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 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE
REQUIRED)
Commission file number 2-65391
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in its Charter)
Delaware 16-1173249
- - ------------------------ ---------------------------------
(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 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 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 Page 11 for a list of all documents incorporated by reference.
<PAGE>
PART I
ITEM 1: BUSINESS
- - -----------------
The Registrant, Realmark Property Investors Limited Partnership (the
"Partnership"), is a Delaware Limited Partnership organized in 1979 pursuant to
an Agreement and Certificate of Limited Partnership (the "Partnership
Agreement"), under the Delaware Uniform Limited Partnership Act. The
Partnership's Corporate General Partner is Realmark Properties, Inc. (the
"Corporate General Partner"), a Delaware corporation, and it's Individual
General Partner is 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 March 26, 1981, and concluded the
offering on December 31, 1981, having raised a total of $3.1 million before
sales commissions and expenses of the offering.
The Partnership's investment objectives are to (1) provide a return of
capital plus capital gains from the sale of appreciated properties; (2) provide
partners with cash distributions until properties are sold; (3) preserve and
protect partners capital; and (4) achieve a build-up of equity through the
reduction of mortgage loans.
The Partnership's one remaining apartment complex, acquired in 1981, is
located in Englewood, Ohio. The surrounding community continues to be marked by
relatively stable occupancy rates and minimal construction. Physical occupancy
at Carriage House of Englewood (formerly Gold Key Village Apartments) for 1996
was 83%, for 1995 was 92% and for 1994 occupancy was at 95%. As the only
property in the Partnership, Carriage House of Englewood accounts for all of the
revenue generated by the Partnership.
The business of the Partnership is not seasonal. As of December 31, 1996,
the Partnership did not directly employ any persons in a full-time position. All
persons who regularly rendered services on behalf of the Partnership through
December 31, 1996 were employees of the Corporate General Partner or its
affiliates.
Carriage House of Englewood is currently managed by Realmark Corporation,
an affiliate of the Corporate General Partner.
ITEM 2: PROPERTIES
- - -------------------
As of December 31, 1996, the Partnership continued to own and operate
Carriage House of Englewood (formerly the Gold Key Village Apartments).
Purchased in November 1981, Carriage House of Englewood, located in Englewood,
Ohio, is a 144 unit rental complex consisting of 24 buildings and recreational
facilities on 9.6 acres of land. Realmark Corporation, an affiliate of the
General Partners, has managed the complex since March 1, 1984.
On May 5, 1992, the Partnership refinanced its two mortgages with a 9% U.S.
Department of Housing and Urban Development (HUD) guaranteed mortgage in the
amount of $2,997,800 due June 1, 2027. The outstanding mortgage balance at
December 31, 1996 was $2,930,266.
2
<PAGE>
On the same date, the Partnership entered into a joint venture agreement
with Realmark Property Investors Limited Partnership VI A (RPILP VI A) for the
purpose of operating Carriage House of Englewood. Under the terms of the joint
venture agreement, the Partnership contributed the property net of the mortgage
and RPILP VI A contributed $497,911. The agreement provided for the income,
loss, cash flow, and sale or refinancing proceeds to be allocated 68% to the
Partnership and 32% to RPILP VI A. On March 1, 1993, RPILP VI A contributed an
additional $125,239, changing the allocation percentages to 60% to the
Partnership and 40% to RPILP VI A.
ITEM 3: LEGAL PROCEEDINGS
- - --------------------------
The Partnership is not a party to, nor is any of the Partnership's property
the subject of, any material pending legal proceedings.
ITEM 4: SUBMISSION 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 established trading market for the units of Limited
Partnership Interest of the Partnership and it is not anticipated that any will
develop in the future.
The Partnership did not make any distributions during 1996, 1995 or 1994
and management does not anticipate making any distributions until Carriage House
of Englewood is sold and all Partnership obligations are satisfied. Unless there
is significant improvement in the overall property performance, it remains
unlikely that the investors will receive any of the proceeds from sale.
As of December 31, 1996, there were 421 record holders of units of Limited
Partnership Interest.
3
<PAGE>
ITEM 6: SELECTED FINANCIAL DATA
- - --------------------------------
<TABLE>
<CAPTION>
Realmark Properties Investors Limited Partnership
----------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Total assets 1,653,163 1,757,445 1,864,870 2,007,503 2,098,072
========== ========== ========== ========== ==========
Notes payable and
Long-term obligations 2,930,266 2,947,711 2,963,659 2,978,240 2,991,570
========= ========= ========= ========= =========
_________________________________________________________________________________________________________________
Revenue 685,142 765,363 744,192 723,783 678,998
Expenses 1,068,126 1,084,592 993,203 884,131 976,222
---------- ---------- ---------- ---------- ----------
Loss before allocation
to minority interest and
extraordinary item (382,984) (319,229) (249,011) (160,348) (297,224)
Loss allocated to
Minority Interest 119,637 91,833 70,183 33,636 33,681
---------- ---------- ---------- ---------- ----------
Loss before
extraordinary item (263,347) (227,396) (178,828) (126,712) (263,543)
Extraordinary item - gain
on retirement of debt -- -- -- -- 91,035
---------- ---------- ---------- ---------- ----------
Net Loss (263,347) (227,396) (178,828) (126,712) (172,508)
========== ========== ========== ========== ==========
_________________________________________________________________________________________________________________
Net cash (used in)
provided by operating
activities (271,721) (134,649) (71,690) (122,857) (166,152)
Principal payments on
long-term debt (17,445) (15,948) (14,581) (13,330) (6,230)
---------- ---------- ---------- ---------- ----------
Net cash used in
operating activities
less principal payments
on long-term debt (289,166) (150,597) (86,271) (136,187) (172,382)
========== ========== ========== ========== ==========
Loss per limited partnership unit:
Before extraordinary item (84.10) (72.62) (57.11) (40.47) (84.16)
Extraordinary item -- -- -- -- 29.07
---------- ---------- ---------- ---------- ----------
Loss per limited
partnership unit (84.10) (72.62) (57.11) (40.47) (55.09)
========== ========== ========== ========== ==========
Weighted average
number of limited
units outstanding 3,100 3,100 3,100 3,100 3,100
========== ========== ========== ========== ==========
_________________________________________________________________________________________________________________
</TABLE>
4
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
- - --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
- - ---------------------
Liquidity and Capital Resources:
- - --------------------------------
The Partnership continues to incur cash flow deficits and large losses from
operations as it has in prior years. During 1996, the Corporate General Partner
and its affiliates continued to advance funds to the Partnership whenever it was
necessary to cover its shortfalls. The General Partner is under no obligation to
advance funds to the Partnership, and there is no assurance that such advances
will continue. As of December 31, 1996, the Corporate General Partner advances
totaled $784,461, all of which is payable on demand and accruing interest at 11%
per annum. Due to the operating shortfalls, the Partnership did not make any
distributions in the years ended December 31, 1996 and 1995. Until such time as
the Partnership can satisfy its obligations and repay the Corporate General
Partner advances, no distributions are anticipated.
