FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
March 31, 1997 33-17579
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
(Exact Name of Registrant as specified in its charter)
Delaware 16-1309988
- -------------------- -----------------------------------
(State of Formation) (IRS Employer Identification Number)
2350 North Forest Road
Suite 12 A
Getzville, New York 14068
(Address of Principal Executive Office)
Registrant's Telephone Number: (716) 636-0280
Indicate by a 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
--- ---
Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-Q or any
amendment to this Form 10-Q. (X)
As of June 30, 1997 the registrant had 78,625.10 units of limited partnership
interest outstanding.
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
INDEX
-----
PAGE NO.
--------
PART I: FINANCIAL INFORMATION
- ------- ---------------------
Balance Sheets -
June 30, 1997 and December 31, 1996 3
Statements of Operations -
Three Months Ended June 30, 1997 and 1996 4
Statements of Operations -
Six Months Ended June 30, 1997 and 1996 5
Statements of Cash Flows -
Six Months Ended June 30, 1997 and 1996 6
Statements of Partners' (Deficit) Capital -
Six Months Ended June 30, 1997 and 1996 7
Notes to Financial Statements 8 - 23
PART II: MANAGEMENT'S DISCUSSION & ANALYSIS OF
- -------- FINANCIAL CONDITION & RESULTS OF
--------------------------------
OPERATIONS 24 - 26
----------
-2-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
BALANCE SHEETS
June 30, 1997 and December 31, 1996
(Unaudited)
June 30 December 31,
1997 1996
---- ----
ASSETS
Property, at cost:
Land $ 746,000 $ 746,000
Buildings and improvements 6,018,094 6,018,094
Furniture, fixtures and equipment 255,652 255,652
----------- -----------
7,019,746 7,019,746
Less accumulated depreciation 1,499,786 1,379,541
----------- -----------
Property, net 5,519,960 5,640,205
Investments in real estate joint ventures 403,595 389,598
Cash 1,246,828 1,508,588
Escrow deposits 405,126 --
Accounts receivable - affiliate 81,913 --
Mortgage costs, net of accumulated amortization
of $35,248 and $189,098 respectively 295,370 93,277
Other assets 22,214 118,069
----------- -----------
Total Assets $ 7,975,006 $ 7,749,737
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgages payable $ 5,010,000 $ 4,225,106
Accounts payable and accrued expenses 127,003 215,520
Security deposits and prepaid rents 97,552 111,962
----------- -----------
Total Liabilities 5,234,555 4,552,588
----------- -----------
Partners' (Deficit) Capital:
General partners (102,314) (88,613)
Limited partners 2,842,765 3,285,762
----------- -----------
Total Partners' Capital 2,740,451 3,197,149
----------- -----------
Total Liabilities and Partners' Capital $ 7,975,006 $ 7,749,737
=========== ===========
See notes to financial statements
-3-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
STATEMENTS OF OPERATIONS
Three Months Ended June 30, 1997 and 1996
(Unaudited)
Three Months Three Months
Ended Ended
June 30, June 30,
1997 1996
---- ----
Income:
Rental $ 388,059 $ 398,615
Interest and other income 49,139 29,314
--------- ---------
Total income 437,198 427,929
--------- ---------
Expenses:
Property operations 281,505 191,081
Interest 55,196 111,317
Depreciation and amortization 144,844 72,134
Administrative:
Paid to affiliates 43,356 19,979
Other 63,942 54,830
--------- ---------
Total expenses 588,843 449,341
--------- ---------
Loss before allocated loss from joint venture (151,645) (21,412)
Allocated income (loss) from joint ventures 6,526 (21,278)
--------- ---------
Net loss $(145,119) $ (42,690)
========= =========
Loss per limited partnership unit $ (1.79) $ (0.53)
========= =========
Distributions per limited partnership unit $ 3.08 $ --
========= =========
Weighted average number of
limited partnership units
outstanding 78,625.1 78,625.1
========= =========
See notes to financial statements
-4-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
STATEMENTS OF OPERATIONS
Six Months Ended June 30, 1997 and 1996
(Unaudited)
Six Months Six Months
