FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
Commission File Number 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 No.)
2350 North Forest Road
Suite 12-A
Getzville, New York 14068
(Address of Principal Executive Office)
Registrant's Telephone Number: (716) 636-9090
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interest
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-K or any
amendment to this Form 10-K. (X)
DOCUMENTS INCORPORATED BY REFERENCE
See Item 14 for a list of all documents incorporated by reference
PART I
------
ITEM 1: BUSINESS
- -----------------
The registrant, Realmark Property Investors Limited Partnership-VI B
("the Partnership"), is a Delaware limited partnership organized in 1987
pursuant to an Amended and Restated Certificate and Agreement of Limited
Partnership (the "Partnership Agreement"), under the Delaware Revised Uniform
Limited Partnership Act. The Partnership's general partners are Realmark
Properties, Inc. (the "Corporate General Partner"), a Delaware corporation, and
Joseph M. Jayson (the "Individual General Partner").
The Registrant commenced the public offering of its limited partnership
units, registered with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, on November 11, 1988. The first interim
closing took place on February 2, 1989, and the initial $2,134,300 of
contributed capital was released to the Partnership at which time it began
operations. The offering was concluded February 28, 1990 at which time the
Partnership had raised $7,862,510, before deducting sales commissions and
syndication costs.
The Partnership's primary business is to own and operate
income-producing real property for the benefit of its limited partners. At
December 31, 2000, the Partnership owned two apartment complexes, both acquired
in 1991: (1) the 144 unit Players Club North Apartments, located in Lutz,
Florida, and (2) Fairway Club Apartments (formerly the Villas), a 192 unit
apartment complex in Greenville, South Carolina. These properties are currently
being actively marketed for sale.
In addition, since 1992, the Partnership has held an 11.5% interest in
Realmark/Foxhunt Limited Partnership, a joint venture owning a 250 unit
apartment complex in Kettering, Ohio. Subsequent to December 31, 2000, the
Foxhunt property was sold, as discussed in the notes to the financial statements
and in management's discussion and analysis.
Occupancy for each complex as of December 31 was as follows:
2000 1999 1998
---- ---- ----
Fairway Club 82% 86% 72%
Players Club 97% 88% 98%
For financial statement purposes, the operations of the Partnership's
properties are consolidated. The following chart lists the percentage of total
Partnership revenue generated by each complex for the year indicated:
2000 1999 1998
---- ---- ----
Fairway Club 52% 55% 45%
Players Club 48% 45% 55%
The business of the Partnership is not seasonal. The Partnership, as of
December 31, 2000, did not directly employ any persons in a full-time position.
All regular employees who rendered services on behalf of the Partnership through
December 31, 2000 were employees of the Corporate General Partner or its
affiliates.
2
This annual report contains certain forward-looking statements concerning the
Partnership's current expectations as to future results. Such forward-looking
statements are contained in Item 7: Management's Discussion and Analysis of
Financial Conditions and Results of Operations. Words such as "believes",
"forecasts", "intends", "possible", "expects", "estimates", "anticipates" or
"plans" and similar expressions are intended to identify forward-looking
statements.
ITEM 2: PROPERTIES
- -------------------
The following is a list of properties owned by the Partnership at December 31,
2000:
Property Name
and Location General Character of Property Purchase Date
------------ ----------------------------- -------------
Players Club North A 144 unit apartment complex securing an 8.48% June 1991
Lutz, FL mortgage loan with a balance at 12/31/00 of
$2,644,202, maturing June 2027
Fairway Club A 192 unit apartment complex securing an 8.30%
Greenville, SC mortgage loan with a balance at 12/31/00 of June 1991
$2,583,100, maturing June 2027
ITEM 3: LEGAL PROCEEDINGS
- --------------------------
The Partnership, as a nominal defendant, the General Partners of the
Partnership and the officers and directors of the Corporate General Partner, as
defendants, were served with a Summons and Complaint on April 7, 2000 in a class
and derivative lawsuit instituted by Ira Gaines and on August 8, 2000 in a class
and derivative lawsuit instituted by Sean O'Reilly and Louise Homburger, each in
Supreme Court, County of Erie, State of New York. In September 2000, the Court
signed an order consolidating these lawsuits. The consolidated lawsuit alleges
claims of mismanagement and improper use of partnership funds relating to the
Realmark Partnerships. The consolidated lawsuit seeks declaratory relief,
unspecified damages, a receiver, an order liquidating the partnership, punitive
damages, attorneys' fees and related relief. The defendants deny any liability
and intend to vigorously defend this lawsuit. Because of the early stage of this
lawsuit and because there has been no discovery to date, legal counsel cannot
render an opinion as to the likely outcome of this case.
ITEM 4: SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -------------------------------------------------------------
None.
