FORM 10-Q
UNITED STATES
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 quarterly period ended September 30, 2001
Commission File Number: 33-17579
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP -VI B
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(Exact name of registrant as specified in its charter)
Delaware 16-1309988
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(State of organization) (IRS Employer Identification No.)
2350 North Forest Road, Suite 12A,Getzville, New York 14068
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(Address of principal executive offices)
(716) 636-0280
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(Registrant's telephone number)
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 [ ]
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
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September 30, December 31,
2001 2000
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Assets
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Cost of property and equipment, all held for sale in 2001 $3,228,531 7,078,885
Less accumulated depreciation 1,164,899 2,330,456
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2,063,632 4,748,429
Cash and equivalents 319,506 708,683
Investment in joint venture - 101,562
Note receivable 326,950 -
Other assets 301,517 427,874
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Total assets $3,011,605 5,986,548
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Liabilities and Partners' Equity
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Mortgage loans payable 2,626,941 5,227,302
Accounts payable and accrued expenses 130,757 111,858
Other liabilities 44,630 103,613
Partners' equity 209,277 543,775
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Total liabilities and partners' equity $3,011,605 5,986,548
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Condensed Consolidated Statements of Operations
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Three months ended Sept. 30, Nine months ended Sept. 30,
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2001 2000 2001 2000
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Rental income $328,574 466,247 1,272,008 1,417,525
Other income 29,821 16,080 99,793 67,872
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Total income 358,395 482,327 1,371,801 1,485,397
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Property operating costs 235,636 294,282 779,317 854,233
Depreciation - 58,379 - 175,137
Administrative expense - affiliates 38,427 44,416 129,844 135,092
Other administrative expense 26,703 30,091 80,716 129,913
Interest 208,870 115,233 433,802 343,924
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Total expenses 509,636 542,401 1,423,679 1,638,299
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Operating loss (151,241) (60,074) (51,878) (152,902)
Equity in earnings (loss) of joint venture - 540 546,261 6,132
Gain on property sale 1,851,531 1,851,531
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Net income (loss) $1,700,290 (59,534) 2,345,914 (146,770)
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Net income (loss) per limited partnership unit $20.98 (0.73) 28.94 (1.81)
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Weighted average limited partnership units 78,625 78,625 78,625 78,625
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Condensed Consolidated Statements of Cash Flows
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Nine months ended September 30,
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2001 2000
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Operating activities:
Net income (loss) 2,345,914 (146,770)
Adjustments:
Equity in earnings of joint venture (546,261) (6,132)
Gain on sale of property (1,851,531) -
Depreciation and amortization - 183,630
Other, principally changes in other assets and liabilities 86,274 61,538
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Net cash provided (used) by operating activities 34,396 92,266
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Investing activities:
Additions to property and equipment - (12,090)
Proceeds from sale of property, excluding note receivable 4,209,377 -
Distributions from joint ventures 647,823 3,450
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Net cash provided (used) by investing activities 4,857,200 (8,640)
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Financing activities:
Distribution to partners (2,680,412) -
Principal payments on mortgage loans (2,600,361) (30,557)
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Net cash provided (used) by financing activities (5,280,773) (30,557)
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Net increase (decrease) in cash and equivalents (389,177) 53,069
Cash and equivalents at beginning of period 708,683 798,022
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Cash and equivalents at end of period $319,506 851,091
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Notes to Financial Statements
September 30, 2001 and 2000
Organization
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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.
Basis of Presentation
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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, 2000 Form
10-K. The interim financial statements should be read in conjunction with the
financial statements included in that Form 10-K. 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.
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Property and Equipment
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Since the first quarter of 2001, the Partnership's two apartment complex
properties, Fairway Club and Players Club, have been actively marketed for sale.
Depreciation not recorded on these properties in the three and nine month
periods ended September 30, 2001 was approximately $50,000 and $165,000,
respectively.
In its March 31, 2001 and June 30, 2001 Form 10-Qs, the Partnership reported the
existence of a contingent $4.7 million sales agreement with an unaffiliated
entity, covering Fairway Club. On August 16, 2001, the sale was consummated for
cash of $4,373,000 and a $327,000 sixty-day note from the purchaser, resulting
in a net gain of $1,851,531.
On a pro forma basis, if the sale of the Fairway Club property had occurred on
December 31, 2000, that balance sheet would have shown: an increase in cash and
equivalents from $.7 to $2.3 million; a note receivable of $327,000; decreases
in property of $2.7 million and in mortgage loans of $2.6 million; and an
increase in partnership capital of $1.9 million.
