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, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
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
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
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 ITEM 14 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 Amended and Restated Agreement of Limited Partnership (the "Partnership
Agreement"), under the Delaware Revised Uniform Limited Partnership Act. The
Partnership's Corporate General Partner is Realmark Properties, Inc. (the
"Corporate General Partner"), a Delaware corporation, and its 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 primary business and its only industry segment is to own and
operate income-producing real property for the benefit of its limited partners.
The Partnership's one remaining apartment complex, acquired in 1981, is located
in Englewood, Ohio. The surrounding community continues to be marked by minimal
residential home construction. According to market studies, the competition was
offering concessions through virtually all of 1999 to attract new renters.
Average physical occupancy at Carriage House of Englewood (formerly Gold Key
Village Apartments) for 1999 was 86% and for 1998 was 84% and for 1997 was 79%.
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, 1999, 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, 1999 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.
The financial statements and financial statement schedule have been prepared
assuming that the Partnership will continue as a going concern. The Partnership
received notice from the U. S. Department of Housing and Urban Development
("HUD") that the Partnership was not in compliance with the Regulatory Agreement
executed May 1, 1992, in connection with the Carriage House of Englewood
project. The Partnership has also encountered recurring losses from operations,
operating cash flow difficulties and an accumulated partners' deficit. These
issues raise substantial doubt about the Partnership's ability to continue as a
going concern. Management's plans concerning these matters are described in note
9 to the financial statements. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty. Please refer
to Item 7 and Note 9 to the financial statements for more information regarding
this issue.
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.
2
<PAGE>
ITEM 2: PROPERTIES
As of December 31, 1999, 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 145
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) insured mortgage in the amount
of $2,997,800 due June 1, 2027. The outstanding mortgage balance at December 31,
1999 was $2,867,486.
Also, on May 5, 1992, the Partnership entered into a joint venture agreement
with Realmark Property Investors Limited Partnership VI A (RPILP VI A) for the
purpose of owning and 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, gain, cash flow, or sale 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 that would impact the future
financial position and operations of the Partnership. However, the registrant
has requested a hearing concerning HUD's Notice of Limited Denial of
Participation that was sent to the Partnership on March 8, 2000. For additional
information concerning this issue refer to Item 7 and Note 9 of the financial
statement.
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 1999, 1998, or 1997 and
management does not anticipate making any additional distributions unless there
has been a significant improvement in the overall property performance, which is
not expected.
As of December 31, 1999, there were 424 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, 1999 Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1995
--------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Total assets $ 1,552,297 $ 1,533,567 $ 1,621,652 $ 1,653,163 $ 1,757,445
=========== =========== =========== =========== ===========
Notes payable and
Long-term obligations $ 2,867,486 $ 2,890,315 $ 2,914,486 $ 2,930,266 $ 2,947,711
=========== =========== =========== =========== ===========
Revenue $ 755,113 $ 623,341 $ 996,136 $ 685,142 $ 765,363
Expenses 1,065,518 1,022,993 952,949 1,068,126 1,084,592
----------- ----------- ----------- ----------- -----------
(Loss) income before allocation
to minority interest (310,405) (399,652) 43,187 (382,984) (319,229)
Joint Venture losses allocated to
Minority Interest 74,844 106,397 101,583 119,637 91,833
----------- ----------- ----------- ----------- -----------
Net (loss) income $ (235,561) $ (293,255) $ 144,770 $ (263,347) $ (227,396)
=========== =========== =========== =========== ===========
Net cash used in operating
activities $ (341,657) $ (419,533) $ (256,752) $ (271,721) $ (134,649)
Principal payments on
long-term debt (22,829) (24,171) (15,780) (17,445) (15,948)
----------- ----------- ----------- ----------- -----------
Net cash used in operating
activities less principal
payments on long-term debt $ (364,486) $ (443,704) $ (272,532) $ (289,166) $ (150,597)
=========== =========== =========== =========== ===========
(Loss) income per limited
partnership unit $ (75.23) $ (93.65) $ 46.23 $ (84.10) $ (72.62)
=========== =========== =========== =========== ===========
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 once again incurred a cash flow deficit and also, incurred a
large loss from operations; in fact, the net cash used in operations totaled
$341,657, which is 19% less than that of 1998 but 33% more than 1997. The
Corporate General Partner and its affiliates continued during 1999 to advance
funds and/or not take payment of fees or reimbursements to which they were
otherwise entitled, whenever it was necessary to cover shortfalls. The Corporate
General Partner is under no obligation to make advances, and there is no
assurance that such advances will continue. As of December 31, 1999, the
Corporate General Partner (and affiliate) advances totaled $1,821,768; 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, 1999, 1998, and 1997. No distributions are anticipated
to be made to the limited partners because, upon the sale of the property, all
proceeds of sale are expected to be needed to satisfy obligations and repay the
Corporate General Partner's advances. It is unlikely that the full amount of
Corporate General Partner's advances will be recovered.
