UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR FISCAL YEAR ENDED DECEMBER 31, 1995
Commission File Number:
2-88845-A
Exact name of Registrant as specified in its charter:
Florida Income Fund, L.P.
State or other Jurisdiction of incorporation or organization:
Iowa
I.R.S. Employer Identification Number:
59-2337910
Address of Principal Executive Offices:
12800 University Drive, Ste 675
Fort Myers, FL 33907
Registrant's Telephone Number, including Area Code:
(941) 481-2011
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
The registrant 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
has been subject to such filing requirements for the past 90 days.
<PAGE>
FLORIDA INCOME FUND, L.P.
FORM 10-K - 1995
CONTENTS AND CROSS REFERENCE INDEX
PART ITEM FORM 10-K
NO. NO. DESCRIPTION PAGE NO.
- ---- ---- ----------- ---------
I 1 Business 3
2 Properties 3 - 7
3 Legal Proceedings 7
4 Submission of Matters to a Vote of
Security Holders 7
II 5 Market for Registrant's Partnership
Equity and Related Partner Matters 8
6 Selected Financial Data 8
7 Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 11
8 Financial Statements and Supplementary Data 12 - 28
9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 29
III 10 Directors and Executive Officers of
the Registrant 29 - 31
11 Executive Compensation 32 - 33
12 Security Ownership of Certain Beneficial
Owners and Management 33
13 Certain Relationships and Related Party
Transactions 33
IV 14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K 34
Signatures 35
2
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS - Florida Income Fund, L.P., (the Partnership)
is an Iowa Limited Partnership formed as of March 1984, for the purpose of
investing in a diversified portfolio of income-producing commercial and
residential real estate properties primarily located in Southwest Florida. The
Partnership's primary objectives are to preserve and protect the Partnership's
original capital, provide distributable cash, a portion of which may constitute
nontaxable income, obtain capital appreciation through increases in value of
Partnership properties, and realize capital gains from the sale of Partnership
properties.
There can be no assurance that these objectives will be achieved. The
achievement of these objectives depends on many factors, including principally
the ability of the Managing General Partner to select suitable properties
(completed) at favorable prices and the successful management of those
properties. The General Partners of the Partnership are Mariner Capital
Management, Inc., a Florida corporation (Managing General Partner or Mariner)
and MCD Real Estate, Inc., an Ohio corporation. The primary market is Southwest
Florida. The partnership invested in several properties in order to achieve a
measure of diversification. The Partnership's original intent was to hold these
properties as long-term investments. The Managing General Partner has chosen to
invest primarily in Southwest Florida because of its experience in dealing in
real estate in this area. Southwest Florida offers, in management's opinion, a
competitive but growing market in which to meet its performance objectives.
On March 28, 1984, a registration statement on Form S-18 for an offering of
5,000 units of limited partnership interest at $1,000 per unit became effective
with the United States Securities and Exchange Commission (File No. 2-88845-A).
McDonald and Company Securities, Inc., an affiliate of MCD Real Estate, Inc.,
one of the General Partner's, acted as the Managing Dealer for the offering,
which ended July 8, 1984, when all units were sold.
The Partnership itself has no executive officers as employees. The Managing
General Partner, which has responsibility for the management of the Partnership,
has assigned certain individuals to devote as much time to the operations of the
Partnership as deemed necessary. All these individuals serve the Partnership on
a part-time basis. The Managing General Partner is also a General Partner in
several other public and private limited partnerships engaged in similar
activities.
ITEM 2. PROPERTIES
The Partnership has acquired four properties which it continues to hold and
operate. These four properties are: (1) Edison Square Shopping Center, acquired
on October 19, 1984; (2) Corporate Office Park, acquired April 15, 1985; (3)
Gallery Motel, acquired June 27, 1985; (4) Villas Plaza Shopping Center acquired
December 6, 1985.
A brief description of these properties and the terms of purchase by the
Partnership is as follows:
3
<PAGE>
EDISON SQUARE
Edison Square is a strip shopping center located in Lee County, Florida,
consisting of approximately 40,000 square feet of net leasable area situated on
3.45 acres of land. The building was completed in early 1984, and is of
contemporary design with masonry construction and glass store fronts. Edison
Square Shopping Center is located on Fowler Street, just east of Edison Mall -
the area's largest regional shopping mall. The property also has access from
Colonial Boulevard, which is a major artery from I-75 to Fort Myers. Fowler
street is a major north/south artery.
The Partnership acquired the Edison Square property on October 19, 1984. The
Partnership has capitalized the following costs associated with the purchase of
Edison Square.
Original Purchase Price $3,295,000
Acquisition Fee 131,800
Less: Seller Adjustment for not
meeting certain leasing requirements (100,000)
----------
Total Capitalized costs of Acquisition $3,326,800
----------
The terms of the purchase were $997,000 cash. A first mortgage of $1,645,000 was
also placed on the property subsequent to closing. The remaining purchase price
was financed by a second mortgage from the seller in the amount of $553,000 at
11% which has subsequently been paid off.
The Partnership refinanced this loan as of September 8, 1994. The terms of this
mortgage are as follows:
The principal amount borrowed was $1,725,000. The interest rate is
fixed at 10.6% and the loan balloons on October 1, 2001. This loan is
being amortized over 22 years and has a principal and interest payment
amount of $16,894.90. The loan is non recourse and Edison Square
Shopping Center is the collateral. The Partnership's debt increased
from $1,426,000 to $1,725,000. These excess proceeds were used to pay
for capital improvements and for loan refinance costs.
The loan can not be prepaid in the first year but may be prepaid after
the second year with a prepayment amount either the greater of (a) 1%
of the principal balance of the note being prepaid or (b) the ratio of
the principal balance of the note being prepaid over the outstanding
principal balance of the note on the prepayment date multiplied by the
present value as of the prepayment date of the remaining scheduled
payments determined by discounting such payments at the discount rate
less the amount of the outstanding principal balance of the note on the
prepayment date. Borrower is also obligated to escrow funds for
insurance, taxes and a replacement reserve.
When purchased, the property was 62.5% occupied. At December 31, 1995 and 1994
the property was 97% and 90% occupied.
4
<PAGE>
CORPORATE PARK
The Partnership acquired Corporate Park on April 15, 1985. The property is an
office complex consisting of approximately 12,800 square feet situated on 1.13
acres of land. Corporate Park is located on Evans Avenue in Fort Myers, Lee
County, Florida. The property is a few blocks from the Metro Park Outlet Mall
and the Edison Mall. It is also enhanced by its excellent access to Colonial
Boulevard - a main thoroughfare to I-75.
The Partnership has capitalized the following costs associated with the
acquisition of Corporate Park:
Original Purchase Price $1,000,000
Acquisition Fee 20,000
Brokerage Commission 30,000
Appraisal 2,000
----------
Total Capitalized Cost $1,052,000
----------
The property was purchased for cash and then subsequently financed with a
$620,000 mortgage which has since been paid off with borrowings from an
affiliated partnership.
