<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the year ended Commission File Number
December 31, 1998 0-11980
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
(Exact name of registrant as specified in its charter)
California 95-3887496
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3250 Ocean Park Blvd., Suite 380
Santa Monica, CA 90405
(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code:
(310) 450-6866
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
----- -----
The Registrant has no voting stock. The Registrant's outstanding securities
consist of units of limited partnership interest which have no readily
ascertainable market value since there is no immediate public trading market
for these securities on which to base a calculation of aggregate market value.
<PAGE>
Venetian Park Associates, Ltd. (A Limited Partnership)
<TABLE>
<CAPTION>
CONTENTS
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<S> <C>
PAGE
PART I
Item 1. Business 1 - 3
Item 2. Properties 4
Item 3. Legal Proceedings 4
Item 4. Submission of Matters to a Vote of Security Holders 4
PART II
Item 5. Market Price of and Dividends on the Registrant's Common Equity
and Related Stockholder Matters 5
Item 6. Selected Financial Data 5
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 6 - 7
Item 8. Financial Statements 7 - 17
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 18
PART III
Item 10. Directors and Executive Officers of the Partnership 18 - 19
Item 11. Executive Compensation 20
Item 12. Security Ownership of Certain Beneficial Owners and Management 21
Item 13. Certain Relationships and Related Transactions 21
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 10-K 22 - 24
Signatures 25
</TABLE>
<PAGE>
PART I
ITEM 1 - BUSINESS:
Venetian Park Associates, Ltd., a California limited partnership (the
"Registrant") was formed on October 31, 1983 to acquire, own and operate a
295 unit rental housing project known as Venetian Park Apartments (the
"Property") on a parcel of real property located at 1540, 1555 and 1560
Mosaic Way and 4841 North Pershing Avenue, Stockton, California, for
$10,925,000, in accordance with Section 221(d) (4) of the National Housing
Act, as amended, and the rules and regulations of the Department of Housing
and Urban Development pertaining thereto. Norman Jacobson and Theodore J.
Weill are the general partners (the "General Partners") of Registrant.
Registrant's objective from the Property are to:
1) Generate sufficient cash flow from operations to (i) pay all expenses, (ii)
reduce the outstanding balances of loans secured by the Partnership
property, and (iii) thereafter, provide cash distributions to the Limited
Partners;
2) Have potential to appreciate in value in excess of the purchase price; and
3) To the extent possible, the Partners should not realize taxable income with
respect to a portion or all of distributions to the Limited Partners of
cash from operations. The fundamental objective was to acquire the Property
for its economic benefits.
Registrant's property is managed by Norman Jacobson Management Company, an
affiliate of one of the General Partners.
GEOGRAPHICAL DATA
VENETIAN PARK APARTMENTS
The Venetian Park Apartments is on a 16.4 acre site in the city of Stockton,
California. Stockton is the county seat of San Joaquin Valley and is
approximately 45 miles south of Sacramento, California, the state capital.
The Property is one block west of Stockton's major regional shopping center
which includes Macy's, Sears, Weinstock's, JCPenney's and Ward's. Delta
College is immediately across the street, and the University of the Pacific
is one mile to the south. Interstate Highway 5 is approximately one mile to
the west, and downtown Stockton is approximately three miles due south. The
Property is located in northern Stockton where nearly all of the city's
population growth has occurred during the past four decades. Stockton's
current population is 210,500, an increase of 48,400 since 1982 when the
population was 162,100.
Agriculture is Stockton's largest industry and is the home of five of
California's major grower and producer associations. Major manufacturing
firms include American Forest Products, Gold Bond Building Products, H. J.
Heinz Company, Safeway Meat Processing, Libbey-Owens-Ford Glass Company and
Sun Diamond Growers of California. Honda Company's district automobile parts
center is located in Stockton. American Savings Bank, with offices throughout
California, is headquartered in Stockton and is the city's largest financial
institution. The Port of Stockton, with approximately 1,000 employees, has
been one of the county's leading employers since 1933. It serves all the
world's major ports.
Stockton Metropolitan Airport is 10 minutes from Venetian Park Apartments.
The city is 85 miles from San Francisco and approximately two and a half
hours driving time from South Lake Tahoe, and less than three hours from
Reno, Nevada.
1
<PAGE>
ITEM 1 - BUSINESS:
PROPERTY DESCRIPTION
VENETIAN PARK APARTMENTS
1540, 1555 AND 1560 MOSAIC WAY AND 4841 N. PERSHING AVENUE
STOCKTON, CALIFORNIA
Number of Units: 295 (41 buildings)
Lot Size: 16.44 acres (716,126 square feet)
Zoning: R-3, Apartment District
Parking: 317 carports, 122 open spaces
Year Built: 1976 through 1978 in four phases
Construction: 2-story wood frame and stucco except 12
one-story "villa" units
AMENITIES
- Clubhouse (includes exercise room with universal gym and sauna)
- Extensive network of canals, waterways and fountains
- Individually-metered central forced-air conditioning and heating in
each unit
- Built-in electric ranges and ovens
- Dishwashers in all apartments
- Refrigerators in all apartments
- Garbage disposals
- Washer and dryer in each apartment
- 209 units with fireplaces
- Dining rooms with wet bar in all villas and townhouses
- Three swimming pools
- One tennis court with access to seven additional courts and 18
night-lighted courts across Pershing Avenue
- Wall-to-wall carpets and drapes
- Large walk-in closets
- Outside storage units in each apartment
- Laundry rooms
<TABLE>
<CAPTION>
APARTMENT MIX
NUMBER TYPE SQ.FT.EA. TOTAL SQ.FT.
