FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 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) 362-0200
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 No X
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
<PAGE>
PART I
Item 1. Business
Secured Investment Resources Fund, L.P. ("Partnership") is a Kansas limited
partnership formed pursuant to the Kansas Revised Uniform Limited Partnership
Act on March 30, 1984. James R. Hoyt is the Individual General Partner and
Secured Investment Resources, Inc., a Kansas corporation, is the Corporate
General Partner. The Partnership was formed with the intent to engage in the
business of acquiring, improving, developing, operating and holding for
investment, income producing properties with the objectives of (i) preserving
and protecting the Partnership's capital; (ii) providing capital gains through
potential appreciation; (iii) providing quarterly "tax sheltered" cash
distributions from operations; (iv) generating tax losses in excess of tax
shelter distributions, which may be used to offset taxable income from other
sources; and (v) increasing equity through the reduction of mortgage loans on
Partnership properties. The term of the partnership is sixty (60) years from
the date of the Partnership Agreement of October 1, 1984, or the date of
which all the assets acquired by the Partnership are sold or converted to
cash.
On August 31, 1986, the Partnership closed its offering, having received
gross proceeds of $12,434,750 from the sale of 24,869.5 units of limited
partnership interests. This amount includes the purchase of 190 units by
the Corporate General Partner.
The Partnership acquired two garden-style apartment communities in 1985 and
three commercial strip shopping centers in 1986. The General Partners feel
that all of these properties met the Partnership's investment criteria and
objectives.
Total rent charges for Sampler Shoppes, Inc. (SSI), the anchor tenant at
Foothills Village Shopping Center, represented approximately 6.0% and 9.0% of
Partnership rent revenues for the years ended December 31, 1997 and 1996,
respectively.
<PAGE>
Item 1. Business--Cont'd.
As of December 31, 1997, the Partnership has made cash distributions to
Limited Partners of $5,343,132 for the period June 1, 1985 through December
31, 1997. No distributions have been made since January 1990. Future
distributions will only be made from excess cash flow not needed for working
capital reserves.
As of December 31, 1997, the Partnership had no employees. Employees of
SPECS, Inc. provide services to the Partnership (as described in Note D).
James R. Hoyt, a General Partner, is the principal and owner of 33% of SPECS,
Inc. as of December 31, 1997.
Competition
The real estate business is highly competitive and the Partnership competes
with numerous entities engaged in real estate activities, some of which have
greater financial resources than those of the Partnership. The Partnership's
management believes that success against such competition is dependent upon
the geographic location of the property, the performance of property managers,
the amount of new construction in the area and the maintenance and appearance
of the property. With respect to residential property, competition is also
based upon the design and mix of the units and the ability to provide a
community atmosphere for the tenants. The Partnership's management believes
that general economic circumstances and trends and new properties in the
vicinity of each of the Partnership's properties will also be competitive
factors.
Inflation
The effects of inflation on the Partnership's operations or investments are
not quantifiable. Revenues from property operations fluctuate proportionately
with increases and decreases in housing costs. Fluctuations in the rate of
inflation also affect the sales values of properties and, correspondingly,
the ultimate gains to be realized by the Partnership from property sales.
<PAGE>
Item 2. Properties.
The following table sets forth the investment portfolio of the Partnership at
December 31, 1997:
Average
Properties at Occupancy(*)
Property Description Initial Cost Date Acquired Percentage
1997 1996
The Colony
Apartments 140 units $5,940,707 Oct. 16, 1989 87% 90%
Burlington, NC
Cascade
Apartments 86 units $2,584,253 Dec. 7, 1989 93% 94%
Topeka, KS
Hidden Valley
Exchange 27,200 Sq.Ft. $2,013,709 Sep. 30, 1986 74% 76%
Shopping Ctr.
Independence, MO
The Market
Shopping Ctr. 12,782 Sq.Ft. $1,414,510 Nov. 18, 1986 87% 74%
Overland Park, KS
(*) Based upon vacancy amount (in dollars) as a percent of gross
possible rents. (Gross possible rents is calculated by
multiplying established market rates for each unit type by the
total unit mix).
The encumbrances against each property are discussed in Note C.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Security Holder
Matters.
(A) There is no established public trading market for the Units of the
Partnership.
(B) There have been no distributions the last seven (7) years.
(C) As of December 31, 1997, the Partnership had admitted 1,297
Limited Partners who purchased 24,869.5 units.
Item 6. Selected Financial Data.
For The Years Ended December 31,
OPERATING DATA 1997 1996 1995 1994 1993
(In Thousands)
Rents $ 2,082 $ 2,225 $ 2,235 $ 2,116 $ 1,857
Maintenance
Escalations
and Other Income 66 74 91 91 110
Property Operating
and Administrative Exp 979 997 1,009 910 821
Interest
Expense 1,003 1,202 1,175 1,208 1,140
Depreciation/
Amortization 558 624 627 590 591
Loss before
extraordinary item (392) (524) (485) (501) (585)
Extraordinary item 90 - - - -
Partnership
Loss $ (302) $ (524) $ (485) $ (501) $ (585)
PER LIMITED PARTNERSHIP UNIT
Loss per limited
partnership unit before
extraordinary item (15.58) (20.88) (19.32) (19.94) (23.27)
Extraordinary item 3.57 - - - -
Total loss per limited
partnership unit(1) $ (12.01) $ (20.88) $ (19.32) $ (19.94) $ (23.27)
Cash Distributions(2)$ --- $ --- $ --- $ --- $ ---
<PAGE>
Item 6. Selected Financial Data--Cont'd.
BALANCE SHEET DATA 1997 1996 1995 1994 1993
(In Thousands)
Total Assets 7,855 11,968 12,398 12,973 13,285
Mortgage Debt 8,246 11,952 11,826 11,576 11,630
(1) Partnership loss per limited partnership unit is computed by dividing
loss allocated to the Limited Partners by the weighted average number
of limited partnership units outstanding. Per unit information has
been computed based on 24,869.5 weighted average limited partnership
units outstanding.
(2) Cash distributions per limited partnership unit have been computed by
dividing distributions paid to the Limited Partners by 24,869.5
weighted average limited partnership units outstanding.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Revenue for the partnership (net of the Foothills, which was foreclosed in
1997 and had revenue of $377,000 and $493,486 for 1997 and 1996 respectively)
decreased in 1997 to $1,771,000 as compared to $1,805,000 in 1996. This
represented a decrease of $34,000 or 1.9%.