The Partnership's one remaining property, Carriage House of Englewood (formerly
Gold Key Apartments) is being marketed for sale. At this time, it remains highly
unlikely that the Limited Partners will receive any proceeds from the sale due
to the amount of the Partnership's liabilities.
During 1999, HUD rejected management's request for a "partial payment of claim."
This would have allowed the Partnership to take a qualifying portion of the
existing mortgage and make it a second mortgage with terms that would have
allowed the Partnership to pay the second mortgage as cash flow improved. The
Partnership is continuing its request to HUD for a partial payment of claim
although it is not as optimistic about HUD's willingness to approve such request
as it was last year. With this in mind the Corporate General Partner continues
to market the property to potential buyers. Currently no contract for sale on
this property exists, although efforts continue to find an interested buyer
through means such as advertising in national newspapers and through networking
efforts.
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 the closer monitoring of expenses such
as payroll, advertising and maintenance, repair and capital improvements, which
have typically been the expenses that have increased from year to year based on
the needs of the property. The HUD noncompliance detailed in the notes
technically allows HUD the ability to request that the mortgagee declare that
the project is in default of the mortgage, which could result in a foreclosure
action against the property. In addition HUD has issued a limited denial of
participation and has requested that management be transferred to an independent
third party. A concerted effort at correcting the noncompliance will hopefully
lead to the ultimate cure of such default. In addition, management has requested
a hearing to discuss and hopefully reach an agreement with HUD.
During the year ended December 31, 1999 the parking lots were repaired and
sealed. In addition landscape renovations were completed, painting of the
entrance doors to the complex and a project to repair the mansard roofs was
commenced. For the year 2000, management intends to continue the mansard roof
repair project and a project to repair and replace sidewalks where needed is
planned, which would require the advance of capital by the Corporate General
Partner that it is not obligated to provide.
5
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CON'T.)
LIQUIDITY AND CAPITAL RESOURCES (CON'T.):
The Partnership conducted a review of its computer systems to identify the
systems that could have been affected by the "year 2000 issue" and implemented a
plan to resolve such issues. The year 2000 issue is the result of computer
programs being written using two digits rather than four digits to define the
applicable year. Computer programs that have time-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could have resulted in a system failure or miscalculations causing disruptions
of operations, including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.
Management contracted with independent computer consultants to resolve the
issue. The majority of the software in use was "2000 compliant" or was adapted
at no significant cost. Management also engaged a computer firm to re-write its
tax software making it Year 2000 compliant. Management did not experience any
significant problems with its computers as a result of the year 2000 issue and
does not anticipate any in the future as a result of the year 2000 issue.
RESULTS OF OPERATIONS:
For the year ended December 31, 1999, the Partnership incurred a net loss of
$235,561 or $75.23 per limited partnership unit. This compares to a net loss of
$293,255 or $93.65 per limited partnership unit for the previous year and a loss
of $144,770 or $46.23 per limited partnership unit for the year ended December
31, 1997. Although cash flow has improved, the Partnership continues to struggle
with poor cash flow.
Partnership revenues for the year ended December 31, 1999 totaled $755,113; this
consisted of rental income of $682,576 and other income, which includes
interest, laundry income, and other miscellaneous sources of income of $72,537.
Revenues for the years ended December 31, 1998 totaled $623,341 and 1997 totaled
$996,136 (includes a non-refundable deposit on the sale of the property of
$370,000). Although other income remained fairly constant as compared to the
year ended December 31, 1997 with under a 3% decrease (mostly attributable to a
decrease in laundry revenue), there does appear to be a rise in income in 1999
as compared to 1998 and 1997. An increase in rental income was attained in 1999
as compared with a decrease in rental revenue in the previous two years. Rental
rates for 1999 remained at approximately the same level as 1998 although
concessions were offered to new renters at various times during the year to
increase occupancy and there was an increase in average occupancy of 2% for the
year. Delinquencies did, however, increase by approximately 7%. Physical
occupancy averaged 86% for the year ended December 31, 1999, 84% for the year
ended December 31, 1998, and 79% for the year ended December 31, 1997.
Management continues to focus additional and continual effort on increasing
occupancy, as well as decreasing delinquencies through, for example, more
aggressive marketing through the use of promotions and rental concessions and
closer monitoring of delinquent rental collections by more timely eviction
filings.
Partnership expenses for the year ended December 31, 1999 totaled $1,065,518, an
increase of $42,525 from those of 1998, which totaled $1,022,993 and an increase
of $112,569 over 1997. Payroll and associated expenses decreased between 1999
and 1998 (i.e., approximately $23,000) and contracted services similarly
decreased slightly (i.e., approximately $4,500). More repair and maintenance
work is being performed at the property by on-site personnel at a lower cost
than would be incurred if the work was contracted out. Administrative expenses
in total decreased by $43,135 between the years ended December 31, 1999 and
1998. Interest expenses charged by affiliates during the year ended December 31,
1999 increased $42,374 from the year ended December 31, 1998 and increased
$47,944 from 1997 to 1998. Interest is charged on accounts payable - affiliates
at an annual rate of 11%. In 1999, affiliates advanced more money, and therefore
interest expense increased.