At December 31, 1995 and 1994, Corporate Park was 100% occupied.
Corporate Office Park and Villas Plaza Shopping Center are secured by a first
mortgage to an affiliated partnership in the amount of $1,400,000. The interest
rate is 12%. This loan matures on December 31, 1997.
GALLERY MOTEL (NOW SEASIDE INN)
The Partnership's third acquisition was purchased on June 27, 1985. The property
is a motel consisting of 7 buildings, which house 32 rental units including 10
motel, 4 efficiency and 8 one-bedroom cottages situated on 1.88 acres of land.
The property also includes a pool, 200 feet of direct frontage on the Gulf of
Mexico and office facilities. The buildings are approximately 25 years old and
were renovated in 1995. They consist of concrete block and wood veneer
construction for some buildings and wood construction for others. All units are
elevated to prevent flooding. The Gallery Motel is located on East Gulf Drive on
Sanibel Island, Florida, directly on the Gulf of Mexico, near the east end of
the Island. Sanibel is located in Lee County, just off Florida's West Coast.
5
<PAGE>
The Partnership has capitalized the following costs associated with the
acquisition of Gallery Motel:
Original Purchase Price $2,150,000
Acquisition Fee 100,000
Less: Imputed discount on
mortgage loan (134,000)
----------
Total Capitalized Cost $2,116,000
----------
Terms of the purchase provided for a cash down payment of $1,000,000 and a
seller mortgage at 11.7% interest rate in the amount of $1,150,000 (which was
discounted to $1,016,000). The purchase terms were negotiated with no interest
or principal payments due for the first year. This mortgage was refinanced with
a local financial institution in December, 1986 at prime plus one percent.
On February 1, 1990, the Partnership consolidated other debts by increasing its
loans on the Gallery Motel with a local financial institution. The loan balance
at December 31st is $2,545,747. The maturity date has now been extended to
November 1, 1996 with an interest rate of Prime plus 1-1/2%; monthly principal
payments of $3,400 commencing July 1, 1995 until maturity, at which time
balance is due in full.
Proceeds from the above mentioned loan were used to pay off $950,000 ($790,000
and $160,000) of notes payable to affiliates, $250,000 of un-collateralized line
of credit and $1,433,768 of mortgages payable to banks. The remainder was used
for capital improvements.
A total renovation of the property was completed in 1995 and it was renamed
Seaside Inn. The Partnership has also obtained a $650,000 loan from an
unaffiliated lender in order to complete renovations. This loan is interest only
at a rate of 12% and is paid quarterly. The loan balloons October 1997. As of
December 31, 1995, $650,000 of the loan had been drawn. The total cost of the
renovations was approximately $985,000. The excess costs were invested by the
management company and are non-refundable unless the management company
purchases the property at which time that sum will be credited to the purchase
price.
The management company, South Seas Resorts Company (SSRC), an affiliate of the
general partner has signed an option agreement to acquire the property on or
before January 1997, at a price of $6,485,000. This price assumes renovations of
$335,000 of which $330,000 has been funded to date. Since the transaction is
between affiliated companies, the general partner must seek approval from the
limited partners of (1) the option terms and (2) an amendment of the partnership
agreement to permit the sale to an affiliate. That approval will be solicited
some time before May 1996. Once approved the transaction will still represent an
option, however SSRC will have $435,000 at risk and non-refundable including the
$335,000 invested in renovations to the property.
6
<PAGE>
VILLAS PLAZA
The Partnership's final property acquisition was made on December 6, 1985. The
property is a shopping center consisting of approximately 36,000 square feet
situated on 3.51 acres of land, located in Lee County, Florida. There are three
buildings with ages ranging from 15 to 30 years. The buildings consist of
masonry construction with wood trim. Villas Plaza is located directly on U.S. 41
and Crystal Drive in Fort Myers, Florida.
The Partnership has capitalized the following costs associated with the
acquisition of Villas Plaza:
Original Purchase Price $1,750,000
Acquisition Fee 52,000
Commissions and Appraisal Fees 4,000
----------
Total Capitalized Cost $1,806,000
----------
Terms of purchase provided for assumption of a first mortgage of $586,000, a
second mortgage from the seller for $328,000, with the balance paid in cash. The
second mortgage was paid off and refinanced with a 10% interest only mortgage
obtained from an affiliated partnership. The second mortgage matured in January
1990. In February 1990, $160,000 of this second mortgage was paid off from
proceeds of the Gallery Motel refinancing (See Page 6). On December 31, 1992,
the Partnership borrowed $500,000 of additional cash from an affiliated
partnership and satisfied the $150,000 second mortgage on Edison square. This
resulted in a new loan of $1,350,000 secured by Villas Plaza and Corporate
Office Park, with a 12% interest rate and matures December 31, 1994. Proceeds
from this refinance were used to pay off the original first mortgage in January
1993, the $150,000 line of credit, the 1% point associated with the refinance
and the remainder will be used for capital improvements to the properties. The
Partnership has obtained a new loan in the amount of $1,400,000 to be used to
pay this loan in full and cover loan costs. See prior discussion under
"Corporate Park".
At December 31, 1995 and 1994, the property was 70% and 86% occupied.
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not a party to nor is any of the Partnership property the
subject of any material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None except for item discussed above under "Gallery Motel" to be submitted by
May 1996.
7
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANTS'S PARTNERS' EQUITY AND RELATED PARTNER MATTERS
The Partnership units are not traded on any public market and it is not
contemplated these units will be traded on any public market in the future. As
of December 31, 1995, there were 456 Limited Partners.
The Partnership paid quarterly cash distributions totaling $105,368, $237,078,
$421,483 during 1995, 1994 and 1993 respectively. The Partnership intends to use
operating cash produced by the Partnership for capital improvements in 1995 and
to distribute any excess cash to the Partners.
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1995 1994 1993 1992 1991
--------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operating revenues (including
interest income of $55 for 1995,
$37 for 1994, $1,151 for 1993,
$1,579 for 1992 and $3,520 for 1991 2,210,238 $2,079,030 $2,133,634 $2,149,907 $2,266,344
Net income (loss) (77,025) $ 68,009 $ 196,756 $ 296,991 $ 302,539
Net income (loss) per weighted
average Limited Partnership unit (14.62) $ 12.91 $ 37.35 $ 56.37 $ 57.42
Total assets 8,461,619 $8,335,671 $7,695,432 $8,185,649 $8,055,435
Mortgages and notes payable 6,299,697 $6,155,942 $5,503,249 $5,766,412 $5,430,867
Distributions to Limited Partners 100,100 $ 225,225 $ 400,409 $ 558,080 $ 538,038
Distributions per Limited
Partnership unit 20.00 $ 45.00 $ 80.00 $ 111.50 $ 107.50
Partners' equity 1,583,975 $1,766,368 $1,935,437 $2,160,164 $2,450,624
Book value per Limited
Partnership unit 334.92 $ 369.54 $ 401.63 $ 444.29 $ 499.42
</TABLE>
Also, refer to Item #8 and the audited Financial Statements referred to herein.
