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
September 30, 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 September 30, 1997 the registrant had 78,625.10 units of limited
partnership interest outstanding.
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
INDEX
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PAGE NO.
--------
PART I: FINANCIAL INFORMATION
- ------- ---------------------
Balance Sheets -
September 30, 1997 and December 31, 1996 3
Statements of Operations -
Three Months Ended September 30, 1997 and 1996 4
Statements of Operations -
Nine Months Ended September 30, 1997 and 1996 5
Statements of Cash Flows -
Nine Months Ended September 30, 1997 and 1996 6
Statements of Partners' (Deficit) Capital -
Nine Months Ended September 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
September 30, 1997 and December 31, 1996
(Unaudited)
September 30, December 31,
1997 1996
---- ----
ASSETS
Property, at cost:
Land $ 746,000 $ 746,000
Buildings and improvements 6,068,231 6,018,094
Furniture, fixtures and equipment 255,652 255,652
----------- -----------
7,069,883 7,019,746
Less accumulated depreciation 1,559,907 1,379,541
----------- -----------
Property, net 5,509,976 5,640,205
Investments in real estate joint ventures 400,635 389,598
Cash 1,096,399 1,508,588
Escrow deposits 458,809 --
Accounts receivable - affiliate 64,913 --
Mortgage costs, net of accumulated amortization
of $35,248 and $189,098 respectively 292,379 93,277
Other assets 22,117 118,069
----------- -----------
Total Assets $ 7,845,228 $ 7,749,737
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgages payable $ 5,003,477 $ 4,225,106
Accounts payable and accrued expenses 229,391 215,520
Security deposits and prepaid rents 105,542 111,962
----------- -----------
Total Liabilities 5,338,410 4,552,588
----------- -----------
Partners' (Deficit) Capital:
General partners (109,323) (88,613)
Limited partners 2,616,141 3,285,762
----------- -----------
Total Partners' Capital 2,506,818 3,197,149
----------- -----------
Total Liabilities and Partners' Capital $ 7,845,228 $ 7,749,737
=========== ===========
See notes to financial statements
-3-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
STATEMENTS OF OPERATIONS
Three Months Ended September 30, 1997 and 1996
(Unaudited)
Three Months Three Months
Ended Ended
September 30, September 30,
1997 1996
---- ----
Income:
Rental $ 381,394 $ 384,522
Interest and other income 19,178 37,479
--------- ---------
Total income 400,572 422,001
--------- ---------
Expenses:
Property operations 310,370 268,156
Interest 170,238 125,716
Depreciation and amortization 72,956 72,133
Administrative:
Paid to affiliates 43,847 82,977
Other 33,834 58,133
--------- ---------
Total expenses 631,245 607,115
--------- ---------
Loss before allocated loss from joint venture (230,673) (185,114)
Allocated income (loss) from joint ventures (2,960) (47,159)
--------- ---------
Net loss $(233,633) $(232,273)
========= =========
Loss per limited partnership unit $ (2.88) $ (2.87)
========= =========
Distributions per limited partnership unit $ -- $ --
========= =========
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
Nine Months Ended September 30, 1997 and 1996
(Unaudited)
Nine Months Nine Months
Ended Ended
September 30, September 30,
1997 1996
---- ----
Income:
Rental $ 1,166,314 $ 1,177,898
Interest and other income 91,038 97,113
----------- -----------
Total income 1,257,352 1,275,011
----------- -----------
Expenses:
Property operations 802,381 698,271
Interest 330,248 345,583
Depreciation and amortization 290,756 216,401
Administrative:
Paid to affiliates 130,532 122,203
Other 154,803 164,552
----------- -----------
Total expenses 1,708,720 1,547,010
----------- -----------
Loss before allocated loss from joint venture (451,368) (271,999)
Allocated income (loss) from joint ventures 11,037 (74,198)
----------- -----------
Net loss $ (440,331) $ (346,197)
=========== ===========
Loss per limited partnership unit $ (5.43) $ (4.27)
=========== ===========
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
Nine Months Ended September 30, 1997 and 1996
(Unaudited)
Nine Months Nine Months
Ended Ended
September 30, September 30,
1997 1996
---- ----
Cash flow from operating activities:
