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, 1997
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>
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FLORIDA INCOME FUND, L.P.
FORM 10-K - 1997
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
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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 acquired four properties which it held and
operated. These four properties were: (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
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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 monthly 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, 1997 and 1996
the property was 90% and 93% occupied, respectively.
4
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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, 1996, Corporate Park was 100% occupied.
The Partnership sold Corporate Office Park to an unrelated purchaser on October
1, 1997 at a price of $750,000 as reported in an 8-K filed October 1, 1997.
The sale generated approximately $395,000 which was distributed to the
partners.
Corporate Office Park and Villas Plaza Shopping Center were secured by a first
mortgage to an affiliated partnership in the amount of $1,400,000. The
interest rate was 12%. This loan was paid in full from the sale of these
properties.
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
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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.
In January 1997, the Partnership sold the Seaside Inn (formerly the Gallery
Motel) to an affiliate of the general partner for $6,485,000, and received net
sales proceeds of approximately $2,725,000, resulting in a gain of
approximately $3,867,000. Proceeds of approximately $2,725,000 were
distributed to the partners.
6
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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 that matured 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, 1996, the property was 73% occupied.
The Partnership sold the Villas Plaza to an unrelated purchaser on March 20,
1997 at a price of $1,900,000 as reported in an 8-K filed on April 2, 1997.
The sale generated approximately $620,000 which was available for distribution
to the partners.
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" which was submitted
on August 8, 1996. 4,950 of the 5,005 limited partnership interests voted in
favor of selling the facility, representing a 91.7% approval. 87 partnership
interests voted against consummating the sale, or abstained, and 338 failed to
vote, which represents a 8.3% negative or abstention vote. The consent
document required a 66.67% affirmative vote.
7
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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, 1997, there were 463 Limited Partners.
The Partnership paid quarterly cash distributions totaling $3,931,182,
$263,421 and $105,368 during 1997, 1996 and 1995, respectively. The
Partnership intends to use operating cash produced by the Partnership for
capital improvements in 1998 and to distribute any excess cash to the Partners.
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1997 1996 1995 1994 1993
--------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operating revenues (including
interest income of $57 for 1997,
$7,162 for 1996, $55 for 1995,
$37 for 1994 and $1,151 for 1993 $ 663,470 $2,469,967 $2,210,238 $2,079,030 $2,133,634
Net income (loss) $3,887,102 $ (169,012) $ (77,025) $ 68,009 $ 196,756
Net income (loss) per weighted
average Limited Partnership unit $ 737.81 $ (32.08) $ (14.62) $ 12.91 $ 37.35
Total assets $2,789,532 $8,318,811 $8,461,619 $8,335,671 $7,695,432
Mortgages and notes payable $1,650,546 $6,231,301 $6,299,697 $6,155,942 $5,503,249
Distributions to Limited Partners $3,922,227 $ 250,250 $ 100,100 $ 225,225 $ 400,409
Distributions per Limited
Partnership unit $ 783.66 $ 50.00 $ 20.00 $ 45.00 $ 80.00
Partners' equity $1,107,462 $1,151,542 $1,583,975 $1,766,368 $1,935,437
Book value per Limited
Partnership unit $ 206.99 $ 252.84 $ 334.92 $ 369.54 $ 401.63
</TABLE>
Also, refer to Item #8 and the audited Financial Statements referred to herein.
8
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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), cash reserves, and the sale of the
Partnerships assets.
The Partnership had two loans that it extended in 1995. Corporate Park and
Villas Plaza Shopping Center were collateralized by a $1,350,000 first mortgage
from an affiliated partnership. The interest rate was 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. See sales of property under Item
2.
The maturity date of the Gallery Motel loan in the amount of $2,545,747 was
extended until March 31, 1997, by a local financial institution. See
discussion to sell property under Item 2.
The Managing General Partner prepared sales packages on all of the
properties and offered all of the properties for sale. The properties were
offered for sale above their current carrying value. A sale of most of
the properties increased cash to the Partnership, However, cash flow from
operations decreased due to the property sales.