6
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS (CON'T.)
RESULTS OF OPERATIONS (CON'T.)
The Partnership continues to expect higher than "normal" property operations
expenses in the coming months due to the maintenance work that needs to be done
at the Carriage House of Englewood Apartments; much work needs to be completed
in order to prepare units for new tenants and to satisfy current tenants (i.e.
cleaning, appliance and carpeting costs), as well as to physically improve the
exterior of the complex. Although this work is necessary in order to increase
the occupancy of the apartment complex, management is trying to control
expenditures so as not to worsen the cash flow situation of the Partnership.
For the year ended December 31, 1999, the tax basis loss was $239,236 or $76.40
per limited partnership unit as compared to the tax basis income reported for
the year ended December 31, 1998 of $174,866 or $55.84 per limited partnership
unit and a tax loss of $183,920 or $58.74 per unit for the year ended December
31, 1997. The Partnership agreement provides for the taxable income or losses to
be allocated 99% to the Limited Partners and 1% to the General Partners. Taxable
income or losses were allocated in accordance with this provision for the years
ended December 31, 1999, 1998 and 1997. The Partnership may be 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.
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership does not have investments in instruments, which are subject to
market risk (e.g., derivatives, options or other interest sensitive
instruments).
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/A, filed with the Securities and Exchange
Commission on April 17, 2000, and incorporated herein by reference in its
entirety: (i) Deloitte & Touche LLP notified the Company on January 11, 2000
that its relationship as the principal accountants to audit the Company's
financial statements had ceased; and (ii) effective January 28, 2000, the
Company engaged Toski, Schaefer & Co., P.C. as its independent accountants.
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, 2000, are listed
below. Each director is subject to election on an annual basis.
<TABLE>
<CAPTION>
YEAR FIRST
NAME TITLE OF ALL POSITIONS HELD WITH COMPANY ELECTED TO POSITION
- ---------------- --------------------------------------- -------------------
<S> <C> <C>
Joseph M. Jayson President and Director 1979
Judith P. Jayson Vice-President and Director 1979
Michael J. Colmerauer Secretary 1991
</TABLE>
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 61, is Chairman, Director and sole stockholder of J.M.
Jayson & 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, 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 has been in real estate 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
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 eighteen years,
Mr. Jayson and an affiliate have also engaged in developmental drilling for gas
and oil.
Judith P. Jayson, age 59, 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 28 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
8
<PAGE>
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (CONT.)
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 42, 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 (JD) 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 16 years.
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) for its fiscal years ended
December 31, 1999, 1998, or 1997 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,
1999, 1998 or 1997.
The following table sets forth for the years ended December 31, 1999, 1998, and
1997, the compensation paid or accrued as payable by the Partnership, directly
or indirectly, to affiliates of the General Partners (all of which are owned
directly or indirectly by Joseph M. Jayson):
<TABLE>
<CAPTION>
Entity Compensation 1999 1998 1997
- ---------------------------------- -------------------------------- ------- ------- -------
<S> <C> <C> <C> <C>
Realmark Properties, Inc. Interest charged on accounts
(the Corporate General Partner) payable -
affiliates $175,653 $133,279 $ 85,335
-------- -------- -------
Reimbursement for allocated
partnership administration
expenses: 27,230 26,228 24,231
Realmark Corporation Property Management Fees 33,761 30,192 31,362
Computer Service Fees 3,030 3,030 3,030
-------- -------- -------
61,820 33,222 34,392
-------- -------- -------
$237,473 $166,501 $119,727
======== ======== ========
</TABLE>
9
<PAGE>
ITEM 11: EXECUTIVE COMPENSATION (CON'T.)
The executive officers receive compensation from J. M. Jayson & Co., Inc.
Any portion of compensation attributable to an officer's services to the
Partnership are immaterial. The directors receive no compensation from
any entity.
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 3 and 7 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, 1999,
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 6 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 Auditor's Report F-1
(ii) Independent Auditors' Report for the two F-2
years ended December 31, 1998
(iii) Balance Sheets as of December 31, 1999 F-3
and 1998
(iv) Statements of Operations for the years ended F-4
December 31, 1999, 1998 and 1997
(v) Statements of Partners' Deficit for the years F-5
ended December 31, 1999, 1998 and 1997
(vi) Statements of Cash Flows for the years ended F-6
December 31, 1999, 1998 and 1997
(vii) Notes to Financial Statements F-7
FINANCIAL STATEMENT SCHEDULE
(i) Schedule III - Real Estate and Accumulated F-16
Depreciation
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) Amended and Restated Agreement of Limited Partnership filed
with the Registration Statement of the Registrant on Form
S-11, filed March 26, 1981 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
on Form S-11, filed March 26, 1981 and amended to date and
incorporated herein by reference.
(b) Property sales agreement with unrelated third party
included with the1996 third quarter Form 10-Q incorporated
herein by reference.
27. Financial Data Schedule
(a) Schedule is included herewith.
