UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-11779
S/M REAL ESTATE FUND VII, LTD.
(Exact name of registrant as specified in its charter)
Texas 75-1845682
(State or other jurisdiction of (I.R.S.Employer
Incorporation or organization) identification No.)
5520 LBJ Freeway, Suite 300, Dallas, Texas 75240
(Address of principal executive offices) (Zip code)
(214) 404-7100
(Registrant's telephone number, including area code)
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
Balance Sheets
Assets
June 30, December 31,
1995 1994
Land $ 962,216 $ 962,216
Buildings and improvements 7,650,943 7,603,046
--------- ---------
8,613,159 8,565,262
Less-accumulated depreciation (4,278,022) (4,091,395)
--------- ---------
4,335,137 4,473,867
Cash and cash equivalents 854,028 933,424
Cash held in escrow 193,855 92,855
Accounts receivable 12,407 12,301
Other assets 41,120 30,562
--------- ---------
Total Assets $ 5,436,547 $ 5,543,009
========= =========
Liabilities and Partners' Deficit
Liabilities:
Notes payable $ 6,380,912 $ 6,380,912
Accounts payable:
Trade 13,319 2,764
Affiliates 40,664 40,664
Accrued interest payable 668,270 717,721
Accrued expenses and other liabilities 133,782 86,965
--------- ---------
Total Liabilities 7,236,947 7,229,026
Partners' Deficit:
General Partners (104,616) (103,472)
Limited Partners (1,695,784) (1,582,545)
--------- ---------
Total Partners' Deficit (1,800,400) (1,686,017)
--------- ---------
Total Liabilities
and Partners' Deficit $ 5,436,547 $ 5,543,009
========= =========
Statement of Partners' Deficit
For the six months ended June 30, 1995
Limited General
Partners Partners Total
Balance at December 31, 1994 $ (1,582,545) $ (103,472) $ (1,686,017)
Net loss (113,239) (1,144) (114,383)
--------- --------- ---------
Balance at June 30, 1995 $ (1,695,784) $ (104,616) $ (1,800,400)
========= ========= =========
Statements of Operations
Three months ended Six months ended
June 30, June 30,
1995 1994 1995 1994
Income
Rental $ 332,578 $ 329,082 $ 652,298 $ 654,238
Interest 12,893 10,822 26,199 17,608
------- ------- ------- -------
Total Income 345,471 339,904 678,497 671,846
------- ------- ------- -------
Expenses
Property operating 174,993 156,542 340,815 337,633
Interest 121,117 122,034 242,667 242,818
Depreciation 93,647 91,648 186,627 183,563
General and administrative 10,431 14,725 22,771 34,263
------- ------- ------- -------
Total Expenses 400,188 384,949 792,880 798,277
------- ------- ------- -------
Net Loss $ (54,717) $ (45,045) $ (114,383) $ (126,431)
======= ======= ======= =======
Net Loss Allocated:
To the General Partners (547) (450) (1,144) (1,264)
To the Limited Partners (54,170) (44,595) (113,239) (125,167)
------- ------- ------- -------
$ (54,717) $ (45,045) $ (114,383) $ (126,431)
======= ======= ======= =======
Per limited partnership unit
(11,080 outstanding) $ (4.89) $ (4.02) $ (10.22) $ (11.30)
Statements of Cash Flows
For the six months ended June 30, 1995 and 1994
1995 1994
Cash Flows from Operating Activities:
Net loss $ (114,383) $ (126,431)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation 186,627 183,563
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Cash held in escrow (101,000) 64,010
Accounts receivable (106) 40,784
Other assets (10,558) 13,189
Accounts payable 10,555 (10,365)
Accrued interest payable (49,451) (31,830)
Accrued expenses and other liabilities 46,817 (94,836)
------- -------
Net cash provided by (used for) operating activities (31,499) 38,084
Cash Flows from Investing Activities:
Additions to investment properties (47,897) --
------- -------
Net cash used for investing activities (47,897) --
------- -------
Net increase (decrease) in cash and cash equivalents (79,396) 38,084
Cash and cash equivalents at beginning of period 933,424 863,717
------- -------
Cash and cash equivalents at end of period $ 854,028 $ 901,801
======= =======
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 292,118 $ 276,925
======= =======
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of June 30, 1995 and the results of operations for the three and
six months ended June 30, 1995 and 1994, cash flows for the six months ended
June 30, 1995 and 1994 and the statement of changes in partners' deficit for
the six months ended June 30, 1995. Results of operations for the period are
not necessarily indicative of the results to be expected for the full year.