8
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY - The principal sources of the Partnership's liquidity are income from
commercial real estate purchased for the Partnership's portfolio (as described
in Results from Operations), and cash reserves.
The Partnership has two loans that it extended in 1995. Corporate Park and
Villas Plaza Shopping Center are collateralized by a $1,350,000 first mortgage
from an affiliated partnership of $1,350,000. The interest rate is 12%. This
loan was refinanced in the amount of $1,400,000 at an interest rate of 12% and
extended to December 31, 1997, with no prepayment penalty. The loan is interest
only with interest paid quarterly.
The maturity date of the Gallery Motel loan in the amount of $2,545,747 has been
extended until November 1, 1996, by a local financial institution. See
discussion to sell property under Item 2.
The Managing General Partner has prepared sales packages on all of the
properties and has offered all of the properties for sale. The properties are
offered for sale above their current carrying value. A sale of all or some of
the properties would increase cash to the Partnership. however, cash flow from
operations would decrease due to the property sale. The Partnership properties
are not considered to be institutional grade due to their smaller size and lack
of sufficient credit tenants; therefore those properties do not have a broad
range of potential purchasers. The purchasers of these property types tend to be
smaller, with less access to the capital markets for funding. There has been
some improvement in this area over the past year and management is hopeful that
it can take advantage of that fact in finding qualified buyers but can make no
predictions at this time.
The Partnership has obtained a $650,000 loan from an unaffiliated lender in
order to renovate the Gallery Motel. This is an interest only loan with a rate
of 12% paid quarterly. Management believes that these renovations will increase
the value of the Gallery Motel through an increase in rate and occupancy.
Management is projecting partner distributions in 1996 to be higher than in 1995
due to the Gallery Motel being operated for twelve months in 1996. A sale of all
or some of he properties would increase cash to the partnership, however, cash
flow from operations would decline due to any property sales.
Other factors that could affect liquidity are unexpected vacancies,
unanticipated capital improvements and the strength of the Florida tourist
industry. Other than as discussed above, Management is not aware of any trends
or demands, commitments events or uncertainties that will result, or that are
reasonably likely to result, in the Partnership's liquidity increasing or
decreasing in any material way.
CAPITAL RESOURCES - As of December 31, 1995, the Partnership had $72,979 in cash
and other interest-bearing deposits.
9
<PAGE>
In connection with debt refinancing in 1995, see Section 7 under Liquidity.
Land and buildings (net of accumulated depreciation of $3,088,938) were carried
at $8,187,168. Improvements to rental properties totalled $924,991 in 1995. The
improvements were paid for by increasing the loan on Gallery Motel.
Management does not anticipate significant capital improvement expenditures in
1996. Factors influencing this would be unexpected vacancies, unanticipated
capital improvements and general property conditions.
RESULTS OF OPERATIONS
COMPARISON OF THE FISCAL YEARS ENDED DECEMBER 31, 1995 AND 1994
During the years ended December 31, 1995 & 1994, the Partnership's principal
sources of revenue were rental income of $2,041,407 and $1,913,524 and expense
reimbursements from tenants of $168,776 and $165,469, respectively. The increase
in rental revenues was attributed to the following properties: Corporate Park
increased $35,823, Edison Square increased $49,826, Villas Plaza decreased
$7,287 and Gallery Motel increased $49,521. Corporate Park experienced a vacancy
for part of 1994 and was 100% occupied during the entire year of 1995. Revenue
increases at Edison Square and Corporate Park were due to higher occupancy and
increased rental rates from cost of living increases. The room revenue increase
at the Gallery Motel was due to higher occupancy and average daily rate in 1995
as compared to 1994. The average daily room rate increased 10.0% from $134.97 to
$148.62. This rate increase was offset by 427 less room nights being rented in
1995 due to the motel being renovated.
Property operating expenses have increased from $920,310 to $1,048,958 primarily
due to increases in operating costs at the Gallery Motel.
Depreciation expense increased from $311,631 to $324,214 due to additional
assets being put into service in 1995. Interest expense increased $99,280 due to
higher interest rate and a higher mortgage balance on the Edison Square loan and
the interest associated with the $650,000 loan for the Gallery renovations.
COMPARISON OF THE FISCAL YEARS ENDED DECEMBER 31, 1994 AND 1993
During the years ended December 31, 1994 and 1993, the Partnership's principal
sources of revenue were rental income of $1,913,524 and $1,960,705 and expense
reimbursements from tenants of $165,469 and $171,778, respectively. The decrease
in rental revenues was attributed to the following properties: Corporate Park
decreased $29,218, Edison Square increased $26,834, Villas Plaza increased
$9,591 and Gallery Motel decreased $54,388. Corporate Park experienced a vacancy
for part of 1994 and was 100% occupied during the entire year of 1993. Revenue
increases at Edison Square and Villas Plaza were due to higher occupancy and
increased rental rates from cost of living increases. The room revenue decrease
at the Gallery Motel was due to lower occupancy in 1994 as compared to 1993.
Although the average daily room rate increased 5.3% from $128.12 to $135.63,
overall gross revenue declined because occupancy declined from 78.6% in 1993 to
71.3% in 1994 or a total of 848 room nights.
10
<PAGE>
Property operating expenses have increased from $901,143 to $920,310 primarily
due to increases in insurance costs. In the past two years, the Gallery Motel
has settled several claims relating to Workman's Compensation and General
Liability claims. These claims plus a general increase in insurance premiums in
the insurance market have contributed to the rise in insurance costs.
Depreciation expense increased from $293,177 to $311,631 due to additional
assets being put into service in 1994. Interest expense increased $30,602 due to
higher interest rate and a higher mortgage balance on the Edison Square loan and
the interest associated with the $650,000 loan for the Gallery renovations.
($500,000 drawn in 1994.)
COMPARISON OF THE FISCAL YEARS ENDED DECEMBER 31, 1993 AND 1992
During the years ended December 31, 1993 and 1992 the Partnership's principal
sources of revenue were rental income of $1,960,705 and $1,977,940 and expense
reimbursements from tenants of $171,778 and $170,388, respectively. The decrease
in rental revenues, together with an increase in property operating expenses,
carrying costs on debt and property taxes, resulted in a decrease in net income
of $100,235. Depreciation expense decreased due to assets being fully
depreciated.
INFLATION - At the present time, inflation and changing prices have not had a
significant impact on operations, however the impact on future operations is not
currently determinable.
CHANGING RETAIL CONDITIONS - The Florida retail market has changed significantly
over the past few years with the trend toward super stores among the giant
retailers. Management expects this trend to continue into the next decade. Among
the retailers opening super stores are the following:
Walmart Builders Square
K-Mart Circuit City
Target Sam's Wholesale
Home Depot
These super stores offer most of the products that are offered by the small
retailers. They are able to do so at highly competitive prices which has driven
many of the smaller retailers out of business or forced them to seek rent relief
in order to stay in business.