Net loss $ (440,331) $ (346,197)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 290,756 216,401
Net (income) loss from joint ventures (11,037) 74,198
Changes in operating assets and liabilities:
Escrow deposits (458,809) --
Other assets 95,952 (14,984)
Accounts payable and accrued expenses 13,871 103,501
Security deposits and prepaid rent (6,420) 6,380
----------- -----------
Net cash (used in) provided by operating activities (516,018) 39,299
----------- -----------
Cash flow from investing activities:
Accounts receivable - affiliates (64,913) (29,755)
Capital expenditures (50,137) --
----------- -----------
Net cash (used in) investing activities (115,050) (29,755)
----------- -----------
Cash flows from financing activities:
Mortgage acquisition costs (166,845) --
Principal payments on mortgages (31,633) (19,529)
Net proceeds from mortgage refinancing 667,357 --
Distributions to partners (250,000) --
----------- -----------
Net cash provided by (used in) financing activities 218,879 (19,529)
----------- -----------
Increase (decrease) in cash (412,189) (9,985)
Cash - beginning of period 1,508,588 641,725
----------- -----------
Cash - end of period $ 1,096,399 $ 631,740
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 338,325 $ 344,342
=========== ===========
See notes to financial statements
-6-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL
Nine Months Ended September 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 (10,386) -- (335,811)
----------- -------- -----------
Balance, September 30, 1996 $ (91,768) 78,625.1 $ 3,183,778
=========== ======== ===========
Balance, January 1, 1997 $ (88,613) 78,625.1 $ 3,285,762
Distribution to partners (7,500) -- (242,500)
Net loss (13,210) -- (427,121)
----------- -------- -----------
Balance, September 30, 1997 $ (109,323) 78,625.1 $ 2,616,141
=========== ======== ===========
See notes to financial statements
-7-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 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 nine month periods ended September 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 September 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 September 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 $2,646,588 at September 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 $1,955,636 at September 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 $2,356,889 at September 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 September 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 $65,262 and $62,927 for the nine months ended September 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 nine months ended September 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 $64,913 and $831,854 at
September 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 $4,752 for the nine months ended September 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 nine months ended September 30, 1997
and 1996 as reported in the statements of operations, and as would be
reported for tax purposes, is as follows:
September 30, September 30,
1997 1996
---- ----
Net loss - statement of operations $ (440,331) $ ( 346,198)
Add to (deduct from):
Difference in depreciation 20,361 ( 210)
Tax basis adjustments -
Joint Ventures (11,052) ( 5,760)
Other non-deductible expenses 54,900 42,087
---------- ------------
Net loss - tax return purposes $ (376,122) $ ( 310,081)
========== ============
The reconciliation of Partners' Capital as of September 30, 1997 and
December 31, 1996 as reported in the balance sheet, and as reported for tax
purposes, is as follows:
September 30, September 30,
1997 1996
---- ----
Partners' Capital - balance sheet $ 2,506,818 $ 3,197,149
Add to (deduct from):
Accumulated difference in
depreciation ( 19,309) ( 39,670)
Tax basis adjustment -
Joint Ventures ( 71,028) ( 59,976)
Syndication fees 1,179,381 1,179,381
Other non-deductible expenses 305,296 250,396
----------- -----------
Partners' Capital - tax return purposes $ 3,901,158 $ 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 September 30, 1997, the
agreement, with an anticipated sales price of $7.4 million, was canceled by
the buyer, but the property is being marketed to several potential buyers.
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 nine months ended September 30, 1997 totaled approximately $160,000.