Operating costs (net of the Foothills which had operating costs of $109,000
in 1997 and $130,000 in 1996) increased in 1997 by $3,000 to $870,000 from
$867,000, or an increase of 0.3%. Depreciation and amortization for 1997
(net of the Foothills which was $131,000 for 1997 and $204,000 for 1996)
increased by $7,000 to $427,000 for 1997 compared to $420,000 for 1996.
Interest for 1997 (net of the Foothills which had interest of $239,000 and
$366,000 for 1997 and 1996 respectively) decreased for the partnership by
$72,000 to $764,000 for 1997 from $836,000 for 1996. The net result to the
Partnership was a decrease in the net loss from continuing properties of
$290,000 in 1997 as compared to $317,000 in 1996.
Revenue for the partnership decreased in 1996 to $2,299,000 as compared to
$2,326,000 in 1995. This represented a decrease of $27,000 or 1.2%.
The operating costs without depreciation and amortization stabilized in 1996
over 1995 with a slight decrease of $12,000 (1.2%) from $1,009,000 to
$997,000. Interest expense was up from 1995 by $27,000 (2.3%). Depreciation
and amortization for 1996 decreased slightly by $3,000 (.3%) over 1995
depreciation of $627,000. The net result to the Partnership was an increase
in the loss of $39,000 (8.0%) over 1995 levels.
Revenue in 1995 was $2,326,000 as compared to $2,207,000 in 1994, an increase
of 5.4%. This higher revenue was achieved through average higher occupancy
levels at both residential and commercial properties and through increased
rental rates on the residential properties.
The increased residential rental rates resulted in a high resident turnover
and higher operating costs. The operating costs increased $99,000 (10.9%)
from $910,000 to $1,009,000. These increases were primarily in the areas of
repairs, payroll, and utilities. Interest expense was down from 1994 by
$33,000 (2.7%). Depreciation for 1995 increased $37,000 (6.3%) over 1994
depreciation of $590,000. The net result to the Partnership was
a reduction of the loss by $16,000 (3.1%) from 1994 levels.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.--Cont'd.
Results of Operations--Cont'd.
The Partnership anticipates that the operating results will improve during
1998. The general partner anticipates that the Fund will achieve higher
occupancy levels, increased rental rates, decreased rent promotions and will
begin a closer monitoring of operating expenses.
Liquidity and Sources of Capital
During 1997, the Partnership's primary source of working capital was from
operations, which provided $292,000 of funds. Property improvements utilized
$70,000 of these funds and $155,000 was used for debt reduction. The net
effect was an increase in cash of $10,000 at year end. The continuing trend
of higher occupancy levels and higher rental rates should continue through
1998 and improve cash flow from operations.
The Partnership is currently in negotiations with the lender for the second
mortgage on the Market Shopping Center and the Hidden Valley Exchange
Shopping Center. The Partnership is attempting to extend the due date from
June 1998 or find a replacement lender. The lender for the Cascade Apartments
has given verbal commitment to extend the mortgage on a month-to-month basis.
During 1996, the Partnership's primary source of working capital was from
borrowing/refinancing of long term debt of $118,000 net of repayments.
Operations provided $68,000 of funds. Property improvements utilized
$200,000 of these funds, and $58,000 was provided by restricted deposits for
capital improvements. The net effect was an increase in cash of $46,000 at
year end. The trend of higher occupancy levels and higher rental rents that
began several years ago should continue through 1997 and improve cash flow
from operations.
During 1995, the Partnership's primary source of working capital was from
borrowing/refinancing of long term debt of $196,000 net of repayments.
Operations provided $39,000 of funds. Property improvements utilized
$183,000 of these funds, as did $73,000 in restricted deposits for capital
improvements. The net effect was a decrease in cash of $21,000 at year end.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.--Cont'd.
Liquidity and Sources of Capital--Cont'd.
During 1995, Sampler Shoppes, Inc. (The primary tenant at Foothills) paid the
entire amount of delinquent rent thereby reducing the Rent and Other
receivable balance at December 31, 1994 by $231,000. With these funds the
partnership paid delinquent real estate taxes of $138,000 at Foothills
Shopping Center, reduced accrued interest on real estate loans and funded
additional closing costs on the new Colony Apartments' loan.
The General Partners' believe that sufficient working capital will be
available to fund known, on-going operating and capital expenditure
requirements for the Partnership during 1998. The Partnership expects
continued increased rental income from the residential properties due to
ongoing scheduled rental increases. It is also anticipated that occupancy
will remain stable on the commercial properties. Operating expenses in 1998
will be up slightly from 1997 due primarily to increased operating costs
incurred in conjunction with scheduled rent increases. Interest expense on
variable rate notes is expected to increase slightly from 1997 levels.
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 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.
The Partnership is actively seeking a mortgage lender for the Cascade
Apartments mortgage, which matured in March, 1996. The mortgage was extended
by the lender from March, 1996 at the same rate of interest. As of the date
of this report, the Partnership continues to make monthly principal and
interest payments of $18,900 and will continue on a month-to-month basis
with the lender until a refinancing can be completed which is anticipated to
be in 1998.
On August 27, 1997 foreclosure proceedings were instituted on behalf of the
mortgage holders of the property known as Foothills Village Shopping Center.
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 $968,745, plus
accrued interest of $86,077. The fund's basis in the property at the time of
the foreclosure, net of depreciation and other items, was approximately
$3,565,000. The Partnership recorded a one-time gain on the foreclosure in
the amount of $89,719.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.--Cont'd.
Liquidity and Sources of Capital--Cont'd.
The General Partners' intend to evaluate the property portfolio to determine
if it is prudent to offer one or more properties for sale. Any unleveraged
portion of the net sales proceeds will generate additional working capital.
The General Partners have determined it prudent to discontinue cash
distributions, until such time that adequate working capital reserves are
available. No distributions have been made since 1990.
Year 2000
The Partnership is currently dependent upon the General Partners and SPECS,
Inc. ("SPECS") for management and administrative services. It is anticipated
that the General Partners and SPECS will have to modify or replace portions
of their software so that the computer systems will function properly with
respect to dates in the year 2000 and thereafter (the "Year 2000 Issue").
The project is estimated to be completed no later than January, 1999. It is
anticipated that SPECS will install a Year 2000 compliant software system at
the property by that date. The cost of the conversion is not anticipated to
be material. The general partners believe that with modifications to
existing software and conversion to new software, the Year 2000 Issue will
not pose significant operational problems for its computer systems. However,
if such conversions are not made, or are not completed timely, the Year 2000
Issue could have a material impact on the operations of the Partnership.
