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, 2000 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 12A
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 [ ]
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI-B
Form 10-Q
INDEX
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements
Balance Sheets - March 31, 2000 and December 31, 1999 3
Statements of Operations - Three months ended March 31, 2000 and 1999 4
Statement of Partners' Equity - Three months ended March 31, 2000 5
Statements of Cash Flows - Three months ended March 31, 2000 and 1999 6
Notes to Financial Statements 7 - 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2 - 5. Not applicable 11
Item 6. Exhibits and Reports on Form 8-K 11
2
PART I - Item 1. Financial Statements
--------------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI B
Balance Sheets
March 31, 2000 and December 31, 1999
(Unaudited)
March 31, December 31,
Assets 2000 1999
------ ---- ----
Property and equipment, at cost:
Land and improvements $ 780,500 780,500
Buildings and improvements 6,040,520 6,028,430
Furniture, fixtures and equipment 257,865 257,865
----------- -----------
7,078,885 7,066,795
Less accumulated depreciation 2,155,611 2,097,343
----------- -----------
Net property and equipment 4,923,274 4,969,452
Investment in joint ventures 108,450 101,543
Cash and cash equivalents 824,015 798,022
Receivables from affiliated parties 97,157 90,816
Escrow deposits 180,711 231,206
Mortgage costs, less accumulated amortization
of $32,361 in 2000 and $29,530 in 1999 307,345 310,176
Other assets 25,125 33,502
----------- -----------
Total assets $ 6,466,077 6,534,717
=========== ===========
Liabilities and Partners' Equity
--------------------------------
Liabilities:
Mortgage loans payable 5,258,532 5,269,300
Accounts payable and accrued expenses 167,893 167,611
Security deposits and prepaid rents 105,208 129,613
----------- -----------
Total liabilities 5,531,633 5,566,524
----------- -----------
Partners' equity (deficit):
General partners (156,494) (155,482)
Limited partners 1,090,938 1,123,675
----------- -----------
Total partners' equity 934,444 968,193
----------- -----------
Contingency
----------- -----------
Total liabilities and partners' equity $ 6,466,077 6,534,717
=========== ===========
See accompanying notes to financial statements
3
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI B
Statements of Operations
Three months ended March 31, 2000 and 1999
(Unaudited)
Three months ended
------------------
March 31, March 31,
2000 1999
---- ----
Income:
Rental $ 459,955 441,941
Interest and other income 33,883 20,247
--------- ---------
Total income 493,838 462,188
--------- ---------
Expenses:
Property operations 274,052 338,662
Interest 114,462 115,428
Depreciation 58,268 61,777
Administrative:
Affiliated parties 46,492 41,143
Other 41,220 55,534
--------- ---------
Total expenses 534,494 612,544
--------- ---------
Loss before equity in earnings (loss) of joint venture (40,656) (150,356)
Equity in earnings (loss) of joint venture 6,907 (34,226)
--------- ---------
Net loss $ (33,749) (184,582)
========= =========
Net loss per limited partnership unit $ (.42) (2.28)
========= =========
Weighted average number of limited partnership
units outstanding 78,625.1 78,625.1
========= =========
See accompanying notes to financial statements
4
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI B
Statement of Partners' Equity
Three months ended March 31, 2000
(Unaudited)
Limited Partners
General ----------------
Partners Units Amount
-------- ----- ------
Balances at January 1, 2000 $ (155,482) 78,625.1 1,123,675
Net loss (1,012) -- (32,737)
---------- -------- ----------
Balances at March 31, 2000 $ (156,494) 78,625.1 1,090,938
========== ======== ==========
See accompanying notes to financial statements
5
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI B
Statements of Cash Flows
Three months ended March 31, 2000 and 1999
(Unaudited)
Three months ended
------------------
March 31, March 31,
2000 1999
---- ----
Cash flows from operating activities:
Net loss $ (33,749) (184,582)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 61,099 64,608
Equity in joint venture operations (6,907) 34,226
Changes in:
Receivables from affiliated parties (6,341) (22,262)
Escrow deposits 50,495 26,657
Other assets 8,377 906
Accounts payable and accrued expenses 282 (794)
Security deposits and prepaid rents (24,405) 9,164
--------- ---------
Net cash provided by (used in)
operating activities 48,851 (72,077)
Cash flows from investing activities - additions to property
and equipment (12,090) --
Cash flows from financing activities - principal payments
on mortgage loans (10,768) (31,157)
--------- ---------
Net increase (decrease) in cash and cash equivalents 25,993 (103,234)
Cash and cash equivalents at beginning of period 798,022 842,779
--------- ---------
Cash and cash equivalents at end of period $ 824,015 739,545
========= =========
Supplemental disclosure of cash flow information -
cash paid during the period for interest $ 111,708 112,597
========= =========
See accompanying notes to financial statements.