-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 September 30, 1997 and December 31, 1996 and the results of
its operations for the nine months ended September 30, 1997 and 1996 is as
follows:
-16-
FOX HUNT JOINT VENTURE
BALANCE SHEETS
September 30, 1997 and December 31, 1996
September 30 December 31
1997 1996
---- ----
ASSETS
Cash and cash equivalents $ 393,613 $ 162,914
Property, net of accumulated depreciation 2,886,577 2,886,577
Accounts receivable - affiliates 233,894 249,929
Mortgage costs 247,641 253,937
Other assets 265,883 335,272
----------- -----------
Total Assets $ 4,027,608 $ 3,888,629
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage payable $ 4,506,071 $ 4,528,289
Accounts payable and accrued expenses 195,559 262,871
Other liabilities 70,321 68,038
----------- -----------
Total Liabilities 4,771,951 4,859,198
----------- -----------
Partners' Capital (744,343) (970,569)
----------- -----------
Total Liabilities and Partners' Capital $ 4,027,608 $ 3,888,629
=========== ===========
-17-
FOX HUNT JOINT VENTURE
STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 1997 and 1996
Nine Months Nine Months
Ended Ended
September 30, September 30,
1997 1996
---- ----
Income:
Rental $ 1,052,253 $ 946,123
Interest and other income 40,868 51,087
----------- -----------
Total income 1,093,121 997,210
----------- -----------
Expenses:
Property operations 402,160 532,010
Depreciation and amortization 6,296 166,368
Interest 304,835 306,754
Administrative 153,604 155,712
----------- -----------
Total expenses 866,895 1,160,844
----------- -----------
Net income (loss) $ 226,226 $ (163,634)
=========== ===========
Allocation of net income (loss):
The Partnership $ 26,016 $ (18,818)
Other Joint Venturer (RPILP II) 200,210 (144,816)
----------- -----------
$ 226,226 $ (163,634)
=========== ===========
-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) 26,016 (18,818)
----------- ----------
Investment in joint venture, September 30 $ 397,135 $ 367,243
=========== ==========
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 September 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, but the property is being marketed to several properties.
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 nine months ended September 30, 1997 totaled approximately $110,000.
-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 September 30, 1997 and December 31, 1996 and the results of
its operations for the nine months ended September 30, 1997 and 1996 is as
follows:
-20-
LAKEVIEW JOINT VENTURE
BALANCE SHEETS
September 30, 1997 and December 31, 1996
September 30, December 31,
1997 1996
---- ----
ASSETS
Cash and cash equivalents $ 20,401 $ --
Propery, net of accumulated depreciation 2,519,906 2,507,241
Other assets 247,186 311,430
----------- -----------
Total Assets $ 2,787,493 $ 2,818,671
=========== ===========
LIABILITIES AND PARTNERS' (DEFICIENCY)
Liabilities:
Cash overdraft $ -- $ 2,373
Mortgage payable 2,490,369 2,508,128
Accounts payable and accrued expenses 239,424 221,736
Accounts payable - affiliates 212,306 165,995
Other liabilities 72,039 54,736
----------- -----------
Total Liabilities 3,014,138 2,952,968
----------- -----------
Partners' (Deficiency) (226,645) (134,297)
----------- -----------
Total Liabilities and Partners' (Deficiency) $ 2,787,493 $ 2,818,671
=========== ===========
-21-
LAKEVIEW JOINT VENTURE
STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 1997 and 1996
Nine Months Nine Months
Ended Ended
September 30, September 30,
1997 1996
---- ----
Income:
Rental $ 498,033 $ 493,523
Interest and other income 34,725 34,307
--------- ---------
Total income 532,758 527,830
--------- ---------
Expenses:
Property operations 300,296 442,593
Depreciation and amortization 10,461 124,290
Interest 195,447 176,390
Administrative 118,902 125,992
--------- ---------
Total expenses 625,106 869,265
--------- ---------
Net loss $ (92,348) $(341,435)
========= =========
Allocation of net loss:
The Partnership $ (14,979) $ (55,381)
Other Joint Venturer (77,369) (286,054)
--------- ---------
$ (92,348) $(341,435)
========= =========
-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 ( 14,979) ( 55,380)
---------- -----------
Investment in joint venture, September 30 $ 3,500 $ ( 795)
========== ===========
-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.
A distribution of $3.08 per limited partnership unit was made during the quarter
ended June 30, 1997. The General Partner hopes to make additional distributions
in the near future, but with the capital improvement work scheduled and the cash
needed to complete such work, management does not anticipate making such
distributions before the end of 1997. Escrow accounts have been set up as part
of the new mortgages on these properties to cover the costs of the work planned,
but because releases of escrowed funds are not immediate, in the meantime for
cash flow purposes the cash from operations is being used to pay for the
improvements.
