FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from.........to.........
Commission file number 0-9508
PREFERRED PROPERTIES FUND 80
(Exact name of small business issuer as specified in its charter)
California 94-2599964
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports ), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) PREFERRED PROPERTIES FUND 80
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 1996
<TABLE>
<S> <C> <C>
Assets
Cash and cash equivalents $ 604
Other assets 75
Deferred costs, net 53
Investment properties:
Land $ 1,059
Buildings and related personal property 4,286
5,345
Less accumulated depreciation (1,774) 3,571
$ 4,303
Liabilities and Partners' Deficit
Liabilities
Accrued expenses and other liabilities $ 157
Note payable 5,400
Promissory notes:
Principal 250
Deferred interest payable 181
Partners' Deficit:
General partners $ (882)
Limited partners (19,997 units (803) (1,685)
$ 4,303
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
b) PREFERRED PROPERTIES FUND 80
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Revenues:
Rental income $ 213 $ 199
Interest income 5 39
Total revenues 218 238
Expenses:
Operating 29 21
Interest 137 134
Depreciation 28 28
General and administrative 51 68
Total expenses 245 251
Net loss $ (27) $ (13)
Net loss allocated to general partners (5%) $ (1) $ (1)
Net loss allocated to limited partners (95%) (26) (12)
Net loss $ (27) $ (13)
Net loss per limited partnership unit $ (1.30) $ (.60)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
c) PREFERRED PROPERTIES FUND 80
CONSOLIDATED STATEMENT OF PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners' Partners' Total
<S> <C> <C> <C> <C>
Original capital contributions 19,997 $ 100 $ 19,997 $ 20,097
Partners' deficit
at December 31, 1995 19,997 $ (881) $ (777) $ (1,658)
Net loss for the three
months ended March 31, 1996 -- (1) (26) (27)
Partners' deficit
at March 31, 1996 19,997 $ (882) $ (803) $ (1,685)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) PREFERRED PROPERTIES FUND 80
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (27) $ (13)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 28 28
Amortization 4 2
Change in accounts:
Other assets (46) 82
Accrued expenses and other liabilities 52 (70)
Net cash provided by operating activities 11 29
Cash flows from investing activities:
Net cash provided by investing activities -- --
Cash flows from financing activities:
Notes payable principal payments (15) (18)
Joint venture partner distributions -- (9)
Retirement of promissory notes -- (166)
Purchase of minority interest in joint venture -- (10)
Cash distributions to limited partners -- (1,301)
Net cash used in financing activities (15) (1,504)
Net decrease in cash and cash equivalents (4) (1,475)
Cash and cash equivalents at beginning of period 608 2,498
Cash and cash equivalents at end of period $ 604 $ 1,023
Supplemental disclosure of cash flow information:
Interest paid in cash during the period $ 137 $ 204
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e) PREFERRED PROPERTIES FUND 80
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of Preferred Properties Fund 80
(the "Partnership") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of NPI Equity Investment II, Inc. ("NPI Equity" or the "Managing General
Partner"), all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three month period ended March 31, 1996, are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 1996. For
further information, refer to the financial statements and footnotes thereto
included in the Partnership's annual report on Form 10-K for the year ended
December 31, 1995.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
Note B - Transactions with Affiliated Parties
Preferred Properties Fund 80 has no employees and is dependent on the Managing
General Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
The following transactions with Insignia Financial Group, Inc. ("Insignia"),
National Property Investors, Inc. ("NPI Inc."), and affiliates were charged to
expense in 1996 and 1995:
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
1996 1995
(in thousands)
<S> <C> <C>
Reimbursement for services of affiliates (included
in general and administrative expenses) $35 $44
</TABLE>
For the period from January 19, 1996, to March 31, 1996, the Partnership insured
its property under a master policy through an agency and insurer unaffiliated
with the Managing General Partner. An affiliate of the Managing General Partner
acquired, in the acquisition of a business, certain financial obligations from
an insurance agency which was later acquired by the agent who placed the current
year's master policy. The current agent assumed the financial obligations to
the affiliate of the Managing General Partner who received payments on these
obligations from the agent. The amount of the Partnership's insurance premiums
accruing to the benefit of the affiliate of the Managing General Partner by
virtue of the agent's obligations is not significant.
