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 September 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 500, 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
September 30, December 31,
Assets 1995 1994
Land $ 962,216 $ 962,216
Building and improvements 7,650,943 7,603,046
8,613,159 8,565,262
Less-accumulated depreciation (4,371,430) (4,091,395)
4,241,729 4,473,867
Cash and cash equivalents 871,128 933,424
Cash held in escrow 246,848 92,855
Accounts receivable 1,380 12,301
Other assets 31,281 30,562
Total Assets $ 5,392,366 $ 5,543,009
Liabilities and Partners' Deficit
Liabilities:
Notes payable $ 6,380,912 $ 6,380,912
Accounts payable:
Trade 18,575 2,764
Affiliates 40,664 40,664
Accrued interest payable 641,361 717,721
Accrued expenses and
other liabilities 192,291 86,965
Total Liabilities 7,273,803 7,229,026
Partners' Deficit:
General Partners (105,426) (103,472)
Limited Partners (1,776,011) (1,582,545)
Total Partners' Deficit (1,881,437) (1,686,017)
Total Liabilities and
Partners' Deficit $ 5,392,366 $ 5,543,009
Statement of Partners' Deficit
For the nine months ended September 30, 1995
Limited General
Partners Partners Total
Balance at December 31, 1994 $ (1,582,545) $ (103,472) $ (1,686,017)
Net loss (193,466) (1,954) (195,420)
Balance at September 30, 1995 $ (1,776,011) $ (105,426) $ (1,881,437)
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
Income 1995 1994 1995 1994
Rental $ 331,041 $ 335,039 $ 983,339 $ 989,277
Interest 11,941 7,286 38,140 24,894
Total Income 342,982 342,325 1,021,479 1,014,171
Expenses
Property operating 191,658 199,352 532,473 536,985
Interest 120,662 124,410 363,329 367,228
Depreciation 93,408 91,366 280,035 274,929
General and
administrative 18,291 12,876 41,062 47,139
Total Expenses 424,019 428,004 1,216,899 1,226,281
Net Loss $ (81,037) $ (85,679) $ (195,420) $ (212,110)
Net Loss Allocated:
To the General
Partners (810) (857) (1,954) (2,121)
To the Limited
Partners (80,227) (84,822) (193,466) (209,989)
$ (81,037) $ (85,679) $ (195,420) $ (212,110)
Per limited
partnership unit
(11,080 outstanding) $ (7.24) $ (7.65) $ (17.46) $ (18.95)
Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net loss $ (195,420) $ (212,110)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation 280,035 274,929
Increase (decrease) in cash arising
from changes in operating assets
and liabilities:
Cash held in escrow (153,993) 81,315
Accounts receivable 10,921 41,405
Other assets (719) (13,984)
Accounts payable 15,811 (13,311)
Accrued interest payable (76,360) (48,159)
Accrued expenses and other
liabilities 105,326 (48,149)
Net cash provided by (used for)
operating activities (14,399) 61,936
Cash Flows from Investing Activities:
Additions to investment property (47,897) --
Net cash used for investing activities (47,897) --
Net increase (decrease) in cash and
cash equivalents (62,296) 61,936
Cash and cash equivalents at beginning of period 933,424 863,717
Cash and cash equivalents at end of period $ 871,128 $ 925,653
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 439,689 $ 415,387
Write-off of fully depreciated
building & improvements $ -- $ 79,215
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 September 30, 1995 and the results of operations for the three
and nine months ended September 30, 1995 and 1994, cash flows for the nine
months ended September 30, 1995 and 1994 and the statement of changes in
partners' deficit for the nine months ended September 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 nine months ended September 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. Although it is
anticipated that the Partnership's remaining property, Fifth Avenue Apartments
("Fifth Avenue"), will generate cash flow to meet operating needs and minimum
required debt service payments in the future, there can be no assurances that
such payments will be made. The mortgage securing the property matures on
December 31, 1995. As of September 30, 1995, the outstanding balance of the
mortgage, including principal and accrued interest, totalled $7,022,273. The
General Partners have entered into discussions with the lender for a further
restructuring or extension of the mortgage secured by Fifth Avenue while
concurrently pursuing efforts to sell the property. However, there can be no
assurances that such efforts will be successful. If efforts to sell the
property are unsuccessful, or if an agreement with the lender to restructure
or extend the debt prior to its maturity cannot be reached, the lender may
exercise its option to foreclose upon the property.
Cash and cash equivalents totalled $871,128 at September 30, 1995, compared
with $933,424 at December 31, 1994. The $62,296 decrease is due to capital
expenditures and cash used for operating activities.
Cash held in escrow increased to $246,848 at September 30, 1995, compared with
$92,855 at December 31, 1994. The $153,993 increase is primarily attributable
to escrow contributions for insurance and real estate taxes.
Accrued interest payable totalled $641,361 at September 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 nine months of
1995.
Accrued expenses and other liabilities totalled $192,291 at September 30, 1995,
compared to $86,965 at December 31, 1994. The increase is primarily
attributable to accruals for real estate taxes for the first three quarters of
1995.
Results of Operations
For the three and nine months ended September 30, 1995, Partnership operations
resulted in net losses of $81,037 and $195,420, respectively, compared to net
losses of $85,679 and $212,110, respectively, for the corresponding 1994
periods. The decrease in net loss for both periods is primarily attributable
to an increase in interest income and a decrease in total expenses.
Rental income totalled $331,041 and $983,339, respectively, for the three and
nine months ended September 30, 1995, compared to $335,039 and $989,277,
respectively, for the corresponding 1994 periods. Occupancy at Fifth Avenue
averaged approximately 95% for both the three and nine months ended September
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 $8.27 and $8.19 for the three and nine months ended
September 30, 1995, up from $7.98 and $7.95, respectively, for the
corresponding periods in 1994.
Interest income totalled $11,941 and $38,140, respectively, for the three and
nine months ended September 30, 1995, compared to $7,286 and $24,894,
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 nine 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
nine months ended September 30, 1995 totalled $191,658 and $532,473,
respectively, relatively unchanged from $199,352 and $536,985, respectively,
for the corresponding periods in 1994.
General and administrative expenses totalled $18,291 and $41,062, respectively,
for the three and nine months ended September 30, 1995, compared to $12,876 and
$47,139 for the corresponding 1994 periods. The increase for the three month
period is primarily attributable to accruals for legal and other costs relating
to the pending maturity of Fifth Avenue's mortgage obligation. The decrease
for the nine month period is primarily attributable to legal and audit costs
recognized by the Partnership in the 1994 period 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
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended September 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: November 14, 1995
BY: /s/ Kenneth L. Zakin
Name: Kenneth L. Zakin
Title: Director and President
Date: November 14, 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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