FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
March 31, 1999 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 March 31, 1999 the registrant had 78,625.10 units of limited partnership
interest outstanding.
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
INDEX
-----
PAGE NO.
--------
PART I: FINANCIAL INFORMATION
- ------- ---------------------
Balance Sheets -
March 31, 1999 and December 31, 1998 3
Statements of Operations -
Three Months Ended March 31, 1999 and 1998 4
Statements of Cash Flows -
Three Months Ended March 31, 1999 and 1998 5
Statements of Partners' (Deficit) Capital -
Three Months Ended March 31, 1999 and 1998 6
Notes to Financial Statements 7 - 21
PART II: MANAGEMENT'S DISCUSSION & ANALYSIS OF
- ----------------------------------------------
FINANCIAL CONDITION & RESULTS OF OPERATIONS 22 - 24
-------------------------------------------
PART III: FINANCIAL DATA SCHEDULE
- --------- -----------------------
-2-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
BALANCE SHEETS
--------------
March 31, 1999 and December 31, 1998
------------------------------------
(Unaudited)
March 31, December 31,
1999 1998
---- ----
ASSETS
- ------
Property, at cost:
Land $ 780,500 $ 780,500
Buildings and improvements 6,028,430 6,028,430
Furniture, fixtures and equipment 255,652 255,652
------------------ -----------------
7,064,582 7,064,582
Less accumulated depreciation 1,935,963 1,874,186
------------------ -----------------
Property, net 5,128,619 5,190,396
Investments in real estate joint ventures 196,203 230,429
Cash 739,545 842,779
Accounts receivable - affiliate 122,257 99,995
Escrow deposits 302,113 328,770
Mortgage costs, net of accumulated amortization
of $21,038 and $18,207 respectively 318,668 321,499
Other assets 30,770 31,676
------------------ -----------------
Total Assets $ 6,838,175 $ 7,045,544
================== =================
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Liabilities:
Mortgages payable $ 5,277,930 $ 5,309,087
Accounts payable and accrued expenses 231,386 232,180
Security deposits and prepaid rents 100,425 91,261
------------------ -----------------
Total Liabilities 5,609,741 5,632,528
------------------ -----------------
Partners' (Deficit) Capital:
General partners (147,674) (142,137)
Limited partners 1,376,108 1,555,153
------------------ -----------------
Total Partners' Capital 1,228,434 1,413,016
------------------ -----------------
Total Liabilities and Partners' Capital $ 6,838,175 $ 7,045,544
================== =================
See notes to financial statements
-3-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
Three Months Ended March 31, 1999 and 1998
------------------------------------------
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
---- ----
Income:
Rental $ 441,941 $ 394,281
Interest and other income 20,247 17,142
-----------------
------------------
Total income 462,188 411,423
------------------ -----------------
Expenses:
Property operations 338,662 404,170
Interest 112,597 115,984
Depreciation and amortization 64,608 64,608
Administrative:
To affiliates 41,143 41,463
Other 55,534 56,391
-----------------
------------------
Total expenses 612,544 682,616
------------------ -----------------
Loss before allocated loss from joint venture (150,356) (271,193)
Allocated loss from joint ventures (34,226) (28,386)
------------------ -----------------
Net loss $ (184,582) $ (299,579)
================== =================
Loss per limited partnership unit $ (2.28) $ (3.70)
================== =================
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 CASH FLOWS
------------------------
Three Months Ended March 31, 1999 and 1998
------------------------------------------
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
---- ----
Cash flow from operating activities:
Net loss $ (184,582) $ (299,579)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 64,608 64,749
Net loss from joint venture(s) 34,226 28,386
Changes in operating assets and liabilities:
Other assets 906 (1,040)
Accounts payable and accrued expenses (794) 26,724
Security deposits and prepaid rent 9,164 (39,567)
------------------ -----------------
Net cash used in operating activities (76,472) (220,327)
------------------ -----------------
Cash flow from investing activities:
(Increase) in accounts receivable - affiliates (22,262) -
Decrease in escrow deposits 26,657 47,457
------------------ -----------------
Net cash provided by investing activities 4,395 47,457
------------------ -----------------
Cash flows from financing activities:
Principal payments on mortgages and
net cash used in financing activities (31,157) (6,563)
------------------ -----------------
Decrease in cash (103,234) (179,433)
Cash - beginning of period 842,779 1,421,615
------------------ -----------------
Cash - end of period $ 739,545 $ 1,242,182
================== =================
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 112,597 $ 115,984
================== =================
See notes to financial statements
-5-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL
-----------------------------------------
Three Months Ended March 31, 1999 and 1998
------------------------------------------
(Unaudited)
General Limited Partners
Partners
Amount Units Amount
------ ----- ------
Balance, January 1, 1998 $ (122,707) 78,625.1 $ 2,438,063
Net loss (8,987) - (290,591)
------------------ -------------- ------------------
Balance, March 31, 1998 $ (131,694) 78,625.1 $ 2,147,472
================== ============== ==================
Balance, January 1, 1999 $ (142,137) 78,625.1 $ 1,555,153
Net loss (5,537) - (179,045)
------------------ -------------- ------------------
Balance, March 31, 1999 $ (147,674) 78,625.1 $ 1,376,108
================== ============== ==================
See notes to financial statements
-6-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Three Months Ended March 31, 1999 and 1998
------------------------------------------
(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 three month periods ended
March 31, 1999 and 1998, 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.
