1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 0-16805
ASSOCIATED PLANNERS REALTY FUND
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-4036980
--------------------------------- ---------------------
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5933 W. CENTURY BLVD., SUITE 900
LOS ANGELES, CALIFORNIA 90045
------------------------------------------
(Address of principal executive offices)
(Zip Code)
(310) 670-0800
------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
------- -------
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PART 1. FINANCIAL INFORMATION
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
==========================================================================================
MARCH 31, 1999 December 31, 1998
(UNAUDITED) (Audited)
- ------------------------------------------------------------------------------------------
ASSETS
Rental real estate held for sale, less accumulated
depreciation (Note 2) $4,481,023 $5,606,662
Cash and cash equivalents 1,333 257,749
Other assets 29,997 42,494
- ------------------------------------------------------------------------------------------
TOTAL ASSETS $4,512,353 $5,906,905
==========================================================================================
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Accounts payable:
Trade $ 9,837 $ 10,914
Related party (Note 4) 10,569 14,425
Notes payable (Note 3) 1,431,100 1,439,198
Security deposits and prepaid rent 26,013 30,020
- ------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,477,519 1,494,557
Minority interest -- 193,782
PARTNERS' EQUITY (NOTES 5 AND 6)
Limited partners:
$1,000 stated value per unit - authorized
7,500 units; issued and outstanding 7,499 2,953,167 4,164,156
General partner 81,667 54,410
- ------------------------------------------------------------------------------------------
TOTAL PARTNERS' EQUITY 3,034,834 4,218,566
- ------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $4,512,353 $5,906,905
==========================================================================================
See accompanying notes to financial statements.
3
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
LIMITED PARTNERS
-------------------- GENERAL
TOTAL UNITS AMOUNT PARTNER
----------- ----- ----------- -------
BALANCE AT DECEMBER 31, 1998 $ 4,218,566 7,499 $ 4,164,156 $54,410
Net income 414,720 -- 370,382 44,338
Distributions to limited partners (1,581,371) -- (1,581,371) --
Distributions to general partner (Note 4(a)) (17,081) -- -- (17,081)
----------- ----- ----------- -------
BALANCE AT MARCH 31, 1999 $ 3,034,834 7,499 $ 2,953,167 $81,667
=========== ===== =========== =======
THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
LIMITED PARTNERS
-------------------- GENERAL
TOTAL UNITS AMOUNT PARTNER
----------- ----- ----------- -------
BALANCE AT DECEMBER 31, 1997 $ 4,356,209 7,499 $ 4,303,000 $53,209
Net income (10,172) -- (12,873) 2,701
Distributions to limited partners (152,905) -- (152,905) --
Distributions to general partner (Note 4(a)) (16,989) -- -- (16,989)
----------- ----- ----------- -------
BALANCE AT MARCH 31, 1998 $ 4,176,143 7,499 $ 4,137,222 $38,921
=========== ===== =========== =======
See accompanying notes to financial statements.
4
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
=================================================================================
THREE MONTHS Three Months
ENDED Ended
MARCH 31, 1999 March 31, 1998
(UNAUDITED) (Unaudited)
- ---------------------------------------------------------------------------------
REVENUES
Rental (Note 2) $150,464 $ 166,154
Gain on sale of property (Note 2) 380,849 --
Interest 13,251 2,807
- ---------------------------------------------------------------------------------
544,564 168,961
- ---------------------------------------------------------------------------------
COSTS AND EXPENSES
Operating 39,186 56,002
Property taxes 10,626 15,237
Property management fees (Note 4 (c)) 7,569 7,145
General and administrative 18,849 14,412
Depreciation and amortization 31,847 41,308
Interest expense (Note 3) 21,767 39,323
- ---------------------------------------------------------------------------------
129,844 173,427
- ---------------------------------------------------------------------------------
INCOME FROM OPERATIONS 414,720 (4,466)
Minority interest in net loss (income)
of joint ventures -- 5,706
- ---------------------------------------------------------------------------------
NET INCOME (LOSS) $414,720 $ (10,172)
=================================================================================
NET INCOME (LOSS) PER LIMITED PARTNERSHIP
UNIT (Note 5) $ 49.39 $ (1.72)
=================================================================================
See accompanying notes to financial statements.