The Partnership's one remaining property, Carriage House of Englewood
(formerly Gold Key Apartments) came under contract for sale during July 1996.
The sale is subject to a number of contingencies and is cancelable at any time
by the buyer. Until such time as all of the buyers due diligence is performed,
no closing date can be established. The Partnership has received as of December
31, 1996 non-refundable deposits on the sale of this property totaling $220,000,
which includes a note for $47,200. The Corporate General Partner feels the
pending sale is in the best interest of the Limited Partners, although at this
date, it appears highly unlikely that the Limited Partners will receive any
proceeds from the sale due to the amount of the Partnership's liabilities.
During 1996, management was successful in securing the release of funds
from the property's replacement escrow reserve from the United States Department
of Housing and Urban Development (HUD) and the mortgagor on the property. The
additional cash was used to fund operations and to do needed capital
improvements to the property, such as roofing repairs and interior and exterior
painting. Although HUD and the mortgagor have assisted the Partnership through
the release of the escrowed funds, unless the property shows significant
improvement in occupancy and collections, as well as a decrease in expenses, the
property could be in a position to default on its mortgage, thus throwing it
into a foreclosure. With this in mind, the Corporate General Partner is
aggressively attempting to close on the pending sale, as well as continuing to
market the property to other buyers.
Management has once again implemented corrective action plans in response
to the going concern consideration discussed in Note 9 to the financial
statements, as well as to deal with the HUD noncompliance detailed in the notes
to the financial statements. These plans include tighter cash management through
the closer monitoring of expenses such as payroll, advertising and maintenance,
which have typically been the expenses that have increased from year to year.
Additionally, tighter credit policies have been put into place as a means of
avoiding the collection problems which the property incurred during the past
several years. The HUD noncompliance detailed in the notes technically puts the
Partnership in default of the mortgage which could result in fines or interest
charges being levied, or the take over of the property by HUD. A concerted
effort at correcting the noncompliance will hopefully lead to the ultimate cure
of such default.
Results of Operations:
- - ----------------------
For the year ended December 31, 1996, the Partnership incurred a net loss
of $263,347 or $84.10 per limited partnership unit. This is a slight increase
from the year ended December 31, 1995 which resulted in a loss of $227,396 or
$72.62 per limited partnership unit, and a considerable increase over the loss
incurred in the year ended December 31, 1994 which was $178,828 or $57.11 per
limited partnership unit.
5
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
- - --------------------------------------------------------------------------------
RESULTS OF OPERATIONS (Con't.)
- - ------------------------------
Results of Operations (Con't.):
- - -------------------------------
Partnership revenues for the year ended December 31, 1996 totaled $685,142;
this consisted of rental income of $640,124 and other income, which includes
interest, laundry income, and other miscellaneous sources of income of $45,018.
Although other income remained fairly constant as compared to the year ended
December 31, 1995 and increased approximately 18% in comparison to the year
ended December 31, 1994, there was a drastic decrease in rental revenues which
totaled $717,713 in 1995 and $705,970 in 1994. The decrease in rental income is
related to the drop in occupancy at Carriage House of Englewood which was
considerable during 1996. Physical occupancy averaged 83% during the year ended
December 31, 1996, although it saw lows of 70% at points during the year, as
compared to occupancy averages of 92% and 95% for the years ended December 31,
1995 and 1994, respectively. At the end of 1996, the property began to see
improved occupancy; management continues to focus additional and continual
effort on increasing occupancy, as well as decreasing delinquencies.
Partnership expenses for the year ended December 31, 1996 totaled
$1,068,126, a decrease of slightly over $16,000 from those of 1995, but not yet
returned to the level of 1994 which were $993,203. Decreases in payroll, repairs
and maintenance and contracted services throughout the partnership continue to
result in decreases in operating expenses, while substantially higher
advertising, legal fees and portfolio management and accounting charges resulted
in higher administrative expenses. The increase in administrative expenses was
primarily due to activities, such as more aggressive advertising campaigns,
undertaken to increase occupancies. Interest expense remained almost exactly the
same as the previous year, and increased slightly as compared to 1994 due to the
higher carrying value of the loan from affiliates between the two years.
The Partnership expects to incur higher than "normal" property operations
expenses in the near future due to the costs associated with preparing units for
new tenants (i.e. cleaning, painting, appliance and carpeting costs), as well as
due to costs to be incurred to physically improve the exterior of the complex.