11
<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 APRIL 18, 2000
------------------------------ ----------------
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 18, 2000
------------------------------------ ----------------
JOSEPH M. JAYSON, DATE
PRESIDENT AND DIRECTOR
/s/ JUDITH P. JAYSON APRIL 18, 2000
------------------------------------ ----------------
JUDITH P. JAYSON, DATE
DIRECTOR
/s/ MICHAEL J. COLMERAUER APRIL 18, 2000
------------------------------ ----------------
MICHAEL J. COLMERAUER, DATE
SECRETARY
12
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Realmark Property Investors Limited Partnership
We have audited the accompanying balance sheet of Realmark Property Investors
Limited Partnership as of December 31, 1999, and the related statements of
operations, partners' deficiency, and cash flows for the year ended December 31,
1999. 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 Partners. Our responsibility is
to express an opinion on the financial statements and the financial statement
schedule based on our audit. The financial statements of Realmark Property
Investors Limited Partnership for the years ended December 31, 1998 and 1997
were audited by other auditors whose report dated April 14, 1999, on those
statements included an explanatory paragraph that described substantial doubt
about the Partnership's ability to continue as a going concern as discussed in
note 9 to those financial statements.
We conducted our audit 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 audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements present fairly, in all material
respects, the financial position of Realmark Property Investors Limited
Partnership as of December 31, 1999, and the results of its operations and its
cash flows for the year 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.
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 U.S. Department of Housing
and Urban Development has declared the Partnership in default under various
paragraphs of its regulatory agreement. The Partnership has also encountered
recurring losses from operations, operating cash flow difficulties and an
accumulated partners' deficit. These issues raise substantial doubt about the
Partnership's 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.
Toshi, Schaefer & Co., P.C.
Williamsville, New York
March 23, 2000
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Realmark Property Investors Limited Partnership:
We have audited the accompanying balance sheet of Realmark Property Investors
Limited Partnership (the Partnership) as of December 31, 1998, and the related
statements of operations, partners' deficit, and cash flows for each of the two
years in the period ended December 31, 1998. Our audits 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 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. 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 as of December 31, 1998, and the results of its operations and its
cash flows for each of the two years in the period ended December 31, 1998 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 those 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 to
those financial statements. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
DELOITTE & TOUCHE LLP
Buffalo, New York
April 14, 1999
F-2
<PAGE>
<TABLE>
<CAPTION>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Balance Sheets
December 31, 1999 and 1998
ASSETS 1999 1998
------------------- ----------- -----------
Property and equipment, at cost (assets held for sale):
<S> <C> <C>
Land $ 182,500 182,500
Land improvements 185,000 185,000
Buildings 2,487,824 2,487,824
Furniture, fixtures and equipment 169,992 164,141
----------- -----------
3,025,316 3,019,465
Less accumulated depreciation 1,753,995 1,753,995
----------- -----------
Net property and equipment 1,271,321 1,265,470
----------- -----------
Cash 6,883 8,618
Due from minority interest in consolidated joint venture 8,644 -
Security deposits 40,365 14,604
Escrow deposits 52,598 65,464
Prepaid expenses 15,555 16,738
Mortgage costs, less accumulated amortization of
$44,020 in 1999 and $38,278 in 1998 156,931 162,673
----------- -----------
Total assets $ 1,552,297 1,533,567
=========== ===========
LIABILITIES AND PARTNERS' DEFICIENCY
Liabilities:
Mortgage payable 2,867,486 2,890,315
Accounts payable and accrued expenses 207,133 237,083
Accounts payable - affiliates 1,821,768 1,471,883
Accrued interest payable 21,506 21,677
Security deposits and prepaid rent 66,026 42,470
----------- -----------
Total liabilities 4,983,919 4,663,428
----------- -----------
Minority interest in consolidated joint venture - 66,200
----------- -----------
Partners' deficiency:
General partners (796,810) (794,454)
Limited partners (2,634,812) (2,401,607)
----------- -----------
Total partners' deficiency (3,431,622) (3,196,061)
----------- -----------
Total liabilities and partners' deficiency $ 1,552,297 1,533,567
=========== ===========
See accompanying notes to financial statements.