Inflation
The effects of inflation on the Partnership's operations or investments are
not quantifiable. Revenues from property operations fluctuate proportionately
with increases and decreases in housing costs. Fluctuations in the rate of
inflation also affect the sales values of properties and, correspondingly,
the ultimate gains to be realized by the Partnership from property sales.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.--Cont'd.
New Accounting Standards
SFAS No. 130, "Reporting Comprehensive Income," was issued in June 1997.
Comprehensive income is defined as net income plus certain items that are
recorded directly to shareholders' equity, such as unrealized gains and
losses on available-for-sale securities. Components of comprehensive income
will be included in a financial statement that has the same prominence as
other financial statements starting in the first quarter of fiscal 1999.
SFAS No. 130's disclosure requirements will have no impact on the
Partnership's financial condition or results of operations.
SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information," is effective for financial statements for periods beginning
after December 15, 1997, but interim reporting is not required in 1998.
An operating segment is defined under SFAS No. 131 as a component of an
enterprise that engages in business activities that generate revenue and
expense for which operating results are reviewed by the chief operation
decision maker in the determination of resource allocation and performance.
The Partnership anticipates no impact of SFAS No. 131 on future financial
statement disclosures.
In April 1998, the Accounting Standards Executive Committee issued Statement
of Position 98-5 Reporting on the Costs of Start-Up Activities. SOP 98-5
provides guidance on the financial reporting of start up costs and
organization costs. It requires costs of start-up activities and
organization costs to be expensed as incurred. The SOP broadly defines
start-up activities and provides examples to help entities determine what
costs are and are not within the scope of this SOP. The SOP applies to all
nongovernmental entities and, in general, is effective for financial
statements for fiscal years beginning after December 15, 1998.
The Partnership is not in its start-up phase and thus does not expect this
SOP to have a significant effect on its financial statement when it becomes
effective.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.--Cont'd.
New Accounting Standards--Cont'd.
In June 1998, the Financial Accounting Standards Board Issued SFAS 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS 133
requires companies to recognize all derivatives contracts as either
assets or liabilities in the balance sheet and to measure them at fair
value. If certain conditions are met, a derivative may be specifically
designated as a hedge, the objective of which is to match the timing of
gain or loss recognition on the hedging derivative with the recognition
of (i) the changes in the fair value of the hedged asset or liability
that are attributable to the hedged risk or (ii) the earnings effect of
the hedged forecasted transaction. For a derivative not designated as a
hedging instrument, the gain or loss is recognized in income in the period
of change. SFAS 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999.
Historically, the Partnership has not entered into derivatives contracts
either to hedge existing risks or for speculative purposes. Accordingly,
the Partnership does not expect adoption of the new standard on January 1,
2000 to affect its financial statements.
Item 8. Financial Statements and Supplementary Data.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
Index
Page
Independent Auditors' Report 14
Financial Statements:
Consolidated Balance Sheets - December 31,
1997 and 1996 15-16
Consolidated Statements of Operations -
Years Ended December 31, 1997, 1996
and 1995 17
Consolidated Statements of Partnership Capital
(Deficit)-
Years Ended December 31, 1997, 1996
and 1995 18
Consolidated Statements of Cash Flows -
Years Ended December 31, 1997,
1996 and 1995 19-20
Notes to Consolidated Financial Statements 21-33
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Secured Investment Resources Fund, L.P.
Mission, KS
We have audited the accompanying consolidated balance sheets of Secured
Investment Resources Fund, L.P. as of December 31, 1997 and 1996, and the
related consolidated statements of operations, partnership capital (deficit)
and cash flows for each of the three years in the period ended December 31,
1997. We have also audited the schedules listed in the accompanying index.
These financial statements and schedules are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on
these financial statements and schedules based upon 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 and
schedules are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements and schedules. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial statements and
schedules. We believe that our audits provide a reasonable basis for our
opinion.
As discussed in Note C, the Partnership has mortgage loans that mature
during the next fiscal year or that have become due. The Partnership is
in current negotiations with the mortgage holders to extend or refinance
these obligations.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Secured Investment
Resources Fund, L.P. at December 31, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in the period
ended December 31, 1997 in conformity with generally accepted accounting
principles.
Also in our opinion, the schedules present fairly, in all material respects,
the information set forth therein.
s/ BDO Seidman
St. Louis, Missouri
February 6, 1998
(Except for Note L dated January 13, 1999)
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED BALANCE SHEETS
December 31,
1997 1996
ASSETS
INVESTMENT PROPERTIES (Notes B and C)
Land and buildings $11,750,152 $16,523,135
Furniture, fixtures and equipment 910,967 1,714,939
12,661,119 18,238,074
Less accumulated depreciation and
allowance for losses 5,191,706 6,667,531
7,469,413 11,570,543
Cash 217,424 206,974
Rents and other receivables, less
allowance of $36,950 in 1997 and
$42,350 in 1996 (Notes F and I) 15,425 10,236
Prepaid expenses --- 368
Debt issuance costs, net of accumulated
amortization of $95,733 in 1997 and
$63,135 in 1996 124,284 141,488
Commercial commissions, deposits and
other 7,415 17,015
Restricted deposits 20,626 15,105
385,174 397,186
$ 7,854,587 $11,967,729
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED BALANCE SHEETS--CONT'D.