PART II
-------
ITEM 5: MARKET FOR REGISTRANT'S UNITS OF LIMITED PARTNERSHIP INTEREST
- ----------------------------------------------------------------------
There is currently no active trading market for the units of Limited
Partnership Interest of the Partnership and it is not anticipated that any will
develop in the future. As of December 31, 2000, there were 1,031 record holders
of units of Limited Partnership Interest.
3
ITEM 6: SELECTED FINANCIAL DATA
- --------------------------------
At or for the year ended December 31,
--------------------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------
Balance sheet data
Net rental property $4,748,429 4,969,452 5,190,396 5,450,259 5,640,205
Total assets 5,986,548 6,534,717 7,045,544 8,034,759 7,749,737
Mortgage loans payable 5,227,302 5,269,300 5,309,087 5,345,640 4,225,106
Partners' equity 543,775 968,193 1,413,016 2,272,833 3,197,149
================================================================================
Operating data
Rental income 1,863,378 1,695,604 1,446,398 1,531,418 1,552,571
Other income 109,956 189,827 183,156 120,815 131,383
--------------------------------------------------------------------------------
Total revenue 1,973,334 1,885,431 1,629,554 1,652,233 1,683,954
--------------------------------------------------------------------------------
Property operating costs 1,151,282 1,245,846 1,297,078 1,125,361 826,421
Depreciation 233,113 223,157 259,863 237,150 232,660
Interest expense 458,931 462,411 466,099 577,199 421,954
Administrative expenses 368,139 344,713 349,535 344,466 373,953
--------------------------------------------------------------------------------
Total expenses 2,211,465 2,276,127 2,372,575 2,284,176 1,854,988
--------------------------------------------------------------------------------
Loss before equity in joint venture
operations (238,131) (390,696) (743,021) (631,943) (171,034)
Equity in earnings (loss) of joint
venture 3,469 (54,127) (116,796) (42,373) (51,048)
--------------------------------------------------------------------------------
Net loss (234,662) (444,823) (859,817) (674,316) (222,082)
================================================================================
Cash flow data
Net cash provided (used) by:
Operating activities 151,055 (77,516) (543,988) (454,424) 918,459
Investing activities (8,640) 72,546 - (108,725) (36,500)
Financing activities (231,754) (39,787) (35,594) 530,828 (69,001)
--------------------------------------------------------------------------------
Net increase (decrease) in cash (89,339) (44,757) (579,582) (32,321) 812,958
================================================================================
Per limited partnership unit:
Net loss ($2.90) (5.49) (10.61) (8.32) (2.74)
Distributions $2.34 - - 3.08 0.23
================================================================================
4
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------------------------------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
Liquidity and Capital Resources:
- --------------------------------
At December 31, 2000, the Partnership had a cash position of
approximately $700,000, after its 2000 operations generated cash of $150,000 and
after making a partner distribution of $190,000 late in the year. While rental
market conditions are never certain, if the occupancy levels at both properties
remain constant or increase, operations should continue to produce cash flow,
unless unplanned repairs, replacements or other nonrecurring expenditures should
need to be addressed. The Partnership has no material commitments at December
31, 2000.
Results of Operations:
- ----------------------
For the year ended December 31, 1999, the Partnership's net loss of
$444,823 was a 48% decrease from the year ended December 31, 1998. The
improvement was attributable to several factors, the primary one being an
increase in occupancy at Fairway Club where rental income increased by $213,694
or 34%. Average occupancy at Fairway Club in 1999 was 84%, a substantial
increase over the 71% of the prior year. Average occupancy levels at Players
Club decreased somewhat in 1999 to 94%, from 97% in 1998.
All primary expense categories decreased in 1999. Extensive repairs and
replacements continued at the Fairway Club in 1999 but to a lesser degree than
in 1998, accounting for the decrease in property operating costs. Depreciation
expense decreased in 1999, as certain equipment became fully depreciated in
1998. Administrative and interest expenses were essentially the same in both
1999 and 1998.
The increases in rental income continued in 2000 as the occupancy rate
at Fairway Club rose to 88%. Occupancy at Players Club remained constant, but it
was able to realize increased rent income of approximately $40,000 by increasing
rates. Together, the two properties showed a $168,000 increase in rental income,
partially offset by an $80,000 decrease in other income. The latter resulted
from lower amounts of fees and forfeitures.
In 2000, property operating costs again fell because of lower costs of
repairs and replacements as compared to the costs of the extensive work
completed in 1999. Higher professional fees caused the increase in
administrative expenses in 2000, while depreciation and interest expense were
relatively level.
The Foxhunt Joint Venture generated a net loss of $470,672 in 1999 as
compared to a 1998 net loss of $943,631. The decrease in the loss was primarily
the result of increased rental income of approximately $125,000 and a decrease
in property operations, interest and depreciation expenses of approximately
$393,000. The latter decreased approximately $100,000 in 1999 since the Foxhunt
property became the subject of a formal plan of disposal on July 1, 1999. The
lack of depreciation in 2000 and a significant decrease in operating costs led
to net income of $30,000 at Foxhunt in 2000. The complex was sold on March 1,
2001. Refer to the notes to the consolidated financial statements for details of
the sale.