-7-
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
------------------------------------------
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.
Cash
----
For purposes of reporting cash flows, cash includes the following items:
cash on hand; cash in checking; and money market savings.
-8-
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
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.
Mortgage Costs
--------------
Mortgage costs incurred in obtaining property mortgage financing have been
deferred and are being amortized over the terms of the respective
mortgages.
Unconsolidated Joint Ventures
-----------------------------
The Partnership's investment in affiliated real estate joint venture(s)
are accounted for on the equity method. The joint venture(s) are not
consolidated in the Partnership's financial statements because the
Partnership is not the majority owner.
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 March 31, 1999 and 1998.
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.
-9-
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
Comprehensive Income
--------------------
The Partnership has adopted Statement of Financial Accounting Standards
(SFAS) No. 130, Reporting Comprehensive Income. SFAS 130 establishes
standards for reporting and display of comprehensive income and its
components in a full set of general purpose financial statements.
Comprehensive income is defined as "the change in equity of a business
during a period from transactions and other events and circumstances from
non-owner sources". Other than net income (loss), the Partnership has no
other sources of comprehensive income.
Segment Information
-------------------
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information establishes standards for the way public business enterprises
report information about operating segments in annual financial
statements. The Partnership's only operating segment is the ownership and
operation of income-producing real property for the benefit of its limited
partners.
4. ACQUISITION AND DISPOSITION OF RENTAL PROPERTY
----------------------------------------------
In June 1991 the Partnership acquired a 192 unit apartment complex
(Fairway Club, formerly 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.
5. MORTGAGES PAYABLE
-----------------
In connection with the acquisition of rental property, the Partnership
obtained mortgages as follows:
Fairway Club (formerly The Villa)
---------------------------------
A mortgage with a balance of $2,598,554 and $2,639,105 at March 31, 1999
and 1998, respectively, providing for monthly principal and interest
payments of $20,002, bearing interest at 8.30%. The note matures June
2027. The mortgage is secured by the assets of Fairway Club (formerly The
Villa) Apartment complex.
-10-
MORTGAGES PAYABLE (CONTINUED)
-----------------------------
Players Club
------------
A mortgage with a balance of $2,679,376 and $2,699,977 at March 31, 1999
and 1998, respectively, providing for principal and interest payments of
$20,824, bearing interest at 8.48%. The note matures June 2027.
The mortgage is secured by the assets of Players Club Apartment complex.
The aggregate maturities of mortgages payable for each of the next five
years are as follows:
Year Amount
---- ------
1999 $ 46,170
2000 50,196
2001 54,574
2002 59,333
2003 64,507
Thereafter 5,034,307
---------------
TOTAL $ 5,309,087
===============
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 $20,091 for both the three months ended
March 31, 1999 and 1998.
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 three months ended March 31, 1999 or 1998.
-11-
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 $122,257 at March 31, 1999.
The majority of this balance was reimbursed during the second quarter of
1999; the balance is in the process of being reimbursed.
Computer service charges for the partnerships are paid or accrued to an
affiliate of the General Partner. The fee is based upon the number of
apartment units and totaled $3,168 for the three months ended March 31,
1999 and 1998.
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.