December 31,
1997 1996
LIABILITIES AND PARTNERSHIP CAPITAL (DEFICIT)
Mortgage Debt (Note C) $ 8,246,116 $11,952,227
Accrued interest 93,187 128,096
Accounts payable and accrued
expenses (Note G) 157,071 106,926
Due to related parties (Note D) 62,630 57,416
Unearned revenue 9,561 110,733
Tenant security deposits 56,924 75,485
TOTAL LIABILITIES 8,625,489 12,430,883
PARTNERSHIP CAPITAL (DEFICIT)
General Partners
Capital contribution 1,000 1,000
Partnership deficit (63,806) (60,789)
(62,806) (59,789)
Limited Partners
Capital contributions 5,608,838 5,608,838
Partnership deficit (6,316,934) (6,018,203)
(708,096) (409,365)
TOTAL PARTNERSHIP CAPITAL (DEFICIT) (770,902) (469,154)
$ 7,854,587 $11,961,729
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
1997 1996 1995
REVENUES
Rents $ 2,081,994 $ 2,224,610 $ 2,234,875
Interest 3,944 4,990 6,721
Maintenance escalations 62,293 68,992 84,824
2,148,231 2,298,592 2,326,420
OPERATING AND ADMINISTRATIVE
EXPENSES
Property operating
expenses 756,849 753,457 738,543
General and administrative
expenses 47,655 50,846 58,304
Professional services (Note D) 70,091 89,990 104,216
Management fees (Note D) 104,534 102,613 107,915
Depreciation & amortization 557,765 623,856 627,298
1,536,894 1,620,762 1,636,276
NET OPERATING INCOME 611,337 677,830 690,144
NON-OPERATING (EXPENSES)
Interest (1,002,804) (1,202,257) (1,175,423)
(391,467) ( 524,427) ( 485,279)
EXTRAORDINARY ITEM
Gain on foreclosure (Note J) 89,719 - -
PARTNERSHIP LOSS $ (301,748) $ (524,427) $ (485,279)
Allocation of loss:
General Partners $ (3,017) $ (5,244) $ (4,853)
Limited Partners (298,731) (519,183) (480,426)
$ (301,748) $ (524,427) $ (485,279)
Loss per limited partnership
unit before extraordinary
item (15.58) (20.88) (19.32)
Extraordinary item 3.57 - -
Total loss per partnership
unit $ (12.01) $ (20.88) $ (19.32)
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF PARTNERSHIP CAPITAL (DEFICIT)
Years Ended December 31, 1997, 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 (3,017) (298,731) (301,748)
Balances at December 31, 1997 $ (62,806) $ (708,096) $ (770,902)
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
1997 1996 1995
OPERATING ACTIVITIES
Partnership loss $ (301,748) $ (524,427) $ (485,279)
Adjustments to reconcile
partnership loss to net
cash provided by operating
activities:
Depreciation and
amortization 557,765 623,856 627,298
Gain on Foreclosure (89,719) - -
Provisions for losses
on rents and other
receivables (5,400) (14,850) 36,819
Changes in assets and
liabilities:
Rents and other
receivables 211 22,965 189,148
Prepaid expenses 368 7,889 12,675
Commercial commissions,
deposits and other 9,600 (2,445) (12,097)
Accounts payable
and accrued expenses 75,364 (133,830) (131,140)
Accrued interest 73,009 33,950 (188,743)
Unearned revenue (8,672) 59,250 (9,376)
Tenant security
deposits (18,561) (3,898) 166
NET CASH PROVIDED BY
OPERATING ACTIVITIES 292,217 68,460 39,471
INVESTING ACTIVITIES
Improvements to investment
properties (69,991) (199,542) (182,714)
Restricted deposits (30,906) 58,194 (73,299)
NET CASH USED IN
INVESTING ACTIVITIES (100,897) (141,348) (256,013)
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS--CONT'D.
Years Ended December 31,
1997 1996 1995
FINANCING ACTIVITIES
Borrowings under
debt arrangements $ - $ 2,017,300 $ 3,850,781
Debt issuance costs (30,632) (13,842) (43,867)
Advances (to) from
related parties 5,214 6,494 (11,178)
Principal payments on
debt (155,452) (1,891,504) (3,600,042)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (180,870) 118,448 195,694
INCREASE (DECREASE) IN CASH 10,450 45,560 (20,848)
CASH BEGINNING OF YEAR 206,974 161,414 182,262
CASH END OF YEAR $ 217,424 $ 206,974 $ 161,414
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
Organization and Business--Secured Investment Resources Fund, L.P.
(the Partnership) is a Kansas limited partnership formed pursuant to the
Kansas Revised Uniform Limited Partnership Act on March 30, 1984. The
General Partners' and Limited Partners' interest in Partnership earnings
or loss initially amounts to 1% and 99%, respectively. The allocation of
the 1% interest between the General Partners is discretionary. At such
point in time cash distributions to the Limited Partners amount to their
original invested capital plus interest at a rate of the greater of 8% or
the increase in the consumer price index per annum, cumulative non-compounded
on their adjusted invested capital, earnings or loss will be allocated 15%
to the General Partners and 85% to the Limited Partners.
Consolidated Limited Partnerships
To satisfy current real estate lending requirements that real estate assets
be in single asset partnerships, the Partnership has formed two single asset
partnerships. Cascade Joint Venture L.P., a Kansas limited partnership was
formed on December 28, 1993 and Colony Joint Venture, L.P., a Kansas limited
partnership was formed on September 14, 1994. These partnerships retained
the same partnership structure as Secured Investment Resources Fund, L.P.,
with Secured Investment Resources Fund, L.P. being the sole Limited Partner.
The General Partners of Cascade Joint Venture L.P. and Colony Joint Venture,
L.P. are identical to the General Partners of Secured Investment Resources
Fund, L.P. The result of operations of these single asset partnerships have
been consolidated with the Partnership.
Depreciation--Investment property is depreciated on a straight-line basis
over the estimated useful life of the property (30 years for buildings and
5 years for furniture, fixtures and equipment). Improvements are capitalized
and depreciated over their estimated useful lives. Maintenance and repair
expenses are charged to operations as incurred.
Income Taxes--Any tax liabilities or benefits arising from Partnership
operations are recognized individually by the respective partners and,
consequently, no provision will be made by the Partnership for income taxes
or income tax benefits.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D.
NOTE A--SIGNIFICANT ACCOUNTING POLICIES--CONT'D
Partnership Loss Per Limited Partnership Unit--Partnership loss per limited
partnership unit is computed by dividing loss allocated to the Limited
Partners by the weighted average number of limited partnership units
outstanding. Per unit information has been computed based on 24,869.5
weighted average limited partnership units outstanding.
Debt Issuance Costs--Loan costs are capitalized by the Partnership and are
amortized over the term of the related loan.
Accounting 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 statement and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
New Accounting Standards-SFAS No. 130, "Reporting Comprehensive Income," was
issued in June 1997. Comprehensive income is defined as net income plus
certain items that are recorded directly to shareholders' equity, such as
unrealized gains and losses on available-for-sale securities. Components of
comprehensive income will be included in a financial statement that base the
same prominence as other financial statements starting in the first quarter
of fiscal 1999. SFAS No. 130's disclosure requirements will have no impact
on the Partnership's financial condition or results of operations.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D
NOTE A--SIGNIFICANT ACCOUNTING POLICIES--CONT'D
New Accounting Standards (cont'd)-SFAS No. 131, "Disclosure about Segments
of an Enterprise and Related Information," is effective for financial
statements for periods beginning after December 31, 1997, but interim
reporting is not required in 1998. An operation segment is defined under
SFAS No. 131 as a component of an enterprise that engages in business
activities that generate revenue and expense for which operating results are
reviewed by the chief operating decision maker in the determination of
resource allocation and performance. The Partnership anticipates no impact
of SFAS No. 131 on future financial statement disclosures.