The Lakeview Village Joint Venture generated a net loss of $51,040 in
1998, with the Partnership's 16.22% share amounting to $8,279. The property was
sold in December of 1998. Refer to the notes to the consolidated financial
statements for details of the sale.
5
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
The Partnership invests only in short term money market instruments, in
amounts in excess of daily working cash requirements. The rates of earnings on
those investments increase or decrease in line with the general movement of
interest rates. The mortgage loans on the Partnership's properties are fixed
rate and therefore, are not subject to market risk.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
Listed under Item 14 of this report.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE
- --------------------
As reported on Form 8-K, filed with the Securities and Exchange
Commission on January 19, 2000 and amended on February 3, 2000, April 17, 2000
and May 2, 2000, incorporated herein by reference in their entirety: (i)
Deloitte & Touche LLP notified the Partnership on January 11, 2000 that its
relationship as the principal accountants to audit the Partnership's financial
statements had ceased; and (ii) effective January 28, 2000, the Partnership
engaged Toski, Schaefer & Co., P.C. as its independent accountants.
PART III
--------
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -----------------------------------------------------------
The Partnership, as an entity, does not have any directors or officers.
The Individual General Partner of the Partnership is Joseph M. Jayson. The
directors and executive officers of Realmark Properties, Inc., the Partnership's
Corporate General Partner, as of December 31, 2000, are listed below. Each
director is subject to election on an annual basis.
Title of All Positions
Name Held with the Company Year First Elected to Position
- ---- --------------------- ------------------------------
Joseph M. Jayson Chairman of the Board, President 1979
and Treasurer
Judith P. Jayson Vice President and Director 1979
Joseph M. Jayson and Judith P. Jayson are married to each other.
The Directors and Executive Officers of the Corporate General Partner
and their principal occupations and affiliations during the last five years or
more are as follows:
6
Joseph M. Jayson, age 62, is Chairman, Director and sole stockholder of J. M.
Jayson and Company, Inc. and certain of its affiliated companies: U.S.
Apartments LLC, Westmoreland Capital Corporation, Oilmark Corporation and U.S.
Energy Development Corporation. In addition, Mr. Jayson is Chairman of Realmark
Corporation, Chairman, President and Treasurer of Realmark Properties, Inc.,
wholly-owned subsidiaries of J. M. Jayson and Company, Inc. and co-general
partner of Realmark Property Investors Limited Partnership, Realmark Property
Investors Limited Partnership-II, Realmark Property Investors Limited
Partnership-III, Realmark Property Investors Limited Partnership-IV, Realmark
Property Investors Limited Partnership-V, Realmark Property Investors Limited
Partnership-VI A, and Realmark Property Investors Limited Partnership-VI B. Mr.
Jayson has been in the real estate business for the last 38 years and is a
Certified Property Manager as designated by the Institute of Real Estate
Management ("I.R.E.M."). Mr. Jayson received a B.S. Degree in Education in 1961
from Indiana University, a Masters Degree from the University of Buffalo in
1963, and has served on the Educational Faculty of the Institute of Real Estate
Management. Mr. Jayson has for the last 38 years been engaged in various aspects
of real estate brokerage and investment. He brokered residential properties from
1962 to 1964, commercial investment properties from 1964 to 1967, and in 1967
left commercial real estate to form his own investment firm. Since that time,
Mr. Jayson and J. M. Jayson & Company, Inc. have formed or participated in
various ways with forming over 30 real estate related limited partnerships. For
the past 19 years, Mr. Jayson and an affiliate have also engaged in
developmental drilling for gas and oil.
Judith P. Jayson, age 60, is currently Vice President and a Director of
Realmark Properties, Inc. She is also a Director of the property management
affiliate, Realmark Corporation. Mrs. Jayson has been involved in property
management for the last 29 years and has extensive experience in the hiring and
training of property management personnel and in directing, developing and
implementing property management systems and programs. Mrs. Jayson, prior to
joining the firm in 1973, taught business in the Buffalo, New York High School
System. Mrs. Jayson graduated from St. Mary of the Woods College in Terre Haute,
Indiana, with a degree in Business Administration.
ITEM 11: EXECUTIVE COMPENSATION
- -------------------------------
No direct remuneration was paid or payable by the Partnership to
directors and officers (since it has no directors or officers), nor was any
direct remuneration paid or payable by the Partnership to directors or officers
of Realmark Properties, Inc., the Corporate General Partner and sponsor, for the
year ended December 31, 2000. The Corporate General Partner and its affiliate,
Realmark Corporation, are entitled to fees and to certain expense reimbursements
with respect to Partnership operations, as set forth in item 13 hereof and in
the notes to the consolidated financial statements.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -----------------------------------------------------------------------
No person is known to the Partnership to own of record or beneficially,
more than 5% of the Units of Limited Partnership Interests of the Partnership.