The Partnership obtained a $650,000 loan from an unaffiliated lender in
order to renovate the Gallery Motel. This was an interest only loan with a rate
of 12% paid quarterly. Management believed that these renovations increased the
value of the Gallery Motel through an increase in rate and occupancy.
Partner distributions in 1997 were higher than in 1996 due to the sales of most
of the Partnership's portfolio.
Other factors that could affect liquidity are unexpected vacancies and
unanticipated capital improvements. 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, 1997, the Partnership had $101,791 in
cash and other interest-bearing deposits.
9
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In connection with debt refinancing in 1995, see Section 7 under Liquidity.
Land and buildings (net of accumulated depreciation of $1,281,205) are
carried at $2,563,510 at December 31, 1997. Improvements to rental properties
totaled $27,850 in 1997. The improvements were paid for out of cash from
operating activities.
Management does not anticipate significant capital improvement expenditures in
1998. Factors influencing this would be unexpected vacancies and general
property conditions.
RESULTS OF OPERATIONS
COMPARISON OF THE FISCAL YEARS ENDED DECEMBER 31, 1997 AND 1996
During the years ended December 31, 1997 & 1996, the Partnership's principal
sources of revenue were proceeds from sales of properties of $9,135,000 and
$0, rental income of $580,853 and $2,305,736 and expense reimbursements of
$82,560 and $157,069, respectively. The decrease in rental revenues and
tenant reimbursements are attributable to the sales of the Gallery Motel,
Villas Plaza, and Corporate Office Park during the year.
Property operating expenses have decreased from $1,078,297 to $322,358
primarily due to the sales of the properties.
Depreciation expense decreased from $454,860 to $155,805 due to property
sales. Interest expense decreased $494,361 due to the payoff of mortgage
balances as a result of property sales.
Management recognized a loss on impairment of $0 and $229,500 at December 31,
1997 and 1996, respectively.
COMPARISON OF THE FISCAL YEARS ENDED DECEMBER 31, 1996 AND 1995
During the years ended December 31, 1996 & 1995, the Partnership's principal
sources of revenue were rental income of $2,305,736 and $2,041,407 and expense
reimbursements from tenants of $157,069 and $168,776, respectively. The
increase in rental revenues was attributed to the following properties:
Corporate Park increased $7,482, Edison Square increased $11,732, Villas Plaza
decreased $5,375 and Gallery Motel increased $250,490. Corporate Park was 100%
occupied during the entire year of 1996. Revenue increases at Edison Square and
Corporate Park were due to higher occupancy and increased rental rates from
CPI increases.
The room revenue increase at the Gallery Motel was due to higher
average daily rate in 1996 as compared to 1995. The average daily room rate
increased more than 10.0% from $148.62 to $163.98. Additionally, there were
2,511 more room nights available to be rented as a result of the motel
renovations being completed.
Property operating expenses have increased from $1,048,958 to $1,078,297
primarily due to increases in operating costs at the Gallery Motel.
Depreciation expense increased from $324,214 to $454,860 due to additional
assets being put into service in 1995. Interest expense decreased $28,515
due to lower mortgage balances on the Edison Square and Gallery loans.
Management recognized a loss on impairment of $229,500 and $0 at December 31,
1996 and 1995, respectively.
10<PAGE>
<PAGE>
COMPARISON OF THE FISCAL YEARS ENDED DECEMBER 31, 1995 AND 1994
During the years ended December 31, 1995 and 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.
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 had a negative effect on both occupancies and rental rates at
properties such as those which were held by the Fund. Management had to
compete with other properties for dwindling supply of small retailers.
Management expects this trend to continue.
11
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Balance Sheets of the Partnership as of December 31, 1997 and 1996 and the
Statements of Operations, Partner's Capital and Cash Flows of the Partnership
for each of the three years in the period ended December 31, 1997, as well as
the Notes to Financial Statements and Schedule III and the Report of
Independent Accountants there on, dated March 10, 1998, are set forth herein:
12
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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, 1997 and 1996, and the related statements of operations,
partners' capital, and cash flows for each of the three years in the period
ended December 31, 1997. 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, 1997 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Tampa, Florida
March 10, 1998
13
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FLORIDA INCOME FUND, L.P.
