. The costs
and expenses were approximately $13,100 and $18,200 for the three months ended
March 31, 1997 and 1996, respectively.
The Partnership maintains an account with the Prudential Institutional
Liquidity Portfolio Fund, an affiliate of PBP, for investment of its available
cash in short-term investments pursuant to guidelines established by the
Partnership Agreement.
Prudential Securities Incorporated ('PSI'), an affiliate of the General
Partner, owns 835 units at March 31, 1997.
C. Summarized Property Financial Information
Presented below is summarized unaudited financial information for the
Westmont and Pointe Royal Projects representing the properties underlying the
Partnership's two mortgage loan investments. Effective January 1, 1996, the
Westmont and Pointe Royal Projects adopted Statement of Financial Standards
('SFAS') No. 121, 'Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of.' Under SFAS No. 121, impairment of
properties to be held and used is determined to exist when estimated amounts
recoverable through future operations on an undiscounted basis are below the
properties' carrying value. If a property is determined to be impaired, it
should be recorded at the lower of its carrying value or its estimated fair
value.
5
Three months ended
March 31,
-------------------------
Westmont (Chesterfield) 1997 1996
- --------------------------------------------------------------------------------------------------
Revenues:
Rental Income $ 915,612 $ 917,536
Interest and other income 28,588 31,167
---------- ----------
944,200 948,703
---------- ----------
Expenses:
Operating 443,076 410,698
Interest 696,206 683,253
Depreciation 205,247 192,489
---------- ----------
1,344,529 1,286,440
---------- ----------
Net loss $ (400,329) $ (337,737)
---------- ----------
---------- ----------
Three months ended
March 31,
-------------------------
Pointe Royal (Royal View) 1997 1996
- --------------------------------------------------------------------------------------------------
Revenues:
Rental Income $ 913,895 $ 931,928
Interest and other income 29,697 44,816
---------- ----------
943,592 976,744
---------- ----------
Expenses:
Operating 603,248 400,354
Interest 661,507 638,280
Depreciation 195,254 182,924
---------- ----------
1,460,009 1,221,558
---------- ----------
Net loss $ (516,417) $ (244,814)
---------- ----------
---------- ----------
D. Subsequent Event
In May 1997, distributions of approximately $847,000 and $8,600 were paid to
the Unitholders and General Partner, respectively, for the quarter ended March
31, 1997.
6
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership provides permanent financing for two multi-family residential
apartment complexes. As of March 31, 1997, the Partnership had approximately
$1,446,000 of funds available which may be used to pay distributions,
unanticipated or extraordinary expenses and other costs relating to the
operation and administration of the Partnership's business. Cash expended at the
property level in 1997 for capital expenditures will impact the cash flow
received from the properties.
The Partnership's future operating cash requirements and quarterly
distributions are expected to be funded by Partnership operations. The
distribution for the three months ended March 31, 1997 was funded from current
and prior undistributed cash flow from operations.
Results of Operations
As of March 31, 1997 and 1996, occupancy rates for Westmont were 94.7% and
98.8%, respectively, and 93.1% and 99.3%, respectively, for Pointe Royal. Net
income of the Partnership for the three months ended March 31, 1997 decreased by
approximately $300,000 as compared to the same period in 1996.
For financial reporting purposes, the Partnership's mortgage loans are
considered, in substance, to be investments in real estate and are accounted for
using the equity method. Equity income from the underlying properties (which
increases the carrying value of the original investment) decreased by
approximately $298,000 for the three months ended March 31, 1997 as compared to
the same period in 1996. This decrease was primarily due to increased repairs
and maintenance at Pointe Royal and Westmont of approximately $198,000 and
$34,000, respectively. In addition, rental income decreased at Pointe Royal and
Westmont by approximately $18,000 and $2,000, respectively, as a result of
decreased occupancies at both properties partially offset by increased rental
rates. Interest received from mortgage loans for the three months ended March
31, 1997 and 1996 of approximately $500,000 and $1,076,000 respectively, is
accounted for as distributions and, accordingly, reduces the carrying value of
the original investment. Interest received (paid from property cash flow)
decreased by approximately $576,000 for the three months ended March 31, 1997 as
compared to the same period in 1996 primarily due to the reasons noted above in
addition to an increase in capital improvements at the properties.
At March 31, 1997, the accrued interest liabilities at the property level
were approximately $9,253,000. This accrued interest plus the original principal
balances aggregate approximately $55,318,000. The ultimate collectibility of the
accrued interest as well as the full principal balances of the mortgage loans
will depend upon the value of the underlying properties which are estimated,
based on third party appraisals, to be less than the amounts due. However, the
estimated property values exceed the Partnership's carrying amount of the
investment in mortgage loans which is recorded using the equity method of
accounting.
Interest income from cash equivalents decreased by approximately $7,000 for
the three months ended March 31, 1997 as compared to the same period in 1996 due
primarily to lower cash balances.
General and administrative expenses decreased approximately $5,000 for the
three months ended March 31, 1997 as compared to the same period in 1996 due
primarily to lower overall costs associated with administering the Partnership.
7
PART II. OTHER INFORMATION
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
Thomas F. Lynch, III ceased to serve as President, Chief Executive
Officer, Chairman of the Board of Directors and Director of
Prudential-Bache Properties, Inc. effective May 2, 1997. Effective May
2, 1997, Brian J. Martin was elected President, Chief Executive
Officer, Chairman of the Board of Directors and Director of
Prudential-Bache Properties, Inc.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 Amended and Restated Certificate and Agreement of Limited Partnership
dated November 12, 1986 (incorporated by reference to Registration
Statement No. 33-8596 dated November 24, 1986)
3.2 Second Amendment to Amended and Restated Certificate and Agreement of
Limited Partnership dated December 24, 1992 (incorporated by
reference to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992)
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K--None
8
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.
Fogelman Mortgage L.P. I
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/ Eugene D. Burak Date: May 14, 1997
----------------------------------------
Eugene D. Burak
Vice President
Chief Accounting Officer for the Registrant
9