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 14-15
<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 $ 11,732,567 $ 16,523,135
Furniture, fixtures and equipment 916,465 1,714,939
-------- ----------
12,649,032 18,238,074
Less accumulated depreciation
and allowance for losses 5,089,220 6,667,531
-------- ----------
7,559,812 11,570,543
OTHER ASSETS
Cash 207,951 206,974
Rents and other receivables, less
allowance of $32,200 in 1997
$42,350 in 1996 13,349 10,236
Prepaid expenses 22,648 368
Debt issuance costs, net of
accumulated amortization of
$81,334 inn 1997 and $63,135
in 1996 138,683 141,488
Commercial commissions,
deposits and other 6,025 17,015
Restricted deposits 27,538 15,105
-------- ----------
416,194 391,186
-------- ----------
TOTAL ASSETS $ 7,976,006 $ 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) $ 8,275,670 $ 11,952,227
Accrued interest 88,249 128,096
Accounts payable and accrued
expenses 178,748 106,926
Due to related parties (Note C) 61,265 57,416
Unearned revenue 4,590 110,733
Tenant security deposits 54,434 75,485
--------- ----------
TOTAL LIABILITIES 8,662,956 12,430,883
PARTNERSHIP CAPITAL
General Partners
Capital contribution 1,000 1,000
Partnership deficit (62,967) (60,789)
--------- ----------
(61,967) (59,789)
Limited Partners
Capital contributions 5,608,838 5,608,838
Partnership deficit (6,233,821) (6,018,203)
--------- ----------
(624,983) (409,365)
--------- ----------
TOTAL PARTNERSHIP CAPITAL (686,950) (469,154)
$ 7,976,006 $ 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 $1,652,726 $1,650,772 $ 542,996 $ 567,960
Interest 2,581 3,265 843 812
Maintenance escalations 43,143 52,210 8,415 15,197
--------- --------- --------- ---------
1,698,450 1,706,247 552,254 583,969
OPERATING AND
ADMINISTRATIVE EXPENSES
Property operating
expenses 576,427 579,877 192,884 200,849
General and
administrative expenses 22,422 38,229 96 12,239
Professional services 70,997 61,131 25,470 14,406
Management Fees 81,835 75,537 25,162 26,486
--------- --------- --------- ---------
751,681 754,774 243,612 253,980
NET OPERATING INCOME 946,769 951,473 308,642 329,989
NON-OPERATING REVENUE AND
EXPENSES
Gain on foreclosure* (89,719) (89,719)
Interest 813,404 930,476 254,241 281,788
Depreciation and
amortization 440,880 448,370 144,391 148,976
--------- --------- --------- ---------
1,164,565 1,378,846 308,913 430,764
PARTNERSHIP LOSS $ (217,796) $ (427,373) $ (271) $(100,775)
Allocation of loss:
General Partners (2,178) (4,274) (3) (1,008)
Limited Partners (215,618) (423,099) (268) (99,767)
$ (217,796) $ (427,373) $ (271) $ (100,775)
Partnership loss per
limited partnership
unit $ (8.60) $ (17.01) $ (0.00) $ (4.01)
See notes to consolidated financial statements.
* Note E
<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)
Partnership loss (2,178) (215,618) (217,796)
------- --------- --------
Balances at September 30, 1997 $ (61,967) $ (624,983) $ (686,950)
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 $ (217,796) $ (427,373)
Adjustments to reconcile
partnership loss to net cash
provided by (used in) operating
activities:
Gain on foreclosure (89,719)
Depreciation and amortization 440,880 461,176
Provision for losses on rents
and other receivables (251) (17,350)
Changes in assets and liabilities:
Rents and other receivables 7,037 21,064
Prepaid expenses (22,280) (19,020)
Commercial commission, deposits
and other 10,990 (646)
Account payable and
accrued expenses 97,042 (76,681)
Accrued interest 58,071 46,805
Unearned revenue (13,543) 184
Tenant security deposits (21,051) 1,102
------- --------
NET CASH PROVIDED (USED IN)
OPERATING ACTIVITIES 249,380 (10,739)
INVESTING ACTIVITIES
Purchase of and improvements
to investment property (57,904) (164,114)
Restricted deposits (37,818) 59,398
------- --------
NET CASH USED IN
INVESTING ACTIVITIES (95,722) (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 (125,898) (1,856,395)
Debt Issuance Cost (30,632) (8,735)
--------- ---------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (152,681) 157,547
--------- ---------
INCREASE IN CASH
AND CASH EQUIVALENTS 977 42,092
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 206,974 161,414
--------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 207,951 $ 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. - 2,621,779
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
The Market S.C./Hidden Valley
Exchange S.C. 410,000 410,000
$ 8,275,670 $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 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.
NOTE E--FORECLOSURE GAIN (DISPOSITION OF ASSETS)
On August 27, 1997 foreclosure proceedings were instituted on behalf of the
mortgage holder of the property known as Foothills Village S.C. The property
was subject to a first mortgage in the amount of $2,577,084 plus accrued
interest of $19,063 and a second mortgage of $968,245 plus accrued interest of
$86,077. The Fund's basis in the property at the time of foreclosure, net of
depreciation and other items, was approximately $3,565,000.
(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: /s/ James R. Hoyt
James R. Hoyt
as Individual General Partner
Date: November 25, 1998
By: Secured Investment Resources, Inc.
as Corporate General Partner
By: /s/ James R. Hoyt
James R. Hoyt, President
Date: November 25, 1998
<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 25, 1998
By: Secured Investment Resources, Inc.
as Corporate General Partner
By: James R. Hoyt, President
Date: November 25, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<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> 207,951
<SECURITIES> 0
<RECEIVABLES> 45,549
<ALLOWANCES> 32,200
<INVENTORY> 0
<CURRENT-ASSETS> 416,194
<PP&E> 12,649,032
<DEPRECIATION> 5,089,220
<TOTAL-ASSETS> 7,976,006
<CURRENT-LIABILITIES> 2,162,956
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,976,006
<SALES> 0
<TOTAL-REVENUES> 1,695,450
<CGS> 0
<TOTAL-COSTS> 751,681
<OTHER-EXPENSES> 351,161
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 813,404
<INCOME-PRETAX> (217,796)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (217,796)
<EPS-PRIMARY> (4.02)
<EPS-DILUTED> 0
</TABLE>