6
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI B
Notes to Financial Statements
Three months ended March 31, 2000 and 1999
(Unaudited)
(1) Basis of Presentation
- --------------------------
The accompanying interim financial statements have been prepared in
accordance with generally accepted accounting principles and, in the
opinion of management, contain all necessary adjustments for a fair
presentation. The Partnership's significant accounting policies are set
forth in its December 31, 1999 Form 10-K. The interim financial
statements should be read in conjunction with the financial statements
included therein. The interim results should not be considered
indicative of the annual results. Certain reclassifications of prior
period numbers may have been made to conform to the current period
presentation.
(2) Organization
- -----------------
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. The general partners are Realmark Properties, Inc.
(the corporate general partner) and Joseph M. Jayson (the individual
general partner). Joseph M. Jayson is the sole stockholder of J.M.
Jayson & Company Inc. Realmark Properties, Inc. is a wholly-owned
subsidiary 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.
(3) Investment in Joint Venture
- --------------------------------
The Partnership has an 11.5% interest in a joint venture with Realmark
Property Investors Limited Partnership-II (RPILP-II), an entity
affiliated through common general partners, owning 88.5%. The Joint
Venture was formed to own and operate the Foxhunt Apartments, located
in Dayton, Ohio.
In July 1999, management of the joint venture established a plan to
dispose of Foxhunt Apartments. Foxhunt had net income of $60,051 for
the three months ended March 31, 2000. Management of the joint venture
has determined that a sale of the property is in the best interests of
the owners. The Foxhunt property is carried at the lower of depreciated
cost or fair value less costs to sell and is not depreciated during the
disposal period. Depreciation expense not recorded in the three months
ended March 31, 2000 totaled approximately $53,000.
7
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI B
Notes to Financial Statements, Continued
(3) Investment in Joint Venture, Continued
- -------------------------------------------
A summary of the assets, liabilities, and partners' deficiency of the
Foxhunt joint venture as of March 31, 2000 and December 31, 1999 and
the results of its operations for the three months ended March 31, 2000
and 1999 is as follows:
March 31, December 31,
Assets 2000 1999
------ ---- ----
Property and equipment, net of accumulated depreciation $ 2,441,509 2,442,352
Cash and cash equivalents 132,286 128,829
Other assets 135,158 154,553
----------- -----------
Total assets $ 2,708,953 2,725,734
=========== ===========
Liabilities and Partners' Deficiency
------------------------------------
Liabilities:
Mortgage loan payable 5,987,964 6,000,000
Other liabilities 246,686 311,482
----------- -----------
Total liabilities 6,234,650 6,311,482
Partners' deficiency (3,525,697) (3,585,748)
----------- -----------
Total liabilities and partners' deficiency $ 2,708,953 2,725,734
=========== ===========
Three months ended
------------------
March 31, March 31,
2000 1999
---- ----
Income:
Rental $384,970 332,044
Interest and other income 15,593 23,229
-------- --------
Total income 400,563 355,273
-------- --------
Expenses:
Property operations 161,339 330,825
Interest 125,210 130,938
Depreciation 843 120,553
Administrative 53,120 70,578
-------- --------
Total expenses 340,512 652,894
-------- --------
Net income (loss) $ 60,051 (297,621)
======== ========
Allocation of net income (loss):
The Partnership 6,907 (34,226)
RPILP-II 53,144 (263,395)
-------- --------
Total $ 60,051 (297,621)
======== ========
8
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI B
Notes to Financial Statements, Continued
(4) Current Accounting Pronouncements
- --------------------------------------
In June 2000, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 138 - "Accounting for Certain
Derivative Instruments and Certain Hedging Activities, an Amendment of
Statement No. 133" which amends certain provisions of Statement of
Financial Accounting Standards No. 133 - "Accounting for Derivative
Instruments and Hedging Activities". These statements establish
accounting and financial reporting standards for derivative instruments
and hedging activities. These statements become effective for the
Partnership on January 1, 2001. The effect, if any, that Statements No.