The Lakeview Joint Venture continues to struggle with very low occupancies and
poor collections. 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. Management
feels with the property operating the way it is currently (i.e., stabilized
occupancies in the low 90% range and positive cash flow), another interested
purchaser should be found.
-24-
Result of Operations
- --------------------
For the quarter ended September 30, 1997, the Partnership's net loss was
$233,633 or $2.88 per limited partnership unit. Net loss for the quarter ended
September 30, 1996 amounted to $232,273 or $2.87 per unit. For the nine month
period ended September 30, 1997, the net loss was $440,331 or $5.43 per limited
partnership unit as compared to $346,197 or $4.27 per limited partnership unit
for the nine month period ended September 30, 1996.
Partnership revenue for the quarter ended September 30, 1997 totaled $400,572, a
decrease of approximately $21,000 from the 1996 amount of $422,001. Total rental
revenue during this quarter decreased slightly (i.e., by just over $3,000), with
the majority of the decrease being attributed to increased concessions offered
and poor collections at The Villas. For the first nine months of 1997, rental
revenue dropped by almost $11,600. Other income decreased by over $6,000; there
was no one area which caused this decrease (i.e., it was made up of small
decreases in all income items). Compared to the prior year, physical occupancy
dropped significantly (i.e., to 76% at the end of September 1997) and rental
concessions increased drastically at The Villas. For the Partnership as a whole,
delinquencies remained fairly constant when comparing the nine months ended
September 30, 1997 and 1996.
For the quarter ended September 30, 1997, Partnership expenses amounted to
$631,245 which is an increase of approximately $24,000 over those of the same as
the same quarter in 1996. For the nine month period ended September 30, 1997,
Partnership expenses increased by almost $162,000, a large increase when
compared to the same period in 1996. The largest increases were found in
property operations expenditures amounting to approximately $104,000 during the
first nine months of 1997 as compared to the same period during 1996; in this
area, specifically, there was an increase in payroll and related expenses at The
Villas and an increase in repairs and maintenance costs at both Players Club and
The Villas. Management continues to stress the importance of the physical
appearance of the properties as a means of improving occupancy. Property
management has a schedule of improvements (e.g., new carpets and appliances,
fresh coats of paint, etc.) to be done to the properties and it is management's
belief that such improvements will eventually improve the cash flow in the
Partnership. There was a decrease of approximately 35% in contracted services
expenses at Players Club primarily due to decreases in costs associated with
landscaping and interior painting, which is the result of on-site maintenance
personnel performing more of this work themselves. Administrative expenses
decreased slightly by just over $1,400 during the first nine months of 1997 as
compared to those at September 30, 1996.
-25-
Results of Operations (continued):
- -----------------------------------
For the nine month period ended September 30, 1997, the Foxhunt Joint Venture
had net income of $226,226 as compared to a loss of $163,634 for the same period
in 1996. Although one reason for the net income reported is the lack of
depreciation taken as a result of "accounting rules", the property still showed
considerable improvement over last year at this point in time. This property
suffered from lower occupancies and difficulty in collections during the first
nine months of 1996, but continues to show drastic improvement thus far in 1997.
The Partnership was allocated $26,016 of the total net income for the nine month
period ended September 30, 1997.
The Lakeview Joint Venture incurred a net loss of $92,348 for the nine month
period ended September 30, 1997. For the nine month period ended September 30,
1996, this joint venture generated a net loss of $341,435. The Partnership was
allocated $14,979 and $55,381 of the loss for the nine month periods ended
September 30, 1997 and 1996, respectively. Total income in the venture remained
virtually unchanged, but a large decrease in property operations expenses caused
the property to show less of a loss than in previous periods.
On a tax basis, the Partnership loss totaled $376,122 or $4.64 per limited
partnership unit for the nine month period ended September 30, 1997 as compared
to the tax loss for the nine month period ended September 30, 1996 which was
$310,081 or $3.83 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 November 12, 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 November 12, 1997
------------------------------ ------------------------
Joseph M. Jayson, Date
President and Director
/s/Michael J. Colmerauer November 12, 1997
------------------------------ ------------------------
Michael J. Colmerauer Date
Secretary