Although this work is necessary in order to lease up the apartment complex,
management is trying to control expenditures so as not to worsen the cash flow
situation of the Partnership. For example, management has been able to obtain
large price discounts on paint, carpeting and appliances through negotiations
with large national companies, such as Whirlpool. It is hoped that by improving
the property's appearance and through continual maintenance of the interior and
exterior of the buildings that new tenants will be attracted, thus increasing
revenues. Tenant retention also is seen as a means of controlling both operating
and administrative expenses.
For the year ended December 31, 1996, the tax basis loss was $183,920 or
$58.74 per limited partnership unit compared to a tax loss of $194,584 or $62.14
per unit for the year ended December 31, 1995 and a tax loss of $196,138 or
$62.64 per limited partnership unit for the year ended December 31, 1994. The
Partnership agreement provides for the taxable income or losses to be allocated
99% to the Limited Partners and 1% to the General Partners. Through the year
ended December 31, 1986 and for the years ended December 31, 1991 and 1996,
taxable income or losses were allocated in accordance with this provision. For
the years 1987 through 1990, and 1992 through 1995, the Partnership was required
to reallocate taxable losses in accordance with the provisions of Section 704(b)
of the Internal Revenue Code. In general, Section 704(b) may be applicable when
Partnership capital is negative and Limited Partners are not required to restore
negative capital accounts. In such circumstances, the IRS code requires that the
General Partner(s) bear a greater portion of the economic loss than that which
would be allocated pursuant to the Partnership agreement and, therefore, the
loss must be reallocated.
6
<PAGE>
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
- - --------------------
None
7
<PAGE>
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 March 1, 1996, are listed below. Each director is subject
to election on an annual basis.
Year First
Name Title of All Positions Held with Company Elected Director
- - ---- ---------------------------------------- ----------------
Joseph M. Jayson President and Director 1979
Judith P. Jayson Vice-President and Director 1979
Michael J. Colmerauer Secretary
Joseph M. Jayson, President and Director of Realmark Properties, Inc. and
Judith P. Jayson, Vice-President and Director of Realmark Properties, Inc., 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:
Joseph M. Jayson, age 58, is Chairman and Director and sole stockholder of
J.M. Jayson & Company, Inc. and certain of its affiliated companies:
Westmoreland Capital Corporation, Oilmark Corporation and U.S. Energy
Development Corporation. In addition, Mr. Jayson is Chairman of Realmark
Corporation, and President and Director of Realmark Properties, Inc., wholly
owned subsidiaries of J.M. Jayson & Company, Inc. and co-general partner of
Realmark Properties Investors Limited Partnership, Realmark Properties Investors
Limited Partnership-II, Realmark Properties Investors Limited Partnership-III,
Realmark Properties Investors Limited Partnership-IV, Realmark Properties
Investors Limited Partnership-V, Realmark Properties Investors Limited
Partnership-VI A and Realmark Properties Investors Limited Partnership-VI B. Mr.
Jayson is a member of the Investment Advisory Board of the Corporate General
Partner. Mr. Jayson has been in real estate for the last 34 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 34 years been engaged in various aspects
of real estate brokerage and investment. He brokered residential properties from
1962 to 1964, commercial and 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 in forming over 30 real estate related limited partnerships. For
the past sixteen years, Mr. Jayson and J.M. Jayson & Company, Inc. and an
affiliate have also engaged in developmental drilling for gas and oil.
8
<PAGE>
Judith P. Jayson, age 57, 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 35 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. Mrs. Jayson is the wife of
Joseph M. Jayson, the Individual General Partner.
Michael J. Colmerauer, age 39, is Secretary and in-house legal counsel for
J.M. Jayson and Company, Inc., Realmark Corporation, Realmark Properties, Inc.
and other companies affiliated with the General Partners. He received a
Bachelor's Degree (BA) from Canisius College in 1980 and a Juris Doctors (J.D.)
from the University of Tulsa in 1983. Mr. Colmerauer is a member of the American
and Erie County Bar Association and has been employed by the Jayson group of
companies for the last 13 years.
ITEM 11: EXECUTIVE COMPENSATION
- - --------------------------------
No direct remuneration was paid or payable by the Partnerships to directors
and officers (since it has no directors or officers) for its fiscal years ended
December 31, 1996, 1995 or 1994, 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 fiscal years ended December 31,
1996, 1995 or 1994.
The following table sets forth for the years ended December 31, 1996, 1995
and 1994, the compensation paid or accrued as payable by the Partnership,
directly or indirectly, to affiliates of the General Partners:
<TABLE>
<CAPTION>
Amounts
Entity Receiving Type of -------
Compensation Compensation 1996 1995 1994
------------ ------------ ---- ---- ----
<S> <C> <C> <C> <C>
Realmark Properties, Inc. Interest charged on
(The Corporate General accounts payable -
Partner) affiliates $ 84,692 $ 83,159 $ 72,083
------------- ------------ ------------
Reimbursement for
allocated partnership
administration expenses:
Investor Services Fees 1,958 1,881 2,020
Brokerage Fees 2,677 3,175 2,451
Portfolio Management
& Accounting Fees 14,677 8,118 15,043
Realmark Corporation Property Management Fees 33,678 37,930 36,939
Computer Service Fees 3,030 3,030 3,024
------------- ------------ -----------
56,020 54,134 59,477
------------- ------------ -----------
$ 140,712 $ 137,293 $ 131,560
============ ============ ===========
</TABLE>
9
<PAGE>
The Corporate General Partner is entitled to a continuing Partnership
Management Fee equal to 9% of adjusted cash flow (as defined in the Partnership
Agreement). This fee is subordinated to the receipt by the limited partners of a
non-cumulative annual cash return equal to 7% on the average of their adjusted
capital contributions (as defined in the Partnership Agreement). Since the
limited partners have not received a 7% return on their average capital
balances, this fee has not been paid to the General Partner or accrued by the
Partnership. The General Partners are entitled to 1% of Distributable Cash (as
defined in the Partnership Agreement) and to certain expense reimbursements with
respect to Partnership operations.
