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, 1998
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, 1998 and December 31, 1997 3-4
Consolidated Statements of Operations --
Three and Nine Months Ended September 30,
1998 and 1997 5
Consolidated Statements of Partnership
Capital -- Nine Months Ended September 30,
1998 and the Years Ended December 31, 1997,
and 1996 6
Consolidated Statements of Cash Flows --
Nine Months Ended September 30, 1998 and 1997 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,
1998 December 31,
(Unaudited) 1997
ASSETS
INVESTMENT PROPERTIES
Land and buildings $ 11,757,224 $ 11,750,152
Furniture, fixtures and equipment 958,903 910,967
12,716,127 12,661,119
Less accumulated depreciation
and allowance for losses 5,489,315 5,191,706
7,226,812 7,469,413
OTHER ASSETS
Cash 226,458 217,424
Rents and other receivables, less
allowance of $37,000 in 1998
$36,950 in 1997 44,187 15,424
Prepaid expenses 7,165
Debt issuance costs, net of
accumulated amortization of
$101,432 in 1998 and $95,733
in 1997 118,586 124,284
Commercial commissions,
deposits and other 17,708 7,415
Restricted deposits 44,476 20,626
458,580 385,174
TOTAL ASSETS $ 7,685,392 $ 7,854,587
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SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED BALANCE SHEETS--CONT'D.
September 30,
1998 December 31,
(Unaudited) 1997
LIABILITIES AND PARTNERSHIP CAPITAL
Mortgage debt (Note B) $ 8,146,404 $ 8,246,117
Accrued interest 114,632 93,187
Accounts payable and accrued
expenses 262,565 157,071
Due to related parties (Note C) 64,959 62,630
Unearned revenue 7,704 9,561
Tenant security deposits 56,790 56,924
TOTAL LIABILITIES 8,653,054 8,625,490
PARTNERSHIP CAPITAL
General Partners
Capital contribution 1,000 1,000
Partnership deficit (65,775) (63,806)
(64,775) (62,806)
Limited Partners
Capital contributions 5,608,838 5,608,838
Partnership deficit (6,511,724) (6,316,934)
(902,886) (708,095)
TOTAL PARTNERSHIP CAPITAL (967,661) (770,902)
$ 7,685,392 $ 7,854,587
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,
1998 1997 1998 1997
REVENUES
Rents $ 1,266,093 $ 1,645,415 $ 402,273 $ 542,996
Interest 3,035 2,581 1,052 843
Maintenance
escalations 44,406 50,454 9,303 8,415
1,313,535 1,698,450 412,628 552,254
OPERATING AND
ADMINISTRATIVE EXPENSES
Property operating
expenses 470,561 573,268 174,603 192,884
General and
administrative
expenses 25,790 40,450 8,620 96
Professional services 69,814 56,129 33,730 25,470
Management Fees 63,518 81,835 19,152 25,162
629,683 751,682 236,105 243,613
NET OPERATING INCOME 683,851 946,768 176,524 308,641
NON-OPERATING EXPENSES
Interest 577,303 813,404 188,607 254,241
Depreciation and
amortization 303,307 440,880 101,102 144,391
880,610 1,254,284 289,709 398,632
Partnership Loss before
extraordinary item $ (196,759) $ (307,516) $ (113,186) $ (89,991)
Extraordinary Gain on
foreclosure 89,719 89,719
PARTNERSHIP LOSS $ (196,759) $ (217,797) $ (113,186) $ (272)
Allocation of loss:
General Partners (1,968) (2,178) (1,132) (3)
Limited Partners (194,791) (215,619) (112,054) (269)
$ (196,759) (217,797)$ (113,186) $ (272)
Partnership loss per
limited partnership
unit $ (7.83) $ (8.60) $ (4.47) $ (.09)
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF PARTNERSHIP CAPITAL
Nine months Ended September 30, 1998 (Unaudited) and
the Years Ended December 31, 1997
General Limited
Partners Partners Total
Balances at January 1, 1996 $ (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)
Partnership loss (3,017) (298,730) (301,747)
Balances at December 31, 1997 (62,806) (708,095) (770,902)
Partnership loss (1,969) (194,791) (196,760)
Balances at September 30, 1998 $ (64,775) $ (902,886) $ (967,661)
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
September 30,
1998 1997
OPERATING ACTIVITIES
Partnership loss $ (196,759) $ (217,979)
Adjustments to reconcile
partnership loss to net cash
provided by (used in) operating
activities:
Gain on Foreclosure (89,719)
Depreciation and amortization 303,307 (440,880)
Provision for losses on rents
and other receivables 50 (257)
Changes in assets and liabilities:
Rents and other receivables (28,813) 7,037
Prepaid expenses (7,165) (22,280)
Commercial commission, deposits
and other (10,293) (10,990)
Account payable and
accrued expenses 105,494 97,042
Accrued interest 21,445 58,071
Unearned revenue (1,857) (13,543)
Tenant security deposits (134) (21,051)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 185,276 249,380
INVESTING ACTIVITIES
Purchase of and improvements
to investment property (55,008) (57,904)
Restricted deposits (23,850) (37,818)
NET CASH USED IN
INVESTING ACTIVITIES (78,858) (95,722)
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)--CONT'D.