------ ---------------------------------- --------- ------------
<S> <C> <C> <C>
60 Studios 510 30,600
92 1-bedroom, 1 bath 694 63,848
48 2-bedroom, 1 bath 900 43,200
72 2-bedroom, 2 bath 1,080 77,760
12 2-bedroom, 2 bath (Villa) 1,282 15,384
11 2-bedroom, 2.5 bath (Townhouse) 1,420 15,620
295 TOTAL LIVABLE SQUARE FOOTAGE 246,412
</TABLE>
<PAGE>
ITEM 1 - BUSINESS:
VENETIAN PARK APARTMENTS
SCHEDULED GROSS INCOME
BEGINNING JANUARY, 1999
RENTAL RATES
<TABLE>
<CAPTION>
TYPE SQ. FT. EA. CURRENT RENTS
---------------------------- ----------- -------------
<S> <C> <C>
Studio, 1 Bath 510 $360 - $440
1 Bedroom, 1 Bath 694 $415 - $536
2 Bedroom, 1 Bath 900 $500 - $610
2 Bedroom, 2 Bath 1,080 $525 - $656
2 Bedroom, 2 Bath (Villa) 1,282 $610 - $786
2 Bedroom, 2.5 Bath (Townhouse) 1,420 $665 - $770
</TABLE>
<TABLE>
<S> <C>
Scheduled monthly rents..................................................................$156,737
Scheduled monthly rents x 12 months....................................................$1,880,844
Laundry income............................................................................$22,000
Miscellaneous income (1)..................................................................$33,300
Interest income............................................................................$8,000
Total scheduled gross revenues.........................................................$1,944,144
</TABLE>
- -------
(1) Net security deposit forfeitures plus late charges and miscellaneous
income.
3
<PAGE>
ITEM 2 - PROPERTIES:
LOAN INFORMATION
VENETIAN PARK APARTMENTS
Registrant's only property is a 295-unit apartment complex (herein the
"Property") consisting of 41 buildings on a 16.44 acre site at 1540, 1555 and
1560 Mosaic Way and 4841 North Pershing Avenue, Stockton, California, and
commonly known as the Venetian Park Apartments. The Property is subject to
encumbrances, consisting of four (one for each parcel) first trust deed notes
totaling $5,315,331 at December 31, 1998. The partnership borrowed $18,000
for laundry equipment. The outstanding loan balance at December 31, 1998 is
$17,298. The General Partners believe that the foregoing Property is
adequately covered by insurance. Also, at this time there are no proposed
programs for renovation, improvements or further development of the Property.
FIRST TRUST DEED INFORMATION
<TABLE>
<S> <C>
Monthly payments:...........................$44,791
Interest rate:..............................7.5% and 8%
Amortization schedule:......................19 to 20 years
Year due and payable:.......................until paid (2017 to 2018)
Loan balance when due:......................$0
First trust deed holder:....................State Teachers' Retirement Board of Ohio and Colonial Mortgage
Service Co.
Assumption fee:.............................$32,500
</TABLE>
<TABLE>
<CAPTION>
PHASE MONTHLY PAYMENT INTEREST RATE
----- --------------- -------------
<S> <C> <C>
I $14,951 8.0%
II 12,933 7.5%
III 15,894 7.5%
IV 1,013 7.5%
</TABLE>
ITEM 3 - LEGAL PROCEEDINGS:
A former employee has filed a complaint claiming discrimination with the
State of California. A Mutual Release & Settlement Agreement was procured on
January 30, 1998. The Agreement provided for the defendant to pay $7,500.
Venetian Park's insurance carrier covered some of the legal costs. The
insurance carrier provided legal counsel for settling the case and paid the
agreed upon settlement amount.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None
4
<PAGE>
PART II
ITEM 5 - MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDERS MATTERS:
The Limited Partnership Units have limited transferability and no established
public trade market has developed or is expected to develop in the future.
There were approximately 530 holders of Limited partnership Units at December
31, 1998, holding 6,041 Limited Partnership Units of Registrant. Although the
General Partners have an equity interest in Registrant, they were not issued
units. The general partners own 61 units, giving the partnership a total of
6,102 partner units.
During 1998, the Registrant paid $0 or $0 per unit; during 1997, paid
$60,410; and during 1996, paid $0. Additionally, the Registrant paid the
General Partners the following distributions: $0, $608 and $0 for 1998, 1997
and 1996, respectively.
ITEM 6 - SELECTED FINANCIAL DATA:
<TABLE>
<CAPTION>
YEAR OPERATIONAL DATA BALANCE SHEET DATA
- ---- ---------------- ------------------
NET INCOME TOTAL
NET INCOME (LOSS) PER LTD. LONG-TERM
NET REVENUES (LOSS) PARTNER UNIT TOTAL ASSETS DEBT
------------ ---------- --------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
1998 $ 1,610,999 $(85,730) $(14.19) $7,172,848 $5,332,629
1997 1,506,921 (332,327) (54.46) 7,273,875 5,440,034
1996 1,622,281 (13,062) (2.14) 7,757,031 5,555,954
1995 1,590,577 (188,611) (30.91) 7,837,361 5,663,545
1994 1,628,405 (98,415) (16.13) 8,139,694 5,763,051
</TABLE>
PER UNIT LIMITED PARTNER
CASH DISTRIBUTIONS
<TABLE>
<S> <C>
1998 $ 0
1997 10
1996 0
1995 0
1994 10
</TABLE>
5
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:
Results of Operations:
Operating income for 1998 was $1,610,999, an improvement of $104,708 (6.91%)
when compared to the 1997 operating income of $1,506,921 and a decrease of
$11,282 (1.07%) when compared to $1,622,281 for 1996. Net spendable for 1998
was $69,434 vs. ($170,494) in 1997, an improvement of $239,928 or 140.73%.
When compared to 1996 net spendable of $159,060, the net spendable generated
in 1998 was $89,626 (56.35%) lower. Operating income in 1998 includes
Insurance Receivables-Fire Rent Loss of $50,765.
The scheduled gross monthly rental roll for December 1998 was $156,737,
$4,640 (3.05%) more than the December 1997 rent roll of $152,097 and 5.68%
higher than the December 1996 rent roll of $148,308. Aggregate rental loss
(vacancies, net delinquencies and rental discounts) for 1998 of $298,566 is
an improvement of $55,542 or 15.69% when compared to 1997's rental loss of
$354,108. The main contributing factor to this is the decrease in rental
discounts by $68,266 from $106,219 in 1997 to $37,953 in 1998. There was a
noticeable improvement in the local rental market in 1998. However, 1996's
rental loss of $228,648 is lower by $69,918 or 23.42% when compared to 1998.