Additionally, the Partnership's share of net proceeds arising from a sale
or refinancing shall be distributed first to the Limited Partners in amounts
equivalent to a 7% return on their average adjusted capital balances, plus an
amount equal to their capital contributions, then to all partners in amounts
equal to their respective positive capital account balances. The partnership's
share of additional proceeds, after property disposition fees, shall then be
allocated to the Limited Partners in an amount equivalent to 5% of their average
adjusted capital balances and the remainder, if any, in the ratio of 90% to the
Limited Partners and 10% to the General Partners. The Partnership's share of
income arising from the sale or refinancing shall be allocated in the same
manner as the proceeds are to be distributed, except that the General Partners
are to be allocated at least 1% of the income.
The Corporate General Partner is also allowed to collect property
disposition fees upon the sale of acquired properties. This fee is not to exceed
the lesser of 9% of the gross proceeds of the offering applicable to the
property or 50% of normal rates, subordinated to: (i) the payment to the Limited
Partners of a cumulative annual return (not compounded) equal to 7% on their
average adjusted capital balances; (ii) the repayment to the Limited Partners of
a cumulative amount equal to their capital contributions; and (iii) the payment
to all partners of an amount equal to their respective positive capital account
balances to the extent such balances exceed the amounts provided for in the
preceding clauses (i) and (ii). Inasmuch as these conditions have not been met,
no amounts have been recorded with regard to the sale of Clarewood and Gallery.
See also Notes 1 and 4 to the 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 five percent (5%) of the units of Limited Partnership Interest of the
Partnership. Excluding the General Partner's Interest in the Partnership ($1,000
initial capital contribution), the General Partners, as of December 31, 1996,
owned no units of Limited Partnership interest.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- - ---------------------------------------------------------
(a) Transactions with Management and Others
---------------------------------------
All transactions between the Partnership and Realmark Properties, Inc.
(the Corporate General Partner) and any other affiliated organization are
described in Item 11 of this report and in Notes 4 and 7 to the financial
statements.
10
<PAGE>
ITEM 14: EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.
- - ----------------------------------------------------------------------------
(a) Financial Statements and Schedules
----------------------------------
Financial Statements Page
(i) Independent Auditors' Report 13
(ii) Balance Sheets as of December 31, 1996
and 1995 14
(iii) Statements of Operations for years ended
December 31, 1996, 1995 and 1994 15
(iv) Statements of Partners' Deficit for years
ended December 31, 1996, 1995 and 1994 16
(v) Statements of Cash Flows for years ended
December 31, 1996, 1995 and 1994 17
(vi) Notes to Financial Statements 18 - 24
Financial Statement Schedule
----------------------------
(i) Schedule III - Real Estate and Accumulated
Depreciation 25 - 26
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or the notes thereto.
(b) Reports on Form 8-K
-------------------
None
c) Exhibits
4. Instruments defining the rights of security holder, including indentures.
(a) Certificate of Limited Partners filed with the Registration
Statement of the Registrant Form S-11, filed March 26, 1981 and
subsequently amended incorporated herein by reference.
11
<PAGE>
ITEM 14: EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
- - --------------------------------------------------------------------------------
(Con't.)
- - --------
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.
(b) Property sales agreement with unrelated third-party included with
the third quarter Form 10Q incorporated herein by reference.
12
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Realmark Property Investors Limited Partnership
We have audited the accompanying balance sheets of Realmark Property Investors
Limited Partnership as of December 31, 1996 and 1995, and the related statements
of operations, partners' deficit, and cash flows for each of the three years in
the period ended December 31, 1996. Our audits also included the financial
statement schedule listed in the index at Item 14. These financial statements
and financial statement schedule are the responsibility of the General Partners.
Our responsibility is to express an opinion on the financial statements and the
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards. Those standards require that we plan and
perform the audits 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, such financial statements present fairly, in all material
respects, the financial position of Realmark Property Investors Limited
Partnership at December 31, 1996 and 1995, and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 1996
in conformity with generally accepted accounting principles. 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.