5
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
THREE MONTHS Three Months
ENDED Ended
MARCH 31, 1999 March 31, 1998
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (UNAUDITED) (Unaudited)
-------------- --------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $ 414,720 $ (10,172)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 31,847 41,308
Gain on sale of property (380,849) --
Minority interest in net income (loss) -- (5,706)
Increase (decrease) from changes in:
Other assets 12,497 (18,478)
Accounts payable (4,933) 6,988
Security deposits (4,007) 9,018
----------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 69,275 22,958
----------- ---------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Proceeds from sale of rental real estate 1,283,129 --
----------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES 1,283,129 --
----------- ---------
CASH FLOWS (USED IN) FINANCING ACTIVITIES:
Repayment of notes payable (8,098) (7,397)
Distributions to minority interests (2,270) (3,659)
Distributions to limited partners (1,581,371) (152,905)
Distributions to general partner (17,081) (16,989)
----------- ---------
NET CASH (USED IN) FINANCING ACTIVITIES (1,608,820) (180,950)
----------- ---------
NET CASH (DECREASE) IN CASH AND CASH EQUIVALENTS (256,416) (157,992)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 257,749 287,641
----------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,333 $ 129,649
=========== =========
See accompanying notes to financial statements.
6
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
BUSINESS
Associated Planners Realty Fund (the "Partnership"), a California limited
partnership, was formed on November 19, 1985 under the Revised Limited
Partnership Act of the State of California. The Partnership was formed to
acquire income-producing real property throughout the United States with an
emphasis on properties located in California and the southwestern states. The
Partnership purchased these properties on an all cash basis or on a moderately
leveraged basis and intended on owning and operating such properties for
investment over an anticipated holding period of approximately five to ten
years.
BASIS OF PRESENTATION
The consolidated financial statements do not give effect to any assets that the
partners may have outside of their interest in the partnership, nor to any
personal obligations, including income taxes, of the partners.
The consolidated financial statements include the accounts of Associated
Planners Realty Fund and all joint ventures in which it has a majority interest.
RENTAL REAL ESTATE AND DEPRECIATION
Assets are stated at cost. Depreciation is computed using the straight-line
method over estimated useful lives ranging from 5 to 35 years.
In the event that facts and circumstances indicate that the cost of an asset may
be impaired, an evaluation of recoverability would be performed. If an
evaluation is required, the estimated future undiscounted cash flows associated
with the asset would be compared to the carrying amount to determine if a
write-down to market value is required.
RENTAL INCOME
Rental revenue is recognized on a straight-line basis to the extent that rental
revenue is deemed collectible and collection is probable.
STATEMENTS OF CASH FLOWS
For the purposes of the statements of cash flows, the Partnership considers cash
in the bank and all highly liquid investments purchased with original maturities
of three months or less, to be cash and cash equivalents.
7
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT
Net income (loss) per limited partnership unit is calculated by dividing the
limited partners share of net income by the weighted average number of limited
partnership units outstanding for the period.
8
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1998
NOTE 1 - PRESENTATION OF INTERIM INFORMATION
In the opinion of the General Partner of Associated Planners Realty Fund (the
"Partnership"), the accompanying unaudited financial statements include all
normal adjustments considered necessary to present fairly the financial position
as of March 31, 1999, and the results of operations and cash flows for the three
months ended March 31, 1999 and 1998. Interim results are not necessarily
indicative of results for a full year.
The financial statements and notes are presented as permitted by Form 10Q, and
do not contain certain information included in the Partnership's audited
consolidated financial statements and notes for the fiscal year ended December
31, 1998.
NOTE 2 - RENTAL REAL ESTATE HELD FOR SALE
As of March 31, 1999, the Partnership has interests in the following two rental
real estate properties.