The General Partners, as of December 31, 2000, owned no Units of Limited
Partnership Interest. An affiliate of the General Partners owned approximately
2.43% of the units of Limited Partnership Interest at December 31, 2000.
7
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------
The properties of the Partnership's subsidiaries are managed by
Realmark Corporation, an affiliate of the Partnership's corporate general
partner, for a fee of generally 5% of annual net rental income of the
properties. Realmark Corporation and the corporate general partner are also
reimbursed for disbursements made on behalf of the Partnership. Those
transactions are further described, and quantified, in the note to the
consolidated financial statements entitled "Related Party Transactions".
ITEM 14: EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
- ---------------------------------------------------------------------------
(a) Consolidated Financial Statements
---------------------------------
Page
----
Independent Auditors' Report - As of and for the years ended
December 31, 2000 and 1999 F-1
Independent Auditors' Report for the year ended
December 31, 1998 F-2
Consolidated Balance Sheets as of December 31, 2000 and 1999 F-3
Consolidated Statements of Operations for the years ended
December 31, 2000, 1999 and 1998 F-4
Consolidated Statements of Partners' Equity for the years
ended December 31, 2000, 1999, and 1998 F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999, and 1998 F-6
Notes to Consolidated Financial Statements F-7
FINANCIAL STATEMENT SCHEDULE
----------------------------
(i) Schedule III - Real Estate and Accumulated Depreciation F-13
All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements
or the notes thereto.
(b) Reports on Form 8-K
-------------------
None.
(c) Exhibits
--------
4. Instruments defining the rights of security holders,
including indentures
(a) Amended and Restated Certificate and Agreement of
Limited Partnership filed with the Registration
Statement of the Registrant Form S-11, filed
September 30, 1987 and subsequently amended,
incorporated herein by reference.
10. Material contracts
(a) Property Management Agreement with Realmark
Corporation included with the Registration Statement
of the Registrant as filed and amended to date
incorporated herein by reference.
8
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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 April 2, 2001
---------------------------------------- -----------------
JOSEPH M. JAYSON, Date
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below 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 April 2, 2001
---------------------------------------- -----------------
JOSEPH M. JAYSON, Date
President, Treasurer and Director
/s/ Judith P. Jayson April 2, 2001
---------------------------------------- -----------------
JUDITH P. JAYSON, Date
Vice President and Director
9
INDEPENDENT AUDITOR'S REPORT
----------------------------
The Partners
Realmark Property Investors Limited Partnership - VI B:
We have audited the accompanying consolidated balance sheets of Realmark
Property Investors Limited Partnership - VI B and Subsidiaries as of December
31, 2000 and 1999, and the related consolidated statements of operations,
partners' equity, and cash flows for the years then ended. Our audits also
included the financial statement schedule listed in the index at Item 14. These
consolidated financial statements and the financial statement schedule are the
responsibility of the General Partners. Our responsibility is to express an
opinion on the consolidated financial statements and the financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
General Partners, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Realmark Property
Investors Limited Partnership - VIB and Subsidiaries as of December 31, 2000 and
1999, and the results of their operations and their cash flows for the years
then ended, in conformity with generally accepted accounting principles. Also,
in our opinion, the financial statement schedule, when considered in relation to
the basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
As discussed in note 6 to the consolidated financial statements, the Partnership
is involved in a class and derivative lawsuit. The lawsuit alleges claims of
mismanagement and improper use of partnership funds by the general partners of
the Partnership. The lawsuit seeks, among other things, the liquidation of the
Partnership. The possible effect of this contingency is not presently
determinable and, therefore, the consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
TOSKI, SCHAEFER & CO., P.C.