The accompanying financial statements and financial statement schedule have been
prepared assuming that the Partnership will continue as a going concern. As
discussed in Note 9 to the financial statements, the Partnership's failure to
meet its Department of Housing and Urban Development regulatory agreement
requirements, its recurring losses from operations and its partners' deficit
raise substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 9. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
DELOITTE & TOUCHE, LLP
Buffalo, New York
March 25, 1997
13
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
Assets 1996 1995
- - ------ ---- ----
<S> <C> <C>
Property, at cost (assets held for sale, see Note 3):
Land $ 182,500 $ 182,500
Land improvements 185,000 185,000
Buildings 2,413,805 2,404,785
Furniture, fixtures and equipment 164,141 164,141
----------- -----------
2,945,446 2,936,426
Less accumulated depreciation 1,753,995 1,683,705
----------- -----------
Property, net 1,191,451 1,252,721
----------- -----------
Cash - security deposits 29,406 27,851
Escrow deposits 187,815 277,523
Note receivable 47,200 --
Mortgage costs - net of accumulated amortization
of $26,794 in 1996 and $21,052 in 1995 174,157 179,899
Other assets 23,134 19,451
----------- -----------
Total Assets $ 1,653,163 $ 1,757,445
=========== ===========
Liabilities and Partners' (Deficit)
Liabilities:
Cash overdraft $ 208,100 $ 82,399
Mortgage payable 2,930,266 2,947,711
Accounts payable and accrued expenses 229,897 178,445
Accounts payable - affiliates 784,461 874,484
Non-refundable deposits on sale of property 220,000 --
Accrued interest 21,977 22,108
Security deposits and prepaid rent 31,858 42,710
----------- -----------
Total Liabilities 4,426,559 4,147,857
----------- -----------
Minority interest in consolidated joint venture 274,180 393,817
----------- -----------
Partners' (Deficit):
General partners (792,969) (790,336)
Limited partners (2,254,607) (1,993,893)
----------- -----------
Total Partners' (Deficit) (3,047,576) (2,784,229)
----------- -----------
Total Liabilities and Partners' (Deficit) $ 1,653,163 $ 1,757,445
=========== ===========
</TABLE>
See notes to financial statements
14
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Income:
Rental $ 640,124 $ 717,713 $ 705,970
Interest and other 45,018 47,650 38,222
----------- ----------- -----------
Total income 685,142 765,363 744,192
----------- ----------- -----------
Expenses:
Property operations 450,675 455,991 389,870
Interest:
Paid to affiliates 84,692 83,159 72,083
Other 264,455 265,963 267,340
Depreciation and amortization 76,032 123,813 123,231
Administrative:
Paid to affiliates 56,020 54,134 59,477
Other 136,252 101,532 81,202
----------- ----------- -----------
Total expenses 1,068,126 1,084,592 993,203
----------- ----------- -----------
Loss before allocation to minority interest (382,984) (319,229) (249,011)
Loss allocated to minority interest 119,637 91,833 70,183
----------- ----------- -----------
Net loss $ (263,347) $ (227,396) $ (178,828)
============ =========== ===========
Loss per limited partnership unit $ (84.10) $ (72.62) $ (57.11)
=========== =========== ===========
Weighted average number of limited partnership
units outstanding 3,100 3,100 3,100
=========== =========== ===========
</TABLE>
See notes to financial statements
15
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
General Limited Partners
Partners -----------------
Amount Units Amount
Balance, January 1, 1994 $ 786,274) $ 3,100 $(1,591,731)
Net loss (1,788) -- (177,040)
----------- ----------- -----------
Balance, December 31, 1994 (788,062) 3,100 (1,768,771)
Net loss (2,274) -- (225,122)
----------- ----------- -----------
Balance, December 31, 1995 (790,336) 3,100 (1,993,893)
Net loss (2,633) -- (260,714)
----------- ----------- -----------
Balance, December 31, 1996 (792,969) 3,100 (2,254,607)
=========== =========== ===========
See notes to financial statements
16
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(263,347) $(227,396) $(178,828)
Adjustments to reconcile net loss to net cash
flow used in operating activities:
Depreciation and amortization 76,032 123,813 123,231
Minority interest share of net loss (119,637) (91,833) (70,183)
Changes in operating assets and liabilities:
Cash - security deposits (1,555) (686) (669)
Other assets (3,683) (3,483) 3,005
Accounts payable and accrued expenses 51,452 62,995 36,316
Accrued interest (131) (119) (110)
Security deposits and prepaid rent (10,852) 2,060 15,548
--------- --------- ---------
Net cash used in operating activities (271,721) (134,649) (71,690)
--------- --------- ---------
Cash flows from investing activities:
Decrease (increase) in escrow deposits 89,708 841 (1,004)
Property additions (9,020) (14,134) --
--------- --------- ---------
Net cash provided by (used in) investing activities 80,688 (13,293) (1,004)
--------- --------- ---------
Cash flows from financing activities:
Increase in cash overdraft 125,701 82,399 --
(Decrease) increase in accounts
payable - affiliates (90,023) 80,417 69,205
Mortgage payments (17,445) (15,948) (14,581)
Deposits received on sale of property 172,800 -- --
--------- --------- ---------
Net cash provided by financing activities 191,033 146,868 54,624
--------- --------- ---------
Increase (Decrease) in cash -- (1,074) (18,070)
Cash - beginning of year -- 1,074 19,144
--------- --------- ---------
Cash - end of year $ -- $ -- $ 1,074
========= ========= =========
Supplemental Disclosure of Cash Flow
Information:
Cash paid for interest $ 264,586 $ 266,082 $ 267,450
========= ========= =========
During 1996, the Partnership received a deposit of $220,000 representing cash totaling
$172,800 and a note receivable totaling $47,200 related to the pending sale of the
Carriage House of Englewood.
</TABLE>
See notes to financial statements
17
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 1996, 1995 AND 1994
1. FORMATION AND OPERATION OF PARTNERSHIP:
---------------------------------------
Realmark Property Investors Limited Partnership (the "Partnership"), a
Delaware Limited Partnership, was formed on August 28, 1979, to invest in a
diversified portfolio of income producing real estate.
In March 1981, the Partnership commenced the Public Offering of Units of
Limited Partnership Interest. On December 31, 1981 the offering was concluded,
at which time 3,100 units of Limited Partnership Interest were outstanding. The
General Partners are Realmark Properties, Inc., a wholly-owned subsidiary of
J.M. Jayson & Company, Inc. (JMJ) and Mr. Joseph M. Jayson, the sole shareholder
of JMJ. Under the Partnership Agreement, the General Partners and affiliates can
receive compensation for services rendered, and reimbursement for expenses
incurred on behalf of the Partnership (See Note 4).
The Partnership agreement provides for the Partnership's share of taxable
income or losses of the Partnership to be allocated 99% to the Limited Partners
and 1% to the General Partners. Through December 31, 1986 and for 1991 and 1996,
taxable income or losses were allocated in accordance with this provision. For
the years 1987 through 1990, and 1992 through 1995, the Partnership was required
to reallocate losses in accordance with Internal Revenue Section 704(b). In
general, section 704(b) may be applicable when Partnership capital is negative
and Limited Partners are not required to restore negative capital accounts. In
such instances the IRS code requires that the General Partner bears a greater
portion of the economic loss than that which would be allocated pursuant to the
Partnership Agreement and, therefore, the loss must be reallocated.