Location (Property Name) Date Purchased Cost
==================================================================================
Clovis, California January 23, 1987 2,854,221
Simi Valley, California November 12, 1987 2,616,523
March 31, December 31,
The major categories of property are: 1999 1998
==================================================================================
Land $1,631,966 $2,361,894
Building and Improvements 3,792,117 4,629,518
Furniture and Fixtures 46,660 46,660
- ----------------------------------------------------------------------------------
5,470,743 7,038,072
Less accumulated depreciation 989,720 1,431,410
- ----------------------------------------------------------------------------------
Net rental real estate held for sale $4,481,023 $5,606,662
==================================================================================
A significant portion of the Partnership's rental revenue was earned from
tenants whose individual rents represent more than 10% of total rental revenue.
Specifically:
Two tenants accounted for 52% and 45%, respectively, for the three months ended
March 31, 1999;
Three tenants accounted for 48%, 32%, and 11%, respectively, for the three
months ended March 31, 1998;
9
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1998 (CONTINUED)
NOTE 3 - NOTES PAYABLE
In October 1996, the Partnership obtained permanent financing secured by a first
deed of trust from a major insurance company to replace the construction loan on
Shaw Villa Shopping Center. The terms of the loan are as follows: Principal -
$1,500,000; Interest Rate of 9.1% fixed for five years then may be adjusted to
the weekly average of the five year Treasury Note yield for the seventh week
prior to the adjustment date (5th anniversary date) plus 250 basis points, but
in no event less than the existing rate, nor to exceed the maximum rate allowed
by law; Amortized over twenty years; due November 1, 2006; and current monthly
payments of principal, interest and property taxes of $14,919. The note payable
balance is $1,431,100 and $1,462,420 at March 31, 1999 and 1998.
The carrying amount of the loan is a reasonable estimate of fair value because
the interest rates approximate the borrowing rates currently available for
mortgage loans with similar terms and average maturities.
The aggregate annual future maturities at March 31, 1999 are as follows:
AMOUNT
=================================================================================
1999 $ 25,426
2000 36,705
2001 40,187
2002 44,002
2003 48,177
Thereafter 1,236,603
- --------------------------------------------------------------------------------
Total $ 1,431,100
=================================================================================
NOTE 4 - RELATED PARTY TRANSACTIONS
(a) For Partnership management services rendered to the Partnership, the General
Partner is entitled to receive 10% of all distributions of cash from operations.
These amounts totaled $17,081 for the quarter ended March 31, 1999 and $16,989
for the quarter ended March 31, 1998. See also Note 6.
(b) For administrative services provided to the Partnership, the General Partner
is entitled to reimbursement for the cost of certain personnel and relevant
expenses. These amounts totaled $3,000 for the three months ended March 31, 1999
and March 31, 1998.
10
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1998 (CONTINUED)
NOTE 4 - RELATED PARTY TRANSACTIONS (CONTINUED)
(c) Property management fees incurred, in accordance with the Partnership
Agreement, to West Coast Realty Management, Inc., an affiliate of the corporate
General Partner, totaled $7,569 for the quarter ended March 31, 1999, and $7,145
for the quarter ended March 31, 1998.
NOTE 5 - NET INCOME (LOSS) AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP LIST
The Net Income (Loss) per Limited Partnership Unit was computed in accordance
with the partnership agreement using the weighted average number of outstanding
limited partnership units of 7,499 for 1999 and 1998.
The Limited Partner cash distributions, computed in accordance with the
Partnership Agreement, were as follows:
Outstanding Amount Total
Record Date Units Per Unit Distribution
=======================================================================================
March 19, 1999 7,499 $191.03 to $188.52 $ 1,427,641
December 31, 1998 7,499 $ 20.50 153,730
- ---------------------------------------------------------------------------------------
Total $ 1,581,371
=======================================================================================
June 30, 1998 7,499 $ 14.00 $ 104,986
December 31, 1997 7,499 20.39 152,905
- ---------------------------------------------------------------------------------------
Total $ 257,891
=======================================================================================
In the second half of 1997, the Partnership began paying distributions on a
semi-annual basis. This change has permitted the Partnership to operate more
efficiently with lower Partnership operating expenses. These semi-annual
distributions will include cash distributions for the previous six months of
operations.