This trend has had a negative effect on both occupancies and rental rates at
properties such as those held by the Fund. Management has had to compete with
other properties for dwindling supply of small retailers. Management expects
this trend to continue.
11
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The report of Independent Accountants dated February 19, 1996, the Balance
Sheets of the Partnership as of December 31, 1995 and 1994 and the Statements of
Income, Partner's Capital and Cash Flows of the Partnership for each of the
three years in the period ended December 31, 1995, as well as the Notes to
Financial Statements and Schedule III and the Report of Independent Accountants
there on, dated February 19, 1996, are set forth herein:
12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners
Florida Income Fund, L.P.
We have audited the accompanying balance sheets of Florida Income Fund, L.P.
as of December 31, 1995 and 1994, and the related statements of income,
partners' capital, and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits 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 management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Florida Income Fund, L.P. as
of December 31, 1995, and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Myers, Florida
February 19, 1996
Page 13 of 35
<PAGE>
FLORIDA INCOME FUND, L.P.
BALANCE SHEETS
December 31, 1995 and 1994
<TABLE>
<CAPTION>
ASSETS 1995 1994
------------------- -------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 72,979 $ 522,415
Accounts receivable, trade 21,993 39,114
Prepaid expenses and other 60,457 50,240
------------------- -------------------
Total current assets 155,429 611,769
------------------- -------------------
RENTAL PROPERTIES, net 8,187,168 7,631,508
------------------- -------------------
INTANGIBLE ASSETS
Deferred loan costs, net 119,022 92,394
------------------- -------------------
Total assets
$ 8,461,619 $8,335,671
=================== ===================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Current maturities of notes and mortgages payable $ 2,573,342 $2,601,993
Current maturities of notes payable to affiliates 0 1,350,000
Accounts payable 52,122 145,417
Accrued expenses 67,899 170,877
Customer and security deposits 128,605 97,067
Deposit on sale of rental property 329,323 0
------------------- -------------------
Total current liabilities 3,151,291 4,365,354
------------------- -------------------
NOTES AND MORTGAGES PAYABLE
Notes and mortgages payable, less current maturities 2,326,353 2,203,949
Notes and mortgages payable to affiliates, less current maturities 1,400,000 0
------------------- -------------------
Total notes and mortgages payable 3,726,353 2,203,949
------------------- -------------------
PARTNERS' CAPITAL
General partners deficiency (92,291) (83,172)
Limited partners, 5,005 limited partnership units authorized;
5,005 issued and outstanding 1,676,266 1,849,540
------------------- -------------------
Total partners' capital 1,583,975 1,766,368
------------------- -------------------
Total liabilities and partners' capital $ 8,461,619 $ 8,335,671
=================== ===================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 14 of 35
<PAGE>
FLORIDA INCOME FUND, L.P.
STATEMENTS OF INCOME
years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---------------- ---------------- -----------------
<S> <C> <C> <C>
Revenues
Rental income $ 2,041,407 $ 1,913,524 $ 1,960,705
Tenant reimbursements 168,776 165,469 171,778
Interest income 55 37 1,151
---------------- ---------------- -----------------
2,210,238 2,079,030 2,133,634
---------------- ---------------- -----------------
Expenses
Property operating expenses 1,048,958 920,310 901,143
Interest expense 558,958 451,376 430,801
Interest expense - affiliates 163,725 172,027 162,000
Depreciation 324,214 311,631 293,177
Property taxes 146,292 150,487 149,757
Bad debt expense 0 5,190 0
Loss on disposal 45,116 0 0
---------------- ---------------- -----------------
2,287,263 2,011,021 1,936,878
---------------- ---------------- -----------------
Net income (loss) $ (77,025) $ 68,009 $ 196,756
================ ================ =================
Net income (loss) allocated to general partner $ (3,851) $ 3,400 $ 9,838
================ ================ ================
Net income (loss) allocated to limited partners $ (73,174) $ 64,609 $ 186,918
================ ================ =================
Net income (loss) per limited partner unit $ (14.62) $ 12.91 $ 37.35
================ ================ =================
Distributions per limited partner unit $ 20.00 $ 45.00 $ 80.00
================ ================ ================
Weighted average limited partner units outstanding 5,005 5,005 5,005
================ ================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 15 of 35
<PAGE>
FLORIDA INCOME FUND, L.P.
STATEMENTS OF PARTNERS' CAPITAL
years ended December 31, 1995, 1994, and 1993
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
--------------- ---------------- ----------------
<S> <C> <C> <C>
Balances, January 1, 1993 $ (63,483) $ 2,223,647 $ 2,160,164
Net income 9,838 186,918 196,756
Distributions (21,074) (400,409) (421,483)
---------------- ---------------- ----------------
Balances, December 31, 1993 (74,719) 2,010,156 1,935,437
Net income 3,400 64,609 68,009
Distributions (11,853) (225,225) (237,078)
---------------- ---------------- ----------------
Balances, December 31, 1994 (83,172) 1,849,540 1,766,368
Net loss (3,851) (73,174) (77,025)
Distributions (5,268) (100,100) (105,368)
---------------- ---------------- ----------------
Balances, December 31, 1995 $ (92,291) $ 1,676,266 $ 1,583,975
================ ================ ================
RM80</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 16 of 35
<PAGE>
FLORIDA INCOME FUND, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---------------- ---------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (77,025) $ 68,009 $ 196,756
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation 324,211 311,631 293,177
Amortization of loan costs 30,690 13,872 38,906
Loss on disposal of rental property improvements 45,116 0 0
(Increase) decrease in:
Accounts receivable 17,121 (3,609) (8,479)
Prepaid expenses and other (10,217) (14,133) (2,626)
Increase (decrease) in:
Accounts payable and accrued expenses (196,273) 90,213 (4,269)
Customer and security deposits 31,538 13,850 1,942
---------------- ---------------- ----------------
Net cash provided by operating activities 165,161 479,833 515,407
---------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Improvements to rental properties (924,987) (346,224) (149,963)
Rental property sale deposit 329,323 0 0
---------------- ---------------- ----------------
Net cash used in investing activities (595,664) (346,224) (149,963)
---------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line-of-credit agreement 0 0 619,000
Repayments under line-of-credit agreement 0 (111,000) (508,000)
Proceeds of borrowings from unaffiliated companies 150,000 2,225,000 14,079
Proceeds of borrowings from affiliates 1,400,000 0 0
Repayments of borrowings to unaffiliated companies (56,247) (1,461,307) (388,242)
Repayment of borrowings to affiliate (1,350,000) 0 0
Loan origination fees paid (57,318) (96,749) (29,324)
Partner distributions paid (105,368) (237,078) (421,483)
---------------- ---------------- ----------------
Net cash provided by (used in)
financing activities (18,933) 318,866 (713,970)
---------------- ---------------- ----------------
Net increase (decrease) in cash and cash equivalents (449,436) 798,699 (348,526)
Cash and cash equivalents at beginning of year 868,639 69,940 418,466
---------------- ---------------- ----------------
Cash and cash equivalents at end of year $ 419,203 $ 868,639 $ 69,940
================ ================ ================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest on borrowings--affilates $ 206,863 $ 131,194 $ 162,000
Interest on borrowings--other 556,653 451,376 393,839
---------------- ---------------- ----------------
$ 763,516 $ 582,570 $ 555,839
================ ================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 17 of 35
<PAGE>
FLORIDA INCOME FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Florida Income Fund, L.P. (the Partnership) was formed on November
7, 1983, by the filing of a Certificate and Agreement of Limited
Partnership (Partnership Agreement) under the laws of the State of
Iowa. The General Partners, MCD Real Estate, Inc. (MCD) and Mariner
Capital Management, Inc. (MCM), also the Managing General Partner,
contributed $10,000 and the Initial Limited Partner contributed
$5,000 in the initial capitalization of the Partnership. The
Partnership was formed for the purpose of investing in a diversified
portfolio of income-producing commercial and residential real estate
properties located in Florida. The Partnership owns Edison Square
and Villas Plaza (two retail shopping centers), Corporate Park (an
office complex) and the Gallery Motel.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies of the Partnership
follows:
RENTAL INCOME: The Partnership leases space in its retail centers.