Ended Ended
June 30 June 30
1997 1996
Income:
Rental $ 784,920 $ 793,376
Interest and other income 71,860 59,633
----------- -----------
Total income 856,780 853,009
----------- -----------
Expenses:
Property operations 492,011 430,115
Interest 160,010 219,867
Depreciation and amortization 217,800 144,268
Administrative:
Paid to affiliates 86,685 39,226
Other 120,969 106,419
----------- -----------
Total expenses 1,077,475 939,895
----------- -----------
Loss before allocated loss from joint venture (220,695) (86,886)
Allocated loss from joint ventures 13,997 (27,039)
----------- -----------
Net loss $ (206,698) $ (113,925)
=========== ===========
Loss per limited partnership unit $ (2.55) $ (1.41)
=========== ===========
Distributions per limited partnership unit $ 3.08 $ --
=========== ===========
Weighted average number of
limited partnership units
outstanding 78,625.1 78,625.1
=========== ===========
See notes to financial statements
-5-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1997 and 1996
(Unaudited)
Six Months Six Months
Ended Ended
June 30, June 30,
1997 1996
---- ----
Cash flow from operating activities:
Net loss $ (206,698) $ (113,925)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 217,800 144,268
Net loss from joint ventures (13,997) 27,039
Changes in operating assets and liabilities:
Escrow deposits (405,126) --
Other assets 95,855 4,627
Accounts payable and accrued expenses (88,517) 860
Security deposits and prepaid rent (14,410) 40,999
----------- -----------
Net cash (used in) provided by operating activities (415,093) 103,868
----------- -----------
Cash flow from investing activities:
Accounts receivable - affiliates (81,913) (43,081)
Capital expenditures -- --
----------- -----------
Net cash (used in) investing activities (81,913) (43,081)
----------- -----------
Cash flows from financing activities:
Mortgage acquisition costs (166,845) --
Principal payments on mortgages (15,266) (12,093)
Net proceeds from mortgage refinancing 667,357 --
Distributions to partners (250,000) --
----------- -----------
Net cash provided by (used in) financing activities 235,246 (12,093)
----------- -----------
Increase (decrease) in cash (261,760) 48,694
Cash - beginning of period 1,508,588 641,726
----------- -----------
Cash - end of period $ 1,246,828 $ 690,420
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 167,917 $ 218,626
=========== ===========
See notes to financial statements
-6-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL
Six Months Ended June 30, 1997 and 1996
(Unaudited)
General Limited Partners
Partners ------------------------
Amount Units Amount
------ ----- ------
Balance, January 1, 1996 $ (81,382) 78,625.1 $ 3,519,589
Net loss (3,418) -- (110,507)
----------- -------- -----------
Balance, June 30, 1996 $ (84,800) 78,625.1 $ 3,409,082
=========== ======== ===========
Balance, January 1, 1997 $ (88,613) 78,625.1 $ 3,285,762
Distribution to partners (7,500) -- (242,500)
Net loss (6,201) -- (200,497)
----------- -------- -----------
Balance, June 30, 1997 $ (102,314) 78,625.1 $ 2,842,765
=========== ======== ===========
7
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
NOTES TO FINANCIAL STATEMENTS
Six Months Ended June 30, 1997 and 1996
(Unaudited)
1. GENERAL PARTNERS' DISCLOSURE
----------------------------
In the opinion of the General Partners of Realmark Property Investors
Limited Partnership VI-B, all adjustments necessary for a fair
presentation of the Partnership's financial position, results of
operations and changes in cash flows for the six month periods ended June
30, 1997 and 1996, have been made in the financial statements. Such
financial statements are unaudited and subject to any year-end adjustments
which may be necessary.
2. FORMATION AND OPERATION OF PARTNERSHIP
--------------------------------------
Realmark Property Investors Limited Partnership VI-B (the "Partnership"),
a Delaware Limited Partnership, was formed on September 21, 1987, to
invest in a diversified portfolio of income-producing real estate
investments.