Operating expenses during 1998 were $964,881 vs. $1,114,411 in 1997, a cut of
$149,530 (13.42%). When compared to 1996's operating expenses of $884,245,
1998's operating expenses are higher by $80,637 (9.12%).
During 1998, Fixed Expenses was the only category that went up when compared
to 1997 ($688,073 vs. $670,827). This is due to the increase in the monthly
services such as landscape (up by $3,840), security (up by $3,998) and pool
(up by $2,252). In 1996, Fixed Expenses were $631,926 which is lower by
$56,147 when compared to 1998.
Of the total $69,434 net spendable generated during 1998, $53,059 or 76.42%
was booked during the third quarter of 1998 indicating a favorable trend.
Although the fire insurance settlement had not been concluded in December 31,
1998 due to the mortgage holder's tardiness in endorsing the last insurance
proceeds draw of $106,626, the books closed with respect to fire insurance
receipts and disbursements before the end of January 1999. Accordingly, our
accounts payable include funds still owed to the fire insurance adjuster the
partnership hired to negotiate the settlement whose fees were paid in January
1999 from funds generated from the mortgage holder's endorsed proceeds check.
The overall settlement was enough to cover the building repair and the
adjuster's fees. We have not yet received a settlement regarding the
property's loss of rent insurance coverage.
The property's cash accounts at the end of 1998, 1997 and 1996, respectively,
were $135,283, $159,824 and $376,368. The property's FHA reserve for
replacement fund at the end of 1998, 1997 and 1996, respectively, were
$166,672, $141,500 and $141,237. We have applied for a release of
approximately $22,000 of these funds late last year of which $13,310 was
released in February 1999.
Our goal set last year was to apply for refinancing on the first trust deed
loan in order to generate sufficient funds for the reroofing of the complex,
the completion of the exterior painting and refurbishment of the driveways;
however, until we improve our occupancy rate and cash flow, it is unwise to
pursue such refinancing although lenders have ample funds available for
apartment loans at favorable terms.
ANALYSIS OF CASH FLOWS:
Operating Activities:
The Partnership had a cash flow from operating activities of $115,351,
($58,633), and $279,906 for each of the three years in the period ended
December 31, 1998, respectively. The improvement of the cash flow in 1998 was
attributable to the decline in vacancies, decrease in rental discounts and
the lowering of operating expenses in all categories except fixed expenses.
6
<PAGE>
Financing Activities:
The principal repayment of long-term debt remain consistent over the
three-year period. There were no cash distributions to partners in 1998 to
recover from the negative cash flow in 1997. The Partnership declared and
paid a distribution in January 1997 for the 1996 year. The relatively small
distribution of $61,018 is the first to be issued in some period of time. The
distributions to partners were $0, $61,018, and $0 for each of the three year
period ended December 31, 1998, respectively.
ITEM 8 - FINANCIAL STATEMENTS:
The Registrant's Financial Statements for the periods ended December 31,
1998, 1997 and 1996 follow.
<TABLE>
<CAPTION>
Page
Number
<S> <C>
Independent Auditors' Report..............................8
Balance Sheets............................................9
Statements of Operation..................................10
Statements of Changes in Partners' Equity................11
Statements of Cash Flows.................................12
Notes to Financial Statements.........................13-17
</TABLE>
7
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
TO VENETIAN PARK ASSOCIATES, LTD.
SANTA MONICA, CALIFORNIA
We have audited the accompanying balance sheets of VENETIAN PARK ASSOCIATES,
LTD. (A LIMITED PARTNERSHIP) as of December 31, 1998 and 1997, and the
related statements of operations, changes in partners' equity, and cash flows
for each of the years in the three year period ended December 31, 1998. 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 Venetian Park Associates,
Ltd. (A Limited Partnership) as of December 31, 1998 and 1997, and the
results of its operations and its cash flows for each of the years in the
three year period ended December 31, 1998, in conformity with generally
accepted accounting principles.