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Statements of Operations
Years ended December 31, 1999, 1998 and 1997
1999 1998 1997
---- ---- ----
Income:
<S> <C> <C> <C>
Rental $ 682,576 581,864 583,445
Forfeited deposits on sale of property - - 370,000
Interest and other 72,537 41,477 42,691
----------- ----------- -----------
Total income 755,113 623,341 996,136
----------- ----------- -----------
Expenses:
Property operations 468,179 422,895 436,623
Interest:
To affiliates 175,653 133,279 85,335
Other 264,773 266,771 268,549
Administrative:
To affiliates 61,820 59,450 58,623
Other 95,093 140,598 103,819
----------- ----------- -----------
Total expenses 1,065,518 1,022,993 952,949
----------- ----------- -----------
Income (loss) before allocation to minority interest (310,405) (399,652) 43,187
Joint venture losses allocated to minority interest 74,844 106,397 101,583
----------- ----------- -----------
Net income (loss) $ (235,561) (293,255) 144,770
=========== =========== ===========
Income (loss) per limited partnership unit $ (75.23) (93.65) 46.23
=========== =========== ===========
Weighted average number of limited partnership
units outstanding 3,100 3,100 3,100
=========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Statements of Partners' Deficiency
Years ended December 31, 1999, 1998 and 1997
General Limited Partners
Partners Units Amount
---------- -------- ----------
<S> <C> <C> <C>
Balances at December 31, 1996 $ (792,969) 3,100 (2,254,607)
Net income 1,448 - 143,322
---------- -------- ----------
Balances at December 31, 1997 (791,521) 3,100 (2,111,285)
Net loss (2,933) - (290,322)
---------- -------- ----------
Balances at December 31, 1998 (794,454) 3,100 (2,401,607)
Net loss (2,356) - (233,205)
---------- -------- ----------
Balances at December 31, 1999 $ (796,810) 3,100 (2,634,812)
========== ======== ==========
See accompanying notes to financial statements
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Statements of Cash Flows
Years ended December 31, 1999, 1998 and 1997
1999 1998 1997
--------- --------- ---------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income (loss) $(235,561) (293,255) 144,770
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Deposits forfeited on sale of property - - (370,000)
Amortization of deferred mortgage expense 5,742 5,742 5,742
Minority interest share of joint venture
net losses (74,844) (106,397) (101,583)
(Increase) decrease in:
Security deposits (25,761) 15,550 (748)
Prepaid expenses 1,183 (1,628) 8,024
Increase (decrease) in:
Accounts payable and accrued expenses (35,801) 4,816 2,370
Accrued interest payable (171) (43,862) 43,562
Security deposits and prepaid rent 23,556 (499) 11,111
--------- --------- ---------
Net cash used in operating activities (341,657) (419,533) (256,752)
--------- --------- ---------
Cash flows from investing activities:
Decrease in escrow deposits 12,866 89,730 32,621
Payments received on note receivable - - 47,200
Deposits received on sale of property - - 150,000
Additions to property and equipment - (12,691) (61,328)
--------- --------- ---------
Net cash provided by investing
activities 12,866 77,039 168,493
--------- --------- ---------
Cash flows from financing activities:
(Decrease) increase in cash overdraft - (315,892) 107,792
Increase (decrease) in accounts
payable - affiliates 349,885 691,175 (3,753)
Principal payments on mortgages (22,829) (24,171) (15,780)
--------- --------- ---------
Net cash provided by financing
activities 327,056 351,112 88,259
--------- --------- ---------
Net increase (decrease) in cash (1,735) 8,618 -
Cash at beginning of year 8,618 - -
--------- --------- ---------
Cash at end of year $ 6,883 8,618 -
========= ========= =========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 259,202 304,891 219,245
========= ========= =========
Property and equipment included in accounts payable $ 5,851 - -
========= ========= =========
</TABLE>
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. An additional $150,000 in deposits was
received in 1997. All deposits were forfeited in 1997 and recorded as income.
See accompanying notes to financial statements.
F-6
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Notes to Financial Statements
December 31, 1999, 1998 and 1997
(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, its only
industry segment.
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.
(the corporate general partner) and Mr. Joseph M. Jayson (the
individual general partner). Mr. Joseph M. Jayson is the sole
shareholder 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 affiliates can receive
compensation for services rendered, and reimbursement for expenses
incurred on behalf of the Partnership (note 7).
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. Taxable income or losses were
allocated in accordance with this provision for the years ended
December 31, 1999, 1998 and 1997. The Partnership may be 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 note 6.
F-7
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Notes to Financial Statements, Continued
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF ACCOUNTING
The accompanying financial statements have been prepared on the
accrual basis of accounting.
(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.
(c) PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation is provided
for in amounts sufficient to relate the cost of depreciable assets
to operations over their estimated service lives using the
straight-line method. The estimated lives of the Partnership's
assets range from 5 to 25 years. Improvements are capitalized,
while expenditures for maintenance and repairs are charged to
expense as incurred. Upon disposal of depreciable property, the
appropriate property accounts are reduced by the related costs and
accumulated depreciation. The resulting gains and losses are
reflected in the statements of operations. As discussed in note 3,
no depreciation was recorded for the years ended December 31,
1999, 1998 and 1997 as the assets were held for sale. The
accelerated cost recovery system is used to calculate depreciation
expense for tax purposes.
(d) CASH
For purposes of reporting cash flows, cash includes money market
accounts and any highly liquid debt instruments purchased with a
maturity of three months or less.
(e) SECURITY DEPOSITS
Security deposits represents cash on deposit in accordance with the
HUD regulatory agreement for the property which has a HUD insured
mortgage. The cash shortage in the security deposit account as of
December 31, 1998 was replenished by the general partners in the
first quarter of 1999 so that the security deposit liability was
fully funded.
(f) ESCROW DEPOSITS
Escrow deposits represent cash which is restricted for the payment of
property taxes and insurance in accordance with the mortgage
agreement.