BALANCE SHEETS
December 31, 1997 and 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
------------------- -------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 101,791 $ 334,144
Accounts receivable, trade 27,466 54,295
Prepaid expenses and other 48,826 86,025
------------------- -------------------
Total current assets 178,083 474,464
------------------- -------------------
RENTAL PROPERTIES, net 2,563,510 7,544,846
------------------- -------------------
INTANGIBLE ASSETS
Deferred loan costs, net 47,939 70,001
------------------- -------------------
Total assets $2,789,532 $ 8,089,311
=================== ===================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Current maturities of notes and mortgages payable $ 29,171 $ 3,183,070
Current maturities of notes payable to affiliates 0 1,400,000
Accounts payable and other 7,998 97,522
Accrued interest 14,600 42,000
Customer and security deposits 8,926 141,063
Deposit on sale of rental property 0 425,883
------------------- -------------------
Total current liabilities $ 60,695 $ 5,289,538
------------------- -------------------
NOTES AND MORTGAGES PAYABLE
Notes and mortgages payable, less current maturities $1,621,375 $ 1,648,231
------------------- -------------------
Total notes and mortgages payable $1,621,375 $ 1,648,231
------------------- -------------------
PARTNERS' CAPITAL
General partners capital (deficiency) $ 71,487 $ (113,913)
Limited partners, 5,005 limited partnership units authorized;
5,005 issued and outstanding 1,035,975 1,265,455
------------------- -------------------
Total partners' capital $1,107,462 $ 1,151,542
------------------- -------------------
Total liabilities and partners' capital $2,789,532 $ 8,089,311
=================== ===================
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
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FLORIDA INCOME FUND, L.P.
STATEMENTS OF OPERATIONS
years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---------------- ---------------- -----------------
<S> <C> <C> <C>
Revenues
Rental income $ 580,853 $ 2,305,736 $ 2,041,407
Tenant reimbursements 82,560 157,069 168,776
Interest income 57 7,162 55
Gain on sale of rental properties 3,999,439 0 0
---------------- ---------------- -----------------
4,662,909 2,469,967 2,210,238
---------------- ---------------- -----------------
Expenses
Property operating expenses 322,358 1,078,297 1,018,268
Interest expense 176,277 556,858 589,648
Interest expense - affiliates 54,220 168,000 163,725
Depreciation 155,805 454,860 324,214
Property taxes 67,147 143,090 146,292
Bad debt expense 0 8,374 0
Loss on impairment of asset 0 229,500 0
Loss on disposal of fixed assets 0 0 45,116
---------------- ---------------- -----------------
775,807 2,638,979 2,287,263
---------------- ---------------- -----------------
Net income (loss) $ 3,887,102 $ (169,012) $ (77,025)
================ ================ =================
Net income (loss) allocated to general partner $ 194,355 $ (8,451) $ (3,851)
================ ================ ================
Net income (loss) allocated to limited partners $ 3,692,747 $ (160,561) $ (73,174)
================ ================ =================
Net income (loss) per limited partner unit $ 737.81 $ (32.08) $ (14.62)
================ ================ =================
Distributions per limited partner unit $ 783.66 $ 50.00 $ 20.00
================ ================ ================
Weighted average limited partner units outstanding 5,005 5,005 5,005
================ ================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
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FLORIDA INCOME FUND, L.P.
STATEMENTS OF PARTNERS' CAPITAL
years ended December 31, 1997, 1996, and 1995
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
-------------- -------------- ---------------
<S> <C> <C> <C>
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)
-------------- -------------- ---------------
December 31, 1995 (92,291) 1,676,266 1,583,975
Net loss (8,451) (160,561) (169,012)
Distributions (13,171) (250,250) (263,421)
--------------- --------------- ---------------
Balances, December 31, 1996 (113,913) 1,265,455 1,151,542
Net income 194,355 3,692,747 3,887,102
Distributions (8,955) (3,922,227) (3,931,182)
--------------- --------------- ---------------
Balances December 31, 1997 $ 71,487 $ 1,035,975 $ 1,107,462
================= ================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
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FLORIDA INCOME FUND, L.P.