/s/ Block, Plant, Eisner, Fiorito & Belak-Berger
Encino, California
FEBRUARY 23, 1999
8
<PAGE>
VENETIAN PARK ASSOCIATES, LTD. (A LIMITED PARTNERSHIP)
<TABLE>
<CAPTION>
BALANCE SHEETS
- ------------------------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------------------------
December 31, 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash $ 38,050 $ 51,337
Tenants' rents receivable 2,309 2,778
Insurance receivable 158,642 0
Prepaid expenses 25,660 24,019
- ------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 224,661 78,134
- ------------------------------------------------------------------------------------------
Restricted deposits and funded reserves:
Tenants' security deposits 97,232 108,486
Mortgage escrow deposits 62,560 66,682
Reserve for replacements 166,672 141,500
- ------------------------------------------------------------------------------------------
326,464 316,668
- ------------------------------------------------------------------------------------------
Fixed assets, net 6,603,181 6,860,291
- ------------------------------------------------------------------------------------------
Other assets:
Prepaid loan fees, net of accumulated amortization
of $14,590 in 1998 and $13,637 in 1997 17,816 18,769
Deposits 726 13
- ------------------------------------------------------------------------------------------
18,542 18,782
- ------------------------------------------------------------------------------------------
$7,172,848 $7,273,875
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' EQUITY
- ------------------------------------------------------------------------------------------
December 31, 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable - trade and accrued expenses $ 104,688 $ 88,656
Accrued expense - fire damage 82,281 0
Accrued interest 35,466 35,466
Tenants' prepaid rents 5,998 1,276
Current portion of long-term debt 137,777 127,095
- ------------------------------------------------------------------------------------------
Total current liabilities 366,210 252,493
- ------------------------------------------------------------------------------------------
Other liabilities:
Long-term debt, net of current portion 5,194,852 5,312,939
Tenants' security deposits 89,251 100,178
- ------------------------------------------------------------------------------------------
5,284,103 5,413,117
- ------------------------------------------------------------------------------------------
Commitments and contingencies
- ------------------------------------------------------------------------------------------
Partners' equity 1,522,535 1,608,265
- ------------------------------------------------------------------------------------------
$7,172,848 $7,273,875
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
9
<PAGE>
VENETIAN PARK ASSOCIATES, LTD. (A LIMITED PARTNERSHIP)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
- ---------------------------------------------------------------------------------------------------------
Years ended December 31, 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Rental income $ 1,548,750 $ 1,438,831 $ 1,549,615
Other income 55,151 57,886 61,201
Interest income 7,098 10,204 11,465
- ---------------------------------------------------------------------------------------------------------
1,610,999 1,506,921 1,622,281
- ---------------------------------------------------------------------------------------------------------
Expenses:
Administrative 263,785 283,725 256,375
Utilities 190,979 189,869 171,759
Operating and maintenance 354,746 483,789 305,075
Taxes and insurance 166,760 155,781 162,612
Financial expense 440,372 448,154 457,423
Depreciation and amortization 279,287 277,130 281,299
- ---------------------------------------------------------------------------------------------------------
1,695,929 1,838,448 1,634,543
- ---------------------------------------------------------------------------------------------------------
Loss before franchise tax (84,930) (331,527) (12,262)
Franchise tax 800 800 800
- ---------------------------------------------------------------------------------------------------------
Net loss $ (85,730) $ (332,327) $ (13,062)
- ---------------------------------------------------------------------------------------------------------
Net (loss) per limited partner units
(6,041 units issued and outstanding) $ (14.19) $ (54.46) $ (2.14)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
<PAGE>
VENETIAN PARK ASSOCIATES, LTD. (A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
(61 UNITS) (6,041 UNITS) (6,102 UNITS)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, December 31, 1995 $ 19,184 $ 1,995,488 $ 2,014,672
December 31, 1996:
Net loss (131) (12,931) (13,062)
Distribution to partners 0 0 0
- ------------------------------------------------------------------------------------------------
Balance, December 31, 1996 19,053 1,982,557 2,001,610
December 31, 1997:
Net loss (3,322) (329,005) (332,327)
Distribution to partners (608) (60,410) (61,018)
- ------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997 15,123 1,593,142 1,608,265
DECEMBER 31, 1998:
NET LOSS (857) (84,873) (85,730)
DISTRIBUTION TO PARTNERS 0 0 0
- ------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 $ 14,266 $ 1,508,269 $ 1,522,535
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
VENETIAN PARK ASSOCIATES, LTD. (A LIMITED PARTNERSHIP)
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------------------------------------------
Years ended December 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (85,730) $(332,327) $ (13,062)
- ------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net (loss) to net cash
provided by operating activities:
Depreciation and amortization 279,287 277,130 281,299
Change in assets -(increase) decrease:
Tenants' rents receivable 469 0 0
Insurance receivables (158,642) 0 0
Tenants' security deposits 11,254 (19,026) (5,426)
Prepaid expenses (1,641) 867 (800)
Restricted deposits and reserves (21,050) (12,312) (22,478)
Deposits (713) 926 58
Change in liabilities - increase (decrease):
Accounts payable and accrued expenses 16,041 31,177 24,526
Accrued expenses - fire damage 82,281 0 0
Tenants' prepaid rents 4,722 (3,908) 1,702
Tenants' security deposit payable (10,927) (1,160) 14,087
- ------------------------------------------------------------------------------------------------------------------
Total adjustments 201,081 273,694 292,968
- ------------------------------------------------------------------------------------------------------------------
NET CASH FLOW PROVIDED BY (USED BY)
OPERATING ACTIVITIES 115,351 (58,633) 279,906
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of fixed assets (21,233) 0 (13,379)
- ------------------------------------------------------------------------------------------------------------------
NET CASH (USED BY) INVESTING ACTIVITIES (21,233) 0 (13,379)
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of equipment loan 18,000 0 0
Principal reduction of long-term debt (125,405) (115,920) (107,591)
Capital distributions to partners 0 (61,018) 0
- ------------------------------------------------------------------------------------------------------------------
NET CASH (USED BY) FINANCING ACTIVITIES (107,405) (176,938) (107,591)
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash (13,287) (235,571) 158,936
Cash at beginning of year 51,337 286,908 127,972
- ------------------------------------------------------------------------------------------------------------------
Cash at end of year $ 38,050 $ 51,337 $ 286,908
- ------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest expense $ 413,382 $ 421,602 $ 430,114
State franchise tax 800 800 800
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
VENETIAN PARK ASSOCIATES, LTD. (A LIMITED PARTNERSHIP)
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
ORGANIZATION AND
SIGNIFICANT
ACCOUNTING POLICIES:
ORGANIZATION: The partnership, organized as a limited
partnership within California, was formed October
31, 1983 to acquire an interest in real property
located in Stockton, California. On October 31,
1983 the partnership purchased an existing
apartment complex with a total of 295 units
comprised of four separate apartment projects
operated under Section 221(d) (4) of the National
Housing Act. Such projects are regulated by HUD as
to operating methods and are considered by HUD to
be a major program. The project mortgage loans are
insured by HUD. The partnership is economically
dependent on the Stockton, California rental
market.
With HUD approval, the financial statements have
been prepared on a consolidated basis encompassing
the following four separate HUD projects:
PROJECT NAME HUD PROJECT NUMBER
-------------------------------------------------------
Venetian Park Apartments I 136-35387-PM
Venetian Park Apartments II 136-35409-PM
Venetian Park Apartments III 136-35450-PM
Venetian Park Apartments IV 136-35518-PM
CASH AND CASH For purposes of the statement of cash flows, the
EQUIVALENTS: Partnership considers all unrestricted investment
instruments purchased with original maturities of
three months or less to be cash equivalents. At
December 31, 1998, 1997 and 1996, there were no
cash equivalents.
