FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period to
Commission file number 0-14542
SECURED INVESTMENT RESOURCES FUND, L.P.
(Exact name of registrant as specified in its charter)
Kansas 48-0979566
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5453 W. 61st Place, Mission, Kansas 66205
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number,
including area code) (913) 384-5700
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests ("Units")
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 periods 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
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
Index
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheets --
September 30, 1997 and December 31, 1996 3-4
Consolidated Statements of Operations --
Three and Nine Months Ended September 30,
1997 and 1996 5
Consolidated Statements of Partnership
Capital -- Nine Months Ended September 30,
1997 and the Years Ended December 31, 1996,
and 1995 6
Consolidated Statements of Cash Flows --
Nine Months Ended September 30, 1997 and 1996 7-8
Notes to Consolidated Financial Statements 9-10
Item 2. Managements Discussion and Analysis
of Financial Condition and Results
of Operations 11-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of
Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED BALANCE SHEETS
September 30,
1997 December 31,
(Unaudited) 1996
ASSETS
INVESTMENT PROPERTIES
Land and buildings $ 16,541,303 $ 16,523,135
Furniture, fixtures and equipment 1,754,202 1,714,939
18,295,505 18,238,074
Less accumulated depreciation
and allowance for losses 7,106,566 6,667,531
11,188,939 11,570,543
OTHER ASSETS
Cash 236,312 206,974
Rents and other receivables, less
allowance of $43,300 in 1997
$42,350 in 1996 18,112 10,236
Prepaid expenses 27,672 368
Debt issuance costs, net of
accumulated amortization of
$81,334 in 1997 and $63,135
in 1996 153,921 141,488
Commercial commissions,
deposits and other 22,001 17,015
Restricted deposits 27,538 15,105
485,556 391,186
TOTAL ASSETS $ 11,674,495 $ 11,961,729
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED BALANCE SHEETS--CONT'D.
September 30,
1997 December 31,
(Unaudited) 1996
LIABILITIES AND PARTNERSHIP CAPITAL
Mortgage debt (Note B) $ 11,820,106 $ 11,952,227
Accrued interest 203,025 128,096
Accounts payable and accrued
expenses 210,139 106,926
Due to related parties (Note C) 61,265 57,416
Unearned revenue 96,090 110,733
Tenant security deposits 80,559 75,485
TOTAL LIABILITIES 12,471,184 12,430,883
PARTNERSHIP CAPITAL
General Partners
Capital contribution 1,000 1,000
Partnership deficit (64,064) (60,789)
(63,064) (59,789)
Limited Partners
Capital contributions 5,608,838 5,608,838
Partnership deficit (6,342,463) (6,018,203)
(733,625) (409,365)
TOTAL PARTNERSHIP CAPITAL (796,689) (469,154)
$ 11,674,495 $ 11,961,729
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Nine months Ended Three Months Ended
September 30, September 30,
1997 1996 1997 1996
REVENUES
Rents $1,680,101 $1,650,772 $ 570,371 $ 567,960
Interest 2,581 3,265 843 812
Maintenance
escalations 64,373 52,210 29,645 15,197
1,747,055 1,706,247 600,859 583,969
OPERATING AND
ADMINISTRATIVE EXPENSES
Property operating
expenses 579,595 579,877 196,052 200,849
General and
administrative
expenses 31,529 38,229 9,203 12,239
Professional services 76,616 61,131 31,089 14,406
Management Fees 86,232 75,537 29,559 26,486
773,972 754,774 265,903 253,980
NET OPERATING INCOME 973,083 951,473 334,956 329,989
NON-OPERATING EXPENSES
Interest 843,385 930,476 284,222 281,788
Depreciation and
amortization 457,233 448,370 160,744 148,976
1,300,618 1,378,846 444,966 430,764
PARTNERSHIP LOSS $ (327,535) $ (427,373) $ (110,010) $(100,775)
Allocation of loss:
General Partners (3,275) (4,274) (1,100) (1,008)
Limited Partners (324,260) (423,099) (108,910) (99,767)
$ (327,535) $ (427,373) $ (110,010) $ (100,775)
Partnership loss per
limited partnership
unit $ (13.04) $ (17.01) $ (4.38) $ (4.01)
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF PARTNERSHIP CAPITAL