In November 1988, the Partnership commenced the public offering of units
of limited partnership interest. Other than matters relating to
organization, it had no business activities and, accordingly, had not
incurred any expenses or earned any income until the first interim closing
(minimum closing) of the offering, which occurred on February 2, 1989. The
offering was concluded on February 28, 1990, at which time 78,625.1 units
of limited partnership interest were sold and outstanding. The General
Partners are Realmark Properties, Inc., a wholly-owned subsidiary of J.M.
Jayson & Company, Inc. and Joseph M. Jayson, the Individual General
Partner. Joseph M. Jayson is the sole shareholder of J.M. Jayson &
Company, Inc.
Under the partnership agreement, the general partners and their affiliates
can receive compensation for services rendered and reimbursement for
expenses incurred on behalf of the Partnership.
-8-
FORMATION AND OPERATION OF PARTNERSHIP (CONTINUED)
Net income or loss and proceeds arising from a sale or refinancing shall
be distributed first to the limited partners in amounts equivalent to a 7%
return on the average of their adjusted capital contributions, then an
amount equal to their capital contributions, then an amount equal to an
additional 5% of the average of their adjusted capital contributions after
the general partners receive a 3% property disposition fee. Such fees
shall be reduced, but not below zero, by the amounts necessary to pay to
limited partners whose subscriptions were accepted by January 31, 1989, an
additional cumulative annual return (not compounded) equal to 2% based on
their average adjusted capital contributions, and to limited partners
whose subscriptions were accepted between February 1, 1989 and June 30,
1989, an additional cumulative annual return (not compounded) equal to 1%
based on their average adjusted capital contributions commencing with the
first fiscal quarter following the termination of the offering of units,
then to all partners in an amount equal to their respective positive
capital balances, and finally, in the ratio of 87% to the limited partners
and 13% to the general partners.
The partnership agreement also provides that distribution of funds,
revenues, costs and expenses arising from partnership activities,
exclusive of any sale or refinancing activities, are to be allocated 97%
to the limited partners and 3% to the general partners.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash
----
For purposes of reporting cash flows, cash includes the following items:
cash on hand; cash in checking; and money market savings.
Property and Depreciation
-------------------------
Depreciation is provided using the straight-line method over the estimated
useful lives of the respective assets. Expenditures for maintenance and
repairs are expensed as incurred, and major renewals and betterments are
capitalized. The Accelerated Cost Recovery System and Modified Accelerated
Cost Recovery System are used to determine depreciation expense for tax
purposes.
-9-
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
Acquisition Fees
----------------
Acquisition fees are paid to the general partner as properties are
specified, which generally occurs when a contract to purchase the property
is entered into. Acquisition fees are allocated to specific properties
when actual closing takes place. Acquisition fees paid for properties that
ultimately are not acquired will be applied toward other properties that
are acquired or reallocated to existing properties. There were no
capitalized acquisition fees at June 30, 1997.
Unconsolidated Joint Ventures
-----------------------------
The Partnership's investment in affiliated real estate joint ventures are
accounted for on the equity method.
Rental Income
-------------
Leases for residential properties have terms of one year or less. Rental
income is recognized on the straight line method over the term of the
lease.
Rents Receivable
----------------
Due to the nature of these accounts, residential rents receivable are
fully reserved as of June 30, 1997 and 1996.
Income (Loss) per Limited Partnership Unit
------------------------------------------
The income (loss) per limited partnership unit is based on the weighted
average number of limited partnership units outstanding during the period.
4. ACQUISITION AND DISPOSITION OF RENTAL PROPERTY
----------------------------------------------
In June 1991 the Partnership acquired a 192 unit apartment complex (the
Villa) located in Greenville, South Carolina for a purchase price of
$3,165,456, which included $373,493 in acquisition fees.
In June 1991 the Partnership acquired a 144 unit apartment complex
(Players Club) located in Lutz, Florida for a purchase price of
$3,070,800, which included $190,737 in acquisition fees.