-12-
INCOME TAXES (CONTINUED)
------------------------
The reconciliation of net loss for the three months ended March 31, 1999
and 1998 as reported in the statements of operations, and as would be
reported for tax purposes, is as follows:
March 31, March 31,
1999 1998
---- ----
Net loss - statement of operations $ ( 184,582) $ (299,554)
Add to (deduct from):
Difference in depreciation 7,800 8,348
Tax basis adjustments -
Joint Ventures 5,000 ( 17,973)
Other non-deductible expenses 15,600 -
------------- -------------
Net loss - tax return purposes $( 156,182) $ ( 309,179)
============= =============
The reconciliation of Partners' Capital as of March 31, 1999 and December
31, 1998 as reported in the balance sheet, and as reported for tax
purposes, is as follows:
March 31, December 31,
1999 1998
---- ----
Partners' Capital - balance sheet $ 1,228,434 $ 1,413,016
Add to (deduct from):
Accumulated difference in
depreciation ( 1,033) ( 8,833)
Tax basis adjustment -
Joint Ventures 88,555 83,555
Syndication fees 1,179,381 1,179,381
Other non-deductible expenses 346,898 331,298
------------ ------------
Partners' Capital - tax return purposes $ 2,842,235 $ 2,998,417
============ ============
-13-
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 and a net loss of $129,930 for the year then ended.
Management has determined that a sale of the property is in the best
interest of the investors. As of December 31, 1996, an agreement,
cancelable by the buyer, was signed with an anticipated sales price of
$7.4 million. The agreement was subsequently canceled in 1997 by the
buyer.
The following financial statements of the joint venture are presented on a
historical-cost basis. The equity ownership was determined based upon the
cash paid into the joint venture by the Partnership as a percentage of the
general partner's estimate of the fair market value of the apartment
complex and other net assets at the date of inception.
A summary of the assets, liabilities and partner's capital of the joint
venture as of June 30, 1998 and December 31, 1997 and the results of its
operations for the six months ended June 30, 1998 and 1997 is as follows:
-14-
FOX HUNT JOINT VENTURE
----------------------
BALANCE SHEETS
--------------
March 31, 1999 and December 31, 1998
------------------------------------
March 31, December 31
1999 1998
---- ----
ASSETS
- ------
Cash and cash equivalents $ 639,927 $ 1,014,583
Property, net of accumulated depreciation 2,457,968 2,530,775
Accounts receivable - affiliates 46,608 228,256
Mortgage costs 81,163 128,910
Other assets 818,941 361,253
---------------- -----------------
Total Assets $ 4,044,607 $ 4,263,777
================ =================
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Liabilities:
Mortgage payable $ 6,000,000 $ 6,000,000
Accounts payable and accrued expenses 382,722 294,685
Other liabilities 103,161 112,747
---------------- -----------------
Total Liabilities 6,485,883 6,407,432
---------------- -----------------
Partners' Capital (2,441,276) (2,143,655)
---------------- -----------------
Total Liabilities and Partners' Capital $ 4,044,607 $ 4,263,777
================ =================
-15-
FOX HUNT JOINT VENTURE
----------------------
STATEMENTS OF OPERATIONS
------------------------
Three Months Ended March 31, 1999 and 1998
------------------------------------------
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
---- ----
Income:
Rental $ 332,044 $ 339,183
Interest and other income 23,229 21,559
---------------- -----------------
Total income 355,273 360,742
---------------- -----------------
Expenses:
Property operations 330,825 208,416
Depreciation and amortization 120,553 74,905
Interest 130,938 101,365
Administrative 70,578 50,901
---------------- -----------------
Total expenses 652,894 435,587
---------------- -----------------
Net income (loss) $ (297,621) $ (74,845)
================ =================
Allocation of net income (loss):
The Partnership $ (34,226) $ (8,607)
Other Joint Venturer (RPILP II) (263,395) (66,238)
---------------- -----------------
$ (297,621) $ (74,845)
================ =================
-16-
INVESTMENT IN JOINT VENTURES (CONTINUED)
---------------------------------------
A reconciliation of the Partnership's investment in the joint venture is
as follows:
1999 1998
---- ----
Investment in joint venture, January 1 $ 267,383 $ 375,900
Allocation of net (loss) income (34,226) ( 8,607)
----------- ----------
Investment in joint venture, March 31 $ 233,157 $ 367,293
=========== ==========
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 three month period
ended March 31, 1998 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 and a net loss of $222,600 for the year
ended December 31, 1996. Management has determined that a sale of the
property is in the best interest of the investors. As of December 31,
1996, an agreement, cancelable by the buyer, was signed with an
anticipated sales price of $4,090,000. The agreement was subsequently
canceled in 1997 by the buyer. In December 1998, management closed on the
sale of this property. The sales price was $3,400,000, and the resulting
gain for financial statement purposes was $851,317. The Lakeview Joint
Venture satisfied the majority of its mortgage liability using the
proceeds from the sale of its property. The remaining obligation was
forgiven by the lender, resulting in an extraordinary gain of $253,159 for
financial statement purposes.
