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 March 31, 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
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SECURED INVESTMENT RESOURCES FUND, L.P.
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheets --
March 31, 1998 and December 31, 1997 3-4
Consolidated Statements of Operations --
Three Months Ended March 31, 1998 and 1997 5
Consolidated Statements of Partnership
Capital -- Three Months Ended March 31, 1998
and the Years Ended December 31, 1997,
and 1996 6
Consolidated Statements of Cash Flows --
Three Months Ended March 31, 1998 and 1997 7-8
Notes to Consolidated Financial Statements 9-10
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of
Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED BALANCE SHEETS
March 31,
1998 December 31,
(Unaudited) 1997
ASSETS
INVESTMENT PROPERTIES
Land and buildings $ 11,754,515 $ 11,750,152
Furniture, fixtures and equipment 922,065 910,967
12,676,580 12,661,119
Less accumulated depreciation
and allowance for losses 5,290,909 5,191,706
7,385,671 7,469,413
OTHER ASSETS
Cash 255,521 217,424
Rents and other receivables,
less allowance of $34,500 in 1998
and $54,900 in 1997 (3,907) 15,425
Prepaid expenses 21,496
Debt issuance costs, net of
accumulated amortization of
$97,633 in 1998 and $95,733
in 1997 122,385 124,284
Commercial commissions,
deposits and other 6,849 7,415
Restricted deposits 28,576 20,626
430,920 385,174
TOTAL ASSETS $ 7,816,591 $ 7,854,587
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SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED BALANCE SHEETS--CONT'D.
March 31,
1998 December 31,
(Unaudited) 1997
LIABILITIES AND PARTNERSHIP CAPITAL
Mortgage debt (Note B) $ 8,212,675 $ 8,246,116
Accrued interest 100,282 93,187
Accounts payable and accrued
expenses 195,801 157,071
Due to related parties (Note C) 44,040 62,631
Unearned revenue 6,735 9,561
Tenant security deposits 57,366 56,924
TOTAL LIABILITIES 8,616,899 8,625,490
PARTNERSHIP CAPITAL
General Partners
Capital contribution 1,000 1,000
Partnership deficit (64,100) (63,806)
(63,100) (62,806)
Limited Partner
Capital contributions 5,608,838 5,608,838
Partnership deficit (6,346,047) (6,316,934)
(737,208) (708,095)
TOTAL PARTNERSHIP CAPITAL (800,308) (770,902)
$ 7,816,591 $ 7,854,587
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended
March 31,
1998 1997
REVENUES
Rents $ 437,751 $ 537,801
Interest 968 837
Maintenance
escalations 13,896 17,697
452,615 556,335
OPERATING AND
ADMINISTRATIVE EXPENSES
Property operating
expenses 144,115 181,653
General and
administrative
expenses 8,938 10,705
Professional services 14,089 22,977
Management fees 22,694 27,149
189,836 242,484
NET OPERATING INCOME 262,779 313,851
NON-OPERATING EXPENSES
Interest 191,084 276,587
Depreciation and
amortization 101,102 148,244
292,186 424,831
PARTNERSHIP LOSS $ (29,407) $ (110,980)
Allocation of loss:
General Partner (294) (1,109)
Limited Partner (29,113) (109,871)
$ (29,407) $ (110,980)
Partnership loss per
limited partnership
unit $ (1.17) $ (4.42)
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF PARTNERSHIP CAPITAL (Unaudited)
Three Months Ended March 31, 1998 (Unaudited) and
the Years Ended December 31, 1997 and 1996
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 (294) (29,113) (29,407)
Balances at March 31, 1998 $ (63,100) $ (737,208) $ (800,309)
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended
March 31,
1998 1997
OPERATING ACTIVITIES
Partnership income $ (29,407) $ (110,980)
Adjustments to reconcile
partnership loss to net cash
provided by (used in) operating
activities:
Depreciation and amortization 101,102 151,728
Provision for losses on rents
and other receivables (2,450) 12,550
Changes in assets and liabilities:
Restricted deposits (7,950) 2,962
Rents and other receivables 21,782 (11,535)
Prepaid expenses (21,496) (51,479)
Debt issuance costs 0 (8,735)
Commercial commissions, deposits
and other 567 (10,291)
Accounts payable and
accrued expenses 38,730 78,666
Accrued interest 7,095 18,505
Unearned revenue (2,826) (8,706)
Tenant security deposits 442 (303)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 105,589 (71,063)
INVESTING ACTIVITIES
Purchases of and improvements
to investment properties (15,460) (10,244)
NET CASH USED IN
INVESTING ACTIVITIES (15,460) (10,244)
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)--CONT'D.