If the property had been sold on January 1, 2000, the pro forma results of
operations for the year ended December 31, 2000 would have been a net loss of
$177,000 ($2.25 per limited partnership unit) $57,000 less than the historical
net loss, resulting from decreases in revenue and expense of $1,019,000 and
$1,076,000, respectively. For the nine months ended September 30, 2001, the pro
forma operating results would have been an operating profit of $72,000,
resulting from decreases in revenue and expense of $626,000 and $750,000,
respectively. For the three months ended September 30, 2001, the pro forma
operating results would have been a profit of $20,000, resulting from decreases
in revenue and expense of $108,000 and $279,000, respectively. Fairway Club's
expense for the quarter and nine months ended September 30, 2001 includes a
charge of approximately $127,000 to write-off unamortized deferred mortgage
costs.
All of the foregoing pro forma operating data excludes the gain on the
disposition of the property and simply reflects the elimination of Fairway
Club's operating accounts from the consolidated historical results.
Investment in Joint Venture
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At December 31, 2000, the Partnership had 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. The
Foxhunt property had been the subject of a plan of disposal since July 1999 and
was sold for $7,600,000 on March 1, 2001, to an unaffiliated entity. After
satisfaction of the $5,942,000 mortgage loan on the property and payment of
closing costs, the net proceeds were approximately $1.1 million. The
Partnership's equity in the net income of the venture includes its share of the
net gain of approximately $4,700,000.
Contingency
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The Partnership, as a nominal defendant, the General Partners of all of the
Realmark Partnerships 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
(the"Court"). 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.
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While the defendants deny any liability and have vigorously defended this
lawsuit, on August 29, 2001, the parties entered into a Stipulation of
Settlement (the "Agreement"). On October 4, 2001, the Court issued an "Order
Preliminarily Approving Settlement" that, among other things, calls for a
hearing on November 21, 2001 to determine whether the Agreement should be
approved by the Court. The Agreement provides, among other things, that:
* $1 million of the amount owed to the General Partners and/or their
affiliates by Realmark Property Investors Limited Partnership IV be
forgiven.
* The payable to the General Partners and/or their affiliates by Realmark
Property Investors Limited Partnership VI-A at March 31, 2001, in the
amount of $481,598, cease to accrue interest.
* All of the Realmark Partnerships' properties be disposed of within 360
days of the hearing order.
The consolidated financial statements do not include any adjustments that might
result from the outcome of this matter, pending the action of the Court.
Current Accounting Pronouncements
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Statements of Financial Accounting Standards Nos. 138 and 133, which concern
accounting for derivative instruments and hedging activities, became effective
for the Partnership on January 1, 2001 and did not have any effect on the
Partnership's financial statements.
PART I - Item 2. Management's Discussion and Analysis of Financial Condition
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and Results of Operations
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Liquidity and Capital Resources
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The Partnership's cash position is adequate to fund its anticipated recurring
cash needs. As the result of the sale of Fairway Club and the distribution from
the Foxhunt joint venture, the Partnership had sufficient cash to make a
distribution of $2.7 million to partners in the quarter ended September 30,
2001.
Results of Operations
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As indicated in the notes to financial statements, the Partnership's operations,
excluding the operating accounts of Fairway Club, produced operating income of
$20,000 and $72,000 for the three and nine months ended September 30, 2001,
respectively. Comparable pro forma results for the same 2000 periods, excluding
depreciation, would be operating losses of $5,000 and $27,000.
In 2001, the occupancy rate at Players Club continues to be well over the 90%
level. Rental income remained constant in the third quarter of 2001 as compared
to the 2000 third quarter, while increasing approximately $32,000 in the 2001
nine month period. Property operating costs at Players Club decreased $6,000 in
the third quarter and approximately $12,000 in the nine months ended September
30, 2001, principally because of lower maintenance payroll and utility expense.
Administrative costs decreased in both 2001 periods because of lower advertising
costs and professional fees.
Interest expense in both 2001 periods increased because of a charge of $127,000
for the unamortized deferred mortgage costs on Fairway's loan.
The increase in the partnership's equity in the earnings of Foxhunt is
attributable to the gain on the sale of Foxhunt in the first quarter of 2001.
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PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk
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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 - Item 6 Exhibits and Reports on Form 8-K
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On August 31, 2001, the Partnership filed a Form 8-K, reporting the sale of
Fairway Club under item 2 thereof.
SIGNATURES
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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
November 14, 2001 /s/ Joseph M. Jayson
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Date Joseph M. Jayson,
Individual General Partner and
Principal Financial Officer
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