(g) MORTGAGE COSTS
Mortgage costs incurred in obtaining the property mortgage financing
are recorded at cost less applicable amortization. Amortization is
being computed using the straight-line method over the life of the
mortgage.
F-8
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Notes to Financial Statements, Continued
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
(h) MINORITY INTEREST IN CONSOLIDATED JOINT VENTURE
The minority interest in Carriage House Joint Venture is stated at the
amount of capital contributed by the minority investor adjusted
for its share of joint venture losses. The Carriage House joint
venture is consolidated in the Partnership's financial statements
because the Partnership is a majority owner and exerts significant
control over its operations.
(i) RENTAL INCOME
Rental income is recognized as earned according to the terms of the
leases. 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.
(j) INCOME PER LIMITED PARTNERSHIP UNIT
The income per limited partnership unit is based on the weighted
average number of limited partnership units outstanding for the
year.
(k) ACCRUED RENT RECEIVABLE
Due to the nature of accrued rent receivable, all such receivables are
fully reserved at December 31, 1999 and 1998.
(l) INCOME TAXES
No income tax provision has been included in the financial statements
since profit or loss of the Partnership is required to be reported
by the respective partners on their income tax returns.
(m) COMPREHENSIVE INCOME
The Partnership has adopted Statement of Financial Accounting
Standards (SFAS) No. 130 - "Reporting Comprehensive Income." SFAS
130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general
purpose financial statements. Comprehensive income is defined as
"the change in equity of a business enterprise during a period
from transactions and other events and circumstances from
non-owner sources." Other than net income (loss), the Partnership
has no other sources of comprehensive income.
(n) SEGMENT INFORMATION
SFAS No. 131 - "Disclosures about Segments of an Enterprise and
Related Information" establishes standards for the way public
business enterprises report information about operating segments
in annual financial statements. The Partnership's only operating
segment is the ownership and operation of income-producing real
property for the benefit of its partners.
F-9
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Notes to Financial Statements, Continued
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
(o) ACCOUNTING CHANGES AND DEVELOPMENTS
In June 1998, the Financial Accounting Board (FASB) 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. It requires that an entity
measure all derivative instruments at fair value and recognize
such instruments as either assets or liabilities in the balance
sheets. The accounting for changes in the fair value of a
derivative instrument will depend on the intended use of the
derivative as either a fair value hedge, a cash flow hedge or a
foreign currency hedge. The effect of the changes in fair value of
the derivatives and, in certain cases, the hedged items are to be
reflected in either the statements of operations or as a component
of other comprehensive income, based upon the resulting
designation. As issued, SFAS No. 133 was effective for fiscal
years beginning after June 15, 1999. In June 1999, the FASB issued
SFAS No. 137 - "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No.
133." SFAS No. 137 defers the effective date of SFAS No. 133 for
one year to fiscal years beginning after June 15, 2000. Since the
Partnership does not currently have any derivative instruments or
hedging activities, management does not believe that SFAS No. 133
will have a material effect on the Partnership financial
statements, taken as a whole.
(p) RECLASSIFICATIONS
Reclassifications have been made to certain 1998 and 1997 balances in
order to conform them to the 1999 presentation.
(3) ACQUISITION AND DISPOSITION OF RENTAL PROPERTY
In November 1981, the Partnership acquired a 145 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 $1,271,321 and $1,265,470 at December 31, 1999 and
1998 respectively. Carriage House of Englewood incurred losses of
$191,989, $265,994 and $253,956 for the years ended December 31, 1999,
1998 and 1997, respectively. Management has determined that a sale of
the property is in the best interest of the limited partners.
Management continues to actively market the property for sale.
In connection with a pending sale, the Partnership received
non-refundable deposits totaling $370,000 in 1996 and 1997. All such
deposits were forfeited in 1997 and recorded as income.
F-10
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Notes to Financial Statements, Continued
(3) ACQUISITION AND DISPOSITION OF RENTAL PROPERTY, CONTINUED
Statement of Financial Accounting Standards 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. Fair value is determined based on estimated future cash flows.
Depreciation expense, not recorded during the disposal period, for the
years ended December 31, 1999, 1998 and 1997 totaled approximately
$120,000, $120,000 and $122,000, respectively. Management believes
that the property's fair value has not changed significantly since
being classified as held for sale.
(4) MORTGAGE PAYABLE
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) insured mortgage in the amount of
$2,997,800. The mortgage provides for monthly principal and interest
payments of $23,503 through June 2027. The mortgage also requires
monthly escrow deposits for real estate taxes and insurance amounting
to $7,208. The balance of the mortgage at December 31, 1999 and 1998
was $2,867,486 and $2,890,315, 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.
The aggregate maturities of the mortgage payable for each of the next five
years and thereafter, assuming principal payments are not accelerated,
are as follows:
2000 $ 24,970
2001 27,312
2002 29,875
2003 32,677
2004 35,742
Thereafter 2,716,910
---------
$2,867,486
==========
(5) 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.