In April 1998, the Accounting Standards Executive Committee issued Statement
of Position 98-5 Reporting on the Costs of Start-Up Activities. SOP 98-5
provides guidance on the financial reporting of start up costs and
organization costs. It requires costs of start-up activities and
organization costs to be expensed as incurred. The SOP broadly defines
start-up activities and provides examples to help entities determine what
costs are and are not within the scope of this SOP. The SOP applies to all
nongovernmental entities and, in general, is effective for financial
statements for fiscal years beginning after December 15, 1998.
The Partnership is not in its start-up phase and thus does not expect this
SOP to have a significant effect on its financial statement when it becomes
effective.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D
NOTE A--SIGNIFICANT ACCOUNTING POLICIES--CONT'D
New Accounting Standards (cont'd)-In June 1998, the Financial Accounting
Standards Board Issued SFAS 133, Accounting for Derivative Instruments and
Hedging Activities. SFAS 133 requires companies to recognize all derivatives
contracts as either assets or liabilities in the balance sheet and to measure
them at fair value. If certain conditions are met, a derivative may be
specifically designated as a hedge, the objective of which is to match the
timing of gain or loss recognition on the hedging derivative with the
recognition of (i) the changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk or (ii) the earnings
effect of the hedged forecasted transaction. For a derivative not designated
as a hedging instrument, the gain or loss is recognized in income in the
period of change. SFAS 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999.
Historically, the Partnership has not entered into derivatives contracts
either to hedge existing risks or for speculative purposes. Accordingly,
the Partnership does not expect adoption of the new standard on January 1,
2000 to affect its financial statements.
Reclassification--Certain reclassifications have been made to the 1995
Financial Statement to conform to the 1996 presentation. These
reclassifications had no effect on the results of operations.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D.
NOTE B--INVESTMENT PROPERTIES
Investment properties consist of the following:
December 31,
1997 1996
Cost (including capital
improvements subsequent
to acquisition):
The Colony Apartments $ 6,380,600 $ 6,339,111
Cascade Apartments 2,713,277 2,693,957
Hidden Valley Exchange
Shopping Center 2,130,407 2,122,326
Foothills Village
Shopping Center - 5,645,845
The Market Shopping Center 1,434,163 1,434,163
Partnership 2,672 2,672
12,661,119 18,238,074
Less
Accumulated depreciation (4,786,706) (6,262,531)
Allowance for losses (405,000) (405,000)
$ 7,469,413 $ 11,570,543
During 1990, the Partnership reduced the carrying value of its commercial
property portfolio to reflect real estate market conditions. This change
is reflected in Allowance for Losses on Investment Properties. Depreciation
expense was $525,259, $589,250 and $584,926 for the years ended December 31,
1997, 1996, and 1995.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D.
NOTE C--MORTGAGE DEBT
Non-recourse mortgage debt consists of the following:
December 31,
1997 1996
Collateralized by Investment Property
First Mortgages
Hidden Valley Exchange S.C. $ 807,348 $ 813,628
The Market S.C./Hidden Valley 1,577,536 1,601,745
Foothills Village S.C. - 2,621,779
The Colony Apts. 3,619,623 3,661,657
Cascade Apts. 1,831,609 1,875,173
Second Mortgages
Foothills Village S.C. - 968,245
The Market S.C./Hidden Valley 410,000 410,000
$ 8,246,116 $11,952,227
Hidden Valley Exchange Shopping Center (Hidden Valley) and The Market
Shopping Center (The Market) In February 1993, a $750,000 note,
collateralized by Hidden Valley and assignment of its rents and leases,
was increased to $820,000 and converted to a mortgage payable with
interest charged at 8.5%. This loan requires monthly principal and
interest payments of $6,266 with the final payment due September 2000.
Also in February 1993, a $1,650,000 note, collateralized by Hidden Valley
and The Market, was increased to $1,800,000 and converted to a mortgage
payable. In August of 1995 an advance on the $1,800,000 note brought the
balance to $1,825,696. This loan is payable at 7.0% interest with monthly
principal and interest of $11,426 through the maturity date of June 2001.
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 monthly interest payments on this
mortgage 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. The Partnership is attempting to extend the due date from June
1998 or find a replacement lender.
The Partnership is in violation of covenants on both of the above notes which
require certain financial reports to be filed within 120 days after year end.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D.
NOTE C--MORTGAGE DEBT--CONT'D.
Foothills Village Shopping Center (Foothills)
On August 27, 1997 foreclosure proceedings were instituted on behalf of the
mortgage holder on the property known as Foothills Village Shopping Center.
The property was foreclosed and the Partnership no longer owns an interest
in the property. The property was subject to a first mortgage in the amount
of $2,582,414, plus accrued interest of $21,841 and a second mortgage in the
amount of $968,245, plus accrued interest of $86,077.
The Colony Apartments (The Colony)
On January 17, 1995, the purchase money note in the amount of $3,500,000 was
retired through the issuance of a new mortgage. This new mortgage in the
original amount of $3,728,000 is due in February, 2005. The interest rate is
fixed for the term of the loan at 10.09%, with monthly principal and interest
payments of $34,113.
Cascade Apartments (Cascade)
A 9.875% note is collateralized by Cascade. Both principal and interest
payments are made in an amount necessary to amortize the $2,100,000 loan
over 25 years with the unpaid principal due on the maturity date of March 1,
1995. The loan is in default; however, the lender has given a verbal
commitment to extend the mortgage on a month-to-month basis. The Partnership
will make monthly principal, interest and escrow payments of $21,733 until
permanent financing is found.
Cash paid for interest totaled $1,037,713, $1,168,308 and $1,364,166 during
1997, 1996, and 1995, respectively.
Maturities of mortgage debt are as follows:
Year
1998 2,322,239
1999 88,114
2000 881,288
2001 1,551,247
2002 69,110
Thereafter 3,334,118
TOTAL $ 8,246,116
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D.
NOTE D--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.