Nine months Ended September 30, 1997 (Unaudited) and
the Years Ended December 31, 1996 and 1995
General Limited
Partners Partners Total
Balances at January 1, 1995 $ (49,692) $ 590,244 $ 540,552
Partnership loss (4,853) (480,426) (485,279)
Balances at December 31, 1995 (54,545) 109,818 55,273
Partnership loss (5,244) (519,183) (524,427)
Balances at December 31, 1996 (59,789) (409,365) (469,154)
Patnership loss (3,275) (324,260) (327,535)
Balances at September 30, 1997 $ (63,064) $ (733,625) $ (796,689)
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
September 30,
1997 1996
OPERATING ACTIVITIES
Partnership loss $ (327,535) $ (427,373)
Adjustments to reconcile
partnership loss to net cash
provided by (used in) operating
activities:
Depreciation and amortization 464,986 461,176
Provision for losses on rents
and other receivables 950 (17,350)
Changes in assets and liabilities:
Rents and other receivables (8,826) 21,064
Prepaid expenses (27,304) (19,020)
Commercial commission, deposits
and other (12,739) (646)
Account payable and
accrued expenses 103,213 (76,681)
Accrued interest 74,930 46,805
Unearned revenue (14,643) 184
Tenant security deposits 5,074 1,102
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 258,106 (10,739)
INVESTING ACTIVITIES
Purchase of and improvements
to investment property (57,432) (164,114)
Restricted deposits (12,432) 59,398
NET CASH USED IN
INVESTING ACTIVITIES (69,864) (104,716)
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)--CONT'D.
Nine Months Ended
September 30,
1997 1996
FINANCING ACTIVITIES
Mortgage Proceeds $ 0 $ 2,017,300
Due To (From) Related Parties 3,849 5,377
Principal payments on
long-term debt (132,121) (1,856,395)
Debt Issuance Cost (30,632) (8,735)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (158,904) 157,547
INCREASE IN CASH
AND CASH EQUIVALENTS 29,338 42,092
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 206,974 161,414
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 236,312 $ 203,506
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 30, 1997
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared
in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the nine month period
ended September 30, 1997 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1997.
For further information, refer to the financial statements and
footnotes thereto included in the Partnership's annual report on
Form 10-K for the year ended December 31, 1996.
NOTE B--MORTGAGE DEBT
Mortgage debt consists of the following:
September 30, December 31,
1997 1996
Collateralized by Investment
Property:
First Mortgages:
The Colony Apartments $ 3,630,474 $ 3,661,657
Foothills Village S.C. 2,576,191 2,621,779
Cascade Apartments 1,842,905 1,875,173
The Market S.C./Hidden Valley
Exchange S.C. 1,583,489 1,601,745
Hidden Valley Exchange S.C. 808,802 813,628
Second Mortgages:
Foothills Village, S.C. 968,245 968,245
The Market S.C./Hidden Valley
Exchange S.C. 410,000 410,000
$ 11,820,106 $ 11,952,227
Interest expense totaled $843,385 and $930,476 for the nine months
ending September 30, 1997 and 1996, respectively.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
NOTES TO FINANCIAL STATEMENTS--CONT'D.
NOTE B--MORTGAGE DEBT--CONT'D.
The mortgage for Cascade Apartments matured March 1, 1995. The
present mortgage holder has agreed to temporarily extend the
mortgage on a month-to-month basis and the Partnership continues to
make principal and interest payments of $18,900 to said mortgage
holder.
On May 28, 1996, the Partnership signed a note, collateralized by
a second mortgage on The Market and Hidden Valley Exchange, in the
amount of $410,000 at 7% interest. The Partnership will make
consolidated monthly principal and interest payments on this and the
first mortgage in the amount of $11,426 per month until June 25,
1998 when the entire amount becomes due and payable. The proceeds
of this note were used to pay delinquent real estate taxes for The
Market and Hidden Valley Exchange as well as accrued interest and
related loan costs.