STATEMENTS OF CASH FLOWS
years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---------------- ---------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 3,887,102 $ (169,012) $ (77,025)
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities
Gain on sale of rental properties (3,999,439) 0 0
Amortization of loan cost 22,062 49,020 30,690
Depreciation 155,805 454,860 324,211
Bad debt 0 8,374 0
Loss on disposal of rental property improvements 0 0 45,116
Loss on impairment of rental property 0 229,500 0
(Increase) decrease in:
Accounts receivable 26,829 (32,302) 17,121
Prepaid expenses and other 37,199 (33,942) (10,217)
Increase (decrease) in:
Accounts payable and accrued expenses (116,924) 19,502 (196,273)
Customer and security deposits (132,137) 12,458 31,538
---------------- ---------------- ----------------
Net cash provided by (used in) operating activities (119,503) 538,458 165,161
---------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of rental properties 8,852,820 0 0
Improvements to rental properties (27,850) (42,038) (924,987)
Rental property sale deposit (425,883) 96,560 329 323
---------------- ---------------- ----------------
Net cash (used in) provided by operating activities 8,399,087 54,522 (595,664)
---------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of borrowings from notes and mortgages payable 0 0 150,000
Proceeds of borrowings from affiliates 0 0 1,400,000
Repayments of borrowings to notes and mortgages payable (3,180,755) (68,394) (56,247)
Repayment of borrowings from affiliates (1,400,000) 0 (1,350,000)
Loan origination fees paid 0 0 (57,318)
Partner distributions paid (3,931,182) (263,421) (105,368)
---------------- ---------------- ----------------
Net cash used in financing activities (8,511,937) (331,815) (18,933)
---------------- ---------------- ----------------
Net increase (decrease) in cash and cash equivalents (232,353) 261,165 (449,436)
Cash and cash equivalents at beginning of year 334,144 72,979 522,415
---------------- ---------------- ----------------
Cash and cash equivalents at end of year $ 101,791 $ 334,144 $ 72,979
================ ================ ================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest on borrowings--affiliates $ 96,220 $ 126,000 $ 206,863
Interest on borrowings--other 176,277 507,838 556,653
---------------- ---------------- ----------------
$ 272,497 $ 633,838 $ 763,516
================ ================ ================
</TABLE>
NONCASH INVESTING AND FINANCING ACTIVITIES:
During 1997, approximately $267,000 of selling expenses were deducted from
the proceeds of the Seaside Inn, Villas Plaza and Corporate Park sales.
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
<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 originally purchased
Edison Square and Villas Plaza (two retail shopping centers),
Corporate Park (an office complex) and the Gallery Motel. The
Partnership sold the Gallery Motel in January, 1997, Villas Plaza in
March 1997, and Corporate Park in October 1997 (see Note 6).
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.
18
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
RENTAL PROPERTIES
Rental properties are carried at cost, less accumulated depreciation.
Depreciation is computed principally under the straight-line method
over the estimated useful lives (40 years) 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.
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets to be Disposed of" (SFAS 121).
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. Management reviews the
partnership's property holdings on a periodic basis and believed that
an impairment of the Corporate Park property exists. A loss of
$229,500 on impairment of the Corporate Park property was recognized
in the year ended December 31, 1996.
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.
WEIGHTED AVERAGE NUMBER OF LIMITED PARTNER UNITS OUTSTANDING: Net
income (loss) and distributions per limited partner unit are
calculated based upon the weighted average number of units of limited
partnership interest outstanding for the years ended December 31,
1997, 1996 and 1995.
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: 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, 1997,
based upon market rates, approximates the amounts disclosed in
Note 4.
RECLASSIFICATIONS: Certain amounts in the 1996 and 1995 financial
statements have been reclassified to conform to the current year
presentation. These reclassifications have no effect on the net
income or partners' capital previously reported.
19
<PAGE>
<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>
1997 1996
-------------- ---------------
<S> <C> <C>
Land $ 665,360 $ 2,429,433
Buildings and improvements 3,179,355 8,888,711
Loss on impairment of asset 0 (229,500)
-------------- ---------------
3,844,715 11,088,644
Accumulated depreciation (1,281,205) (3,543,798)
-------------- ---------------
Rental properties, net $ 2,563,510 $ 7,544,846
============== ===============
</TABLE>
Depreciation expense was $155,805, $454,860 and $324,214 for 1997, 1996
and 1995, respectively.