-10-
5. MORTGAGES PAYABLE
-----------------
In connection with the acquisition of rental property, the Partnership
obtained mortgages as follows:
The Villa
---------
A mortgage with a balance of $2,650,000 at June 30, 1997, providing for
monthly principal and interest payments of $19,864, bearing interest at
8.30%. The note matures June 2005.
A mortgage with a balance of $0 and $1,963,073 at June 30, 1997 and 1996,
respectively, providing for monthly principal and interest payments of
$17,998, bearing interest at 9.875%. The note was to mature in July 1998,
however, the mortgage was fully paid off in May of 1997 when the mortgage
was refinanced.
Players Club
------------
A mortgage with a balance of $2,360,000 at June 30, 1997, providing for
monthly principal and interest payments of $18,297, bearing interest at
8.59%. The note matures June 2005.
A mortgage with a balance of $0 and $2,288,603 at June 30, 1997 and 1996,
respectively, providing for monthly principal and interest payments of
$20,402, bearing interest at 10%. The note was to mature in July 1998,
however, the mortgage was fully paid off in May of 1997 when the mortgage
was refinanced.
The mortgages described above are secured by the individual properties to
which they relate.
-11-
MORTGAGES PAYABLE (CONTINUED)
-----------------------------
The aggregate maturities of mortgages payable for each of the next five
years are as follows:
Year Amount
1997 $ 14,378
1998 30,668
1999 33,404
2000 36,386
2001 39,632
Thereafter 4,855,532
-------------
TOTAL $ 5,010,000
=============
6. RELATED PARTY TRANSACTIONS
--------------------------
Management fees for the management of certain of the Partnership's
properties are paid to an affiliate of the General Partners. The
management agreement provides for 5% of gross monthly receipts of the
complexes to be paid as fees for administering the operations of the
properties. These fees totaled $42,542 and $33,000 for the six months
ended June 30, 1997 and 1996, respectively.
According to the terms of the Partnership Agreement, the General Partner
is also entitled to receive a partnership management fee equal to 7% of
net cash flow (as defined in the Partnership Agreement), 2% of which is
subordinated to the limited partners having received an annual cash return
equal to 7% of their adjusted capital contributions. There were no such
fees paid or accrued for the six months ended June 30, 1997 or 1996.
-12-
RELATED PARTY TRANSACTIONS (CONTINUED)
---------------------------------------
Pursuant to the terms of the Partnership agreement, the corporate general
partner charges the Partnership for reimbursement of certain costs and
expenses incurred by the corporate general partner and its affiliates in
connection with the administration of the Partnership and acquisition of
properties. These charges are for the Partnership's allocated share of
such costs and expenses as payroll, travel, communication costs related to
partnership accounting, partner communication and relations, and
acquisition of properties. Partnership accounting, communication,
marketing and acquisition expenses are allocated based on total assets,
number of partners and number of units, respectively.
Accounts receivable - affiliates amounted to $81,913 and $845,420 at June
30, 1997 and 1996 respectively. This balance is in the process of being
reimbursed.
Computer service charges for the partnerships are paid or accrued to an
affiliate of the General Partner. The fee is based upon the number of
apartment units and totaled $3,168 for the six months ended June 30, 1997
and 1996.
7. INCOME TAXES
------------
No provision has been made for income taxes since the income or loss of
the partnership is to be included in the tax returns of the individual
partners.
The tax returns of the Partnership are subject to examination by the
Federal and state taxing authorities. Under federal and state income tax
laws, regulations and rulings, certain types of transactions may be
accorded varying interpretations and, accordingly, reported partnership
amounts could be changed as a result of any such examination.
