SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarterly Period Ended SEPTEMBER 30, 2001
Commission File Number 0-09262
REAL ESTATE ASSOCIATES LIMITED
(A California Limited Partnership)
I.R.S. Employer Identification No. 95-3187912
9090 WILSHIRE BLVD., SUITE 201,
BEVERLY HILLS, CALIF. 90211
Registrant's Telephone Number,
Including Area Code (310) 278-2191
Indicate by check mark whether the registrant (1) has filed all documents and
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve 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 [ ]
REAL ESTATE ASSOCIATES LIMITED
(a California limited partnership)
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2001
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets, September 30, 2001 and December 31, 2000 ............... 1
Statements of Operations,
Nine and Three Months Ended September 30, 2001 and 2000 ......... 2
Statement of Partner's Equity (Deficiency),
Nine Months Ended September 30, 2001............................. 3
Statements of Cash Flows,
Nine Months Ended September 30, 2001 and 2000 ................... 4
Notes to Financial Statements .......................................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ...................... 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................... 14
Item 6. Exhibits and Reports on Form 8-K ................................... 14
Signatures ......................................................................... 15
REAL ESTATE ASSOCIATES LIMITED
(a California limited partnership)
BALANCE SHEETS
SEPTEMBER 30, 2001 AND DECEMBER 31, 2000
ASSETS
2001 2000
----------- ---------
(Unaudited)
INVESTMENTS IN LIMITED PARTNERSHIPS (Note 2) $ 709,954 $ 661,411
CASH AND CASH EQUIVALENTS 2,733 2,511
DUE FROM GENERAL PARTNER (Note 3) -- 23,096
--------- ---------
TOTAL ASSETS $ 712,687 $ 687,018
========= =========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Accrued fees due to general partner (Note 3) $ 63,583 $ --
Accounts payable 77,895 33,663
--------- ---------
141,478 33,663
COMMITMENTS AND CONTINGENCIES (Notes 3 and 4)
PARTNERS' EQUITY (DEFICIENCY):
General partners (121,357) (120,536)
Limited partners 692,566 773,891
--------- ---------
571,209 653,355
--------- ---------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 712,687 $ 687,018
========= =========
The accompanying notes are an integral part of these financial statements.
1
REAL ESTATE ASSOCIATES LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(Unaudited)
Nine months Three months Nine months Three months
ended ended ended ended
Sept 30, 2001 Sept 30, 2001 Sept 30, 2000 Sept 30, 2000
------------- ------------- ------------- -------------
INTEREST AND OTHER INCOME $ 296 $ 39 $ 5,118 $ 1,167
--------- -------- --------- --------
OPERATING EXPENSES:
Legal and accounting 47,177 18,871 56,318 7,700
Management fees - general partner (Note 3) 79,659 26,553 79,656 26,538
Administrative (Note 3) 29,773 12,708 33,388 7,228
--------- -------- --------- --------
Total operating expenses 156,609 58,132 169,362 41,466
--------- -------- --------- --------
LOSS FROM OPERATIONS (156,313) (58,093) (164,244) (40,299)
DISTRIBUTIONS FROM LIMITED
PARTNERSHIPS RECOGNIZED AS
INCOME (Note 2) 8,580 -- 9,481 --
EQUITY IN INCOME OF LIMITED
PARTNERSHIPS AND AMORTIZATION
OF ACQUISITION COSTS (Note 2) 65,587 5,136 64,200 22,200
--------- -------- --------- --------
NET LOSS $ (82,146) $(52,957) $ (90,563) $(18,099)
========= ======== ========= ========
NET LOSS PER LIMITED PARTNERSHIP
INTEREST (Note 1) $ (5) $ (3) $ (5) $ (1)
========= ======== ========= ========
The accompanying notes are an integral part of these financial statements.