20
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. RENTAL PROPERTIES, CONTINUED
The leases at Edison Square are noncancelable leases. Based on the terms
of the leases in existence at December 31, 1997, future minimum annual
rentals from these leases over the next five years, and in the
aggregate, will be approximately as follows:
1998 $ 344,604
1999 234,475
2000 26,935
2001 13,103
2002 13,758
----------------
$ 632,875
================
3. DEFERRED LOAN COSTS:
Deferred loan costs at December 31 are as follows:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Loan costs $ 84,000 $ 122,182
Accumulated amortization (36,861) (52,181)
------------ ------------
$ 47,939 $ 70,001
============ ============
</TABLE>
Additions to deferred loan costs relate to modifications of note terms
and other refinancing transactions during the years ended December 31,
1997 and 1996. Certain loan costs became fully amortized during the
years ended December 31, 1997 and 1996 and, therefore, were written
off. Amortization expense was $22,062, $49,020 and $30,690 for 1997,
1996 and 1995, respectively.
21
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. NOTES AND MORTGAGES PAYABLE:
Notes and mortgages payable consisted of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
---------------- ----------------
<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 $2,494,400 due March 1997,
prime rate at December 31, 1996 was 8.25% $ 0 $ 2,504,947
Installment loan payable with monthly payments of $334
including interest at 6.5%, final payment due May 1997 0 1,642
---------------- ----------------
Total note and mortgage payable to banks 0 2,506,589
---------------- ----------------
Other mortgages payable:
Mortgage payable with monthly payments of $16,895 including
interest at 10.6%, final payment due October 2001 1,650,546 1,674,712
Mortgage payable with interest payable quarterly at 12%
balloon payment of entire principal plus accrued interest
due October 1997 0 650,000
---------------- ----------------
Total other mortgages payable 1,650,546 2,324,712
---------------- ----------------
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 0 1,400,000
---------------- ----------------
Total affiliated debt 0 1,400,000
---------------- ----------------
Total notes and mortgages payable 1,650,546 6,231,301
Less current maturities (29,171) (4,583,070)
---------------- ----------------
Total long-term debt less current maturities $ 1,621,375 $ 1,648,231
================ ================
</TABLE>
22
<PAGE>
<PAGE>
4. NOTES AND MORTGAGES PAYABLE, CONTINUED
Long-term portions of notes and mortgages payable are scheduled to
mature approximately as follows:
1998 $ 29,171
1999 32,419
2000 36,028
2001 1,552,928
Thereafter 0
----------------
$ 1,650,546
================
All rental properties are pledged as collateral for mortgages payable,
as are rents and receivables related to Edison Square.
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, 1997, 1996 and 1995, the General Partners
and their affiliates received fees of $12,409, $106,235 and $133,256,
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 $25,800,
$403,615 and $343,530 were incurred during the years ended December 31,
1997, 1996 and 1995, respectively, of which the following amounts were
included in accounts payable and accrued expenses:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- ----------------
<S> <C> <C> <C>
Amounts included in accounts payable $ 2,150 $ 25,829 $ 10,562
================= ================= ================
Amounts included in accrued expenses $ 0 $ 18,279 $ 0
================= ================= ================
</TABLE>
6. PROPERTY DISPOSITIONS:
In January 1997, the Partnership sold the Seaside Inn (formerly the
Gallery Motel) to an affiliate of the general partner for $6,485,000,
and received net sales proceeds of approximately $2,725,000, resulting
in a gain of approximately $3,867,000. Proceeds of approximately
$2,725,000 were distributed to the partners.
In March 1997, the Partnership sold Villas Plaza property to an
unrelated party for $1,900,000, and received net sales proceeds of
approximately $620,000, resulting in a gain of approximately $55,500.
Proceeds of approximately $620,000 were distributed to the partners.
In October 1997, the Partnership sold Corporate Park property to an
unrelated party for $750,000, and received net sales proceeds of
approximately $397,000, resulting in a gain of approximately $76,900.