11
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1998 (CONTINUED)
NOTE 6 - REALLOCATION OF PARTNER BALANCES
Per the provisions of Section 11.1 (V)(ii) of the Partnership Agreement, the
General Partner determined that action was necessary to "cure the ambiguities"
caused by the Agreement itself. The ambiguity involved the treatment of the
partnership management fee, being paid to the General Partner, as an expense of
the Partnership, when in fact, it should have been treated as a general partner
withdrawal of capital. In order to properly reflect this inception to date
correction, a transfer of $305,548 was made from the General Partner's capital
account to the Limited Partners capital account during the quarter ended March
31, 1996.
NOTE 7 - LIQUIDATION OF PARTNERSHIP
At March 31, 1999, all of the Partnership's remaining properties are being held
for sale. The General Partner plans to liquidate the Partnership after the final
property is sold. There is no assurance that the remaining properties will be
sold and the Partnership will be liquidated during 1999. The financial
statements do not contain any adjustments that might result from the liquidation
of the Partnership.
12
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements in the Management Discussion and Analysis constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking
statements involve known and unknown risks, uncertainties, and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements,
expressed of implied by such forward-looking statements.
INTRODUCTION
Associated Planners Realty Fund (the "Partnership") was organized in November
1985, under the California Revised Limited Partnership Act. The Partnership
began offering units for sale on March 28, 1986. As of December 27, 1987, the
Partnership had raised $7,499,000 in gross capital contributions. The
Partnership netted approximately $6,720,000 after sales commissions and
syndication costs.
The Partnership was organized for the purpose of investing in, holding, and
managing improved, leveraged income-producing property, such as residential
property, office buildings, commercial buildings, industrial properties, and
shopping centers. The Partnership intended to own and operate such properties
for investment over an anticipated holding period of approximately five to ten
years.
The Partnership's principal investment objectives are to invest in rental real
estate properties which will:
(1) Preserve and protect the Partnership's invested capital;
(2) Provide for cash distributions from operations;
(3) Provide gains through potential appreciation; and
(4) Generate Federal income tax deductions so that during the early
years of property operations, a portion of cash distributions may
be treated as a return of capital for tax purposes and, therefore,
may not represent taxable income to the limited partners.
The ownership and operation of any income-producing real estate is subject to
those risks inherent in all real estate investments, including national and
local economic conditions, the supply and demand for similar types of
properties, competitive marketing conditions, zoning changes, possible casualty
losses, increases in real estate taxes, assessments, and operating expenses, as
well as others.
13
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
INTRODUCTION (CONTINUED)
The Partnership is operated by the General Partner subject to the terms of the
Amended and Restated Agreement of Limited Partnership. The Partnership has no
employees, and all administrative services are provided by West Coast Realty
Advisors, Inc., the General Partner.
RESULTS OF OPERATIONS - MARCH 31, 1999 VS. MARCH 31, 1998
Operations for the quarter ended March 31, 1999, reflect an entire period of
operations for the Partnership's properties, except for the two properties
located in Encinitas, California which were sold in January 1999.
Net income for the quarter ended March 31, 1999 of $414,720 was higher than the
net loss for the quarter ended March 31, 1998 of $10,172 due primarily to a
$380,849 gain recognized from the sale of the Encinitas, California property.