Three Months Ended
March 31,
1998 1997
FINANCING ACTIVITIES
Debt Issuance Costs 0 (9,977)
Due To (From) Related Parties (18,591) 1,242
Principal payments on
long term debt (33,441) (33,302)
NET CASH PROVIDED BY
FINANCING ACTIVITIES (52,032) (42,037)
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 38,097 18,782
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD 217,424 206,974
CASH AND CASH EQUIVALENTS
END OF PERIOD $ 255,521 $ 225,756
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
March 31, 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 three month period
ended March 31, 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:
March 31, December 31,
1998 1997
Collateralized by Investment
Property
First Mortgages:
The Colony Apartments $ 3,608,495 3,619,623
Cascade Apartments 1,820,032 1,831,609
The Market S.C./Hidden Valley
Exchange S.C. 1,569,457 1,577,536
Hidden Valley Exchange S.C. 804,691 807,348
Second Mortgages:
The Market S.C./Hidden Valley
Exchange S.C. 410,000 410,000
$ 8,212,675 $ 8,246,116
Interest expense totaled $191,084 and $276,587 for the three months ending
March 31, 1998 and 1997, respectively.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited)--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:
Three Months Ended
March 31,
1998 1997
Property Management Fees $ 22,694 $ 27,149
Amounts due (to) from related parties consist of the following:
March 31, December 31,
1998 1997
Secured Investment Resources
Fund, L.P. III $ (87,637) $ (85,694)
Secured Investment Resources
Fund, L.P. II (5,000) (5,000)
SIR, Inc. 28,597 28,063
The Colony Apartments 20,000
$ (44,040) $ (62,631)
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)--CONT'D.
NOTE D--CASH DISTRIBUTIONS
No cash distributions have been made since January 1990. Future distributions
will only be made 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 three months of 1998 decreased by $103,720 (18.8%)
compared with the same period of last year. During that period, residential
revenues increased $27,639, while commercial revenues decreased $120,555 and
miscellaneous revenues decreased $10,804.
Total operating and administrative expenses decreased $52,648 (21.9%) when
comparing the first three months of 1998 to the first three months of 1997.
The Partnership anticipates that operating results for the year ending
December 31, 1998 will show an increase in revenues due to new leases signed
on the commercial properties, and increases in rental rates for the apartment
rentals.
Liquidity and Capital Reserves
During the first three months of 1998 $105,390 of cash was provided by
operating activities, $15,400 was used for investing activities and $52,000
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 cash flow from operations will
continue to improve because of strong occupancy, stabilized rental rates,
stabilized expenses, and new leases stabilized on commercial properties.
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.
<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 March 31, 1997.
<PAGE>
<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: May 28, 1999
By: Secured Investment Resources, Inc.
as Corporate General Partner
By: /s/ James R. Hoyt
James R. Hoyt, President
Date: May 28, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 255,521
<SECURITIES> 0
<RECEIVABLES> 30,593
<ALLOWANCES> (34,500)
<INVENTORY> 0
<CURRENT-ASSETS> 430,920
<PP&E> 12,676,580
<DEPRECIATION> 5,290,909
<TOTAL-ASSETS> 7,816,591
<CURRENT-LIABILITIES> 404,224
<BONDS> 8,212,675
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,816,591
<SALES> 0
<TOTAL-REVENUES> 452,615
<CGS> 0
<TOTAL-COSTS> 189,836
<OTHER-EXPENSES> 101,102
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 191,084
<INCOME-PRETAX> (29,407)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (29,407)
<EPS-BASIC> (1.17)
<EPS-DILUTED> 0
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