133 and 138 will have on the Partnership's operations and financial
position will not be material.
(5) Subsequent Event - Contingency
- -----------------------------------
The Partnership, as a nominal defendant, the General Partners of the
Partnership and the three individuals constituting the officers and
directors of the Corporate General Partner, as defendants, were served
with a Summons and Complaint on April 19, 2000 in a class and
derivative action instituted by Ira Gaines and on August 21, 2000 in a
class and derivative action instituted by Sean O'Reilly and Louise
Homburger, each in Supreme Court, County of Erie, State of New York.
The actions allege breaches of contract and breaches of fiduciary duty
and seek, among other things, an accounting, the removal of the General
Partners, the liquidation of the Partnership and the appointment of a
receiver to supervise the liquidation, and damages. The General
Partners and the officers and directors of the Corporate General
Partner have filed a motion to dismiss the first complaint and are
presently reviewing the second complaint and intend to vigorously
pursue their defense.
9
PART I - Item 2. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations
-------------------------
Liquidity and Capital Resources
- -------------------------------
The Partnership continues to maintain a cash position adequate to fund its
scheduled capital improvements for 2000 that include replacement of carpeting
and appliances to enhance the attractiveness of apartments to both current and
future residents. Other improvements planned and/or in process include interior
painting and completion of roof and gutter repairs at Fairway Club Apartments
(formerly The Villas). Landscaping improvements have been made to both sites. No
distributions to partners were made during the three months ended March 31, 2000
or 1999. The ability to make distributions later in the current year will be
evaluated after the capital improvement work scheduled at the properties is
completed.
Results of Operations
- ---------------------
As compared to the first quarter of 1999, the Partnership's net loss decreased
approximately $151,000 to $33,749 for the quarter ended March 31, 2000. The
primary components of the decrease were as follows:
Income increases:
Rental $ 18,000
Equity in operations of joint venture 41,000
Other 14,000
Expense decreases:
Property operations 65,000
Administrative 9,000
Other 4,000
--------
Total $151,000
========
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 Players Club North and Fairway Club Apartments.
Occupancy at Fairway Club Apartments has increased to 93% at March 31, 2000 from
85% at March 31, 1999 principally because of an overall decrease of vacancies in
the market. Occupancy at Players Club North remains consistently high at 90% at
March 31, 2000. It is expected that improvements in occupancy will continue in
the next several months of 2000 as improvements are made to the property.
The largest decreases in property operations expense were in replacements and
payroll expenses. Advertising and other promotional costs accounted for much of
the decrease in administrative expense.
For the three month period ended March 31, 2000, the Foxhunt Joint Venture had
net income of $60,051 as compared to a loss of $297,621 for the same period in
1999. This property improved both its occupancy and collection rates in 2000.
10
PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
The Partnership's cash equivalents are short-term, interest-bearing bank
accounts and its mortgage loans are fixed-rate. It has not entered
into any derivative contracts. Therefore, it has no market risk
exposure.
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
- --------------------------
The Partnership, as a nominal defendant, the General Partners of the
Partnership and the three individuals constituting the officers and
directors of the Corporate General Partner, as defendants, were served
with a Summons and Complaint on April 19, 2000 in a class and
derivative action instituted by Ira Gaines and on August 21, 2000 in a
class and derivative action instituted by Sean O'Reilly and Louise
Homburger, each in Supreme Court, County of Erie, State of New York.
The actions allege breaches of contract and breaches of fiduciary duty
and seek, among other things, an accounting, the removal of the
General Partners, the liquidation of the Partnership and the
appointment of a receiver to supervise the liquidation, and damages.
The General Partners and the officers and directors of the Corporate
General Partner have filed a motion to dismiss the first complaint and
are presently reviewing the second complaint and intend to vigorously
pursue their defense.
Items 2, 3, 4 and 5
- -------------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
The Partnership reported a change in independent accountants under item 4
of Form 8-K, filed on January 19, 2000 and amended on February 3, 2000,
April 17, 2000 and May 2, 2000.
11
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 PARTNERHIP VI-B
By: /s/ Joseph M. Jayson 11/15/2000
---------------------------------- -------------
Joseph M. Jayson, Date
Individual General Partner and
Principal Financial Officer
12