No significant events have occurred subsequent to fiscal year 1994 and no
material contingencies exist which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
- -------------------------------
For the six months ended June 30, 1995, the Partnership had sufficient cash to
meet both operating expenses and minimum required debt service pursuant to the
Partnership's Modified Plan of Reorganization. The mortgage securing the
Partnership's remaining property, Fifth Avenue Apartments ("Fifth Avenue"),
matures on December 31, 1995. As of June 30, 1995, the outstanding balance of
the mortgage, including principal and accrued interest, totalled $7,049,182.
It is the General Partners' intention to pursue efforts to sell the property or
reach an agreement with the lender for a further restructuring or extension of
the mortgage secured by Fifth Avenue during 1995. However, there can be no
assurances that such efforts will be successful. Although it is anticipated
that the property will generate cash flow to meet operating needs and required
debt service payments in the future, there can be no assurances that such
payments will be made.
Cash and cash equivalents totalled $854,028 at June 30, 1995, compared with
$933,424 at December 31, 1994. The $79,396 decrease is due to capital
expenditures and cash used for operating activities.
Cash held in escrow increased to $193,855 at June 30, 1995, compared with
$92,855 at December 31, 1994. The $101,000 increase is primarily attributable
to escrow contributions for insurance and real estate taxes partially offset by
the payment of a portion of Fifth Avenue's 1994 real estate taxes in January
1995.
Accrued interest payable totalled $668,270 at June 30, 1995, compared to
$717,721 at December 31, 1994. The decrease is a result of interest payments
made on the Partnership's mortgage obligation during the first six months of
1995.
Accrued expenses and other liabilities totalled $133,782 at June 30, 1995,
compared to $86,965 at December 31, 1994. The increase is primarily
attributable to accruals for real estate taxes for the first and second
quarters of 1995.
Results of Operations
- ---------------------
For the three and six months ended June 30, 1995, Partnership operations
resulted in net losses of $54,717 and $114,383, respectively, compared to net
losses of $45,045 and $126,431, respectively, for the corresponding 1994
periods. The increase in net loss for the three month period is primarily
attributable to an increase in property operating expenses. The decrease in
the net loss for the six month period is primarily due to an increase in
interest income and a decrease in general and administrative expenses.
Rental income totalled $332,578 and $652,298, respectively, for the three and
six months ended June 30, 1995, compared to $329,082 and $654,238,
respectively, for the corresponding 1994 periods. Occupancy at Fifth Avenue
averaged approximately 96% and 95%, respectively, for the three and six months
ended June 30, 1995, compared to approximately 97% and 96%, respectively, for
the corresponding periods in 1994. The average rental income per occupied
square foot at the property was $8.22 and $8.15 for the three and six months
ended June 30, 1995, up from $7.91 and $7.94, respectively, for the
corresponding periods in 1994.
Interest income totalled $12,893 and $26,199, respectively, for the three and
six months ended June 30, 1995, compared to $10,822 and $17,608, respectively,
for the corresponding 1994 periods. The increases are primarily a result of
higher interest rates earned on the Partnership's average cash balances during
the first six months of 1995.
Property operating expenses consist primarily of on-site personnel expenses,
utility costs, repair and maintenance costs, property management fees,
insurance and real estate taxes. Property operating expenses for the three and
six months ended June 30, 1995 totalled $174,993 and $340,815, respectively,
compared to $156,542 and $337,633, respectively, for the corresponding periods
in 1994. The increase for the three month period is primarily attributable to
higher insurance and real estate taxes in the 1995 period.
General and administrative expenses totalled $10,431 and $22,771, respectively,
for the three and six months ended June 30, 1995, compared to $14,725 and
$34,263 for the corresponding 1994 periods. The higher balance for the 1994
periods is primarily attributable to legal and audit costs recognized by the
Partnership in conjunction with the sale of Rockcreek Apartments in December
1993.
PART II OTHER INFORMATION
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended June 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
S/M REAL ESTATE FUND VII, LTD.
BY: SM7 APARTMENT INVESTORS INC.
General Partner
Date: August 10, 1995 BY: /s/ Kenneth L. Zakin
--------------------------
Name: Kenneth L. Zakin
Title: Director and President
Date: August 10, 1995 BY: /s/ Daniel M. Palmier
--------------------------
Name: Daniel M. Palmier
Title: Vice President and
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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