Williamsville, New York
March 23, 2001
F-1
INDEPENDENT AUDITORS' REPORT
To the Partners of
Realmark Property Investors Limited Partnership VI B:
We have audited the accompanying statements of operations, partners' capital
(deficit) and cash flows of Realmark Property Investors Limited Partnership VIB
(the Partnership) for the year ended December 31, 1998. Our audit also included
the financial statement schedule listed in the index at Item 14. These financial
statements and the financial statement schedule are the responsibility of the
General Partner. Our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the results of operations and cash flows of the Partnership for the
year ended December 31, 1998 in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, such financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
Deloitte & Touche LLP
Buffalo, New York
April 12, 1999
F-2
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI B
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2000 and 1999
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 and equipment 257,865 257,865
----------- -----------
7,078,885 7,066,795
Less accumulated depreciation 2,330,456 2,097,343
----------- -----------
Net property and equipment 4,748,429 4,969,452
Cash and equivalents 708,683 798,022
Receivable from affiliated parties 9,524 90,816
Escrow deposits 77,372 231,206
Investments in joint ventures 101,562 101,543
Deferred mortgage costs, less accumulated amortization
of $40,854 in 2000 and $29,530 in 1999 298,852 310,176
Other assets 42,126 33,502
----------- -----------
Total assets $ 5,986,548 6,534,717
=========== ===========
Liabilities and Partners' Equity
--------------------------------
Liabilities:
Mortgage loans payable 5,227,302 5,269,300
Accounts payable and accrued expenses 111,858 167,611
Security deposits and prepaid rents 103,613 129,613
----------- -----------
Total liabilities 5,442,773 5,566,524
----------- -----------
Partners' equity (deficit):
General partners (168,215) (155,482)
Limited partners 711,990 1,123,675
----------- -----------
Total partners' equity 543,775 968,193
Contingency ----------- -----------
Total liabilities and partners' equity $ 5,986,548 6,534,717
=========== ===========
See accompanying notes to consolidated financial statements
F-3
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI B
AND SUBSIDIARIES
Consolidated Statements of Operations
Years Ended December 31, 2000, 1999 and 1998
2000 1999 1998
---- ---- ----
Income:
Rental $ 1,863,378 1,695,604 1,446,398
Interest and other 109,956 189,827 183,156
----------- ----------- -----------
Total income 1,973,334 1,885,431 1,629,554
----------- ----------- -----------
Expenses:
Property operations 1,151,282 1,245,846 1,297,078
Interest 458,931 462,411 466,099
Depreciation 233,113 223,157 259,863
Administrative:
Affiliated parties 177,503 164,799 150,152
Other 190,636 179,914 199,383
----------- ----------- -----------
Total expenses 2,211,465 2,276,127 2,372,575
----------- ----------- -----------
Loss before equity in earnings (loss) of joint ventures (238,131) (390,696) (743,021)
Equity in earnings (loss) of joint ventures 3,469 (54,127) (116,796)
----------- ----------- -----------
Net loss $ (234,662) (444,823) (859,817)
=========== =========== ===========
Net loss per limited partnership unit $ (2.90) (5.49) (10.61)
=========== =========== ===========
Distributions per limited partnership unit $ 2.34 -- --
=========== =========== ===========
Weighted average number of limited partnership
units outstanding 78,625.1 78,625.1 78,625.1
=========== =========== ===========
See accompanying notes to consolidated financial statements
F-4
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI B
AND SUBSIDIARIES
Consolidated Statements of Partners' Equity
Years Ended December 31, 2000, 1999 and 1998
Limited Partners
General ----------------
Partners Units Amount
-------- ----- ------
Balances at December 31, 1997 $ (116,342) 78,625.1 2,389,175
Net loss (25,795) -- (834,022)
---------- -------- ----------
Balances at December 31, 1998 (142,137) 78,625.1 1,555,153
Net loss (13,345) -- (431,478)
---------- -------- ----------
Balances at December 31, 1999 (155,482) 78,625.1 1,123,675
Net loss (7,040) -- (227,622)
Distributions to partners (5,693) -- (184,063)
---------- -------- ----------
Balances at December 31, 2000 $ (168,215) 78,625.1 711,990
========== ======== ==========
See accompanying notes to consolidated financial statements
F-5
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI B
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31, 2000, 1999 and 1998
2000 1999 1998
---- ---- ----
Cash flows from operating activities:
Net loss $ (234,662) (444,823) (859,817)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 244,437 234,480 271,185
Equity in (earnings) loss of joint ventures (3,469) 54,127 116,796
Changes in:
Receivable from affiliated parties 81,292 9,179 (42,093)
Escrow deposits 153,834 97,564 80,038
Other assets (8,624) (1,826) (17,252)
Accounts payable and accrued expenses (55,753) (64,569) (42,447)
Security deposits and prepaid rents (26,000) 38,352 (50,398)
---------- ---------- ----------
Net cash provided by (used in)
operating activities 151,055 (77,516) (543,988)
---------- ---------- ----------
Cash flows from investing activities:
Additions to property and equipment (12,090) (2,213) --
Distributions received from joint venture 3,450 74,759 --
---------- ---------- ----------
Net cash provided by (used in)
investing activities (8,640) 72,546 --
---------- ---------- ----------
Cash flows from financing activities:
Mortgage acquisition costs -- -- 959
Principal payments on mortgage loans (41,998) (39,787) (36,553)
Distributions to partners (189,756) -- --
---------- ---------- ----------
Net cash used in financing
activities (231,754) (39,787) (35,594)
---------- ---------- ----------
Net decrease in cash and equivalents (89,339) (44,757) (579,582)
Cash and equivalents at beginning of year 798,022 842,779 1,422,361
---------- ---------- ----------
Cash and equivalents at end of year $ 708,683 798,022 842,779
========== ========== ==========
Supplemental disclosure of cash flow information -
cash paid for interest $ 447,911 450,122 436,301
========== ========== ==========
See accompanying notes to consolidated financial statements
F-6
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI B
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
(1) Formation and Operation of Partnership
- -------------------------------------------
Realmark Property Investors Limited Partnership - VI B (the Partnership) is
a Delaware limited partnership formed on September 21, 1987, to invest
in a diversified portfolio of income producing real estate investments.