-13-
INCOME TAXES (CONTINUED)
------------------------
The reconciliation of net loss for the six months ended June 30, 1997 and
1996 as reported in the statements of operations, and as would be reported
for tax purposes, is as follows:
June 30, June 30,
1997 1996
---- ----
Net loss - statement of operations $ ( 206,698) $ (113,925)
Add to (deduct from):
Difference in depreciation 13,574 ( 140)
Tax basis adjustments -
Joint Ventures ( 7,368) ( 3,840)
Other non-deductible expenses 36,600 28,058
----------- ------------
Net loss - tax return purposes $ (163,892) $ ( 89,847)
=========== ============
The reconciliation of Partners' Capital as of June 30, 1997 and December
31, 1996 as reported in the balance sheet, and as reported for tax
purposes, is as follows:
June 30, December 31,
1997 1996
---- ----
Partners' Capital - balance sheet $ 2,740,451 $ 3,197,149
Add to (deduct from):
Accumulated difference in
depreciation ( 26,096) ( 39,670)
Tax basis adjustment -
Joint Ventures ( 67,344) ( 59,976)
Syndication fees 1,179,381 1,179,381
Other non-deductible expenses 286,996 250,396
----------- -----------
Partners' Capital - tax return purposes $ 4,113,388 $ 4,527,280
=========== ===========
-14-
8. INVESTMENT IN JOINT VENTURES
----------------------------
On September 27, 1991 the Partnership entered into an agreement to form a
joint venture with Realmark Property Investors Limited Partnership II
(RPILP II) and Realmark Property Investors Limited Partnership VI-B (RPILP
VI-B). The joint venture was formed for the purpose of operating the
Foxhunt Apartments located in Dayton, Ohio and owned by RPILP II. Under
the terms of the original agreement, the Partnership contributed $390,000
and RPILP VI-B contributed $1,041,568 to buy out the wraparound promissory
note on the property. RPILP II contributed the property net of the first
mortgage.
On April 1, 1992 RPILP II returned RPILP VI-A's entire capital
contribution and $580,000 of the capital originally invested by the
Partnership. The amended joint venture agreement now provides that any
income, loss, gain, cash flow or sale proceeds be allocated 88.5% to RPILP
II and 11.5% to the Partnership. Prior to the buyout the allocations were
63.14% to RPILP II, 26.82% to the Partnership and 10.04% to the RPILP
VI-A. The allocated net loss of the joint venture has been included in the
statements of operations of the Partnership.
In July of 1996, the Partnership entered into a plan to dispose of the
property, plant and equipment of Foxhunt Apartments with a carrying amount
of $2,886,577. Management has determined that a sale of the property is in
the best interest of the investors. As of June 30, 1997, the agreement,
with an anticipated sales price of $7.4 million, was canceled by the
buyer.
Financial Accounting Standards Statement No. 121, Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed
Of (the "Statement") requires that assets to be disposed of be recorded at
the lower of carrying value or fair value, less costs to sell. The
Statement also requires that such assets not be depreciated during the
disposal period, as the assets will be recovered through sale rather than
through operations. In accordance with this Statement, the long-lived
assets of the Partnership, classified as held for sale on the balance
sheet, are recorded at the carrying amount which is the lower of carrying
value or fair value less costs to sell, and have not been depreciated
during the disposal period. Depreciation expense, not recorded during the
disposal period, for the six months ended June 30, 1997 totaled
approximately $93,000.
-15-
INVESTMENT IN JOINT VENTURES (CONTINUED)
----------------------------------------
The following financial statements of the joint venture are presented on a
historical-cost basis. The equity ownership was determined based upon the
cash paid into the joint venture by the Partnership as a percentage of the
general partner's estimate of the fair market value of the apartment
complex and other net assets at the date of inception.