The partnership maintains cash balances in excess
of the current FDIC limit, at Wells Fargo Bank.
FIXED ASSETS AND Fixed assets are stated at cost. Depreciation is
DEPRECIATION: provided on the straight-line and accelerated
methods over estimated useful lives which range
from 5 to 35 years. The fixed assets are pledged
as collateral for the mortgage note payable.
Maintenance, repairs and minor renewals are
expensed as incurred.
AMORTIZATION: Prepaid loan fees are being amortized on a
straight-line basis over the term of the loans,
33-1/3 years.
INCOME TAXES: Income or loss of the partnership is allocated 1%
to the general partners and 99% to the limited
partners, which represents their respective
ownership interests in the partnership. No income
tax provision has been included in the financial
statements since income or loss of the partnership
is required to be reported by the respective
partners on their income tax returns. The State of
California imposes a minimum franchise tax per
year for limited partnerships.
ADVERTISING COSTS: The Partnership's policy is to expense advertising
costs when incurred. The advertising costs for
1998, 1997 and 1996 were expensed in the amount of
$32,121, $58,634 and $27,819, respectively.
</TABLE>
13
<PAGE>
VENETIAN PARK ASSOCIATES, LTD. (A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ORGANIZATION AND
SIGNIFICANT
ACCOUNTING
POLICIES (CONTINUED):
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.
RESTRICTED CASH:
TENANT SECURITY The Federal Housing Administration requires that
DEPOSITS: all tenants' security deposits collected be
restricted to repayment of extraordinary damages
caused by the tenants or repayment to the tenants
at the end of their leases. These deposits are to
be held in separate bank accounts in the name of
the project.
INSURANCE RECEIVABLE: Venetian Park suffered fire damage to 8 units in
Phase II. Venetian Park hired the Greenspan
Company, professional adjusters of losses for the
insured to represent the partnership to negotiate
with the insurance company for settlement of fire
damage and loss of rents. The insurance carrier,
Travelers Indemnity of Illinois, paid $250,804 to
Reilly Mortgage Company and other vendors
directly. The monies were held in the reserve for
replacement account and payments were made payable
to Venetian Park and the specific vendor. As of
year end, $106,626 was due for fire damage and
$52,016 for loss of rents. The $106,626 was
received on January 27, 1999. The $52,016
receivable is still pending review by the
insurance company adjuster. As of the month of
February, 1999, the eight units were available for
rent.
RESERVE FOR The FHA also requires reserve for replacement
REPLACEMENTS: funds to be maintained by the mortgagee for the
mortgagor to cover major expenditures of the
project for replacements. The payments are
included with the mortgage payments and amount to
$2,098 per month. The disbursements from this fund
require the approval of HUD. The activity was as
follows:
1998 1997
-----------------------------------------------------------------------------
Balance, beginning of year $ 141,500 $ 141,237
Deposits 25,172 25,172
Interest earned, net of service charge 3,444 3,443
Interest withdrawals (3,444) (3,501)
Replacement expenditures 0 (24,851)
-----------------------------------------------------------------------------
Balance, end of year $ 166,672 $ 141,500
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>
14
<PAGE>
VENETIAN PARK ASSOCIATES, LTD. (A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<S> <C>
RESTRICTED CASH
(CONTINUED):
MORTGAGE ESCROW The mortgage escrow deposits account is also
DEPOSITS ACCOUNT: maintained by the mortgagee for the mortgagor for
the future payment of insurance and taxes.
Payments to the account are included with the
monthly mortgage payments. The activity was as
follows:
1998 1997
---------------------------------------------------------------------
Balance, beginning of year $ 66,682 $ 54,633
Deposits 157,597 173,746
Disbursements:
Property taxes (105,380) (108,322)
Hazard and mortgage insurance (56,339) (53,375)
---------------------------------------------------------------------
Balance, end of year $ 62,560 $ 66,682
---------------------------------------------------------------------
FIXED ASSETS, NET: Fixed assets consist of the following:
1998 1997
------------------------------------------------------------------------
Land $ 1,158,278 $ 1,158,278
Buildings and improvements 9,562,017 9,562,017
Furniture and fixtures 332,190 310,957
------------------------------------------------------------------------
11,052,485 11,031,252
Less accumulated depreciation 4,449,304 4,170,961
------------------------------------------------------------------------
$ 6,603,181 $ 6,860,291
------------------------------------------------------------------------
------------------------------------------------------------------------
LONG TERM DEBT:
MORTGAGE PAYABLE: The mortgages payable are 40-year notes which are
insured by HUD under Section 221(d)(4) of the
National Housing Act. The face amount of the
mortgages were $6,643,000. The mortgage loans are
recorded at fair value. The notes are secured by
first trust deeds on the land and buildings. Under
agreements with the mortgage lender and FHA, the
Project is required to make monthly escrow
deposits for property insurance, mortgage
insurance, property taxes and reserve for
replacement of fixed assets. The interest rates,
monthly installments and outstanding balances due
are as follows:
</TABLE>
15
<PAGE>
VENETIAN PARK ASSOCIATES, LTD. (A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- ------------------------------------------------------------------------------
LONG TERM DEBT:
<TABLE>
<S> <C>
MORTGAGE PAYABLE DUE INTEREST MONTHLY BALANCE BALANCE
(CONTINUED): DATE RATES INSTALLMENTS 12/31/98 12/31/97
--------------------------------------------------------------------------------------
I 2017 8.0% $ 14,951 $1,698,040 $1,739,782
II 2017 7.5% 12,933 1,556,778 1,593,699
III 2017 7.5% 15,894 1,936,349 1,980,059
IV 2018 7.5% 1,013 124,164 126,494
--------------------------------------------------------------------------------------
$ 44,791 $5,315,331 $5,440,034
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
LOAN PAYABLE: The partnership borrowed $18,000 from Wells Fargo
Bank for the acquisition of laundry equipment
payable in 60 monthly installments including
principal and interest at $426 per month. The
interest rate is 14.80% per annum. The maturity
date of the loan is August 15, 2003. The
outstanding loan balance at December 31, 1998 is
$17,298.