Rental revenue for the three months ended March 31, 1999 decreased from that for
the three months ended March 31, 1998 by $15,690, due to lower rents collected
from multi-tenant Santa Fe Business Park Building, as a result of these two
properties being sold during January 1999. Interest income increased $10,444 for
the three months ended March 31, 1999 as compared to the three months ended
March 31, 1998 due to higher cash balances maintained in money market accounts
during the quarter ended March 31, 1999, compared to the quarter ended March 31,
1998
Operating expenses decreased $16,816 (30%) as a result of lower common area
maintenance charges, utilities and consulting fees during the quarter ended
March 31, 1999 compared to the quarter ended March 31, 1998. General and
administrative expenses increased $4,437 (31%) due to higher legal and
accounting expenses. Depreciation expense decreased $9,461 (23%) during the
quarter ended March 31, 1999 compared to the quarter ended March 31, 1998
primarily due to the sale of the Encinitas properties during January 1999.
During the quarter ended March 31, 1999, the Partnership distributed $1,598,452
to the general and limited partners and $2,270 to the minority interest partner,
as compared to the quarter ended March 31, 1998 when the Partnership distributed
$169,894 to the general and limited partners and $3,659 to the minority interest
partner. This increase was primarily due to the Partnership selling the two
properties located in Encinitas, California in January 1999. Cash basis income
for the quarter ended March 31, 1999 was $65,718. This was derived by adding
depreciation and amortization expense to net income, less the gain on sale of
properties. In contrast, cash basis income for the quarter ended March 31, 1998
was $31,136.
14
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS - MARCH 31, 1999 VS. MARCH 31, 1998 (CONTINUED)
Overall the Partnership generated $65,718 in income from operations before
depreciation expense of $31,847 and $380,849 gain from the sale of the
Encinitas, California properties for the quarter ended March 31, 1999. This
compares favorably to the quarter ended March 31, 1997 when cash basis income
totaled $31,136 before depreciation expense of $41,308. Net income (loss) per
limited partnership unit increased from $(1.72) in 1998 to $49.39 in 1999. The
number of limited partnership units outstanding in each quarter was 7,499.
RESULTS OF OPERATIONS - MARCH 31, 1998 VS. MARCH 31, 1997
Operations for the quarter ended March 31, 1997, reflect an entire period of
operations for the Partnership's properties.
Net loss for the quarter ended March 31, 1998 ($10,172) was lower than the net
income for the quarter ended March 31, 1997 ($48,588) due to lower rents
collected from the Santa Fe Business Park properties.
Rental revenue for the three months ended March 31, 1998 decreased from that for
the three months ended March 31, 1997 by approximately $22,800, due to lower
rents collected from multi-tenant Santa Fe Business Park Building. Interest
income increased $419 (18%) during the quarter ended March 31, 1998 when
compared to the quarter ending March 31, 1997. This increase was due to the
Partnership converting from a quarterly distribution cycle to a semi-annual
distribution cycle with the first record date and payment date being December
31, 1997 and February 6, 1998, respectively. Hence, net income for the third
quarter 1997 was held in a interest bearing account and paid on February 6,
1998. In contrast, the net income for the third quarter 1996 was paid in
November 1996.
Operating expenses increased $22,916 (69%) as a result of higher leasing
commissions and utilities during the quarter ended March 31, 1998 compared to
the quarter ended March 31, 1997. General and administrative expenses decreased
$2,390 (14%) due to lower insurance and legal and accounting expenses.
Depreciation expense remained constant for the quarters ending March 31, 1998
and March 31, 1997.
15
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS - MARCH 31, 1998 VS. MARCH 31, 1997 (CONTINUED)
During the quarter ended March 31, 1998, the Partnership distributed $169,894 to
the general and limited partners and $3,659 to the minority interest partner, as
compared to the quarter ended March 31, 1997 when the Partnership distributed
$76,657 to the general and limited partners and $2,535 to the minority interest
partner. This increase was due to the Partnership converting from a quarterly
distribution cycle to a semi-annual distribution cycle with the first record
date and payment date being December 31, 1997 and February 6, 1998,
respectively. Cash basis income for the quarter ended March 31, 1998 was
$31,136. This was derived by adding depreciation and amortization expense to net
income. In contrast, cash basis income for the quarter ended March 31, 1997 was
$89,841.