A summary of the assets, liabilities and partner's capital of the joint
venture as of June 30, 1997 and December 31, 1996 and the results of its
operations for the six months ended June 30, 1997 and 1996 is as follows:
-16-
FOX HUNT JOINT VENTURE
BALANCE SHEETS
June 30, 1997 and December 31, 1996
June 30 December 31
1997 1996
---- ----
ASSETS
Cash and cash equivalents $ 290,444 $ 162,914
Property, net of accumulated depreciation 2,886,577 2,886,577
Accounts receivable - affiliates 240,502 249,929
Mortgage costs 249,739 253,937
Other assets 369,789 335,272
----------- -----------
Total Assets $ 4,037,051 $ 3,888,629
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage payable $ 4,513,643 $ 4,528,289
Accounts payable and accrued expenses 246,664 262,871
Other liabilities 93,412 68,038
----------- -----------
Total Liabilities 4,853,719 4,859,198
----------- -----------
Partners' Capital (816,668) (970,569)
----------- -----------
Total Liabilities and Partners' Capital $ 4,037,051 $ 3,888,629
=========== ===========
-17-
FOX HUNT JOINT VENTURE
STATEMENTS OF OPERATIONS
Six Months Ended June 30, 1997 and 1996
Six Months Six Months
Ended Ended
June 30, June 30,
1997 1996
---- ----
Income:
Rental $ 682,362 $ 617,614
Interest and other income 46,035 47,012
--------- ---------
Total income 728,397 664,626
--------- ---------
Expenses:
Property operations 247,642 293,553
Depreciation and amortization 4,197 110,134
Interest 203,391 204,757
Administrative 119,266 119,034
--------- ---------
Total expenses 574,496 727,478
--------- ---------
Net income (loss) $ 153,901 $ (62,852)
========= =========
Allocation of net income (loss):
The Partnership $ 17,699 $ (7,228)
Other Joint Venturer (RPILP II) 136,202 (55,624)
--------- ---------
$ 153,901 $ (62,852)
========= =========
-18-
INVESTMENT IN JOINT VENTURES (CONTINUED)
----------------------------------------
A reconciliation of the Partnership's investment in the joint venture is
as follows:
1997 1996
---- ----
Investment in joint venture, January 1 $ 371,119 $ 386,061
Allocation of net income (loss) 17,699 ( 7,228)
----------- ----------
Investment in joint venture, June 30 $ 388,818 $ 378,833
=========== ==========
On August 30, 1992 the Partnership entered into a joint venture agreement
with Realmark Property Investors Limited Partnership IV (RPILP IV) for the
purpose of operating the Lakeview Apartment complex located in Milwaukee,
Wisconsin and owned by RPILP IV. Under the terms of the agreement, the
Partnership contributed $175,414 while RPILP IV contributed the property
net of the outstanding mortgage.
The joint venture agreement provides that any income, loss, cash flow or
sale proceeds be allocated 16.22% to the Partnership and 83.78% to RPILP
IV. The allocated net loss of the joint venture for the six month period
ended June 30, 1997 has been included in the statement of operations for
the Partnership.
In July of 1996, the Partnership entered into a plan to dispose of the
property, plant and equipment of Lakeview Village Apartments with a
carrying amount of $2,507,241. Management has determined that a sale of
the property is in the best interest of the investors. As of June 30,
1997, the agreement with an anticipated sales price of $4,090,000, was
terminated by the buyer.
Financial Accounting Standards Statement No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED
OF (the "Statement") requires that assets to be disposed of be recorded at
the lower of carrying value or fair value, less costs to sell. The
Statement also requires that such assets not be depreciated during the
disposal period, as the assets will be recovered through sale rather than
through operations. In accordance with this Statement, the long-lived
assets of the Partnership, classified as held for sale on the balance
sheet, are recorded at the carrying amount which is the lower of carrying
value or fair value less costs to sell, and have not been depreciated
during the disposal period. Depreciation expense, not recorded during the
disposal period, for the six months ended June 30, 1997 totaled
approximately $84,000.
-19-
INVESTMENT IN JOINT VENTURES (CONTINUED)
----------------------------------------
The equity ownership percentage was determined based upon the cash paid
into the joint venture by the Partnership as a percentage of the general
partner's estimate of the fair market value of the apartment complex and
other net assets at the date of inception.