2
REAL ESTATE ASSOCIATES LIMITED
(a California limited partnership)
STATEMENT OF PARTNERS' EQUITY (DEFICIENCY)
NINE MONTHS ENDED SEPTEMBER 30, 2001
(Unaudited)
General Limited
Partners Partners Total
---------- --------- ---------
PARTNERSHIP INTERESTS 16,505
========
EQUITY (DEFICIENCY),
January 1, 2001 $(120,536) $773,891 $653,355
Net loss for the nine months
ended September 30, 2001 (821) (81,325) (82,146)
--------- -------- --------
EQUITY (DEFICIENCY),
September 30, 2001 $(121,357) $692,566 $571,209
========= ======== ========
The accompanying notes are an integral part of these financial statements.
3
REAL ESTATE ASSOCIATES LIMITED
(a California limited partnership)
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(Unaudited)
2001 2000
-------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(82,146) $ (90,563)
Adjustments to reconcile net loss to net cash
used in operating activities:
Equity in income of limited partnerships
and amortization of acquisition costs (65,587) (64,200)
Decrease in due from general partner 23,096
Increase in accrued fees and
expenses due to general partner 63,583
Increase in accounts payable 44,232 599
-------- ---------
Net cash used in operating activities (16,822) (154,164)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from limited partnership
recognized as return of capital 40,044 35,733
Advances to limited partnerships (23,000) (24,000)
-------- ---------
Net cash provided by investing activities 17,044 11,733
-------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 222 (142,431)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,511 203,866
-------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,733 61,435
======== =========
The accompanying notes are an integral part of these financial statements.
4
REAL ESTATE ASSOCIATES LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
GENERAL
The information contained in the following notes to the financial
statements is condensed from that which would appear in the annual
audited financial statements; accordingly, the financial statements
included herein should be reviewed in conjunction with the financial
statements and related notes thereto contained in the annual report for
the year ended December 31, 2000 prepared by Real Estate Associates
Limited (the "Partnership.") Accounting measurements at interim dates
inherently involve greater reliance on estimates than at year end. The
results of operations for the interim periods presented are not
necessarily indicative of the results for the entire year.
In the opinion of the Partnership, the accompanying unaudited financial
statements contain all adjustments (consisting primarily of normal
recurring accruals) necessary to present fairly the financial position
as of September 30, 2001, and the results of operations and changes in
cash flows for the six and three months then ended.
The general partners have a 1 percent interest in profits and losses of
the Partnership. The limited partners have the remaining 99 percent
interest which is allocated in proportion to their respective individual
investments. National Partnership Investments Corp. (NAPICO) is the
managing general partner of the Partnership. Casden Properties Inc. owns
a 95.25% economic interest in NAPICO, with the balance owned by Casden
Investment Corporation ("CIC"). CIC, which is wholly owned by Alan I.
Casden, owns 95% of the voting common stock of NAPICO.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of
America.
RECENT ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board issued SFAS No.
141, "Business Combinations" and SFAS No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 141 was effective immediately and SFAS 142
will be effective January 2002. The new standards are not expected to
have a significant impact on the Partnership's financial statements.
5
REAL ESTATE ASSOCIATES LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2001
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
METHOD OF ACCOUNTING FOR INVESTMENT IN LIMITED PARTNERSHIPS
The investment in limited partnerships is accounted for on the equity
method. Acquisition, selection fees and other costs related to the
acquisition of the projects have been capitalized to the investment
account and are being amortized on a straight line basis over the
estimated lives of the underlying assets, which is generally 30 years.
NET LOSS PER LIMITED PARTNERSHIP INTEREST
Net loss per limited partnership interest was computed by dividing the
limited partners' share of net loss by the number of limited partnership
interests outstanding during the period. The number of limited
partnership interests was 16,505 for the periods presented.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and money market funds with an
original maturity of three months or less. The Partnership has its cash
and cash equivalents on deposit with high credit quality financial
institutions. At times, such cash and cash equivalents are in excess of
the FDIC insurance limit.