Overall the Partnership generated $31,136 in income from operations before
depreciation expense of $41,308 for the quarter ended March 31, 1998. This
compares unfavorably to the quarter ended March 31, 1997 when cash basis income
totaled $89,841 before depreciation expense of $41,253. Net income (loss) per
limited partnership unit decreased from $5.34 in 1997 to ($1.72) in 1998. The
number of limited partnership units outstanding in each quarter was 7,499.
LIQUIDITY AND CAPITAL RESOURCES
During the quarter ended March 31, 1998, the Partnership made distributions to
the limited partners totaling $1,581,371 of which $1,474,510 constituted a
return of capital. This includes a distribution of $1,427,641 from the sale of
the two properties located in Encinitas, California, which were sold in January
1999. The remaining distribution of $153,730 or $20.50 per limited partnership
unit compares unfavorably to the $190,529 in cash generated from property
operations (net income plus depreciation expense). Additionally, the partnership
distributed $17,081 to the general partner and $2,270 to the minority interest
partner during the quarter ended March 31, 1999.
Management uses cash as its primary measure of the Partnership's liquidity. The
amount of cash that represents adequate liquidity for a real estate limited
partnership, in the short-term and long-term, depends on several factors. Among
them are:
1. Relative risk of the partnership;
2. Condition of the partnership's properties;
3. Stage in the partnership's life cycle (e.g., money-raising, acquisition,
operating or disposition phase); and
4. Distributions to partners.
The Partnership believes that it has the ability to generate sufficient cash to
meet both short-term and long-term liquidity needs, based upon the above four
factors.
16
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The first factor refers to the risk of Partnership's investments. The
Partnership's investments in properties were paid for in cash or on a moderately
leveraged basis.
The second factor relates to the condition of the Partnership's properties. All
Partnership properties are in good condition. There is no foreseeable need to
increase reserves to fund deferred or unusual maintenance and repair
expenditures.
The third factor relates to life cycle. The Partnership completed its funding,
acquisition and operating stages of properties in previous years. Thus, the
Partnership is in the disposition stage. As part of the disposition stage, the
Partnership has attempted to list each property for sale. Additionally, in
January 1999 the Partnership sold the two properties located in Encinitas,
California to unaffiliated buyers for sales price of $775,000 and $900,000,
respectively. The proceeds from these property sales were distributed to the
limited and general partners in March 1999 in accordance with the Partnership
Agreement.
The fourth factor relates to Partnership distributions. The Partnership is
currently making semi-annual distributions from operations. Such distributions
are subject to payments of Partnership expenses and reasonable reserves for
expenses, maintenance, and replacements. In addition, at least six months of
cash profits are left in the Partnership's balance sheet at each quarter end,
since the Partnership makes distributions to the limited partners one month
after each record date of June 30, and December 31. The General Partner believes
that the Partnership will have the ability to meet its cash requirements in both
the short-term and long-term.
During the quarter ended March 31, 1999, the General Partner earned partnership
management fees of $17,081. Partnership management fees were paid and calculated
in accordance with the partnership agreement.
Slowdowns in the economy, inflation and changing prices have had a nominal
effect on the Partnership's revenues and income from continuing operations.
During the thirteen years of the Partnership's existence, inflationary pressures
in the U.S. economy have been minimal, and this has been consistent with the
experience of the Partnership in operating rental real estate in California. The
Partnership has several lease clauses with its tenants that will help alleviate
much of the negative impact of inflation. Among these are:
A. Triple net leases at the Shaw Villa Shopping Center and Pacific
Bell Building which give the Partnership an ability to pass on
higher operating costs to its tenants.
17
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The General Partner is attempting to sell the remaining two properties owned by
the Partnership. Once the sale of the Shaw Villa Shopping Center and Pacific
Bell Building properties are sold, the net proceeds will be distributed to the
limited and general partners in accordance with the partnership agreement, and
the partnership will then be terminated and dissolved.