These leases range from one to fifteen years and include provisions
for minimum rent increases at stated amounts or the Consumer Price
Index.
ALLOCATION OF NET INCOME (LOSS): In accordance with the Partnership
Agreement, net income (loss), prior to recoupment of the partners'
original capital investment, is allocated five percent (5%) to the
general partners and ninety-five percent (95%) to the limited
partners as a class. Subsequent to recoupment, income (loss) is
allocated twenty percent (20%) to the general partners and eighty
percent (80%) to the limited partners as a class.
RENTAL PROPERTIES: In March 1995, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of" (SFAS 121). The Statement
requires that long-lived assets and certain identifiable intangibles
to be held and used be reviewed for impairment whenever events or
changes in circumstances indicate that their carrying amount may not
be recoverable. In assessing recoverability, estimates of future
cash flows expected to result from the use of the asset and its
eventual disposition should be used. If the sum of the expected
future cash flows (undiscounted and without interest charges) is
less than the carrying amount of the asset, an impairment loss
should be recognized based on the value of the asset. SFAS 121 is
effective for financial statements for fiscal years beginning after
December 15, 1995 with earlier application encouraged. Management
has reviewed its property holdings and believes no impairment exists
at December 31, 1995.
Page 18 of 35
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
RENTAL PROPERTIES, CONTINUED
Depreciation is computed principally under the straight-line method
over the estimated useful lives of the assets. Repairs and
maintenance are included in operating expenses and major
improvements are capitalized.
Upon the sale or retirement of depreciable assets, the cost and
related accumulated depreciation are removed from the accounts and
the difference between the carrying value and any proceeds realized
on sale is included in the determination of net income.
TENANT REIMBURSEMENTS: Common area maintenance, property tax and
utilities expenses for the rental properties are reimbursed to the
fund through tenant assessments. These costs are included in
property operating expenses and property tax expense.
DEFERRED LOAN COSTS: Loan costs incurred from financing and
refinancing the various property acquisitions have been capitalized
at cost and are being amortized over the lives of the related loans.
Amortization of loan costs is included with interest expense in the
income statement.
INCOME TAXES: The accompanying financial statements do not show a
provision or liability for Federal or State income taxes because the
partners are taxed individually on their share of Partnership
earnings.
PER UNIT INCOME: Per unit income is based on the weighted average
number of units outstanding for the years ended December 31, 1995,
1994 and 1993.
CASH EQUIVALENTS: For purposes of the statement of cash flows, the
Partnership considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS: Statement of Financial
Accounting Standards No. 107, "Disclosures About Fair Value of
Financial Instruments," requires that the Partnership disclose
estimated fair values of financial instruments. The recorded value
for cash and cash equivalents approximates fair value because of the
short maturity of these instruments. The fair value of the
Partnership's short and long-term notes and mortgages payable at
December 31, 1995, based upon market rates, approximates the amounts
disclosed in Footnote 4.
Page 19 of 35
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
MANAGEMENT'S USE OF ESTIMATES: The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
2. RENTAL PROPERTIES:
Rental properties consisted of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
---------------- ----------------
<S> <C> <C>
Land $ 2,429,433 $ 2,429,433
Buildings and improvements 8,846,673 8,117,442
---------------- ----------------
11,276,106 10,546,875
Accumulated depreciation (3,088,938) (2,915,367)
---------------- ----------------
$ 8,187,168 $ 7,631,508
================ ================
</TABLE>
Depreciation expense was $324,214, $311,631 and $293,177 for 1995, 1994
and 1993, respectively.
On June 1, 1995, management of the Partnership entered into an option
agreement with an affiliate to sell the Gallery Motel. The agreement is
subject to approval by the limited partners. The option is exercisable
on or before January 1, 1997 at $6,485,000. At December 31, 1995, the
Partnership has received $329,323 under the option agreement. The
carrying value of the motel was $2,718,152 at December 31, 1995.
Page 20 of 35
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. RENTAL PROPERTIES, CONTINUED
The leases at Edison Square, Villas Plaza and Corporate Park are
noncancelable leases. Based on the terms of the leases in existence at
December 31, 1995, future minimum annual rentals from these leases over
the next five years, and in the aggregate, will be approximately as
follows:
1996 $ 754,900
1997 584,317
1998 350,525
1999 153,755
2000 25,380
Thereafter 0
----------------
$ 1,868,877
================
3. DEFERRED LOAN COSTS:
Deferred loan costs at December 31 are as follows:
<TABLE>
<CAPTION>
1995 1994
---------------- ----------------
<S> <C> <C>
Loan costs $ 147,597 $ 95,979
Accumulated amortization (28,575) (3,585)
---------------- ----------------
$ 119,022 $ 92,394
================ ================
</TABLE>
Additions to deferred loan costs relate to modifications of note terms
and other refinancing transactions during the years ended December 31,
1995 and 1994. Certain loan costs became fully amortized during the
years ended December 31, 1995 and 1994 and, therefore, were written
off. Amortization expense was $30,690, $13,872 and $38,906 for 1995,
1994 and 1993, respectively.