The Partnership's share of gains or losses arising from the sale or
refinancing of properties shall be allocated 99% to the Limited Partners and 1%
to the General Partners. The Partnership's share of net proceeds arising from a
sale or refinancing shall be distributed first to the Limited Partners in
amounts equivalent to a 7% return on their average adjusted capital balances,
plus an amount equal to their capital contributions, then to all partners in
amounts equal to their respective positive capital account balances. The
partnership's share of additional proceeds, after property disposition fees,
shall then be allocated to the Limited Partners in an amount equivalent to 5% of
their average adjusted capital balances and the remainder, if any, in the ratio
of 90% to the Limited Partners and 10% to the General Partners. The
Partnership's share of income arising from the sale or refinancing shall be
allocated in the same manner as the proceeds are to be distributed, except that
the General Partners are to be allocated at least 1% of the income.
On May 5, 1992, the Partnership entered into an agreement to form a joint
venture with Realmark Property Investors Limited Partnership VI A (RPILP VI A).
The joint venture was formed for the purpose of operating Carriage House of
Englewood, formerly Gold Key Village Apartments, owned by the Partnership. The
joint venture is further described in Footnote 7.
18
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 1996, 1995 AND 1994
(Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
a) Use of Estimates
-----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
b) Cash
----
For purposes of reporting cash flows, cash includes the following items:
cash on hand and cash in checking and money market savings.
c) Cash-Security Deposits
----------------------
Cash-security deposits represents cash on deposit in accordance with the
HUD regulatory agreement for the property which has a HUD mortgage.
d) Escrow Deposits
---------------
Escrow deposits represent cash which is restricted for the payment of
property taxes or for repairs and replacements in accordance with the mortgage
agreement.
e) Mortgage Costs
--------------
Mortgage costs incurred in obtaining property mortgage financing have been
deferred and are being amortized over the term of the mortgage using the
straight-line method.
f) Property and Depreciation
-------------------------
Depreciation is provided using the straight-line method over the estimated
useful lives of the respective assets, and totaled $70,290, $118,072 and
$117,489 for the years ended December 31, 1996, 1995 and 1994, respectively. The
estimated useful lives of the Partnership's assets range from 5 to 25 years.
Expenditures for maintenance and repairs are expensed as incurred; major
renewals and betterments are capitalized. The Accelerated Cost Recovery System
is used to calculate depreciation expense for tax purposes. See further
discussion at Footnote 3.
g) Minority Interest in Consolidated Joint Venture
-----------------------------------------------
The minority interest in a consolidated joint venture is stated at the
amount of capital contributed by the minority investor adjusted for its share of
joint venture losses.
19
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 1996, 1995 AND 1994
(Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Con't.):
----------------------------------------------------
h) Rental Income
-------------
All rental income is derived from one residential rental property. The
outstanding leases with respect to this property are for terms of one year or
less. The rental income is recognized as earned according to the terms of the
leases.
i) Loss Per Limited Partnership Unit
---------------------------------
The loss per limited partnership unit is based on the weighted average
number of limited partnership units outstanding for the year.
j.) Accrued Rent Receivable
-----------------------
Due to the nature of accrued rent receivable, all such receivables are
fully reserved for at December 31,1996 and 1995.
3. ACQUISITION AND DISPOSITION OF RENTAL PROPERTY:
-----------------------------------------------
In November 1981, the Partnership acquired a 144 unit apartment complex
(Carriage House of Englewood, formerly Gold Key Village Apartments) located in
Englewood, Ohio, for a purchase price of $2,860,754, which included $191,872 in
acquisition fees.
In July, 1982, the Partnership acquired a 99 unit apartment complex
(Clarewood) located in Lafayette, Louisiana, for a purchase price of $2,428,834,
which included $134,992 in acquisition fees.
In July, 1982, the partnership acquired a 155 unit apartment complex
(Gallery) located in Lafayette, Louisiana, for a purchase price of $3,546,653,
which included $197,987 in acquisition fees.
In October, 1989, the partnership sold Clarewood and Gallery for a combined
price of $4,647,516, which generated a total net gain for financial statement
purposes of $1,209,194.
In July 1996, the Partnership entered into a plan to dispose of the
property, plant and equipment of Carriage House of Englewood with a carrying
amount of $1,191,451. Carriage House of Englewood incurred a loss of $299,092
for the year ended December 31, 1996. Management has determined that a sale of
the property is in the best interest of the investors. As of December 31, 1996,
an agreement, cancelable by the buyer, has been signed with an anticipated sales
price of $3,700,000.
In connection with the pending sale, the Partnership has received $220,000
in non-refundable deposits, of which $47,200 is represented by a note receivable
from the buyer.
20
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 1996, 1995 AND 1994
(Continued)
3. ACQUISITION AND DISPOSITION OF RENTAL PROPERTY (Con't.):
--------------------------------------------------------
Financial Accounting Standards Statement No. 121, Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of (the
"Statement") requires that assets to be disposed of be recorded at the lower of
carrying value or fair value, less costs to sell. The Statement also requires
that such assets not be depreciated during the disposal period, as the assets
will be recovered through sale rather than through operations. In accordance
with this Statement, the long-lived assets of the Partnership, classified as
held for sale on the balance sheet, are recorded at the carrying amount which is
the lower of carrying value or fair value less costs to sell, and have not been
depreciated during the disposal period. Depreciation expense, not recorded
during the disposal period, for the year ended December 31, 1996 totaled
approximately $44,000.
4. RELATED PARTY TRANSACTIONS:
---------------------------
Management fees for the properties are paid or accrued to an affiliate of
the General Partners. The management agreement provides for 5% of gross monthly
rental receipts of the complex to be paid as fees for administering the
operations of the property. These fees totaled $33,678, $37,930 and $36,939 for
the years ended December 31, 1996, 1995 and 1994, respectively.