On December 6, 1993, NPI Equity II became the managing partner of FRI and
assumed operational control over Fox Capital Management Corporation ("FCMC"), an
affiliate of FRI. As a result, NPI Equity II became responsible for the
operation and management of the business and affairs of the Registrant and the
other investment partnerships sponsored by FRI and/or FCMC. NPI Equity II is a
wholly-owned subsidiary of NPI, Inc. The individuals who had served previously
as partners of FRI and as officers and directors of FCMC contributed their
general partnership interests in FRI to a newly formed limited partnership,
Portfolio Realty Associates, L.P. ("PRA"), in exchange for limited partnership
interests in PRA. In the foregoing capacity, such partners continue to hold
indirectly certain economic interests in the Registrant and such other
investment partnerships, but ceased to be responsible for the operation and
management of the Registrant and such other partnerships.
On August 17, 1995, the stockholders of NPI, Inc. entered into an agreement to
sell to IFGP Corporation, a Delaware corporation, an affiliate of Insignia, a
Delaware corporation, all of the issued and outstanding common stock of NPI,
Inc. for an aggregate purchase price of $1,000,000. The closing of the
transactions contemplated by the above mentioned agreement (the "Closing")
occurred on January 19, 1996.
Upon the Closing, the officers and directors of NPI, Inc., FCMC and the Managing
General Partner resigned and IFGP Corporation caused new officers and directors
of each of those entities to be elected.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment property consists of one commercial complex. The
property remains fully occupied by two tenants.
The Partnership's net loss for the three months ended March 31, 1996, was
approximately $27,000 versus an approximate $13,000 net loss for the same period
of 1995. The increase in the net loss is attributable to a decrease in interest
income and an increase in operating expense. The decrease in interest income is
due to a reduction in cash reserves as compared to the first quarter of 1995.
Operating expense increased due to an increase in tax expense in 1996.
Partially offsetting the increase in net loss was a decrease in general and
administrative expense due to a reduction in General Partner reimbursements for
services of affiliates and legal fees.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of its investment property to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the Managing General Partner attempts to protect the Partnership from
the burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.
At March 31, 1996, the Partnership had unrestricted cash of $604,000 as compared
to $1,023,000 at March 31, 1995. Net cash provided by operating activities
decreased primarily as a result of the increase in net loss as discussed above.
Other assets increased due to increased tenant reimbursements, receivables and
increased tax escrows which also resulted in a reduction in cash provided by
operations. Net cash used in financing activities decreased due to the
partnership not making distributions in the first quarter of 1996 and the
retirement of promissory notes in 1995. The Partnership's interest in the joint
venture was terminated in 1995 resulting in a reduction of cash used in
financing activities in 1996.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The first mortgage
indebtedness of $4,100,000 is amortized over 25 years with a balloon payment due
April 1, 1997. The ground lease of $1,300,000 requires interest only payments
and matures April 1, 1998. Future cash distributions will depend on the levels
of cash generated from operations, a property sale, and the availability of cash
reserves. Cash distributions totaling approximately $1,300,000 were paid in the
first quarter of 1995. No cash distributions were paid during the first quarter
of 1996.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K:
A Form 8-K dated January 19, 1996, was filed reporting the change
in control of the registrant.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned thereunto, duly
authorized.
PREFERRED PROPERTIES FUND 80
By: MONTGOMERY REALTY COMPANY - 80,
Its General Partner
By: FOX REALTY INVESTORS,
the Managing General Partner of the
General Partner
By: NPI Equity Investments II, Inc.,
Managing Partner
/s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
/s/Ronald Uretta
Ronald Uretta
Principal Financial Officer and
Principal Accounting Officer
Date: May 14, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Preferred
Properties Fund 80 1996 First Quarter 10-QSB and is qualified in its entirety by
reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000312903
<NAME> PREFERRED PROPERTIES FUND 80
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 604
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 5,345
<DEPRECIATION> 1,774
<TOTAL-ASSETS> 4,303
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 5,400
0
0
<COMMON> 0
<OTHER-SE> (1,685)
<TOTAL-LIABILITY-AND-EQUITY> 4,303
<SALES> 0
<TOTAL-REVENUES> 218
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 245
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 137
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (27)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (27)
<EPS-PRIMARY> (1.30)
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