F-11
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Notes to Financial Statements, Continued
(5) FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED
Management believes it is impracticable to estimate the fair value of the
mortgage payable, which has a carrying value of $2,867,486 at December
31, 1999, because it is uncertain if a comparable mortgage could be
obtained in the current market. The terms of the mortgage payable are
described in note 4.
(6) MINORITY INTEREST OF RELATED PARTY IN CARRIAGE HOUSING 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 from the joint venture 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. Carriage House of Englewood incurred net losses of
$191,989, $265,994 and $253,956 for the years ended December 31, 1999,
1998 and 1997, respectively. The forfeited deposits received on the
sale of property, discussed in Note 3, are considered revenues of the
Partnership and not allocable to the minority interest.
A reconciliation of the minority interest share in Carriage House of
Englewood Joint Venture is as follows:
1999 1998
-------- --------
Balance at beginning of year $ 66,200 172,597
Allocated loss (74,844) (106,397)
-------- --------
Balance at end of year $ (8,644) 66,200
======== ========
(7) RELATED PARTY TRANSACTIONS
Related party transactions for the years ended December 31, 1999, 1998 and
1997 are as follows:
(a) ACCOUNTS PAYABLE - AFFILIATES
Accounts payable - affiliates, which are payable on demand, amounted
to $1,821,768 and $1,471,883 at December 31, 1999 and 1998,
respectively. The payables represent fees due and advances from
the general partners or an affiliate of the general partners.
Interest is charged on accounts payable - affiliates at an annual
rate of 11%. Interest expense amounted to $175,653, $133,279 and
$85,335 for the years ended December 31, 1999, 1998 and 1997,
respectively.
F-12
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Notes to Financial Statements, Continued
(7) RELATED PARTY TRANSACTIONS, CONTINUED
(b) MANAGEMENT FEES
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
amounted to $33,761, $30,192 and $31,362 for the years ended
December 31, 1999, 1998 and 1997, respectively.
(c) COMPUTER SERVICE CHARGES
Computer service charges for the Partnership are paid or accrued to an
affiliate of the general partners. These charges are based upon
the number of apartment units and amounted to $3,030 for the years
ended December 31, 1999, 1998 and 1997.
(d) OTHER EXPENSES
Pursuant to the partnership agreement, the corporate general partner
charges the Partnership for reimbursement of certain expenses
incurred by the corporate general partner and its affiliates in
connection with the administration of the Partnership and for
other direct Partnership expenses. These charges are for the
Partnership's allocated share of such 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 amounted to $28,666, $26,228 and $24,231 for the years
ended December 31, 1999, 1998 and 1997, respectively.
(e) PROPERTY DISPOSITION FEES
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). These conditions have not been
met, so no amounts have been recorded with regard to the sale of
Clarewood and Gallery.
(8) INCOME TAXES
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.
F-13
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Notes to Financial Statements, Continued
(8) INCOME TAXES, CONTINUED
The reconciliation of partners' deficiency for the years ended December
31, 1999, 1998 and 1997, as reported in the balance sheets and as
reported for tax return purposes, is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Partners' deficiency - balance sheets $(3,431,622) (3,196,061) (2,902,806)
Add to (deduct from):
Accumulated difference in depreciation (973,064) (969,389) (965,732)
Accumulated amortization of mortgage
discount 240,000 240,000
240,000
Syndication costs 248,000 248,000 248,000
Reserve for bad debts 127,359 127,359 103,826
Other 1,711 1,711 1,711
Tax basis adjustment - joint venture (17,085) (17,085) (17,085)
----------- ----------- -----------
Partners' deficiency - tax return purposes $(3,804,701) (3,565,465) (3,292,086)
=========== =========== ===========
The reconciliation of net income (loss) for the years ended December 31,
1999, 1998 and 1997, as reported in the statements of operations, and as
would be reported for tax return purposes is as follows:
1999 1998 1997
----------- ----------- -----------
Net income (loss) - statements of operations $ (235,561) (293,255) 144,770
Add to (deduct from):
Difference in depreciation (3,675) (3,657) (5,177)
Difference due to reserve for bad debts - 23,533 35,273
----------- ----------- -----------
Net income (loss) - tax return purposes $ (239,236) (273,379) 174,866
=========== =========== ===========
</TABLE>
(9) GOING CONCERN CONSIDERATIONS
On May 5, 1992, the Partnership obtained a mortgage insured 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. On October 21, 1999 and January 14,
2000, the Partnership received notices from the U.S. Department of
Housing and Urban Development (HUD) that it was in violation of the
regulatory agreement. On March 8, 2000, HUD issued the Partnership a
notice of default of the regulatory agreement. HUD claims that the
Partnership is not in compliance with several provisions of the
regulatory agreement including the following:
(a) Owners must not transfer any of the mortgaged property.
(b) Owners must not make any distribution of assets of the project except
distributions from surplus cash.
(c) Owners must maintain the mortgaged premises and equipment in good
repair and condition.