Amounts paid by the Partnership to SPECS, Inc. are as follows:
Years Ended December 31,
1997 1996 1995
Property management fees $104,534 $102,613 $107,915
Professional Services 66,931 47,168 46,000
$171,465 $149,781 $153,915
The General Partners are entitled to receive a Partnership Management Fee
equal to 5% of Cash Flow From Operations (as defined) for managing the
normal operations of the Partnership except for Hidden Valley and The Market
whose Management Fee is equal to 3% of Cash Flow From Operations. There
was no management fee due for the years ending December 31, 1997, 1996 and
1995.
Amounts due from (to) related parties consist of the following:
Years Ended December 31,
1997 1996
SIR, Inc. $ 28,063 $ 25,929
Secured Investment Resources
Fund, L.P. II (5,000) (5,000)
Secured Investment Resources
Fund, L.P. III (85,693) (78,345)
Due From (To) Related Parties $ (62,630) $ (57,416)
Advances to SIR Inc. are scheduled to be reimbursed in 1998.
In May, 1995, the Partnership began repaying the advances owed to Secured
Investment Resources Fund, L.P. III. During 1996, $2,440 of principal
was repaid while $6,142 of interest expense was accrued at 9% per annum
into the note balance. During 1997, $7,348 of interest expense was accrued
at 9% per annum into the note balance.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D.
NOTE E--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.
NOTE F--PARTNERSHIP LIQUIDITY
The Partnership operates within the real estate industry and is subject to
its economic forces, which contributes additional liquidity risk to the
Partnership's investment portfolio. These risks include, but are not limited
to, changes in general or local economic conditions, changes in interest
rates and the availability of permanent mortgage financing which may render
the acquisition, sale or refinancing of a property difficult or unattractive,
changes in real estate and zoning laws, increases in real estate taxes,
federal or local economic or rent controls, floods, earthquakes and other
acts of God and other factors beyond the control of the Partnership's
management. The illiquidity of real estate investments generally may impair
the ability of the Partnership to respond promptly to changing economic
conditions.
The General Partners believe that sufficient working capital will be
available to fund known, ongoing operating and capital expenditure
requirements of the Partnership during 1998. The primary sources of working
capital during 1998 are expected to be cash flow from operations. The
Partnership is actively seeking a mortgage lender for the Cascade Apartments
mortgage. This mortgage presently has an interest rate of 9.875%. The
projected new loan proceeds would include refinancing costs as well as
reserves for capital improvements as needed on the mortgaged properties.
Certain positive factors are expected to 1998 operations. Occupancy levels
on the commercial properties have improved and stabilized requiring less
tenant improvement costs and leasing commission expense. The two residential
properties are expected to maintain, if not increase, their levels of
occupancy and income during 1998. Management believes revenue will increase
from 1997 levels because of this leasing activity. It is anticipated that
property operating expenses in 1998 will increase only slightly from those
amounts which were incurred during 1997.
Interest expense on the variable rate notes payable is expected to increase
slightly over those levels realized during 1997. The availability of the
liquidity sources and accomplishment of these objectives are partially
predicated on the real estate economic conditions discussed above, which are
beyond the control of the Partnership and will influence the achieved results.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D.
NOTE G--ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
December 31,
1997 1996
Vendor accounts payable $ 12,390 $ 16,353
Property taxes 21,123 16,473
Professional fees 102,076 55,458
Utilities 14,852 11,764
Accrued Payroll and taxes 6,630 6,878
$ 157,071 $ 106,926
As of December 31, 1997, all real estate taxes are current.
NOTE H--INCOME TAX
The Partners' capital accounts differ for financial reporting purposes and
federal income tax purposes. The primary difference results from
depreciation and amortization and provision for doubtful accounts. The
effect of these items is summarized as follows:
December 31,
1997 1996
Financial reporting basis:
Total assets $ 7,854,587 $ 11,961,729
Total liabilities ( 8,625,489) (12,430,883)
Total Partners' capital (deficit)$ (770,902) $ (469,154)
Tax basis:
Total assets $ 6,800,719 $ 11,016,535
Total liabilities ( 8,740,592) (12,320,149)
Total Partners' capital (deficit)$( 1,939,873) $ (1,303,614)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D.
NOTE H--INCOME TAX--CONT'D
Years Ended December 31,
1997 1996 1995
Partnership loss-financial
reporting purposes $ (301,748) $ (524,427) $ (485,279)
Book versus tax differences
due to:
Unearned revenue (106,573) - -
Gain on foreclosure (89,719) - -
Depreciation and
amortization (64,940) (69,531) (57,364)
Provision for doubtful
accounts (5,400) (14,850) (49,902)
Other (67,879) 59,251 (2,017)
(334,511) (25,130) (109,283)
Partnership loss-federal
income tax purposes $ (636,259) $ (549,557) $ (594,562)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D.
NOTE I--LEASES
Rental income on investment properties is reported when earned. The
Partnership leases its commercial properties under non-cancelable operating
lease agreements. The Partnership's residential properties are leased under
short-term lease agreements. Future minimum rents to be received as of
December 31, 1997 are as follows:
Year
1998 $ 199,354
1999 152,784
2000 92,680
2001 49,845
2002 9,429
Thereafter 0
Total $ 504,092
NOTE J--GAIN ON FORECLOSURE
On August 27, 1997 foreclosure proceedings were instituted on behalf of the
mortgage holder of the property known as Foothills Village Shopping Center.
The property was subject to a first mortgage in the amount of $2,582,414 plus
accrued interest of $21,841 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. As a result of the foreclosure, the difference between the
Fund's basis and the total of the outstanding debt, net of depreciation and
restricted deposits, or $89,719, was treated as a gain on disposition of the
asset.
NOTE K--DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instrument for which it is practicable to estimate
that value:
Long-Term Debt. The fair value of the Partnership's long-term debt is
estimated based on the quoted market prices for the same or similar issues
or on the current rates offered to the Partnership for debt of the same
remaining maturities.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D.
NOTE K--DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS--CONT'D
The estimated fair values of the Partnership's financial instruments are as
follows:
Carrying Fair
Amount Value
Long-term debt $ 8,246,116 $6,285,000
<PAGE>
NOTE L--SUBSEQUENT EVENT
In January 1999, the Partnership consummated a settlement agreement in which
it sold its investment in the Colony Apartments and transferred its
investment in the Market Shopping Center to its lender. The sale price of
the Colony Apartments was $5,530,000 with an approximate gain on the sale of
$850,000. In consideration with the lender releasing its collateral interest
in the Colony Apartments, the Partnership transferred its interest in the
Market Shopping Center to the lender. As a result of this transfer, the
Partnership expects to realize an additional gain of approximately $500,000.