INCOME TAXES
No provision has been made for income taxes in the accompanying
financial statements since such taxes, if any, are the liability of the
individual partners.
6
REAL ESTATE ASSOCIATES LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2001
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
IMPAIRMENT OF LONG-LIVED ASSETS
The Partnership reviews long-lived assets to determine if there has been
any permanent impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable.
If the sum of the expected future cash flows is less than the carrying
amount of the assets, the Partnership recognizes an impairment loss.
The Partnership holds limited partnership interests in 9 limited
partnerships, located in 5 different states. The limited partnerships as
of September 30, 2001 own residential low income rental projects
consisting of 657 apartment units. The mortgage loans of these projects
are payable to or insured by various governmental agencies.
The Partnership, as a limited partner, is entitled from 50 percent to 99
percent of the profits and losses in the limited partnerships.
Equity in losses of limited partnerships are recognized in the financial
statements until the limited partnership investment account is reduced
to a zero balance. Losses incurred after the limited partnership
investment account is reduced to zero are not recognized. The cumulative
amount of the unrecognized equity in losses of certain limited
partnerships was in the aggregate approximately $3,560,000 and
$3,541,631 as of September 30, 2001 and December 31, 2000, respectively.
Distributions from the limited partnerships are accounted for as a
return of capital until the investment balance is reduced to zero.
Subsequent distributions received are recognized as income.
The following is a summary of the investments in limited partnerships
for the nine months ended September 30, 2001:
Balance, beginning of period $ 661,411
Cash distribution recognized as return of capital (40,044)
Advances to limited partnerships 23,000
Amortization of acquisition costs (2,090)
Equity in income of limited partnerships 67,677
---------
Balance, end of period $ 709,954
=========
7
REAL ESTATE ASSOCIATES LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2001
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED):
The following are unaudited combined estimated statements of operations
for the nine and three months ended September 30, 2001 and 2000 for the
limited partnerships in which the Partnership has investments:
Nine months Three months Nine months Three months
ended ended ended ended
Sept. 30, 2001 Sept. 30, 2001 Sept. 30, 2000 Sept. 30, 2000
-------------- -------------- -------------- --------------
REVENUES
Rental and other $3,045,000 $1,015,000 $3,130,000 $1,044,000
EXPENSES
Depreciation 588,000 196,000 569,000 190,000
Interest 636,000 212,000 666,000 222,000
Operating 1,773,000 591,000 1,729,000 576,000
---------- ---------- ---------- ----------
2,997,000 999,000 2,964,000 988,000
---------- ---------- ---------- ----------
NET INCOME $48,000 $16,000 $166,000 $56,000
========== ========== ========== ==========
NAPICO, or one of its affiliates, is the general partner and property
management agent for certain of the limited partnerships included above.
The Local Partnerships pay the affiliate property management fees in the
amount of 5 percent of their gross rental revenues and data processing
fees. The amounts paid were approximately $2,995 for the nine months
ended September 30, 2001.
Under recently adopted law and policy, the United States Department of
Housing and Urban Development ("HUD") has determined not to renew the
Housing Assistance Payment ("HAP") Contracts on a long term basis on the
existing terms. In connection with renewals of the HAP Contracts under
such new law and policy, the amount of rental assistance payments under
renewed HAP Contracts will be based on market rentals instead of above
market rentals, which may be the case under existing HAP Contracts. The
payments under the renewed HAP Contracts may not be in an amount that
would provide sufficient cash flow to permit owners of properties
subject to HAP Contracts to meet the debt service requirements of
existing loans insured by the Federal Housing Administration of HUD
("FHA") unless such mortgage loans are restructured. In order to address
the reduction in payments under HAP Contracts as a result of this new
policy, the Multi-family Assisted Housing Reform and Affordability Act
of 1997 ("MAHRAA"), which was adopted in
8
REAL ESTATE ASSOCIATES LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2001
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED):
October 1997, provides for the restructuring of mortgage loans insured
by the FHA with respect to properties subject to the Section 8 program.