Nine Months Ended
September 30,
1998 1997
FINANCING ACTIVITIES
Mortgage Proceeds $ 0 $ 0
Due To (From) Related Partie 2,329 3,849
Principal payments on
long-term debt (99,712) (125,898)
Debt Issuance Cost 0 (30,632)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (97,384) (152,681)
INCREASE IN CASH
AND CASH EQUIVALENTS 9,034 977
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 217,424 206,974
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 226,458 $ 207,951
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 30, 1998
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, 1998 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1998. 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, 1997.
NOTE B--MORTGAGE DEBT
Mortgage debt consists of the following:
September 30, December 31,
1998 1997
Collateralized by Investment
Property:
First Mortgages:
The Colony Apartments $ 3,585,577 $ 3,619,623
Cascade Apartments 1,796,006 1,831,609
The Market S.C./Hidden Valley
Exchange S.C. 1,553,631 1,577,536
Hidden Valley Exchange S.C. 801,190 807,348
Second Mortgages:
The Market S.C./Hidden Valley
Exchange S.C. 410,000 410,000
$ 8,146,404 $ 8,246,116
Interest expense totaled $577,303 and $813,404 for the nine months ending
September 30, 1998 and 1997, 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,
1998 1997
Property management fees $ 63,518 $ 81,835
Amounts due (to) from related parties consist of the following:
September 30, December 31,
1998 1997
Secured Investment Resources
Fund, L.P. III $ (85,693)
Secured Investment Resources
Fund, L.P. II (94,623) (5,000)
SIR, Inc. 51,664 28,063
Colony Apartments 20,000
Cascade Apartments (42,000)
$ (64,959) $ (62,630)
<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 1998 decreased by $384,915 (22.7%)
compared with the same period last year. Residential revenues increased
$2,649, commercial revenues decreased $362,987, and miscellaneous revenues
decreased $24,578 during the same nine-month period.
Total operating and administrative expenses decreased $121,999 (16.3%) when
comparing the first nine months of 1998 to the first nine months of 1997.
The Partnership anticipates that operating results for the year ending
December 31, 1998 will show an improving trend in revenues due to new leases
signed on the commercial properties and improving residential rentals.
Liquidity and Capital Resources
During the first nine months of 1998 $185,276 of cash was provided by
operating activities, $78,858 was used for investing activities and $97,384
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 General Partners are negotiating to extend such mortgage.
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 1998 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 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: June 8, 1999
By: Secured Investment Resources, Inc.
as Corporate General Partner
By:
James R. Hoyt, President
Date: June 8, 1999
<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: June 8, 1999
By: Secured Investment Resources, Inc.
as Corporate General Partner
By: /s/ James R. Hoyt
James R. Hoyt, President
Date: June 8, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 226,458
<SECURITIES> 0
<RECEIVABLES> 81,187
<ALLOWANCES> (37,000)
<INVENTORY> 0
<CURRENT-ASSETS> 458,580
<PP&E> 12,716,127
<DEPRECIATION> 5,489,315
<TOTAL-ASSETS> 7,685,392
<CURRENT-LIABILITIES> 506,650
<BONDS> 8,146,404
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,685,392
<SALES> 0
<TOTAL-REVENUES> 1,313,535
<CGS> 0
<TOTAL-COSTS> 629,684
<OTHER-EXPENSES> 303,307
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 577,303
<INCOME-PRETAX> (196,759)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (196,759)
<EPS-BASIC> (7.83)
<EPS-DILUTED> 0
</TABLE>