The Partnership, as General Partner, may be required to satisfy the
outstanding liabilities of the Lakeview Joint Venture in excess of its
ownership interest.
-17-
INVESTMENT IN JOINT VENTURES (CONTINUED)
---------------------------------------
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 three months ended March 31, 1998 totaled
approximately $42,000.
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 March 31, 1999 and December 31, 1998 and the results of its
operations for the three months ended March 31, 1999 and 1998 is as
follows:
-18-
LAKEVIEW JOINT VENTURE
----------------------
BALANCE SHEETS
--------------
June 30, 1998 and December 31, 1997
-----------------------------------
March 31, December 31,
1999 1998
---- ----
ASSETS
- ------
Property, net of accumulated depreciation $ - $ -
Other assets 25,264 25,264
----------------- -----------------
Total Assets $ 25,264 $ 25,264
================= =================
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Liabilities:
Accounts payable and accrued expenses $ 90,452 $ 90,452
Accounts payable - affiliates 410,862 410,862
----------------- -----------------
Total Liabilities 501,314 501,314
----------------- -----------------
Partners' (Deficit) (476,050) (476,050)
----------------- -----------------
Total Liabilities and Partners' (Deficit) Capital $ 25,264 $ 25,264
================= =================
-19-
LAKEVIEW JOINT VENTURE
----------------------
STATEMENTS OF OPERATIONS
------------------------
Six Months Ended June 30, 1998 and 1997
---------------------------------------
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
---- ----
Income:
Rental $ - $ 81,081
Interest and other income - 3,744
----------------- -----------------
Total income - 84,825
----------------- -----------------
Expenses:
Property operations - 82,732
Depreciation and amortization - 43,743
Interest - 51,544
Administrative - 28,746
----------------- -----------------
Total expenses - 206,765
----------------- -----------------
Net loss $ - $ (121,940)
================= =================
Allocation of net loss:
The Partnership $ - $ (19,779)
Other Joint Venturer - (102,161)
----------------- -----------------
$ - $ (121,940)
================= =================
-20-
INVESTMENT IN JOINT VENTURES (CONTINUED)
---------------------------------------
A reconciliation of the Partnership's investment in the joint venture is
as follows:
1999 1998
---- ----
Investment in joint venture, January 1 $ (36,954) $ ( 28,675)
Allocation of net loss - ( 19,779)
----------- -----------
Investment in joint venture, March 31 $ (36,954) $ ( 48,454)
=========== ===========
-21-
PART II MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS.
------------------------------------
Liquidity and Capital Resources
-------------------------------
The Partnership continued to utilize existing cash to fund its operations.
At March 31, 1999, management feels there is still adequate cash to
complete scheduled capital improvements (both capitalizable and
non-capitalizable). Management continues to replace carpeting and
appliances as needed to either rent an apartment or maintain a current
resident. Other capital improvements and/or physical improvements planned
and/or in process include continuing both interior and exterior painting,
repairs and possible replacement of some concrete sidewalks, resurfacing
of the tennis courts, and completion of roof and gutter repairs at Fairway
Club (formerly The Villas). Management continues to stress to its on-site
employees the importance of physical appearance as a means of attracting
new tenants.
No distribution was made during the three months ended March 31, 1999 or
1998. It is uncertain as to when the Partnership will be in a position to
resume making distributions, although management is hopeful that a
distribution will be made in the current year once the capital improvement
work scheduled at the properties is either completed or the full costs may
be measured.
Management has been concentrating heavily on increasing occupancies and at
the same time controlling expenses. Occupancy at Fairway Club Apartments
(formerly The Villas) has increased up to 84.9% at March 31, 1999; in the
previous year, occupancy at this property had declined to a low of 70%.
Occupancy at Players Club remains consistently high reaching 98.6% at
March 31, 1999. The General Partner feels that the Partnership will
continue to see improvements in the next several months of 1999 due to the
completion of on-going improvements being made to the property.
During 1998, Lakeview Apartments located in Milwaukee, Wisconsin was put
into receivership by the lender. This was done as a result of the
Partnership's failure to make regular principal and interest payments on
its mortgage. Due to the poor financial condition of this property and the
extremely low occupancy, management put significant efforts and time into
selling the property and were eventually successful in December of 1998.
The sales price was $3,400,000, and the resulting gain for financial
statement purposes was $851,317. The Lakeview Joint Venture satisfied the
majority of its mortgage liability using the proceeds from the sale of its
property. The remaining obligation was forgiven by the lender, resulting
in an extraordinary gain of $253,159 for financial statement purposes. It
is expected that the Joint Venture will pay off its remaining liabilities
and liquidate some time during 1999.