F-14
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Notes to Financial Statements, Continued
(9) GOING CONCERN CONSIDERATIONS, CONTINUED
(d) Payment for services and supplies must not exceed the amount
ordinarily paid for such services and supplies in the area where
the services are rendered or the supplies furnished.
(e) Books and accounts of the operations of the mortgaged property and the
project must be kept in accordance with the requirements of HUD.
(f) Rents and other receipts of the project must be deposited in the name
of the project in a financial institution, whose deposits are
insured by an agency of the Federal government.
The consequences of the default of the regulatory agreement could
include HUD-imposed sanctions such as the following:
(a) Notifying the holder of the mortgage note of such default, and
requesting the holder to declare default under the note and
mortgage, including declaring the whole indebtedness due, and
thereby proceeding with foreclosure of the mortgage.
(b) Collecting all rents and charges in connection with the operation of
the project and using such collections to pay the owner's
obligations.
(c) Taking possession of the project, bringing any action necessary to
enforce any rights of the owners and operating the project in
accordance with the terms of the regulatory agreement.
(d) Applying to any court for specific performance of the regulatory
agreement, for an injunction against any violation of the
agreement, for the appointment of a receiver to take over and
operate the project in accordance with the terms of the regulatory
agreement.
Given the uncertainty surrounding the outcome of the default of the
regulatory agreement, the Partnership's recurring losses from
operations, cash flow difficulties, and partners' deficiency,
substantial doubt exists about the Partnership's ability to continue as
a going concern. Management is in the process of responding to HUD
regarding the aforementioned default of the regulatory agreement,
including its intentions to take corrective action. Management has
developed a plan and is in the process of trying to sell the
Partnership's assets. In the interim, management plans to continue
negotiating to obtain a partial payment of claim with HUD and its
lender. A partial payment of claim would take a qualifying portion of
the existing mortgage and make it a second mortgage with terms that
allow the Partnership to pay the second mortgage as cash flow improves.
Management has requested that not only does the lender accept the
partial payment of claim, but also that they reduce the interest rate
being charged on the current mortgage to a lower, more "market-level"
rate, which would lower the debt service, and thus increase cash flow.
Management anticipates that this will allow the Partnership to both
fund operations and to do needed capital improvements to the property.
Other interim plans include management's intent to focus on increasing
rental occupancy to near 95% and reducing operating expenses at the
Carriage House of Englewood. A new rental incentive program will be put
into place to encourage property managers to lease. Operating expense
reductions are planned in the form of less deferred maintenance and
replacements at the property than has been done over the past several
years.
F-15
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1999
Initial Cost to Gross amounts at which
Partnership Cost carried at close of period
--------------------------- capitalized ---------------------------
Land Buildings subsequent Land
Property and and to and and
description Encumbrances improvements improvements acquisition improvements improvements Total
- ----------------- ------------- ------------ ------------ ----------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Carriage House of
Englewood
Dayton, OH $ 2,867,486 367,500 2,341,254 146,570 367,500 2,487,824 2,855,324
============= ============ ============ =========== ============ ============ =========
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE III
------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1999
(continued)
Life on which
depreciation
in latest
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 yrs*
========= ==== ===== =========
</TABLE>
* In accordance with Statement of Financial Accounting Standards No. 121,
no depreciation was recorded during the disposal period.
F-16
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III, CONTINUED
-----------------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1999
(1) The aggregate cost for Federal income tax purposes is $2,855,324.
(2) A reconciliation of the carrying amount of land and buildings as of
December 31, 1999, 1998 and 1997 follows:
1999 1998 1997
--------------- --------------- -----------
<S> <C> <C> <C>
Balance at beginning of year $ 2,855,324 2,842,633 2,781,305
Additions - 12,691 61,328
--------------- ----------- -----------
Balance at end of year $ 2,855,324 2,855,324 2,842,633
=============== =========== ===========
(3) A reconciliation of accumulated depreciation for the years ended December
31, 1999, 1998 and 1997 follows:
1999 1998 1997
--------------- --------------- -----------
Balance at beginning of year $ 1,596,577 1,596,577 1,596,577
Depreciation expense - - -
--------------- --------------- -----------
Balance at end of year (4) $ 1,596,577 1,596,577 1,596,577
=============== =============== ===========
(4) Balance applies entirely to buildings and improvements.
</TABLE>
F-17
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Realmark Property Investors Limited Partnership I for
the year ended December 31, 1999, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<CIK> 0000312982
<NAME> REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 6,883
<SECURITIES> 0
<RECEIVABLES> 8,644
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 124,045
<PP&E> 3,025,316
<DEPRECIATION> 1,753,995
<TOTAL-ASSETS> 1,552,297
<CURRENT-LIABILITIES> 319,635
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,552,297
<SALES> 0
<TOTAL-REVENUES> 755,113
<CGS> 0
<TOTAL-COSTS> 1,065,518
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 440,426
<INCOME-PRETAX> (235,561)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (235,561)
<EPS-BASIC> (75.23)
<EPS-DILUTED> 0
</TABLE>