Page 21 of 35
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. NOTES AND MORTGAGES PAYABLE:
Notes and mortgages payable consisted of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
---------------- ----------------
<S> <C> <C>
Unaffiliated debt:
Note and mortgage payable to banks:
Mortgage payable with monthly payments of $3,400 plus
interest at prime plus 1.5%, balloon payment of
approximately $2,508,000 due November 1996,
prime rate at December 31, 1995 was 8.5% $ 2,545,747 $ 2,577,022
Installment loan payable with monthly payments of $334
including interst at 6.5%, final payment due May 1997 5,408 8,937
---------------- ----------------
Total note and mortgage payable to banks 2,551,155 2,585,959
---------------- ----------------
Other mortgages payable:
Mortgage payable with monthly payments of $16,895 includ-
ing interest at 10.6%, final payment due October 2001 1,698,540 1,719,983
Mortgage payable with interest payable quarterly at 12%
balloon payment of entire principal plus accrued interest
due October 1997 650,000 500,000
---------------- ----------------
Total other mortgages payable 2,348,540 2,219,983
---------------- ----------------
Affiliated debt:
Notes and mortgages payable to affiliates:
Mortgage payable with interest payable quarterly at 12%,
balloon payment of entire principal plus accrued interest
due December 1997, collateralized by first mortgage 1,400,000 0
Mortgage payable with interest payable quarterly at 12%,
balloon payment of entire principal plus accrued interest
due on demand, collateralized by first mortgage 0 1,350,000
---------------- ----------------
Total affiliated debt 1,400,000 1,350,000
---------------- ----------------
Total notes and mortgages payable 6,299,695 6,155,942
Less current maturities (2,573,342) (3,951,993)
---------------- ----------------
Total long-term debt less current maturities $ 3,726,353 $ 2,203,949
================ ================
</TABLE>
Page 22 of 35
<PAGE>
4. NOTES AND MORTGAGES PAYABLE, CONTINUED
Long-term portions of notes and mortgages payable are scheduled to
mature approximately as follows:
1996 $ 2,573,342
1997 2,078,123
1998 29,428
1999 32,704
Thereafter 1,586,098
----------------
$ 6,299,695
================
All rental properties are pledged as collateral for mortgages payable,
as are rents and receivables related to Corporate Park, Edison Square,
and Villas Plaza.
5. RELATED PARTY TRANSACTIONS:
The Partnership participated in the following related party
transactions:
The General Partners and their affiliates are entitled to receive
compensation for leasing and management fees in an amount not to exceed
6% of gross revenues produced by commercial Partnership properties. For
the years ending December 31, 1995, 1994 and 1993, the General Partners
and their affiliates received fees of $133,256, $124,535 and $128,096,
respectively.
The general partners and their affiliates are also entitled to
reimbursement of costs (including amounts of any salaries paid to
employees and officers of a general partner or its affiliates) directly
attributable to the operation of the Partnership which could have been
obtained from independent parties. Expenses amounting to $343,530,
$304,072 and $160,787 were incurred during the years ended December 31,
1995, 1994 and 1993, respectively, of which the following amounts were
included in accounts payable and accrued expenses:
<TABLE>
<CAPTION>
1995 1994 1993
----------------- ----------------- ----------------
<S> <C> <C> <C>
Amounts included in accounts payable $ 10,562 $ 106,114 $ 25,511
================= ================= ================
Amounts included in accrued expenses $ 0 $ 40,833 $ 11,501
================= ================= ================
</TABLE>
Page 23 of 35
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Our report on the financial statements of Florida Income Fund, L.P. is
included on page 13 of this Form 10-K. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedule listed in the index on page 34 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Fort Myers, Florida
February 19, 1996
Page 24 of 35
<PAGE>
<TABLE>
<CAPTION>
FLORIDA INCOME FUND, L.P.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER, 31, 1995
COL. A COL. B COL. C COL. D COL. E
COST CAPITALIZED GROSS AMT AT WHICH
INITIAL COST SUBSEQUENT TO CARRIED AT CLOSE
TO PARTNERSHIP ACQUISITION OF PERIOD
-------------- ---------------- ------------------
BLDGS. & CARRYING BLDGS &
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS COSTS LAND IMPROVEMENTS TOTAL
- ----------- ------------ ---- ------------ ------------ -------- ---- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edison Square
Shopping Center
Ft. Myers, FL $1,698,541 $ 665,360 $2,661,440 $ 517,916 $-0- $ 665,360 $3,179,356 $ 3,844,716
Corporate Park
Office Complex
Ft. Myers, FL(a) $ 335,000 $ 263,000 $ 789,000 $ 180,794 $-0- $ 263,000 $ 969,794 $ 1,232,794
Gallery Motel
Sanibel, FL
(32 Unit Motel) $3,201,156 $ 814,918 $1,301,082 $1,415,906 $-0- $ 814,918 $2,716,988 $ 3,531,906
Villas Plaza
Shopping Center
Ft. Myers, FL(a) $1,065,000 $ 686,155 $1,119,845 $ 860,690 $-0- $ 686,155 $1,980,535 $ 2,666,690
---------- ---------- ---------- ---------- ---- ---------- ---------- -----------
TOTALS $6,299,697 $2,429,433 $5,871,367 $2,975,306 $-0- $2,429,433 $8,846,673 $11,276,106
========== ========== ========== ========== ==== ========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
COL. A COL. F COL. G COL. H COL. I
LIFE IN WHICH
DEPRECIATION IN
LATEST INCOME
ACCUMULATED DATE OF DATE STATEMENT IS
DESCRIPTION DEPRECIATION CONSTRUCTION ACQUIRED COMPUTED
- ----------- ------------ ------------ -------- ---------------
<S> <C> <C> <C> <C>
Edison Square
Shopping Center
Ft. Myers, FL $1,061,850 1984 10/19/84 40 years
Corporate Park
Office Complex
Ft. Myers, FL(a) $ 355,182 1984 04/15/85 40 years
Gallery Motel
Sanibel, FL
(32 Unit Motel) $ 813,754 1965 06/27/85 30 years
Villas Plaza
Shopping Center 1963-
Ft. Myers, FL(a) $ 858,152 1978 12/06/85 30 years
----------
TOTALS $3,088,938
==========
<FN>
SEE ACCOMPANYING NOTES TO SCHEDULE III
(a) = $1,400,000
</FN>
</TABLE>
25
<PAGE>
FLORIDA INCOME FUND, L. P.
NOTES TO SCHEDULE III
DECEMBER 31, 1995
REAL ESTATE AND ACCUMULATED DEPRECIATION
Balance as of 12/31/92 $10,007,266
Additions During Period:
Acquisitions through foreclosures $ 0
Other Acquisitions ( 9,131)
Improvements, etc 149,963
Other 0 $ 140,832
--------- -----------
Balance as of 12/31/93 $10,148,098
-----------
Additions During Period:
Acquisitions through foreclosures $ 0
Other Acquisitions 0
Improvements, etc 398,777 $ 398,777
--------- -----------
Balance as of 12/31/94 $10,546,875
-----------
Additions During Period:
Acquisitions through foreclosures 924,991
Other Acquisitions 0
Improvements, etc 0 $ 924,991
--------- -----------
Deletions during period:
Improvements, etc (195,760) (195,760)
--------- -----------
Balance as of 12/31/95 $11,276,106
===========
26
<PAGE>
FLORIDA INCOME FUND, L.P.