Under MAHRAA, an FHA-insured mortgage loan can be restructured into a
first mortgage loan which will be amortized on a current basis and a low
interest second mortgage loan payable to FHA which will only be payable
on maturity of the first mortgage loan. This restructuring results in a
reduction in annual debt service payable by the owner of the FHA-insured
mortgage loan and is expected to result in an insurance payment from FHA
to the holder of the FHA-insured loan due to the reduction in the
principal amount. MAHRAA also phases out project-based subsidies on
selected properties serving families not located in rental markets with
limited supply, converting such subsidies to a tenant-based subsidy.
When the HAP Contracts are subject to renewal, there can be no assurance
that the local limited partnerships in which the Partnership has an
investment will be permitted to restructure its mortgage indebtedness
under MAHRAA. In addition, the economic impact on the Partnership of the
combination of the reduced payments under the HAP Contracts and the
restructuring of the existing FHA-insured mortgage loans under MAHRAA is
uncertain.
On December 30, 1998, after obtaining the consents of the limited
partners, the Partnership sold its limited partnership interests in 8
local limited partnerships to subsidiaries of Casden Properties Inc. The
sale resulted in cash proceeds to the Partnership of $3,900,000 which
was collected in 1999. In March 1999, the Partnership made cash
distributions of $3,861,000 to the limited partners and $39,000 to the
general partners, primarily using proceeds from the sale of the
partnership interests.
NOTE 3 - ACCRUED FEES AND EXPENSES DUE TO GENERAL PARTNER
Under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to NAPICO for an annual
management fee equal to .5 percent of the original invested assets of
the limited partnerships. Invested assets is defined as the costs of
acquiring project interests, including the proportionate amount of the
mortgage loans related to the Partnership's interest in the capital
accounts of the respective partnerships. The management fee incurred was
approximately $80,000 for the nine months ended September 30, 2001 and
2000.
The Partnership reimburses NAPICO for certain expenses. The expense
incurred to NAPICO was approximately $7,020 and $5,300 for the nine
months ended September 30, 2001 and 2000, respectively, and is included
in administrative expenses.
9
REAL ESTATE ASSOCIATES LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2001
NOTE 3 - ACCRUED FEES AND EXPENSES DUE TO GENERAL PARTNER (CONTINUED)
As of September 30, 2001, the fees and expenses of $63,583 due the
general partner exceeded the Partnership's cash. The general partner,
during the forthcoming year, will not demand payment of amounts due in
excess of such cash or such that the Partnership would not have
sufficient operating cash; however, the Partnership will remain liable
for all such amounts.
NOTE 4 - CONTINGENCIES
In April 2001, a lawsuit was filed against the Partnership by a limited
partner. The lawsuit seeks equitable relief for access to the
Partnership's books and records and unspecified damages for breach of
fiduciary duty. The Partnership has provided the plaintiff access to the
requested books and records and the matter is schedule for trial on May
15, 2002.
On August 27, 1998, two investors holding an aggregate of eight units of
limited partnership interests in Real Estate Associates Limited III (an
affiliated partnership in which NAPICO is the managing general partner)
and two investors holding an aggregate of five units of limited
partnership interest in Real Estate Associates Limited VI (another
affiliated partnership in which NAPICO is the managing general partner)
commenced an action in the United States District Court for the Central
District of California against the Partnership, NAPICO and certain other
affiliated entities. The complaint alleges that the defendants breached
their fiduciary duty to the limited partners of certain NAPICO managed
partnerships and made materially false and misleading statements in the
consent solicitation statements sent to the limited partners of such
partnerships relating to approval of the transfer of partnership
interests in limited partnerships, owning certain of the properties, to
Casden Properties Inc., which was organized by an affiliate of NAPICO.