MATURITIES: LONG TERM DEBT MATURING DURING THE NEXT FIVE YEARS
IS AS FOLLOWS:
YEAR ENDING DECEMBER 31,
1999 $ 137,777
2000 147,664
2001 160,844
2002 173,900
2003 188,039
BEYOND FIVE YEARS 4,524,405
-----------------------------------------------------
TOTAL LONG-TERM DEBT DUE 5,332,629
LESS CURRENT PORTION 137,777
-----------------------------------------------------
$5,194,852
-----------------------------------------------------
-----------------------------------------------------
RELATED PARTY Norman Jacobson, a general partner of the
TRANSACTIONS: partnership, is also an officer and stockholder of
Norman Jacobson Realty Resources, Inc. Norman
Jacobson Realty Resources, Inc. (NJRR) received a
management fee for its services equal to 3% of the
project's net revenues for the current year. NJRR
was paid management fees and reimbursed out of
pocket expenses totaling $61,778 during the year
ended December 31, 1998, $57,840 during the year
ended December 31, 1997 and $58,918 during the
year ended December 31, 1996.
The General Partners received cash compensation
from the partnership totaling $31,961 in 1998 and
$30,160 in 1997 and $32,180 in 1996 consisting of
project management fees equal to 2% of the
project's net revenues for each year.
</TABLE>
16
<PAGE>
VENETIAN PARK ASSOCIATES, LTD. (A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
DISTRIBUTIONS TO LIMITED The partnership declared and paid the following
AND GENERAL PARTNERS: distributions in the amount of $0, $61,018 and $0
for the years ended December 31, 1998, 1997 and
1996, respectively.
COMMITMENTS AND A former employee has filed a complaint claiming
CONTINGENCIES: discrimination with the State of California. A
Mutual Release & Settlement Agreement was procured
on January 30, 1998. The Agreement provided for
the defendant to pay $7,500. Venetian Park's
insurance carrier covered some of the legal costs.
The insurance carrier provided legal counsel for
settling the case and paid the agreed upon
settlement amount.
YEAR 2000 ISSUE: Like other organizations and individuals around
the world, Venetian Park Associates, Ltd. could be
adversely affected if the computer systems it uses
and those used by significant third parties (e.g.
vendors, customers, third party administrators,
etc.) do not properly process and calculate
date-related information and data. This is
commonly known as the "Year 2000 issue" (Y2K).
Management is assessing its computer systems and
business processes and intends to initiate actions
to address the Y2K need identified. Management is
also assessing the actions being taken by
significant third parties that interface with the
Company. At this time management believes all
critical systems to be Year 2000 compliant.
</TABLE>
17
<PAGE>
ITEM 9 - DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE:
There have been no disagreements with accountants on any matters of financial
statement presentation or related disclosures.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS:
Registrant has no directors or executive officers but is managed by the
General Partners.
The General Partners are described below:
NORMAN JACOBSON. Mr. Jacobson co-founded WAGNER/JACOBSON CO., INC. in 1958.
That firm engaged primarily in real estate brokerage of income-producing
multifamily residential real estate and served as general partner for a
number of public and private syndications. Because Mr. Jacobson's time is
devoted to property management and syndication activities and serving the
interests of the investors in the syndications formed by him, his involvement
with WAGNER/JACOBSON CO., INC., has ceased. In 1982, Mr. Jacobson, formed
NORMAN JACOBSON REALTY RESOURCES, INC. Mr. Jacobson is also President of
NORMAN JACOBSON MANAGEMENT CO, which acts as property manager for various
apartment complexes and commercial properties in Los Angeles, Orange,
Sacramento, San Joaquin, Solano and Contra Costa Counties.
In 1981 Mr. Jacobson co-formed Jacobson/Weill Income Realty Fund, a publicly
offered real estate fund, which purchased the Chateau Apartments, a 104-unit
apartment complex located at 1503 Fulton Avenue, Sacramento, California. In
1982 Mr. Jacobson and Mr. Ted Weill were co-general partners with Bateman
Eichler, Hill Richards Realty in Parkfair Associates, Ltd., a publicly
offered limited partnership, formed for the purpose of purchasing the
120-unit Parkfair Apartments and Parkfair Professional Building in
Sacramento. In 1983, Mr. Jacobson and Mr. Weill formed Venetian Park
Associates, Ltd. which purchased the 295-unit Venetian Park Apartments in
Stockton, California.
Mr. Jacobson is also General Partner for Hilltop Associates, Ltd. (formed in
1983 to purchase the 70-unit Hilltop Apartments), Hillsdale Investors, Ltd.
(formed in 1984 to purchase the 48-unit Hillsdale Garden Apartments),
Jefferson Place Investors (formed in 1985 to purchase the 66-unit Jefferson
Place Apartments) and Cottage Bell Investors (formed in 1985 to purchase the
160-unit Cottage Bell Apartments). These properties are all in Sacramento. In
addition, Mr. Jacobson is General Partner for Muir Creek Investors (formed in
1986 to purchase the 108-unit Muir Creek Apartments in Martinez, California),
and Med Village Investors (formed in 1988 for the purpose of constructing the
106-unit Mediterranean Village Apartments in Fairfield, California).
Norman Jacobson Realty Resources, Inc., of which Mr. Jacobson is a principal
and the sole owner, is general partner of Palm Mesa, Ltd. (formed in 1970 to
purchase the 147-unit Palm Mesa Apartments) and Parkwood Village, Ltd.
(formed in 1971 to purchase the 276-unit Newport Village Apartments). Both of
these properties are in Costa Mesa, California.
In 1977, Mr. Jacobson was president of the Los Angeles Board of Realtors.