NOTES TO SCHEDULE III
DECEMBER 31, 1995
REAL ESTATE AND ACCUMULATED DEPRECIATION
Balance as of 12/31/92 $2,319,690
Less: Depreciation on Dispositions ( 9,131)
Depreciation expense for 1993 $ 293,177 284,046
--------- ----------
Balance as of 12/31/93 $2,603,736
Depreciation expense for 1994 $ 311,631 311,631
--------- ----------
Balance as of 12/31/94 $2,915,367
Depreciation expense for 1995 $ 324,214
(150,643) 173,571
--------- ----------
Balance as of 12/31/95 $3,088,938
==========
27
<PAGE>
FLORIDA INCOME FUND, L.P.
NOTES TO SCHEDULE III
DECEMBER 31, 1995
REAL ESTATE AND ACCUMULATED DEPRECIATION
(A) The aggregate cost of land and buildings is the same for Federal Income Tax
purposes.
(B) See Note 1 to the Financial Statements for depreciation method.
(C) See Note 4 to the Financial Statements for further information on debt
obligations.
28
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(A) AND (B) IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
The Partnership, as an entity, does not have any directors or officers. The
Managing General Partner is Mariner Capital Management, Inc. (located at 12800
University Dr., Ste. 675, Fort Myers, Florida 33907), a Florida corporation
formed for the purpose of becoming the general partner in limited partnerships
formed principally to invest in real estate. The Managing General Partner is a
wholly owned subsidiary of The Mariner Group, Inc., an Ohio corporation
(referred to herein as "Mariner Group"). The executive officers/directors of the
Managing General Partner as of December 31, 1995, were as follows: Robert M.
Taylor, Timothy R. Bogott, Lawrence A. Raimondi and Michael J. Scullion.
Each of the officers named above, except Michael J. Scullion, has served as an
officer of the Mariner Capital Management, Inc., since its incorporation on July
11, 1983. Michael J. Scullion replaced Richard S. McKinlay as a
Secretary/Treasurer as of September 1, 1987.
MCD Real Estate, Inc. (located at 2100 Society Building, Cleveland, Ohio 44114)
(referred to herein as "MCD") is a Co-General Partner. MCD is an Ohio
corporation and a wholly owned subsidiary of McDonald & Company Securities,
Inc., the Managing Dealer of the offering. McDonald & Company Securities, an
Ohio corporation, is a wholly owned subsidiary of McDonald & Company
Investments, Inc., a publicly-traded Delaware corporation listed on the New York
Stock Exchange. MCD was formed in February of 1981 for the principal purpose of
becoming the general partner of limited partnerships formed to provide equity
financing for various real estate projects. The directors and officers of MCD as
of December 31, 1994, were as follows: James C. Redinger, Thomas M. O'Donnell,
Richard R. Cundiff, and Gordon A. Price.
(C) IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES
Not applicable
(D) FAMILY RELATIONSHIP
Not applicable
(E) BUSINESS EXPERIENCE
29
<PAGE>
ROBERT M. TAYLOR: Age 54, is Chairman of the Board and a Director of the
Managing General Partner. He founded Mariner Group in 1971 and served as
its President until his election as Chairman and Chief Executive Officer of
Mariner Group in 1979. He also serves as an officer or director of various
other Affiliates of Mariner Group. Mr. Taylor is a Director of
Acme-Cleveland Corporation, Cleveland, Ohio, a manufacturer of machine
tools; Barnett Bank of Fort Myers, Fort Myers, Florida; MIL- COM
Electronics Corporation, San Antonio, Texas; Florida Council of 100; the
Fort Myers Chamber of Commerce, and Chairman of the Business Development
Corporation of Southwest Florida, Fort Myers, Florida. Since 1971, Mr.
Taylor has directed the completion of over 30 real estate developments in
Lee County, Florida. Prior to 1971, Mr. Taylor was a management consultant
employed by McKinsey & Company, Inc., Cleveland, Ohio.
TIMOTHY R. BOGOTT: Age 49, is a Director and the former President of the
Managing General Partner. He was involved in all aspects of the
organization and management of Florida Income Fund, L.P., Florida Income
Fund II and Florida Income Fund III until January 1994 when he became
President of South Seas Resorts Company. He joined Mariner Group in 1976
and has held the positions of Project Manager and Director of
Administration and Secretary/Treasurer. Prior to 1976, Mr. Bogott was
employed as an Assistant Vice President of Palmetto Federal Savings and
Loan Association, Fort Myers, Florida (1974-1976) and held various
management positions with the First National Bank of Fort Myers
(1970-1974). Mr. Bogott was elected Secretary/Treasurer of Mariner Group in
1979 and Vice President -Finance in 1983. Mr. Bogott is also President of
Mariner Capital Investment Corporation and is an officer or director of
various other Affiliates of Mariner Group.
LAWRENCE RAIMONDI: Age 48, is President and Director of the Managing
General Partner. He became President in January 1994 after serving as
Executive Vice President in charge of property acquisitions and financing
of partnership debt. He was involved in all property acquisitions for
Florida Income Fund, L.P., Florida Income Fund II and Florida Income Fund
III. He joined Mariner Group in 1981 and served as Director of Project
Finance until joining the general partner. He was employed in the Real
Estate Department of Mellon Bank from 1969 to 1981 in various capacities
with his most recent position being a Commercial Mortgage Officer.
MICHAEL SCULLION: Age 40, is the Secretary/Treasurer of the Managing
General Partner. Mr. Scullion has been a Certified Public Accountant since
1981. He is a member of the American Institute of Certified Public Accounts
(AICPA), and a member of the Florida Institute of Certified Public
Accountants (FICPA). Mr. Scullion joined Mariner Group in 1983. Mr.
Scullion was employed by Coopers & Lybrand, CPA's (1980-1983) prior to that
time.
30
<PAGE>
JAMES C. REDINGER: Age 59. Mr. Redinger joined McDonald & Company (a
partnership that transferred all of its assets to McDonald & Company
Securities, Inc.) in March 1974, becoming a partner in 1977, working in the
area of corporate underwriting and syndication of real estate and oil and
gas ventures. He has had extensive experience in site selection, cost
projections of both commercial and residential real estate projects and the
syndication of such projects through limited partnerships. Mr. Redinger has
served as Chairman of the District Nine Committee of the National
Association of Securities Dealers, Inc., is a Vice President and a Director
of MCD Oil and Gas Company, Inc., a Director of McDonald & Company Venture
Capital, Inc., a Director of McDonald & Company Securities, Inc., and a
Managing Director of McDonald & Company Securities, Inc.
THOMAS M. O'DONNELL: Age 60. Mr. O'Donnell joined McDonald & Company in
1965 in the Corporate Finance Department. Mr. O'Donnell became a partner of
McDonald & Company in 1968 and has been a member of its Policy Committee
since 1971. Mr. O'Donnell is a Chartered Financial Analyst and a member of
the Cleveland Society of Security Analysts. Mr. O'Donnell is a director of
Seaway Food Town, Inc., Maumee, Ohio, a grocery retailer. Mr. O'Donnell is
Chief Executive Officer and Chairman of the Board of McDonald & Company
Investments, Inc., Chief Executive Officer and Chairman of the Board of
McDonald, which operates an insurance agency; a Director of MCD Oil & Gas
Company, Inc., a Director of McDonald & Company Venture Capital, Inc.; and
a Director of McDonald Financial Services.