Accounts payable to affiliates, which are payable on demand, amounted to
$784,461 and $874,484 at December 31, 1996 and 1995, respectively. The payables
represent fees due and advances from the General Partner or an affiliate of the
General Partners. Interest is charged on accounts payable-affiliates at an
annual rate of 11%. Such amounts totaled $84,692, $83,159 and $72,083 for the
years ended December 31, 1996, 1995 and 1994, respectively.
Pursuant to the Partnership Agreement, the Corporate General Partner
charges the Partnership for reimbursement of certain costs and expenses incurred
by the Corporate General Partner and its affiliates in connection with the
administration of the Partnership. These charges were for the Partnership's
allocated share of such costs and expenses as payroll, printing, mailing, travel
and communication costs related to Partnership accounting, partner
communications and property marketing and are included in property operations.
Additionally, Partnership accounting and portfolio management fees, investor
services fees and brokerage fees are allocated based on total assets, number of
partners and number of units, respectively. Such charges totaled $19,312,
$13,174 and $19,514 in 1996, 1995 and 1994, respectively.
Computer service charges for the Partnership are paid or accrued to an
affiliate of the General Partner. The fee is based upon the number of apartment
units and totaled $3,030, $3,030 and $3,024 for the years ended December 31,
1996, 1995 and 1994, respectively.
The Corporate General Partner is allowed to collect property disposition
fees upon the sale of acquired properties. This fee is not to exceed the lesser
of 9% of the gross proceeds of the offering applicable to the property or 50% of
normal rates, subordinated to: (i) the payment to the Limited Partners of a
cumulative annual return (not compounded) equal to 7% on their average adjusted
capital balances; (ii) the repayment to the Limited Partners of a cumulative
amount equal to their capital contributions; and (iii) the payment to all
partners of an amount equal to their respective positive capital account
balances to the extent such balances exceed the amounts provided for in the
preceding clauses (i) and (ii). Inasmuch as these conditions have not been met
no amounts have been recorded with regard to the sale of Clarewood and Gallery.
21
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 1996, 1995 AND 1994
(Continued)
5. MORTGAGE PAYABLE:
-----------------
Carriage House of Englewood
---------------------------
On May 5, 1992, the partnership's first and second mortgages on Carriage
House of Englewood were refinanced with a 9% U.S. Department of Housing and
Urban Development (HUD) guaranteed mortgage in the amount of $2,997,800, due
June 1, 2027. The mortgage provides for monthly principal and interest payments
of $23,503, plus monthly escrow deposits for real estate taxes, insurance and
repairs and maintenance totaling $11,346. The balance of the mortgage at
December 31, 1996 and 1995 was $2,930,266 and $2,947,711, respectively.
The mortgage is secured by all of the assets of Carriage House of
Englewood.
The mortgage is subject to a HUD regulatory agreement which places
restrictions on the operations of the Partnership.
As discussed in Note 9 to the Financial Statements, the Partnership
currently is not in compliance with certain requirements of the HUD regulatory
agreement.
Maturities of the mortgage for each of the next five years and thereafter
are as follows:
1997 $ 19,080
1998 20,871
1999 22,829
2000 24,970
2001 27,312
Thereafter 2,815,204
------------
TOTAL $ 2,930,266
=============
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
Statement of Financial Accounting Standards No. 107 requires disclosure
about fair value of certain financial instruments. The fair values of cash,
accounts payable, accrued expenses and deposit liabilities approximate the
carrying value due to the short-term nature of these instruments.
The fair value of the mortgage payable, which has a carrying value of
$2,930,266 at December 31, 1996, cannot be determined because it is uncertain if
a comparable mortgage could be obtained in the current market. See Note 5 for a
description of the terms of the mortgage payable.
22
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 1996, 1995 AND 1994
(Continued)
7. MINORITY INTEREST OF RELATED PARTY IN CARRIAGE HOUSE OF ENGLEWOOD
JOINT VENTURE:
On May 5, 1992, the Partnership entered into an agreement to form a joint
venture with Realmark Property Investors Limited Partnership VI A (RPILP VI A).
The joint venture was formed for the purpose of operating Carriage House of
Englewood, formerly Gold Key Village Apartments, owned by the Partnership. Under
the original terms of the agreement, RPILP VI A contributed $497,911, with the
Partnership contributing the property net of the first mortgage. On March 1,
1993, RPILP VI A contributed an additional $125,239 to the joint venture. The
amended joint venture agreement provides that any income, loss, gain, cash flow
or sale proceeds be allocated 60% to the Partnership and 40% to RPILP VI A. The
net loss from the date of inception has been allocated to the minority interest
as described above and has been recorded as a reduction of the capital
contribution.
A reconciliation of the minority interest share in Carriage House of
Englewood Joint Venture is as follows:
1996 1995
--------- ---------
Balance, beginning of year $ 393,817 $ 485,650
Allocated loss (119,637) (91,833)
--------- ---------
Balance, end of year $ 274,180 $ 393,817
========= =========
8. INCOME TAXES:
-------------
No provision has been made for income taxes since the income or loss of the
Partnership is to be included in the tax returns of the individual partners.
The tax returns of the Partnership are subject to examination by federal
and state taxing authorities. Under federal and state income tax laws,
regulations and rulings, certain types of transactions, may be accorded varying
interpretations and, accordingly, reported Partnership amounts could be changed
as a result of any such examination.