During 1997, the Colony Apartments had net revenues of approximately
$945,000 and total expenses of $972,000 while the Market Shopping Center had
net revenues of approximately $101,000 and total expenses of $235,000.
<PAGE>
Item 9. Changes in and Disagreements with Registrant's
Certifying Accountants on Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The General Partners of the Partnership are James R. Hoyt and Secured
Investment Resources, Inc.
Secured Investment Resources, Inc. (the "Corporate General Partner") was
incorporated under the laws of the State of Kansas on December, 1983 for
the purpose of acting as General Partner and the Acquisition Agent of the
Partnership.
James R. Hoyt is the sole director and officer of the Corporate General
Partner.
James R. Hoyt, the Individual General Partner, age 60, holds a Bachelor's
Degree in Business Administration and is a licensed real estate broker in
two states. Mr. Hoyt has been actively involved for more than the past
twenty years in various real estate endeavors including development,
syndication, property management and brokerage.
Mr. Hoyt is the Individual General Partner and sponsor of Secured Investment
Resources Fund, L.P. II, (S.I.R. II) and Secured Investment Resources Fund,
L.P. III, (S.I.R. III). Since 1983, Mr. Hoyt has also been involved as the
Individual General Partner in ten specified real estate private placement
offerings. As of December 31, 1997, these partnerships, including Secured
Investment Resources Fund, L.P., have raised a total of $60,709,750.
Item 11. Management Compensation
During 1997, The Partnership paid $104,534 in fees to affiliated companies
for property management services.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
(a) Security ownership of certain beneficial owners.
No individual or group as defined by Section 13(d)(3) of the
Securities Exchange Act of 1934, known to the registrant is the
beneficial owner of more than 5 percent of the registrant's
securities.
(b) Security ownership of Management.
The General Partners own less than 1%.
(c) Change in Control.
None.
<PAGE>
Item 13. Certain Relationships and Related Transactions.
See Notes to Consolidated Financial Statements, Note D, appearing in Item 8.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.
(a)(1) The following Financial Statements of Secured Investment Resources
Fund, L.P. are included in Item 8:
Page
(i) Report of Independent Auditor 14
(ii) Consolidated Balance Sheets -
December 31, 1997 and 1996 15-16
(iii) Consolidated Statements of Operations -
Years Ended December 31, 1997,
1996 and 1995 17
(iv) Consolidated Statements of Partnership
Capital - Years ended December 31,
1997, 1996 and 1995 18
(v) Consolidated Statements of Cash Flows -
Years Ended December 31, 1997,
1996 and 1995 19-20
(vi) Notes to Consolidated Financial
Statements 21-34
(a)(2) The following Financial Statement Schedules are filed as
part of this report:
(i) Schedule II - Allowance for
Doubtful Accounts 39
(ii) Schedule III - Real Estate and
Accumulated Depreciation 40-42
All schedules other than those indicated in the index have been
omitted as the required information is presented in the financial
statements, related notes or is inapplicable.
(a)(3) The following Exhibits are Incorporated by Reference and are an
integral part of this Form 10-K.
<PAGE>
Exhibit Number Description
(4) (a) Restated Certificate and Agreement of Limited
Partnership. (iii)
(b) Second Amendment to Restated Certificate and
Agreement of Limited Partnership. (I)
(10) (a) Property Management Agreement, as amended. (I)
(b) Escrow Agreement. (I)
(c) Administrative Services Agreement. (I)
(d) Amendment No. 1 to Escrow Agreement. (I)
(e) Agreement of Sale for The Colony Apartments. (v)
(f) Purchase Money Short-Term Note for The Colony
Apartments. (v)
(g) Purchase Money Deed of Trust for The Colony
Apartments. (v)
(h) Purchase Money Wraparound Deed of Trust for
The Colony Apartments. (v)
(I) Purchase Money Wraparound Deed of Trust for
The Colony Apartments. (v)
(j) Real Estate Contract of Sale for The Cascade
Apartments. (v)
(k) Lease Agreement for Certain Portions of The Cascade
Apartments. (v)
(l) Real Estate Contract of Sale for the Hidden Valley
Exchange Shopping Center. (vi)
(m) Real Estate Contract of Sale for the Foothills
Village Shopping Center. (vii)
(n) Real Estate Contract of Sale for the Market Shopping
Center. (viii)
(o) Assignment of Real Estate Contract (The Market
Shopping Center). (viii)
(16) (a) Letter Regarding Change in Certified Accountant.
(ix), (x)
(28) (a) Guarantee of James R. Hoyt. (ii)
(b) Guarantee of General Partners. (ii)
(c) North Carolina Special Warranty Deed for The Colony
Apartments. (v)
(d) General Warranty Deed for The Cascade
Apartments. (v)
<PAGE>
(I) Previously filed on September 13, 1985 as an Exhibit to
Post-Effective Amendment #2 to the Registration Statement
on Form S-11 (file no. 2-90975) such Exhibit and Registration
Statement incorporated herein by reference.
(ii) Previously filed on September 19, 1984 as an Exhibit to
Amendment #2 to the Registration Statement of Form S-11
such Exhibit and Registration Statement incorporated herein
by reference.
(iii) Previously included in the Prospectus filed as part of
Amendment #2 to Registration Statement and incorporated
herein by reference.
(iv) Previously filed as an exhibit to a current report on Form
8-K dated February 1, 1985 which exhibit and Form are
incorporated herein by reference.
(v) Previously filed on January 6, 1986 as an exhibit to
Post-Effective Amendment #3 to the Registration Statements on
Form S-11, such Exhibit and Registration Statement
incorporated herein by reference.
(vi) Previously filed as an exhibit to a report on Form 8-K dated
September 30, 1986, which exhibit and Form are incorporated
herein by reference.
(vii) Previously filed as an Exhibit to a report on Form 8-K dated
November 10, 1986, which Exhibit and Form are incorporated herein
by reference.
(viii) Previously filed as an Exhibit to a report on Form 8-K dated
November 20, 1986, which Exhibit and Form are incorporated herein
by reference.
(ix) Previously filed as an Exhibit to a report on Form 8-K dated
December 5, 1986, which Exhibit and Form are incorporated herein
by reference.
(x) Previously filed as an Exhibit to a current report on Form 8-K
dated December 4, 1989, which Exhibit and Form are incorporated
herein by reference.
(xi) Previously filed as an Exhibit to a current report on Form
8-K dated November 27, 1997, which Exhibit and Form are
incorporated herein by reference.
(The remainder of this page intentionally left blank.)
<PAGE>
Secured Investment Resources Fund L.P.