Proceeds of approximately $397,000 were distributed to the partners.
In 1997, the Partnership listed Edison Square for sale. The Managing
General Partner will implement a formal plan of liquidation, in
accordance with the Partnership agreement, when this property is sold.
23 <PAGE>
<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.
Tampa, Florida
March 10, 1998
24
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FLORIDA INCOME FUND, L.P.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER, 31, 1997
COL. A COL. B COL. C COL. D COL. E
COST CAPITALIZED GROSS AMT AT
INITIAL COST SUBSEQUENT TO WHICH CARRIED AT
TO PARTNERSHIP ACQUISITION CLOSE 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 $1,650,546 $ 665,360 $2,661,440 $ 517,915 $-0- $ 665,360 $3,179,355 $ 3,844,715
---------- ---------- ---------- ---------- ---- ---------- ---------- -----------
TOTALS $1,650,546 $ 665,360 $2,661,440 $ 517,915 $-0- $ 665,360 $3,179,355 $ 3,844,715
========== ========== ========== ========== ==== ========== ========== ===========
</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 $1,281,205 1984 10/19/84 40 years
----------
TOTALS $1,281,205
==========
<FN>
SEE ACCOMPANYING NOTES TO SCHEDULE III
</FN>
</TABLE>
25
<PAGE>
<PAGE>
FLORIDA INCOME FUND, L. P.
NOTES TO SCHEDULE III
DECEMBER 31, 1997
REAL ESTATE AND ACCUMULATED DEPRECIATION
Balance as of 12/31/94 $10,546,875
Additions During Period:
Improvements, etc 924,991 924,991
----------
Deletions during period:
Improvements, etc (195,760) (195,760)
---------- ------------
Balance as of 12/31/95 11,276,106
Additions During Period:
Improvements, etc. 42,038
Impairment of value (229,500) (187,462)
---------- ------------
Balance as of 12/31/96 11,088,644
Improvements, etc. 27,850
Cost of real estate sold (7,271,779) (7,243,929)
----------- ------------
Balance as of 12/31/97 $ 3,844,715
============
26
<PAGE>
<PAGE>
FLORIDA INCOME FUND, L.P.
NOTES TO SCHEDULE III
DECEMBER 31, 1997
REAL ESTATE AND ACCUMULATED DEPRECIATION
Balance as of 12/31/94 $2,915,367
Depreciation expense for 1995 324,214
Accumulated depreciation of assets replaced (150,643) 173,571
------------ -----------
Balance as of 12/31/95 3,088,938
Depreciation expense for 1996 454,860 454,860
------------ -----------
Balance as of 12/31/96 3,543,798
Depreciation expense for 1997 155,805
Accumulated depreciation on disposal
of fixed assets (2,418,398) (2,262,593
------------ -----------
Balance as of 12/31/97 $ 1,281,205
===========
27
<PAGE>
<PAGE>
FLORIDA INCOME FUND, L.P.
NOTES TO SCHEDULE III
DECEMBER 31, 1997
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>
<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, 1997, were as follows: Robert
M. Taylor, Timothy R. Bogott, Allen G. Ten Broek and Joe K. Blacketer.
Mr. Taylor and Mr. Bogott have served as officers of the Mariner Capital
Management, Inc., since its incorporation on July 11, 1983. Allen G. Ten Broek
replaced Lawrence A. Raimondi as President as of December 31, 1997. Subsequent
to December 31, 1997, Mr. Blacketer resigned as Secretary/Treasurer. He was
replaced in the capacity by Elaine Hawkins.
MCD Real Estate, Inc. (located at 800 Superior Avenue, Suite 2100, 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, 1997, were as follows: James
C. Redinger, Thomas M. O'Donnell and Richard R. Cundiff.
(C) IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES
Not applicable
(D) FAMILY RELATIONSHIP
Not applicable
(E) BUSINESS EXPERIENCE
29
<PAGE>
<PAGE>
ROBERT M. TAYLOR: Age 56, 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 51, 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.