CASH FLOWS - MARCH 31, 1999 VS. MARCH 31, 1998
Cash resources decreased $256,416 during the three months ended March 31, 1999
compared to a $157,992 decrease in cash resources for the three months ended
March 31, 1998. Cash provided by operating activities increased by $69,275 with
the largest contributor being $446,567 in cash basis net income, offset by
$380,849, resulting from the gain on the sale of the Encinitas, California, for
the three months ended March 31, 1999. In contrast, the three months ended March
31, 1998 provided $22,958 in cash from operating activities due primarily to
$31,136 in cash basis net income. The sole source of cash from investing
activities during the quarter ended March 31, 1999 was $1,283,129 in proceeds
received from the sale of the two properties located in Encinitas, California.
In contrast, there were no investing activities during the quarter ended March
31, 1998. For the three months ended March 31, 1999, financing activities used
$1,608,820 via distributions to limited, general and minority partners totaling
$1,600,722 and repayments on notes payable of $8,098. In contrast, for the three
months ended March 31, 1998, financing activities used an additional $180,950
via distributions to these same parties totaling $173,553 and repayments on
notes payable of $7,397.
CASH FLOWS - MARCH 31, 1998 VS. MARCH 31, 1997
Cash resources decreased $157,992 during the three months ended March 31, 1998
compared to a $1,400 decrease in cash resources for the three months ended March
31, 1997. Cash provided by operating activities increased by $22,958 with the
largest contributor being $31,136 in cash basis net income for the three months
ended March 31, 1998. In contrast, the three months ended March 31, 1997
provided $105,527 in cash from operating activities due primarily to $89,841 in
cash basis net income. The three months ended March 31, 1998 did not have any
investing activities. In contrast, the sole use of cash in investing activities
for the three months ended March 31, 1997 was $20,980 expended for tenant
improvements to an existing tenant at the Shaw Villa Shopping Center. For the
three months ended March 31, 1998, financing activities used $180,950 via
distributions to limited, general and minority partners totaling $173,553 and
repayments on notes payable of $7,397. In contrast, for the three months ended
March 31, 1997, financing activities used an additional $85,947 via
distributions to these same parties totaling $79,192 and repayments on notes
payable of $6,755.
18
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
IMPACT OF YEAR 2000
Many existing computer systems and applications, and other control devices, use
only two digits to identify a year in the date field, without considering the
impact of the upcoming change in the century. As a result, such systems and
applications could fail or create erroneous results unless corrected so that
they can process data related to the year 2000. The General Partner relies on
its systems, applications and devices in operating and monitoring all major
aspects of its business, including financial systems (such as general ledger,
accounts receivable, accounts payable and shareholder servicing), and embedded
computer chips, networks and telecommunications equipment and end products. The
General Partner also relies, directly and indirectly, on external systems of
business enterprises such as its advisor, lessees, suppliers, creditors,
financial organizations, and of governmental entities for accurate exchange of
data. The General Partner's current estimate is that the costs associated with
the year 2000 issue will not have a material adverse effect on the results of
operations or financial position of the General Partner. However, despite the
General Partner's efforts to address the year 2000 impact on its internal
systems, the General Partner may not have fully identified such impact or
whether it can resolve it without disruption of its business and without
incurring significant expense. In addition, even if the internal systems of the
General Partner are not materially affected by the year 2000 issue, the General
Partner could be affected through disruption in the operations of the
enterprises with which the General Partner interacts.
19
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
PART II
O T H E R I N F O R M A T I O N
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) Information required under this section has been included in the
financial statements.
(b) Reports on Form 8-K
None
20
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ASSOCIATED PLANNERS REALTY FUND
A California Limited Partnership
(Registrant)
By: WEST COAST REALTY ADVISORS, INC.
A California Corporation,
General Partner
May 17, 1999 /s/ JOHN R. LINDSEY
---------------------------------
John R. Lindsey
Vice President/Treasurer
May 17, 1999 /s/ W. THOMAS MAUDLIN JR.
---------------------------------
W. Thomas Maudlin Jr.
President of General Partner