Formerly he was president of the Venice Board of Realtors. He has been a
director of the California Association of Realtors (CAR) periodically since
1963 and was elected regional vice-president of the CAR in 1978. In 1971-72
he was vice-chairman of the CAR's Syndication Division and was founding
editor of the Syndication Division's official publication, THE CALIFORNIA
SYNDICATOR. Mr. Jacobson lectures and writes extensively in the fields of
real estate investments. He has periodically instructed for University of
California Extension since 1961, lectures from time to time for the UCLA
Graduate School of Management and is one of 80 real estate professionals in
the United States invited to write a Chapter for THE REAL ESTATE HANDBOOK
published by Dow-Jones, Irwin.
18
<PAGE>
Mr. Jacobson holds a degree in business administration from UCLA, where he
graduated in 1952. THEODORE J. WEILL. Mr. Weill is a general partner in
numerous ongoing private and public syndications, and is active in real
estate development and other activities. From December, 1969 to February,
1977, Mr. Weill served as principal in the development of recreational
communities and became Executive Vice President of the Resort Development
Group of Dart/Kraft Industries in 1970. From January, 1963, to November,
1969, he was President and Chairman of a privately held real estate and
brokerage company specializing in commercial, industrial and income property
with annual sales of $50 million, and a property management company with
managed assets of $100 million. Mr. Weill has served as a consultant to
Dart/Kraft Industries, SRI International and ITT Corporation. In March, 1977,
he founded Weill Financial Corporation, a Los Angeles real estate investment
organization.
Mr. Weill has a Bachelor's degree in marketing and finance from the
University of Pennsylvania, Wharton School of Finance and Commerce in 1956,
and in 1977 graduated with honors from the Pepperdine University
Presidential/Key Executive MBA program.
PROPERTY MANAGEMENT
The Partnership Agreement provides that J/W Management Corp., a California
Corporation organized by the General Partners, will be responsible, through
its own personnel and/or through subcontracted management services, for the
management of the Property, for a fee of 5% of the gross income of the
Property, which fee is generally charged in the Stockton area. Historically,
J/W Management has subcontracted the off-site property management to firms
specializing in apartment house management and has paid 3% of the gross
income to such firms while retaining the remaining 2% as compensation for
overseeing the subcontractor's work. J/W Management Corp. was dissolved in
1990, and the General Partners individually continue to oversee the
subcontractor's work and receive the 2% compensation.
Presently, the off-site management of the property is subcontracted to Norman
Jacobson Management Co., an affiliate of one of the General Partners.
19
<PAGE>
ITEM 11 - EXECUTIVE COMPENSATION:
During the year ended December 31, 1998, the General Partners (see Item 13)
received cash compensation from Registrant totaling $31,961 consisting of
project management fees. Norman Jacobson received $20,934 and Theodore J.
Weill received $11,027.
Also, during the year ended December 31, 1998, one of the General Partners
and his affiliate, Norman Jacobson Management Co. (see Item 13) received cash
compensation from Registrant totaling $61,778 consisting of project
management fees and reimbursement for out-of-pocket expenses.
The following table summarizes the types, estimated amounts and recipients of
compensation that will or may be paid to the General Partners or their
affiliates from and after January 1, 1999:
<TABLE>
<CAPTION>
Person Receiving Type of Compensation Amount Paid
Compensation -------------------- -----------
------------
<S> <C> <C>
General Partners: Interest in distributions from An interest equal to 1% of cash
operations distributions from operations.
Norman Jacobson None
Theodore Weill None
General Partners Subordinated interests in ESTIMATED MAXIMUM AMOUNTS An interest
distributions equal to 25% (less amounts received by
the General Partners by virtue of
their 1% interest in the Partnership)
of the undistributed cash amounts
resulting from the sale or refinance
of the Partnership Property remaining
after payment to investors of an
amount equal to 100% of their original
capital contributions plus an 8%
cumulative annual, noncompounded
return thereon less prior
distributions from the Partnership.
General Partners or one Subordinated Real Estate Equal to an amount not to exceed one-
or more real estate Commissions (payable if half of the acquisition fees which
brokers affiliated with recipient performs services could be paid during the Acquisition
the General Partners related to resales of Period, but only after return of the
Partnership Properties) Limited Partners' capital
contributions and (unless previously
paid through distributions) 6% per
annum cumulative non-compounded return
thereon.
General Partners: Property management fee HUD approval contract provides for 5%
Norman Jacobson of the net revenues of the Property.
Theodore J. Weill The Partnership paid approximately 2%
of net revenues, $31,961 for the year
ended December 31, 1998, which was
paid to the General Partners: $20,934
to Norman Jacobson and $11,027 to
Theodore J. Weill; and
Norman Jacobson Management 3% of net revenues ($47,962) for the
Co., an affiliate of one year ended December 31, 1998) to
of the General Partners Norman Jacobson Management Co.
respon-sible for
management of the property
</TABLE>
20
<PAGE>
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
Registrant has no directors or officers but is managed by the General
Partners. At December 31, 1998, neither of the General Partners owned any of
the outstanding Limited Partnership Units nor did any person known to the
General Partners own 5% or more of the outstanding Limited Partnership Units.
ITEM 13 - CERTAIN RELATIONSHIPS:
The General Partners, either personally or through affiliated entities, are
General Partners in other real estate limited partnerships, some of which may
be comparable in certain respects to the Partnership. The General Partners
have organized other partnerships in the past and will organize other
partnerships in the future, including partnerships which may have investment
objectives similar to those of the Partnership. Such General Partner will
have legal and financial obligations with respect to those other partnerships
which are similar to his obligations with respect of the Partnership,
including contingent liability, for the obligations of such partnerships.
The General Partners are prohibited from entering into any transaction on
behalf of the Partnership with any other limited partnership in which the
General Partners or any affiliate of the General Partners has an interest.
The General Partners may engage in the real estate business or in other
businesses for their own account for the accounts of others or otherwise, and
neither the Partnership nor any Limited Partners shall be entitled to any
interest therein. There may be conflicts of interest on the part of the
General Partners between the Partnership and other limited partnerships with
which they are affiliated at such time as the Partnership attempts to sell or
rent realty or employ resident and building managers, as well as under other
circumstances.