ALLEN G. TEN BROEK: Age 57, Mr. Ten Broek became President of Mariner
Capital Management, Inc. on December 31, 1997. Mr. Ten Broek is also
President and CEO of The Mariner Group, Inc., a position in which he
served from 1979 to 1992, and again since October 1995. The Mariner
Group is an asset management, business development and real estate
development company. From 1992 to 1995 Mr. Ten Broek was the Vice
Chairman and Managing Executive of Hilton Grand Vacations Company, a
timeshare development and operations company affiliated with Hilton
Hotels. Mr. Ten Broek is an original shareholder of The Mariner Group,
Inc. and has been a director of The Mariner Group, Inc. since 1973.
Mr. Ten Broek is the Chairman Emeritus of the Florida Shore and Beach
Preservation Association and Chairman of the American Coastal Coalition.
He is a former director of two local banks and a founding director of
Community Bank of the Islands. Mr. Ten Broek is an officer and director
of various other Mariner affiliates. Mr. Ten Broek is a graduate of the
University of Wisconsin. He worked for ten years in various executive
positions with AT&T prior to joining Mariner.
JOE K. BLACKETER: Age 45, was the Secretary/Treasurer of the Managing
General Partner at December 31, 1997. Mr. Blacketer has been a Certified
Public Accountant since 1983. 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. Blacketer joined Mariner
Group in 1983. Mr. Blacketer was employed by Coopers & Lybrand, CPA's
(1979-1983) prior to that time.
ELAINE HAWKINS: Age 45, is the Vice President/Treasurer of the Managing
General Partner. She joined the Mariner Group in 1980 as the Director
of Risk Management for all of the affiliated entities. In 1988 she
became the President of South Seas and Captiva Properties, Inc., an
affiliated real estate firm. She holds licenses as a real estate broker,
and in property, casualty, life and health insurance. Prior to joining
the company she was employed by Liberty Mutual Insurance Company in
commercial sales.
30
<PAGE>
<PAGE>
JAMES C. REDINGER: Age 61. 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 62. 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 38. 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.
(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>
<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, 1997, to directors or officers of the
General Partners. During the period ended December 31, 1997, 1996 and
1995, the remuneration paid to the affiliates of the General Partners
was as follows:
/bullet/ Management fees totalling $12,409, $106,235 and
$133,256 were paid to the Managing General Partner
or its affiliates for 1997, 1996 and 1995.
/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 $25,800, $403,615 and $343,536
were incurred during the years ended December 31, 1997,
1996 and 1995, respectively. Amounts due to related
parties, and included in accounts payable and accrued
expenses at December 31, 1997 and 1996 are $2,150 and
$44,108. 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>
<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>
<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, 1997 and 1996 14
Statements of Operations for each of the three years
ended December 31, 1997, 1996 and 1995 15
Statements of Partners' Capital for each of the
three years ended December 31, 1997, 1996 and 1995 16
Statements of Cash Flows for each of the three years
ended December 31, 1997, 1996 and 1995 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
EXHIBIT 27 - Financial Data Schedule (for SEC use only)
(A) 3. REPORTS ON FORM 8-K
The Partnership reported on Form 8-K dated October 1, 1997
that Corporate Office Park was sold to an unrelated party.
34
<PAGE>
<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 30, 1998
By: /s/ ALLEN G. TEN BROEK
------------------------------------------
ALLEN G. TEN BROEK
President, Director and CEO
Mariner Capital Management, Inc.
(Principal Executive Officer)
By: /s/
------------------------------------------
Elaine Hawkins, Vice President/Secretary
Mariner Capital Management, Inc.
(Principal Financial and Acctg Officer)
35
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 101,791
<SECURITIES> 0
<RECEIVABLES> 27,466
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 178,083
<PP&E> 3,844,715
<DEPRECIATION> 1,281,205
<TOTAL-ASSETS> 2,789,532
<CURRENT-LIABILITIES> 60,695
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,789,532
<SALES> 4,662,909
<TOTAL-REVENUES> 4,662,909
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 599,530
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 176,277
<INCOME-PRETAX> 3,887,102
<INCOME-TAX> 0
<INCOME-CONTINUING> (112,337)
<DISCONTINUED> 3,999,439
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,887,102
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