Schedule II - Allowance for Doubtful Accounts
December 31, 1997
Balance at Additions Bad Debt Write- Balance at
Beginning of Charged to Offs Deducted End
Period Operations From Allowance of Period
For Years Ended December 31,
1995 141,476 36,819 121,095 57,200
1996 57,200 44,725 59,575 42,350
1997 42,350 31,550 36,950 36,950
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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:
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.
By: Secured Investment Resources, Inc.,
as Corporate General Partner
By:
James R. Hoyt, President
Date:
Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered Securities
Pursuant to Section 12 of the Act.
No annual report or proxy material has been sent to security holders.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: _______________, 1998
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.
By: Secured Investment Resources, Inc.,
as Corporate General Partner
By: /s/ James R. Hoyt
James R. Hoyt, President
Date: _______________, 1998
Supplemental Information to be Furnished With Reports Filed
Pursuant to Section 15(d) of the Act by Registrants Which Have Not
Registered Securities Pursuant to Section 12 of the Act.
No annual report or proxy material has been sent to security
holders.
<TABLE>
Secured Investment Resources Fund, L.P.
Schedule III - Real Estate & Accumulated Depreciation
December 31, 1997
Intial Cost to Partnership (A) Subsequent to Acquisition
Buildings & Furniture Reduction
Encumbrances Land Improvements Equipment Improvements of Basis (B)
<S> <C> <C> <C> <C> <C> <C>
Other Equipment $ --- $ --- $ --- $ --- $ 2,672 $ ---
Garden Apartments:
Colony Apts 3,619,623 578,791 5,035,482 259,367 506,960 ---
Burlington, NC
Cascade Apts 1,831,609 389,924 1,903,915 254,347 165,091 ---
Topeka, KS
Strip Shopping Centers
Hidden Valley 807,348 293,715 1,775,991 --- 151,919 (91,218)
Independence MO
The Market Square 1,987,536 265,250 1,196,129 --- 19,653 (46,869)
Overland Park, KS
$ 8,246,116 $1,527,680 $ 9,911,517 $ 513,714 $ 846,295 $(138,087)
</TABLE>
<PAGE>
<TABLE>
Gross Amount at Which
Carried at Close of Period
<CAPTION>
Buildings & Furniture Accumulated Date Depreciation
Land Improvements Equipment Total Depreciation Acquired Life
<S> <C> <C> <C> <C> <C> <C> <C>
Other Equipment $ --- $ --- $ 2,672 $ 2,672 $ 2,672
Garden Apartments:
Colony Apartments 578,791 5,250,599 551,210 6,380,600 2,592,004 16-Oct-85 30 Yrs <F1>
Burlington, NC 5 Yrs <F2>
Cascade Apartments 389,924 2,057,481 265,872 2,713,277 1,062,796 19-Dec-85 30 Yrs <F1>
Topeka, KS 5 Yrs <F2>
Strip Shopping Centers
Hidden Valley 293,715 1,747,242 89,450 2,130,407 701,113 30-Sep-85 30 Yrs <F1>
Independence, MO 5 Yrs <F2>
Market Square 265,250 1,167,150 1,763 1,434,163 832,121(3) 18-Nov-85 30 Yrs <F1>
Overland Park, KS 5 Yrs <F2>
$1,527,680 $10,222,472 $ 910,967 $12,661,119 $ 5,191,706
<FN>
(1) Estimated useful life of buildings.
(2) Estimated useful life of furniture and fixtures.
(3) Includes Allowance for Losses of $405,000.
</TABLE>
<PAGE>
NOTES:
(A) The initial cost to the Partnership represents the original purchase
price of the properties, including $181,643 and $7,943 of improvements
incurred in 1986 and 1985, respectively, which were contemplated at
the time the property was acquired.
(B) Receipts received under the terms of certain guarantee agreements are
recorded by the Partnership as a reduction of the basis of the property
to which the guaranteed income relates.
Secured Investment Resources Fund, L.P.
Schedule III - Real Estate & Accumulated Depreciation--Continued
December 31, 1997
Furniture
Buildings & Fixtures &
Total Land Improvements Equipment
(c) Reconciliation of Real Estate Owned:
Balance at January 1, 1995 $17,855,818 $2,572,687 $13,804,568 $1,478,563
Additions during year:
Improvements 182,714 --- 109,201 73,513
Balance at December 31, 1995 18,038,532 2,572,687 13,913,769 1,552,076
Additions during year:
Improvements 199,542 --- 36,678 162,864
Balance at December 31, 1996 18,238,074 2,572,687 13,950,447 1,714,940
Additions during year:
Improvements 69,991 --- 17,585 52,406
Reductions during year:
Foreclosure on Property (5,646,946) (1,069,233) (3,722,436) (855,277)
Reclassification - 24,226 23,124 1,102
Balance at December 31, 1997 $12,661,119 $ 1,527,680 $10,222,472 $ 910,967
(D) Reconciliation of Accumulated Depreciation:
Balance at January 1, 1995 $ 5,493,355 $ --- $ 4,486,837 $1,006,518
Additions during year:
Depreciation 584,926 --- 277,906 307,020
Balance at December 31, 1995 6,078,281 --- 4,764,743 1,313,538
Additions during year:
Depreciation 589,250 --- 459,358 129,892
Balance at December 31, 1996 6,667,531 --- 5,224,101 1,443,430
Additions during year:
Depreciation 525,259 --- 427,964 97,295
Reductions during the year:
Foreclosure of Property (2,001,084) --- (1,366,139) (634,945)
Balance at December 31, 1997 $ 5,191,706 $ --- $ 4,285,926 $ 905,780
(E) The total gross amount of real estate at December 31, 1997 includes
$971,323 of acquisition fees paid to affiliates.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 217,424
<SECURITIES> 0
<RECEIVABLES> 52,375
<ALLOWANCES> 36,950
<INVENTORY> 0
<CURRENT-ASSETS> 385,174
<PP&E> 12,661,119
<DEPRECIATION> 5,191,706
<TOTAL-ASSETS> 7,854,587
<CURRENT-LIABILITIES> 379,373
<BONDS> 8,246,116
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,854,587
<SALES> 0
<TOTAL-REVENUES> 2,148,231
<CGS> 0
<TOTAL-COSTS> 979,129
<OTHER-EXPENSES> 557,765
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,002,804
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 89,719
<NET-INCOME> (301,748)
<EPS-PRIMARY> (12.01)
<EPS-DILUTED> 0
</TABLE>