In 1989 and 1990, the Partnership sold, through a public offering,
78,625.1 units of limited partnership interest for $7,862,510. The
general partners are Realmark Properties, Inc. (the corporate general
partner) and Joseph M. Jayson (the individual general partner) who 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 (note 5). The
partnership agreement also provides that the distribution of funds,
revenues, and costs and expenses arising from partnership activities,
exclusive of any sale or refinancing activities, be allocated 97% to
the limited partners and 3% to the general partners.
(2) Summary of Significant Accounting Policies
- -----------------------------------------------
(a) Basis of Accounting and Consolidation
-----------------------------------------
The accompanying consolidated financial statements have been prepared
on the accrual basis of accounting and include the accounts of the
Partnership and its two subsidiaries, that are wholly-owned:
(1) Realmark-Players, LLC that owns Players Club North, a 144 unit
apartment complex located in Lutz, Florida, acquired in 1991
for $3,007,000.
(2) Realmark-Villa, LLC that owns Fairway Club (formerly The
Villa), a 192 unit apartment complex located in Greeneville,
South Carolina, acquired in 1991 for $3,100,000.
In consolidation, all intercompany accounts and transactions have been
eliminated.
(b) Estimates
-------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those
estimates.
F-7
(c) Property and Equipment
--------------------------
Property and equipment are recorded at cost. Depreciation is provided
using the straight-line method over the estimated useful lives of
the assets, from 5 to 25 years. Significant improvements are
capitalized, while expenditures for maintenance, repairs and
replacements are charged to expense as incurred. Upon disposal of
depreciable property, the appropriate property accounts are
reduced by the related costs and accumulated depreciation and
gains and losses are reflected in the consolidated statements of
operations.
The Partnership and its ventures' policy is to consider a property to
be held for sale or disposition when the Partnership or venture
has committed to a plan to sell or dispose of such property and
active marketing activity has commenced or is expected to commence
in the near term or the Partnership or venture has concluded that
it may dispose of the property by no longer funding operating
deficits or debt service requirements of the property thus
allowing the lender to realize upon its security. Any properties
identified as "held for sale or disposition" are no longer
depreciated.
(d) Cash and Equivalents
------------------------
Cash and equivalents include money market accounts and any highly
liquid debt instruments purchased with a maturity of three months
or less.
(e) Deferred Mortgage Costs
---------------------------
Costs incurred in obtaining mortgage financing are deferred and
amortized using the straight-line method over the life of the
respective mortgage.
(f) Joint Ventures
------------------
The Partnership's minority interests in joint ventures are accounted
for on the equity method.
(g) Rental Income
-----------------
Rental income is recognized as earned according to the terms of the
leases that are generally for periods of one year or less, payable
monthly. Delinquent rents are not recorded.
(h) Per Unit Data
-----------------
Per limited partnership unit data is based on the weighted average
number of limited partnership units outstanding for the year.
(i) Fair Value of Financial Instruments
---------------------------------------
The fair value of the Partnership's financial instruments approximated
their carrying values at December 31, 2000.
(j) Income Taxes
----------------
No income taxes are included in the consolidated financial statements
since the taxable income or loss of the Partnership is reportable
by the partners on their income tax returns. At December 31, 2000,
net assets for financial reporting purposes were $552,000 more
than the tax bases of the net assets.
(k) Segment Information
-----------------------
The Partnership's operating segments all involve the ownership and
operation of income-producing real property, and are aggregated
into one reporting segment.
F-8
(l) Accounting Changes and Developments
---------------------------------------
The Financial Accounting Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 133 - "Accounting for
Derivative Instruments and Hedging Activities" which establishes
revised accounting and reporting standards for derivative
instruments and for hedging activities. In June 1999, the FASB
deferred the effective date of SFAS No. 133 to fiscal years
beginning after June 15, 2000. Management believes that SFAS No.
133 will not have a material effect on the Partnership's
consolidated financial statements.
(m) Reclassifications
---------------------
Reclassifications have been made to certain 1999 and 1998 balances to
conform them to the 2000 presentation.