The plaintiffs seek equitable relief, as well as compensatory damages
and litigation related costs. On August 4, 1999, one investor holding
one unit of limited partnership interest in Housing Programs Limited
(another affiliated partnership in which NAPICO is the managing general
partner) commenced a virtually identical action in the United States
District Court for the Central District of California against the
Partnership, NAPICO and certain other affiliated entities. The second
action has been subsumed in the first action, which has been certified
as a class action. NAPICO, the managing general partner of such
partnerships, and the other defendants believe that the plaintiffs'
claims are without merit and are contesting the actions vigorously.
The managing general partner of the Partnership is a plaintiff in
various lawsuits and has also been named a defendant in other lawsuits
arising from transactions in the ordinary course of business.
10
REAL ESTATE ASSOCIATES LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2001
NOTE 4 -- CONTINGENCIES (CONTINUED)
In the opinion of management and the managing general partner, the above
claims will not result in any material liability to the Partnership.
NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure about
Fair Value of Financial Instruments," requires disclosure of fair value
information about financial instruments. The carrying amounts of assets
and liabilities reported on the balance sheets that require such
disclosure approximate fair value due to their short-term maturity.
11
REAL ESTATE ASSOCIATES LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
SEPTEMBER 30, 2001
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary sources of funds include interest income
earned from investing available cash and distributions from limited
partnerships in which the Partnership has invested. It is not expected
that any of the local limited partnerships in which the Partnership has
invested will generate cash flow sufficient to provide for distributions
to limited partners in any material amount. The Partnership made a
distribution to investors on March 12, 1999, primarily using proceeds
from the disposition of its investments in certain limited partnerships.
RESULTS OF OPERATIONS
Partnership revenues consist primarily of interest income earned on
certificates of deposit and other temporary investment of funds not
required for investment in local partnerships.
Operating expenses consist primarily of recurring general and
administrative expenses and professional fees for services rendered to
the Partnership. In addition, an annual Partnership management fee in an
amount equal to .5 percent of investment assets is payable to the
managing general partner.
The Partnership accounts for its investments in the local limited
partnerships on the equity method, thereby adjusting its investment
balance by its proportionate share of the income or loss of the local
limited partnerships. The equity in income of limited partnerships is
recognized from two investee limited partnerships. All other investee
limited partnerships have reduced their investment balances to zero and
as a result thereof, the Partnership does not recognize equity in losses
from those investments in accordance with the equity accounting method.
Distributions received from limited partnerships are recognized as
return of capital until the investment balance has been reduced to zero
or to a negative amount equal to future capital contributions required.
Subsequent distributions received are recognized as income.
Except for money market funds, the Partnership's investments are
entirely interests in other limited partnerships owning government
assisted projects. Available cash is invested in these funds earning
interest income as reflected in the statements of operations. These
investments can be converted to cash to meet obligations as they arise.
12
REAL ESTATE ASSOCIATES LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
SEPTEMBER 30, 2001
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
Under recently adopted law and policy, the United States Department of
Housing and Urban Development ("HUD") has determined not to renew the
Housing Assistance Payment ("HAP") Contracts on a long term basis on the
existing terms. In connection with renewals of the HAP Contracts under
such new law and policy, the amount of rental assistance payments under
renewed HAP Contracts will be based on market rentals instead of above
market rentals, which may be the case under existing HAP Contracts. The
payments under the renewed HAP Contracts may not be in an amount that
would provide sufficient cash flow to permit owners of properties
subject to HAP Contracts to meet the debt service requirements of
existing loans insured by the Federal Housing Administration of HUD
("FHA") unless such mortgage loans are restructured. In order to address
the reduction in payments under HAP Contracts as a result of this new
policy, the Multi-family Assisted Housing Reform and Affordability Act
of 1997 ("MAHRAA"), which was adopted in October 1997, provides for the
restructuring of mortgage loans insured by the FHA with respect to
properties subject to the Section 8 program. Under MAHRAA, an
FHA-insured mortgage loan can be restructured into a first mortgage loan
which will be amortized on a current basis and a low interest second
mortgage loan payable to FHA which will only be payable on maturity of
the first mortgage loan. This restructuring results in a reduction in
annual debt service payable by the owner of the FHA-insured mortgage
loan and is expected to result in an insurance payment from FHA to the
holder of the FHA-insured loan due to the reduction in the principal
amount. MAHRAA also phases out project-based subsidies on selected
properties serving families not located in rental markets with limited
supply, converting such subsidies to a tenant-based subsidy.