RICHARD R. CUNDIFF, III: Age 36. Mr. Cundiff joined McDonald & Company in
December 1982 and has assisted in the development of the Real Estate and
Specialty Finance Department. Specializing in real estate and oil and gas
investment banking, his responsibilities include structuring, marketing and
monitoring investments in these particular areas. Mr. Cundiff is a First
Vice President of McDonald & Company.
GORDON A. PRICE: Age 48. Mr. Price has been a Managing Director and Chief
Financial Officer of McDonald since April 1987. Prior thereto he was Senior
Vice President and Assistant Treasurer of McDonald. Mr. Price is also an
officer and director of various other affiliates of MCD.
(F) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
No director or officer of the Managing General Partner was involved in any
event during the past five years which would be responsive to this
question.
31
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
(A) CURRENT REMUNERATION OF GENERAL PARTNERS, THEIR DIRECTORS AND
OFFICERS
No direct remuneration was paid or payable by the Partnership for the
period ended December 31, 1995, to directors or officers of the
General Partners. During the period ended December 31, 1995, 1994 and
1993, the remuneration paid to the affiliates of the General Partners
was as follows:
/bullet/ During 1994 and 1993, entered into financing agreements
in the aggregate amount of $1,850,000 and $1,350,000,
respectively, with an affiliated partnership of which
MCM is general partner. These loans were obtained to
repay the unsecured note payable to the Mariner Group,
Inc., the Parent of the Managing General Partner, in the
aggregate amount of $612,212, to finance improvements to
Villas Plaza and the Gallery Motel and to refinance the
debt on Corporate Park in the amount of $607,511.
Interest expense incurred during 1994, 1993 and 1992, on
these notes was $172,027, $162,000 and $99,980
respectively.
/bullet/ Management fees totalling $133,256, $124,535 and
$128,096 were paid to the Managing General Partner or
its affiliates for 1995, 1994 and 1993.
/bullet/ The General Partners and their affiliates are also
entitled to reimbursement for expenses (including
amounts of any salaries paid to employees and officers
of a General Partner or its affiliates) directly
attributable to the operation of the Partnership which
could have been obtained from independent parties.
Expenses amounting to $449,858, $140,817, $160,787 and
were incurred during the years ended December 31, 1995,
1994 and 1993, respectively. Amounts due to related
parties, and included in accounts payable and accrued
expenses at December 31, 1995 and 1994 are $49,002 and
$146,947. A portion of this amount is for the payment of
insurance premiums which are collected by Mariner Group,
Inc. (for all Mariner affiliates) and paid to the
carrier on behalf of Florida Income Fund, L.P. The
balance is for reimbursement for on-site property
management personnel and for reimbursement of other
costs for services performed by the general partner or
affiliates which the Partnership would be required to
pay to third parties for comparable services in the same
geographical location.
In accordance with the Partnership Agreement, net income or loss,
prior to recoupment of the partner's original capital investment, is
allocated five percent (5%) to the General Partners and ninety-five
percent (95%) to the Limited Partners as a class. Subsequent to
recoupment, income or loss is allocated twenty percent (20%) to the
General Partners and eighty per cent (80%) to the Limited Partners as
a class.
32
<PAGE>
(B) PROPOSED REMUNERATION
Except for the payment of acquisition fees and the allocation of net
income or loss as described above, the Partnership has no ongoing plan
or arrangement to compensate the persons and entities named above.
However, the Managing General Partner or its affiliates may receive
leasing and management fees in connection with the management of the
Partnership's properties, subject to the limitations described herein
below.
The Managing General Partner or its affiliates are entitled to receive
property management fees not to exceed 6% of the gross revenues from
commercial properties and 5% from residential properties. Other
expenses attributable to the operation of the Partnership may be
reimbursed to the General Partners or affiliates of the Managing
General Partner.
The Managing General Partner or its affiliates are entitled to one
half of the commissions paid as a result of the sale of Partnership
properties, in an amount not to exceed 3% of such prices and
subordinated to the right of the Limited Partners to receive aggregate
cash distributions from the Partnership equal to their capital
contribution plus the applicable preference amount.
(C) REMUNERATION OF DIRECTORS
None.
(D) OPTIONS, WARRANTS AND RIGHTS
The Registrant has granted no options, warrants or rights.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No person is known to the Partnership to be the beneficial owner of over 5% of
the outstanding Partnership units. For information on net income or loss
allocation see Item 11. (A).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
See Note 5, Related Party Transactions in Notes to the Financial Statements, on
page 23 under Item 8.
33
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENT SCHEDULES
The following Financial Statement Schedules of the Partnership are
included in Part II, Item 8:
PAGE
----
Report of Independent Accountants 13
Balance Sheets as of December 31, 1995 and 1994 14
Statements of Income for each of the three years
ended December 31, 1995, 1994 and 1993 15
Statements of Partners' Capital for each of the
three years ended December 31, 1995, 1994 and 1993 16
Statements of Cash Flows for each of the three years
ended December 31, 1995, 1994 and 1993 17
Notes to Financial Statements 18 - 23
Report of Independent Accountants on Schedule III 24
Schedule III Real Estate and Accumulated Depreciation 25 - 28
Schedules Omitted:
Other schedules have been omitted because of the absence of
conditions under which they are required or because the
required information is included in the Financial Statements
and Notes thereto.
(A) 2. EXHIBITS
27 Financial Data Schedule (for SEC use only)
(A) 3. REPORTS ON FORM 8-K
None.
34
<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.
FLORIDA INCOME FUND, L.P.
(Registrant)
March 29, 1996
By: /s/ LAWRENCE A. RAIMONDI
--------------------------------------------
LAWRENCE A. RAIMONDI
President, Director and CEO
Mariner Capital Management, Inc.
(Principal Executive Officer)
By: /s/ MICHAEL J. SCULLION
--------------------------------------------
MICHAEL J. SCULLION
Mariner Capital Management, Inc.
(Principal Financial and Accounting Officer)
35
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 72,979
<SECURITIES> 0
<RECEIVABLES> 21,993
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 155,429
<PP&E> 11,276,106
<DEPRECIATION> 3,088,938
<TOTAL-ASSETS> 8,461,619
<CURRENT-LIABILITIES> 3,151,291
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0
0
<COMMON> 0
<OTHER-SE> 1,583,975
<TOTAL-LIABILITY-AND-EQUITY> 8,461,619
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<TOTAL-REVENUES> 2,210,238
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<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,564,580
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 722,683
<INCOME-PRETAX> (77,025)
<INCOME-TAX> 0
<INCOME-CONTINUING> (77,025)
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<EXTRAORDINARY> 0
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