-22-
Liquidity and Capital Resources (Cont'd.)
----------------------------------------
The Partnership has conducted a review of its computer systems to identify
the systems that could be affected by the "year 2000 issue" and has
substantially developed an implementation plan to resolve such issues. The
year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. Computer
programs that have time-sensitive software may recognize a date using "00"
as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including,
among other things, a temporary inability to process transactions, send
invoices, or engage in similar normal business activities. Management has
discussed with outside independent computer consultants its readiness for
the Year 2000. The majority of the software in use is either "2000
compliant" or will be with little adaptation and at no significant cost
per information provided by their software providers. Management has also
engaged a computer firm to re-write its tax software making it Year 2000
compliant. This work is scheduled to begin May 1, 1999 and is expected to
take three months. Management has a complete inventory of its computers
and feels that the cost of replacing those which will not be "2000
compliant" will be relatively minor (i.e., most likely under $20,000).
Non-informational systems have also been evaluated and management feels
that there will be little, if any, cost to preparing these for the Year
2000 (i.e., most likely under $20,000). Management expects to be fully
Year 2000 compliant with all testing done by September 30, 1999. The
Partnership is working on a contingency plan in the unlikely event that
its systems do not operate as planned. It is management's belief that in
the unlikely event that its informational systems do not operate as
planned in the year 2000, all records could be maintained manually until
the problems with its systems are resolved. Management feels that its
external vendors, suppliers and customers, for the most part, will be
unaffected by the Year 2000 as most do not rely on information systems in
their businesses.
Result of Operations
--------------------
For the quarter ended March 31, 1999, the Partnership's net loss was
$184,582 or $2.28 per limited partnership unit. Net loss for the three
months ended March 31, 1998 amounted to $299,579 or $3.70 per unit.
-23-
Result of Operations (Cont'd.)
------------------------------
Partnership revenue for the quarter ended March 31, 1999 totaled $462,188,
an increase of approximately $51,000 or 12% from the 1998 amount of
$411,423. Total rental revenue increased by approximately $48,000, while
interest and other income increased approximately $3,000 between the three
months ended March 31, 1999 and 1998. The increase in rental income is the
result of higher occupancy at Fairway Club Apartments (formerly The
Villas), improved collections and decreased concessions at both Fairway
Club and Players Club.
For the three months ended March 31, 1999, Partnership expenses amounted
to $612,544 which is a decrease of approximately $70,000 from those
incurred in the same quarter in 1998 which totaled $682,616. The decrease
is virtually all related to a decrease in property operations expenses.
The largest decrease in operations expenses was in contracted services;
both properties in the Partnership saw an over 50% decrease in such
expenses due to the fact that more maintenance work is being done by
in-house maintenance staff. Players Club Apartments actually incurred
higher payroll and related costs totaling approximately $10,000 for the
three months ended March 31, 1999 as compared to the same period during
1998 due to more maintenance at the property being done by on-site
personnel. Other decreases in property operations expenses were seen at
both properties in repairs and maintenance expenses; during the first
three months of 1998, Fairway Club Apartments (formerly The Villas)
incurred expenses for exterior siding and other exterior structural work
which was not incurred again during the three months ended March 31, 1999.
Total administrative expenses remained fairly consistent between the two
three month periods with only a small decrease of approximately $1,200
being recorded.
For the three month period ended March 31, 1999, the Foxhunt Joint Venture
incurred a net loss of $297,621 as compared to a loss of $74,845 for the
same period in 1998. This property suffered from lower occupancies and
difficulty in collections during the three month period ended March 31,
1999, but management expects the property to show improvement during the
remainder of 1999 as capital and physical improvements such as sidewalk
repairs, balcony repairs, installation of new lighting in common areas and
painting are completed . The Partnership was allocated $34,226 and $8,607
of the total net loss for the three month periods ended March 31, 1999 and
1998, respectively.
On a tax basis, the Partnership loss totaled $156,182 or $1.93 per limited
partnership unit for the three month period ended March 31, 1999 as
compared to the tax loss for the three month period ended March 31, 1998
which was $309,179 or $3.81 per limited partnership unit.
-24-
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.
-25-
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 June 1, 1999
-------------------------------------------- ------------------
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 June 1, 1999
-------------------------------------------- ------------------
Joseph M. Jayson, Date
President and Director
/s/ Judith P. Jayson June 1, 1999
-------------------------------------------- ------------------
Judith P. Jayson, Date
Director
/s/ Michael J. Colmerauer June 1, 1999
-------------------------------------------- ------------------
Michael J. Colmerauer Date
Secretary
-26-