When the HAP Contracts are subject to renewal, there can be no assurance
that the local limited partnerships in which the Partnership has an
investment will be permitted to restructure its mortgage indebtedness
under MAHRAA. In addition, the economic impact on the Partnership of the
combination of the reduced payments under the HAP Contracts and the
restructuring of the existing FHA-insured mortgage loans under MAHRAA is
uncertain.
On December 30, 1998, the Partnership sold its limited partnership
interests in 8 local limited partnerships to subsidiaries of Casden
Properties Inc. The sale resulted in cash proceeds to the Partnership of
$3,900,000, which was collected in 1999. In March 1999, the Partnership
made cash distributions of $3,861,000 to the limited partners and
$39,000 to the general partners, primarily using proceeds from the sale
of the partnership interests.
13
REAL ESTATE ASSOCIATES LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
SEPTEMBER 30, 2001
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In April 2001, a lawsuit was filed against the Partnership by a limited partner.
The lawsuit seeks equitable relief for access to the Partnership's books and
records and unspecified damages for breach of fiduciary duty. The Partnership
has provided the plaintiff access to the requested books and records and the
matter is schedule for trial on May 15, 2002.
On August 27, 1998, two investors holding an aggregate of eight units of limited
partnership interests in Real Estate Associates Limited III (an affiliated
partnership in which NAPICO is the managing general partner) and two investors
holding an aggregate of five units of limited partnership interest in Real
Estate Associates Limited VI (another affiliated partnership in which NAPICO is
the managing general partner) commenced an action in the United States District
Court for the Central District of California against the Partnership, NAPICO and
certain other affiliated entities. The complaint alleges that the defendants
breached their fiduciary duty to the limited partners of certain NAPICO managed
partnerships and made materially false and misleading statements in the consent
solicitation statements sent to the limited partners of such partnerships
relating to approval of the transfer of partnership interests in limited
partnerships, owning certain of the properties, to Casden Properties Inc., which
was organized by an affiliate of NAPICO. The plaintiffs seek equitable relief,
as well as compensatory damages and litigation related costs. On August 4, 1999,
one investor holding one unit of limited partnership interest in Housing
Programs Limited (another affiliated partnership in which NAPICO is the managing
general partner) commenced a virtually identical action in the United States
District Court for the Central District of California against the Partnership,
NAPICO and certain other affiliated entities. The second action has been
subsumed in the first action, which has been certified as a class action.
NAPICO, the managing general partner of such partnerships, and the other
defendants believe that the plaintiffs' claims are without merit and are
contesting the actions vigorously.
The managing general partner is involved in various lawsuits. None of these are
related to the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No exhibits are required per the provision of Item 6 of regulation S-K
and no reports on Form 8-K were filed during the quarter ended September
30, 2001.
14
REAL ESTATE ASSOCIATES LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
SEPTEMBER 30, 2001
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.
REAL ESTATE ASSOCIATES LIMITED
(a California limited partnership)
By: National Partnership Investments Corp.
General Partner
/s/ BRUCE NELSON
--------------------------------------
Bruce Nelson
President
Date: November 13, 2001
--------------------------------------
/s/ BRIAN H. SHUMAN
--------------------------------------
Brian H. Shuman
Chief Financial Officer
Date: November 13, 2001
--------------------------------------
15