(3) Mortgage Loans Payable
- ---------------------------
Mortgage loans payable are as follows:
Balance
Total December 31,
Interest monthly ------------
Property collateral rate Maturity payment 2000 1999
------------------- ---- -------- ------- ---- ----
Players Club North 8.48% 2027 $ 20,824 $ 2,644,202 2,665,129
Fairway Club 8.30% 2027 20,002 2,583,100 2,604,171
======== ----------- ---------
$ 5,227,302 5,269,300
=========== =========
The aggregate maturities of the mortgages for each of the five years
following 2000 and thereafter, assuming principal payments are not
accelerated, are as follows:
2001 $ 53,302
2002 57,950
2003 63,003
2004 68,497
2005 74,471
Thereafter 4,910,079
------------
$ 5,227,302
============
(4) Investments in Joint Ventures
- ----------------------------------
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. The venture owns and
operates the Foxhunt Apartments, Dayton, Ohio. The joint venture
agreement provides that any income, loss, gain, cash flow, or sale
proceeds be allocated 88.5% to RPILP-II and 11.5% to the Partnership.
In July 1999, the venturers developed a plan to dispose of Foxhunt
Apartments. Accordingly, no depreciation of the apartments has been
recorded since then. On March 1, 2001, the apartment complex was sold
for $7,600,000 resulting in a net gain to the joint venture for
financial reporting purposes of approximately $4,900,000, after
considering costs of the sale. The net proceeds realized by the venture
were approximately $1,140,000.
F-9
The following financial information of the joint venture is presented on a
historical-cost basis. The equity ownership was determined based upon
the cash contributed to the joint venture by the Partnership as a
percentage of the general partners' estimate of the fair market value
of the apartment complex and other net assets at the date of inception.
Balance Sheet Information
-------------------------
December 31,
------------
Assets 2000 1999
------ ---- ----
Property and equipment, net of accumulated depreciation $ 2,442,352 2,442,352
Other assets 245,457 283,382
-------------- ----------
Total assets $ 2,687,809 2,725,734
============== ==========
Liabilities and Partners' Deficiency
- ------------------------------------
Liabilities:
Mortgage loan payable 5,950,373 6,000,000
Other liabilities 323,019 311,482
-------------- ----------
Total liabilities 6,273,392 6,311,482
Partners' deficiency (3,585,583) (3,585,748)
-------------- ----------
Total liabilities and partners' deficiency $ 2,687,809 2,725,734
============== ==========
Operating Information
---------------------
Years ended December 31,
------------------------
2000 1999 1998
---- ---- ----
Income:
Rental $ 1,436,572 1,410,656 1,285,350
Interest and other income 64,233 99,410 139,155
----------- ----------- ----------
Total income 1,500,805 1,510,066 1,424,505
----------- ----------- ----------
Expenses:
Property operations 733,839 1,024,331 1,099,417
Interest 534,817 648,784 864,886
Depreciation -- 109,124 211,112
Administrative:
Affiliated parties 113,600 101,571 108,381
Other 88,384 96,928 84,340
----------- ----------- ----------
Total expenses 1,470,640 1,980,738 2,368,136
----------- ----------- ----------
Net income (loss) $ 30,165 (470,672) (943,631)
=========== =========== ==========
F-10
Allocation of net income (loss):
The Partnership 3,469 (54,127) (108,517)
RPILP-II 26,696 (416,545) (835,114)
----------- ----------- ----------
Total $ 30,165 (470,672) (943,631)
=========== =========== ==========
A reconciliation of the Partnership's investment in the Foxhunt Joint Venture
follows:
2000 1999 1998
---- ---- ----
Beginning balance $ 101,543 267,383 375,900
Equity in net income (loss) 3,469 (54,127) (108,517)
Cash distribution (3,450) (111,713) --
----------- --------- ----------
Ending balance $ 101,562 101,543 267,383
=========== ========= ==========
From 1992 to 1999, the Partnership had a 16% interest in a joint venture
with Realmark Property Investors Limited Partnership IV (RPILP-IV), an
entity affiliated through common general partners. The venture owned
and operated the Lakeview Apartment complex, Milwaukee, Wisconsin. In
December 1998, the property was sold for $3,400,000 and the Venture was
dissolved. The 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 in 1998. The Venture had $301,197 of rental income in
1998, $1,459,234 of expense, a gain on the property sale of $851,317
and a net loss of $51,040.
(5) Related Party Transactions
- -------------------------------
The corporate general partner and its affiliates earn fees, principally for
property and partnership management and are reimbursed for services
rendered to the Partnership, as provided for in the partnership
agreement. A summary of those items follows:
2000 1999 1998
---- ---- ----
Property management fees based on a
percentage (generally 5%) of rent income $ 95,533 88,266 78,256
Reimbursement for cost of services to the
Partnership that include investor relations,
marketing of properties, professional fees,
communications, supplies, accounting,
printing, postage and other items 81,970 76,533 71,896
--------- -------- --------
$ 177,503 164,799 150,152
========= ======== ========
In addition to the above, other properties specific expenses such as
payroll, benefits, etc. are charged to property operations on the
Partnership's consolidated statements of operations. Receivables from
affiliated parties are payable on demand and bear interest at 11%.