A summary of the assets, liabilities and partners' capital of the joint
venture as of June 30, 1997 and December 31, 1996 and the results of its
operations for the six months ended June 30, 1997 and 1996 is as follows:
-20-
LAKEVIEW JOINT VENTURE
BALANCE SHEETS
June 30, 1997 and December 31, 1996
June 30, December 31,
1997 1996
---- ----
ASSETS
Property, net of accumulated depreciation $ 2,507,241 $ 2,507,241
Other assets 326,974 311,430
----------- -----------
Total Assets $ 2,834,215 $ 2,818,671
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Cash overdraft $ 19,865 $ 2,373
Mortgage payable 2,494,900 2,508,128
Accounts payable and accrued expenses 214,241 221,736
Accounts payable - affiliates 183,968 165,995
Other liabilities 78,357 54,736
----------- -----------
Total Liabilities 2,991,331 2,952,968
----------- -----------
Partners' (Deficit) (157,116)
(134,297)
----------- -----------
Total Liabilities and Partners' (Deficit) Capital $ 2,834,215 $ 2,818,671
=========== ===========
-21-
LAKEVIEW JOINT VENTURE
STATEMENTS OF OPERATIONS
Six Months Ended June 30, 1997 and 1996
Six Months Six Months
Ended Ended
June 30, June 30,
1997 1996
---- ----
Income:
Rental $ 361,977 $ 357,414
Interest and other income 22,882 24,212
--------- ---------
Total income 384,859 381,626
--------- ---------
Expenses:
Property operations 188,258 216,945
Depreciation and amortization 6,974 98,296
Interest 133,326 110,620
Administrative 79,120 77,909
--------- ---------
Total expenses 407,678 503,770
--------- ---------
Net loss $ (22,819) $(122,144)
========= =========
Allocation of net loss:
The Partnership $ (3,701) $ (19,812)
Other Joint Venturer (19,118) (102,332)
--------- ---------
$ (22,819) $(122,144)
========= =========
-22-
INVESTMENT IN JOINT VENTURES (CONTINUED)
----------------------------------------
A reconciliation of the Partnership's investment in the joint venture is
as follows:
1997 1996
---- ----
Investment in joint venture, January 1 $ 18,479 $ 54,585
Allocation of net loss (3,701) (19,812)
--------- ---------
Investment in joint venture, June 30 $ 14,778 $ 34,773
========= =========
-23-
PART II MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS.
------------------------------------
Liquidity and Capital Resources
- -------------------------------
The Partnership continues to generate sufficient cash from operations to enable
it to provide for future capital improvements. During the second quarter of 1997
both properties in this Partnership were refinanced with a new lender. The
result was both increased loan amounts and decreased interest rates, thus
keeping debt service payments fairly constant. The new mortgages also have
replacement and improvement reserve accounts maintained by the lender.
These funds will be used to improve the properties.
A distribution of $3.08 per limited partnership unit was made during the quarter
ended June 30, 1997. The General Partner does hope to make additional
distributions at some time during 1997. Management has been concentrating
heavily on increasing occupancies and at the same time controlling expenses. The
General Partner feels that the Partnership will see improvements in the next
several months of 1997.
During January of 1996, the Partnership was able to secure new financing for the
Lakeview Joint Venture. This reduced debt service and decreased the mortgage
payments, however Lakeview continues to struggle with very low occupancies. The
sale of Lakeview Apartments located in Milwaukee, Wisconsin was terminated by
the purchaser because the city was unwilling to use their bond allocations for
multi-family housing. The General Partner continues to aggressively market this
property for sale to a new buyer as this is deemed to be in the best interests
of the Limited Partners.
Similarly, the sales contract for the sale of the Foxhunt Apartments was also
terminated. The local government was opposed to a one-hundred percent low income
housing project, and accordingly would not support the issuance of the tax
exempt bonds through the State Housing Agency. Due to the opposition from the
local government, the purchaser decided that the likelihood of obtaining a bond
allocation would be difficult and opted to terminate the contract.
Result of Operations
- --------------------
For the quarter ended June 30, 1997, the Partnership's net loss was $145,119 or
$1,79 per limited partnership unit. Net loss for the quarter ended June 30, 1996
amounted to $42,690 or $0.53 per unit. For the six month period ended June 30,
1997, the net loss was $206,698 or $2.55 per limited partnership unit as
compared to $113,925 or $1.41 per limited partnership unit for the six month
period ended June 30, 1996.