NOTE C--RELATED PARTY TRANSACTIONS
SPECS, Inc., a Kansas Corporation in which the individual General
Partner has a minority interest, receives property management fees
for providing property management services. SPECS, Inc. also
performs various professional services for the Partnership,
primarily tax accounting, audit preparation, SEC 10Q and 10K
preparation, and investor services. Property management fees paid
by the Partnership to SPECS, Inc. are as follows:
Nine Months Ended
September 30,
1997 1996
Property management fees $ 86,232 $ 75,537
Amounts due (to) from related parties consist of the following:
September 30, December 31,
1997 1996
Secured Investment Resources
Fund, L.P. III $ (83,794) (78,345)
Secured Investment Resources
Fund, L.P. II (5,000) (5,000)
SIR, Inc. 27,529 25,929
$ (61,265) $ (57,416)
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
NOTE D--CASH DISTRIBUTIONS
No distributions have been made since January 1990. Future
distributions will be made only from excess cash flow not needed for
working capital reserves.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Revenues for the first nine months of 1997 increased by
$41,000 (2.4%) compared with the same period last year.
Apartment rentals decreased $18,000 and commercial properties
accounted for increases of $59,000. The apartment market has
not allowed the Partnership to increase rental rates. Several
smaller leases have been negotiated at Foothills Shopping
Center which has raised occupancy.
Total operating and administrative expenses decreased $7,000
(1.1%) when comparing the first nine months of 1997 to the
first nine months of 1996.
The Partnership anticipates that operating results for the
year ending December 31, 1997 will show a continued increase
in revenues due to new leases signed on the commercial
properties.
Liquidity and Capital Resources
During the first nine months of 1997 $258,100 of cash was
provided by operating activities, $69,900 was used for
investing activities and $158,900 was used in financing
activities.
In May 1996, a $410,000 note, collateralized by Hidden Valley
and The Market, was signed. This loan matures June 25, 1998
and the interest rate is 7%.
The mortgage for Cascade Apartments matured in March, 1995.
The existing mortgage holder has agreed to extend this note on
a month-to-month basis and the Partnership makes monthly
principal and interest payments of $18,900.
The General Partners also anticipate that 1997 cash flow from
operations will continue to improve because of strong
occupancy, rental rate increases, stabilized expenses, and new
leases signed on commercial properties.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.--Cont'd.
The General Partners have the option of offering one or more
properties for sale. Any net proceeds in excess of the
outstanding mortgage balance could be used to generate
additional additional working capital.
The General Partners have determined it prudent to discontinue
cash distributions until such time that adequate working
capital and capital improvement reserves are in place.
(The remainder of this page intentionally left blank.)
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
Inapplicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Inapplicable.
Item 5. OTHER INFORMATION
Inapplicable.
Item 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during
the quarter ended September 30, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SECURED INVESTMENT RESOURCES FUND, L.P.
A Kansas Limited Partnership
(Registrant)
By:
James R. Hoyt
as Individual General Partner
Date: November 15, 1997
By: Secured Investment Resources, Inc.
as Corporate General Partner
By:
James R. Hoyt, President
Date: November 15, 1997
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SECURED INVESTMENT RESOURCES FUND, L.P.
A Kansas Limited Partnership
(Registrant)
By: /s/ James R. Hoyt
James R. Hoyt
as Individual General Partner
Date: November 15, 1997
By: Secured Investment Resources, Inc.
as Corporate General Partner
By: /s/ James R. Hoyt
James R. Hoyt, President
Date: November 15, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Unaudited.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 236,312
<SECURITIES> 0
<RECEIVABLES> 61,412
<ALLOWANCES> (43,300)
<INVENTORY> 0
<CURRENT-ASSETS> 485,556
<PP&E> 18,295,505
<DEPRECIATION> 7,106,566
<TOTAL-ASSETS> 11,674,495
<CURRENT-LIABILITIES> 651,078
<BONDS> 11,820,106
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,674,495
<SALES> 0
<TOTAL-REVENUES> 1,747,055
<CGS> 0
<TOTAL-COSTS> 773,972
<OTHER-EXPENSES> 457,233
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 843,385
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (327,535)
<EPS-PRIMARY> (13.04)
<EPS-DILUTED> 0
</TABLE>