F-11
(6) Contingency
- ----------------
The Partnership, as a nominal defendant, the General Partners of the
Partnership and the officers and directors of the Corporate General
Partner, as defendants, were served with a Summons and Complaint on
April 7, 2000 in a class and derivative lawsuit instituted by Ira
Gaines and on August 8, 2000 in a class and derivative lawsuit
instituted by Sean O'Reilly and Louise Homburger, each in Supreme
Court, County of Erie, State of New York. In September 2000, the Court
signed an order consolidating these lawsuits. The consolidated lawsuit
alleges claims of mismanagement and improper use of partnership funds
relating to the Realmark Partnerships. The consolidated lawsuit seeks
declaratory relief, unspecified damages, a receiver, an order
liquidating the partnership, punitive damages, attorneys' fees and
related relief. The defendants deny any liability and intend to
vigorously defend this lawsuit. Because of the early stage of this
lawsuit and because there has been no discovery to date, legal counsel
cannot render an opinion as to the likely outcome of this case. The
possible effect of this contingency is not presently determinable and,
therefore, the consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
F-12
Schedule III
------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI B AND SUBSIDIARIES
Real Estate and Accumulated Depreciation
December 31, 2000
Gross amounts at which
Cost carried at close of period
Initial Cost to capitalized --------------------------
Partnership subsequent Land Buildings
Property --------------------------- to and and
description Encumbrances Land Buildings acquisition Retirements improvements improvements Total
- ----------- ------------ ------------ ------------ ----------- ----------- ------------ ------------ -----
Fairway Club
Greenville, SC $2,583,100 528,000 3,059,008 280,159 144,026 554,500 3,168,641 3,723,141
Player's Club
North
Lutz, FL 2,644,202 218,000 2,851,851 28,028 -- 226,000 2,871,879 3,097,879
---------- ------- --------- -------- ------- ------- --------- ---------
$5,227,302 746,000 5,910,859 308,187 144,026 780,500 6,040,520 6,821,020
========== ======= ========= ======= ======= ======= ========= =========
Foxhunt Joint
Venture
Kettering, OH $5,950,373 387,500 4,890,020 235,608 -- 387,500 5,125,628 5,513,128
========== ======= ========= ======= ======= ======= ========= =========
(TABLE RESTUBBED)
Life on which
depreciation
in latest
statement
Accumulated Date of Date of operations
Depreciation construction acquired is computed
------------ ------------ -------- -------------
Fairway Club
Greenville, SC 1,039,894 1971 6/91 25 years
Player's Club
North
Lutz, FL 1,034,247 1986 6/91 25 years
---------
2,074,141
=========
Foxhunt Joint
Venture
Kettering, OH 3,083,021 1972 9/91 25 years *
=========
* In accordance with Statement of Financial Accounting Standards No. 121, no
depreciation was recorded during the disposal period.
F-13
Schedule III, Continued
-----------------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI B
AND SUBSIDIARIES
Real Estate and Accumulated Depreciation
December 31, 2000, 1999 and 1998
(1) Cost for Federal income tax purposes is $6,821,020.
(2) A reconciliation of the carrying amount of land and buildings as of
December 31, 2000, 1999 and 1998 follows:
Partnership Properties
----------------------
2000 1999 1998
---- ---- ----
Balance at beginning of year $ 6,808,930 6,808,930 6,808,930
Additions 12,090 -- --
----------- ----------- -----------
Balance at end of year $ 6,821,020 6,808,930 6,808,930
=========== =========== ===========
Joint Venture Properties
------------------------
2000 1999 1998
---- ---- ----
Balance at beginning of year $ 5,513,128 5,494,641 9,588,006
Additions -- 18,487 68,970
Dispositions (5) -- -- (4,162,335)
----------- ---------- ---------
Balance at end of year $ 5,513,128 5,513,128 5,494,641
=========== ========== =========
(3) A reconciliation of accumulated depreciation for building and
improvements for the years ended December 31, 2000, 1999 and 1998
follows:
Partnership Properties
----------------------
2000 1999 1998
---- ---- ----
Balance at beginning of year $ 1,841,470 1,609,200 1,376,933
Depreciation expense 232,671 232,270 232,267
----------- ---------- ----------
Balance at end of year (4) $ 2,074,141 1,841,470 1,609,200
=========== ========== ==========
Joint Venture Properties
------------------------
2000 1999 1998
---- ---- ----
Balance at beginning of year $ 3,083,021 2,977,048 4,570,419
Depreciation expense -- 105,973 209,647
Dispositions (5) -- -- (1,803,018)
----------- ----------- ----------
Balance at end of year (4) $ 3,083,021 3,083,021 2,977,048
=========== =========== ==========
(4) Balance applies entirely to buildings. All properties are depreciated over
25 year lives.
(5) Sale of Lakeview Apartments in 1998.
F-14