It is the policy of the Partnership that the Limited Partners may not engage
directly or indirectly in any capacity for monetary gain. Generally the
Limited Partners participate in the profits, losses and distributions and
have certain limited partner voting rights. No Limited Partner shall have any
right to be active in the conduct or management of the Partnership business,
nor have any power to bind the Partnership by contract, agreement, compromise
or undertaking; provided, however, that Limited Partners shall have the right
to vote on Partnership matters, as set forth in the Partnership Agreement,
which affects its basic structure.
Limited Partners holding 10% of the Units may call (in the General
Partnership notice) a meeting as provided in the Rules of the Commissioner of
Corporations of the State of California, and an affirmative vote of the
majority interest of the Limited Partners shall be required to take action
upon certain matters as provided in the Partnership Agreement.
21
<PAGE>
PART IV
ITEM 14 - FINANCIAL STATEMENTS AND EXHIBITS:
(a) EXHIBITS
None
(b) FINANCIAL STATEMENTS
The following financial statements are included in Item 8:
Independent Auditors' Report
Balance Sheets as of December 31, 1998 and 1997
Statements of Operation for the years ended December 31, 1998,
December 31, 1997 and December 31, 1996.
Statements of changes in partners' equity for the years ended
December 31, 1998, December 31, 1997, and December 31, 1996.
Statements of cash flows for the years ended December 31,
1998, December 31, 1997, and December 31, 1996.
Notes to Financial Statements
The following financial statement schedules follow:
<TABLE>
<CAPTION>
PAGE
<S> <C>
Independent auditors' report on financial statement schedules........ 23
Schedule XI - Real Estate and Accumulated Depreciation............... 24
</TABLE>
22
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON SUPPORTING SCHEDULES
TO VENETIAN PARK ASSOCIATES, LTD.
SANTA MONICA, CALIFORNIA
Under date of February 23, 1999, we reported on the balance sheets of
VENETIAN PARK ASSOCIATES, LTD. (A CALIFORNIA LIMITED PARTNERSHIP) as of
December 31, 1998 and 1997 and the related statements of operations, changes
in partners' equity and cash flows for each of the years in the three-year
period ended December 31, 1998, which are included in Item 8 of this annual
report on Form 10-K. In connection with our audits of the aforementioned
financial statements, we also have audited the related financial statement
schedule as listed in Item 14 of this annual report on Form 10-K. The
financial statement schedule is the responsibility of the Partnership's
management. Our responsibility is to express an opinion on the financial
statement schedule based on our audits.
In our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly,
in all material respects, the information set forth therein.
/s/ Block, Plant, Eisner, Fiorito & Belak-Berger
Encino, California
FEBRUARY 23, 1999
23
<PAGE>
VENETIAN PARK ASSOCIATES, LTD. (A LIMITED PARTNERSHIP)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
DECEMBER 31, 1998
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
COSTS
CAPITALIZED
SUBSEQUENT
INITIAL COST TO
TO PARTNERSHIP (A) ACQUISITION
----------------- ------------
BUILDING IMPROVEMENTS
AND
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Apartment complex $ 5,315,331 $ 1,158,278 $ 9,894,207 $ 125,334
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
GROSS AMOUNT OF WHICH WAS
CARRIED AT CLOSE OF PERIOD (D)
----------------------------------------------------------------------------
BUILDINGS
AND ACCUMULATED
LAND IMPROVEMENTS TOTAL DEPRECIATION
----------------------------------------------------------------------------
$ 1,158,278 $ 9,894,207 $ 11,052,485 $ 4,449,304
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Year of construction 1976-1978
Fiscal year acquired 1983
Life on which depreciation in latest statement of operations is computed 5-35 years
(A) The initial cost to the Partnership represents the original purchase price
of the property.
(B) Reconciliation of real estate owned for 1998, 1997 and 1996:
1998 1997 1996
- -------------------------------------------------------------------------------------------------------
Balance at beginning of period $11,031,252 $11,031,252 $11,017,873
Additions during period 21,233 0 13,379
- -------------------------------------------------------------------------------------------------------
Balance at close of period $11,052,485 $11,031,252 $11,031,252
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
(C) Reconciliation of accumulated depreciation for 1998, 1997 and 1996:
Balance at beginning of year $4,170,961 $3,894,784 $3,614,446
Additions during period:
Depreciation expense 278,343 276,177 280,338
- -------------------------------------------------------------------------------------------------------
$4,449,304 4,170,961 3,894,784
Deductions during period:
Accumulated depreciation on real estate
sold or improvements written off 0 0 0
- -------------------------------------------------------------------------------------------------------
Balance at close of year $4,449,304 $4,170,961 $3,894,784
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
(D) Aggregate cost of real estate at December 31, 1998 for Federal income
tax purposes is $11,053,328.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) or 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.
VENETIAN PARK ASSOCIATES, LTD.
A California Limited Partnership
Date: 3/3/99 By: /s/ Theodore J. Weill
--------------- ------------------------------------
Theodore J. Weill
General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Date: 3/18/99 By: /s/ Norman Jacobson
--------------- ------------------------------------
Norman Jacobson,
General Partner
25
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> DEC-31-1998 DEC-31-1997
<CASH> 364,514 368,005
<SECURITIES> 0 0
<RECEIVABLES> 186,611 45,579
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 551,125 413,584
<PP&E> 11,071,027 11,031,252
<DEPRECIATION> 4,449,304 4,170,961
<TOTAL-ASSETS> 7,172,848 7,273,875
<CURRENT-LIABILITIES> 366,210 252,493
<BONDS> 5,284,103 5,312,939
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 1,522,535 1,708,443
<TOTAL-LIABILITY-AND-EQUITY> 7,172,848 7,273,875
<SALES> 0 0
<TOTAL-REVENUES> 1,610,999 1,506,921
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 1,256,357 1,390,294
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 440,372 448,154
<INCOME-PRETAX> (85,730) (331,527)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (85,730) (331,527)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