The reconciliation of Partners' Deficit for the years ended December 31,
1996, 1995 and 1994, as reported in the balance sheet and as reported for tax
return purposes, is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Partners' Deficit - Balance Sheet $(3,047,576) $(2,784,229) $(2,556,833)
Add to (deduct from):
Accumulated difference in depreciation (960,555) (995,670) (1,034,765)
Accumulated amortization of
mortgage discount 240,000 240,000 240,000
Syndication costs 248,000 248,000 248,000
Reserve for bad debts 68,553 40,032 35,039
Other 1,711 (14,080) (8,800)
Tax basis adjustment - Joint Venture (17,085) (17,085) (11,089)
----------- ----------- -----------
Partners' Deficit - tax return purposes $(3,466,952) $(3,283,032) $(3,088,448)
=========== =========== ===========
</TABLE>
23
<PAGE>
The reconciliation of net loss for the years ended December 31, 1996, 1995
and 1994, as reported in the statement of operations, and as would be reported
for tax return purposes is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Partners' Deficit - Balance Sheet $(3,047,576) $(2,784,229) $(2,556,833)
Add to (deduct from):
Accumulated difference in depreciation (960,555) (995,670) (1,034,765)
Accumulated amortization of
mortgage discount 240,000 240,000 240,000
Syndication costs 248,000 248,000 248,000
Reserve for bad debts 68,553 40,032 35,039
Other 1,711 (14,080) (8,800)
Tax basis adjustment - Joint Venture (17,085) (17,085) (11,089)
----------- ----------- -----------
Partners' Deficit - tax return purposes $(3,466,952) $(3,283,032) $(3,088,448)
=========== =========== ===========
</TABLE>
9. GOING CONCERN CONSIDERATIONS:
On May 5, 1992, the Partnership obtained a mortgage guaranteed by the
Department of Housing and Urban Development (HUD). The mortgage is subject to a
HUD regulatory agreement which places restrictions on the operations of the
Partnership. As of December 31, 1996 the partnership was not in compliance with
several of these regulations including those restricting commingling of funds.
The consequences of the noncompliance with these restrictions could include
HUD-imposed sanctions such as fines or interest charges. Additionally, the
violation of the regulatory agreement could be deemed an event of default by the
mortgagor, and HUD could possibly take over as holder of the mortgage.
Given the uncertainty surrounding the outcome of the noncompliance, the
Partnership's recurring losses from operations, and partners' deficit,
substantial doubt exists about the Partnership's ability to continue as a going
concern. Management is currently negotiating a sale of the Partnership's assets
as described in Footnote 3, and has responded to HUD regarding the
aforementioned noncompliance including its intentions to remedy the situation.
* * * * *
24
<PAGE>
SCHEDULE III
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Initial Cost to Gross amounts at which
Partnership Carried at Close of Period
---------------------------------- ---------------------------------
Cost
Capitalized
Buildings Subsequent Buildings
Property and to and (1)(2)
Description Encumbrances Land Improvements Acquisition Land Improvements Total
<S> <C> <C> <C> <C> <C> <C> <C>
Carriage House of
Englewood
Dayton, OH $ 2,930,266 $ 182,500 $ 2,526,254 $ 72,551 $ 182,500 $ 2,598,805 $ 2,781,305
_______________________________________________________________________________________________________
Life on Which
Depreciation
In Latest
(3)(4) Statement
Property Accumulated Date of Date Of Operations
Description Depreciation Construction Acquired Is Computed
<S> <C> <C> <C> <C>
Carriage House of
Englewood
Dayton, OH $ 1,596,577 1971 11/81 15 - 25 Years
</TABLE>
25
<PAGE>
(1) The aggregate cost for Federal income tax purposes is $2,781,305.
(2) A reconciliation of the carrying amount of land and buildings as of
December 31, 1996, 1995 and 1994 follows:
1996 1995 1994
------------------------------------
Balance at beginning of period $2,772,285 $2,766,285 $2,766,285
Additions 9,020 6,000 --
---------- ---------- ----------
Balance at end of period $2,781,305 $2,772,285 $2,766,285
========== ========== ==========
(3) A reconciliation of accumulated depreciation for the years ended December
31, 1996, 1995 and 1994 follows:
1996 1995 1994
------------------------------------
Balance at beginning of period $1,527,236 $1,409,627 $1,292,137
Additions charged to cost and
expenses during the year 69,341 117,609 117,490
---------- ---------- ----------
Balance at end of year (4) $1,596,577 $1,527,236 $1,409,627
========== ========== ==========
(4) Balance applies entirely to buildings and improvements.
26
<PAGE>
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
By: /s/ Joseph M. Jayson 3/28/97
------------------------------------------- ---------------
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: /s/ Joseph M. Jayson 3/28/97
-------------------------------------------- ---------------
JOSEPH M. JAYSON, President Date
Principal Executive Officer and Director
/s/ Michael J. Colmerauer 3/28/97
-------------------------------------------- ---------------
MICHAEL J. COLMERAUER, Date
Secretary
27
<PAGE>
Supplemental Information to be Furnished with Reports Filed Pursuant
--------------------------------------------------------------------
to Section 15(d) of the Act by Registrants Which Have Not Registered
--------------------------------------------------------------------------
Securities Pursuant to Section 12 of the Act.
---------------------------------------------
The Form 10-K is sent to security holders. No other annual report is
distributed. No proxy statement, form of proxy or other proxy soliciting
material was sent to any of the registrant's security holders with respect
to any annual or other meeting or security holders.
28
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP FOR THE
TWELVE MONTHS ENDED DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 29,406
<SECURITIES> 0
<RECEIVABLES> 47,200
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 268,149
<PP&E> 2,945,446
<DEPRECIATION> 1,753,995
<TOTAL-ASSETS> 1,653,163
<CURRENT-LIABILITIES> 1,496,293
<BONDS> 2,930,266
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,653,163
<SALES> 0
<TOTAL-REVENUES> 685,142
<CGS> 0
<TOTAL-COSTS> 1,068,126
<OTHER-EXPENSES> 119,637
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 349,147
<INCOME-PRETAX> (263,347)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (263,347)
<EPS-PRIMARY> (84.10)
<EPS-DILUTED> 0
</TABLE>