-24-
Results of Operations (continued):
- --------------------- ------------
Partnership revenue for the quarter ended June 30, 1997 totaled $437,198, a
modest increase of $9,269 from the 1996 amount of $427,929. Total rental revenue
during this quarter dropped just over $10,000, with the majority of the decrease
being attributed to increased concessions offered at The Villas in order to
increase falling economic occupancy. For the first six months of 1997, rental
revenue dropped by almost $8,500; other income increased by over $12,000 mostly
due to increased termination fees and forfeited security deposits at Players
Club. Compared to the prior year, physical occupancy dropped, rental concessions
increased, and delinquencies remained virtually unchanged. Management expects
that in the third quarter of 1997 occupancies will increase and the concessions
being offered currently will be lessened.
For the quarter ended June 30, 1997, Partnership expenses amounted to $588,843
which is a significant increase over those of the same as the same quarter in
1996. For the six month period ended June 30, 1997, Partnership expenses
increased by almost $138,000 which is also a large increase as compared to the
same period in 1996. The most notable increase was found in depreciation and
amortization expense. There was similarly an increase in property operations
expenditures amounting to approximately $62,000 during the first six months of
1997 when compared to the same period during 1996; in this area, specifically,
there was an increase in payroll and related expenses and repairs and
maintenance costs. Management is stressing the importance of the physical
appearance of the properties as a means of improving occupancy, and thus more
improvements (e.g., new carpets and appliances, fresh coats of paint, etc.) are
being brought about/completed. There was a decrease in contracted services
expenses as the on-site maintenance personnel perform more of this work
themselves as another means of controlling expenses; specifically decreases in
landscaping and interior painting were noted. Administrative expenses increased
by just over $62,000 during the first six months of 1997 as compared to those at
June 30, 1996. Increases in management fees and legal expenses were primarily
responsible for this increase. Insurance expense saw a decrease of just over
$8,000, while real estate taxes remained fairly stable between the six month
periods ended June 30, 1997 and 1996.
For the six month period ended June 30, 1997, the Foxhunt Joint Venture had net
income of $153,901 as compared to a loss of $62,852 for the same period in 1996.
This property suffered from lower occupancies and difficulty in collections
during the six month period ended June 30, 1996, but showed drastic improvement
during the same six month period in 1997. The Partnership was allocated $17,699
of the total net income for the six month period ended June 30, 1997.
-25-
Results of Operations (continued):
- -----------------------------------
The Lakeview Joint Venture incurred a net loss of $22,819 for the six month
period ended June 30, 1997. For the six month period ended June 30, 1996, this
joint venture generated a net loss of $122,144. The Partnership was allocated
$3,701 and 19,812 of the loss for the six month periods ended June 30, 1997 and
1996, respectively.
On a tax basis, the Partnership loss totaled $163,892 or $2.02 per limited
partnership unit for the six month period ended June 30, 1997 as compared to the
tax loss for the six month period ended March 31, 1997 which was $89,847 or
$1.11 per limited partnership unit.
-26-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
PART II
-------
OTHER INFORMATION
-----------------
Item 1 - Legal Proceedings
- --------------------------
The Partnership is not party to, nor is it the subject of, any material pending
legal proceedings other than ordinary routine litigation incidental to the
Partnership's business.
Item 2, 3, 4 and 5
- ------------------
Not applicable.
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
None.
-27-
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.
REALMARK PROPERTY INVESTORS
LIMITED PARTNERSHIP VI-B
By: /s/Joseph M. Jayson August 8, 1997
------------------------------ ------------------------
Joseph M. Jayson, Date
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: REALMARK PROPERTIES, INC.
Corporate General Partner
/s/Joseph M. Jayson August 8, 1997
------------------------------ ------------------------
Joseph M. Jayson, Date
President and Director
/s/Michael J. Colmerauer August 8, 1997
------------------------------ ------------------------
Michael J. Colmerauer Date
Secretary