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, 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) 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.
As of December 31, 1998, the Partnership has made cash
distributions to Limited Partners of approximately
$5,343,000 for the period June 1, 1985 through December 31,
1998. No distributions have been made since January 1990.
Future distributions will only be made from excess cash
flow not needed for working capital reserves.
<PAGE>
Item 1. Business--Cont'd.
As of December 31, 1998, 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
100% of SPECS, Inc. as of December 31, 1998.
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, 1998:
Average
Occupancy(*)
Property Description Initial Cost Date Acquired Percentage
1998 1997
The Colony
Apartments(A) 140 units $5,940,707 Oct. 16, 1989 77% 87%
Burlington, NC
Cascade
Apartments 86 units $2,584,253 Dec. 7, 1989 97% 93%
Topeka, KS
Hidden Valley
Exchange 27,200 Sq.Ft. $2,013,709 Sep. 30, 1986 67% 74%
Shopping Ctr.
Independence, MO
Market Square
Shopping Ctr.(A) 12,782 Sq.Ft. $1,414,510 Nov. 18, 1986 94% 87%
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 to the Partnership's consolidated financial
statements.
(A) As discussed in Note L to the Partnership's
consolidated financial statements, in January, 1999
the Colony Apartments were sold and the Market Square
Shopping Center transferred ownership to its lender.
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 in the last eight (8) years.
(C) As of December 31, 1998, 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 1998(4) 1997 1996 1995 1994
(In Thousands)
Rents $ 1,644 $ 2,082 $ 2,225 $ 2,235 $ 2,116
Maintenance
Escalations
and Other Income 116 66 74 91 91
Property Operating
and Administrative Exp 899 979 997 1,009 910
Depreciation/
Amortization 410 558 624 627 590
Net Operating Income 451 611 678 690 707
Interest
Expense 769 1,003 1,202 1,175 1,208
Net Income/Loss before
extraordinary gain (318) (392) (524) (485) (501)
Foreclosure Gain(3) -- 90 -- -- --
Partnership Loss $ (318) $ (302) $ (524) $ (485) $ (501)
PER LIMITED PARTNERSHIP UNIT
Operating Loss $ (12.65) $ (15.58) $ (20.88) $ (19.32) $ (19.94)
Extraordinary Gain -- 3.57 -- -- --
Partnership Loss (1) $ (12.65) $ (12.01) $ (20.88) $ (19.32) $ (19.94)
Cash Distributions(2) $ --- $ --- $ --- $ --- $ ---
BALANCE SHEET DATA 1998(4) 1997 1996 1995 1994
(In Thousands)
Total Assets $ 7,664 $ 7,855 $ 11,968 $ 12,398 $ 12,973
Mortgage Debt 8,130 8,246 11,952 11,826 11,576
<PAGE>
Item 6. Selected Financial Data--Cont'd.
(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.
(3) In August 1997, Foothills Village Shopping Center
was foreclosed by the mortgage holder of the
property. As a result of the foreclosure,
approximately $90,000 was treated as a gain on
disposition of the asset.
(4) In January 1999, the Partnership sold the Colony
Apartments and transferred ownership of the Market
Square Shopping Center to its lender.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
1998 vs 1997
Revenue for the Partnership (excluding revenues attributed to the
Foothills Village Shopping Center, which before its foreclosure in
1997 and had revenue of $377,000) decreased in 1998 to $1,760,000
as compared to $1,771,000 in 1997. This represented a decrease of
$11,000 or 0.6%.
Residential properties revenue increased in 1998 primarily as a
result of increases in the rental rate and improving occupancy.
Commercial properties revenue decreased in 1998 primarily due to
tenant relocation and tenant eviction. Management has obtained
leases for the vacant space after only four months and commercial
properties revenue should increase dramatically in 1999.
Operating costs (net of the Foothills operating costs of $109,000
in 1997) increased in 1998 by $28,000 to $898,000 from $870,000, or
an increase of 3.2%. Depreciation and amortization for 1998
decreased by $17,000 to $410,000 for 1998 compared to $427,000 for
1997 (net of the Foothills depreciation of $131,000 for 1997).
Interest for 1998 increased for the partnership by $5,000 to
$769,000 for 1998 form $764,000 for 1997 (net of the Foothills
interest of $239,000 for 1997). Residential operating costs
generally decreased due to a decrease in insurance, repairs and
maintenance and utilities. Commercial properties operating costs
generally increased primarily due to legal expenses relating to
collection, eviction, increases in commissions paid for new leases,
and utilities expense paid by the properties during the period of
low occupancy. The net result to the Partnership was a decrease in
the net loss from continuing properties of $317,900 in 1998 as
compared to $391,000 in 1997.
Management believes that revenue on the remaining properties will
be up significantly over 1998 levels.
Operating expenses in 1999 will be up slightly from 1998 due
primarily to increased operating costs incurred in conjunction with
scheduled rent increases. Interest expense on mortgage notes is
expected to increase slightly from 1998 levels.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.--Cont'd.
Results of Operations--Cont'd.
1998 vs 1997--Cont'd.
Early in 1999, the Partnership sold the Colony Apartments and
conveyed the Market Square Shopping Center it its lender. In
addition, the Partnership refinanced the Cascade Apartments and
renegotiated the debt on Hidden Valley Shopping Center. These
steps should greatly enhance the results of operation for the
Partnership in 1999. The Partnership expects to realize again on
the sale of the Colony Apartments and the conveyance of the Market
Square Shopping Center of approximately $1,300,000. The remaining
properties are budgeted to produce net operating income.
1997 vs 1996
Revenue for the Partnership decreased in 1997 to $2,148,000 as
compared to $2,299,000 in 1996. This represented a decrease of
$151,000 or 6.0%.
The operating costs other than depreciation and amortization
decreased in 1997 over 1996 (1.7%) from $997,000 to $979,000.
Interest expense was down from 1996 by $199,000 (.1%).
Depreciation and amortization for 1997 decreased by $66,000 (10%)
over 1996 depreciation of $420,000. The net result to the
Partnership was a decrease in the loss of $133,000 (.2%) over 1996
levels.
The decrease in operating expense is primarily attributed to
administrative expenses (in particular, legal and accounting) and
common area maintenance expenses for the shopping centers (in
particular, snow removal as a result of less snow falls and
utilities due to higher occupancy levels).
The Partnership anticipates that the operating results will improve
during 1999. 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.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.--Cont'd.
Liquidity and Sources of Capital
During 1998, the Partnership's primary source of cash flows was from
operations, which provided $235,000 of funds. Property improvements
utilized $62,000 of these funds and $123,000 was used for debt
reduction. The net effect was an increase in cash of $20,000 at year
end. The continuing trend of increasing occupancy levels at Cascade
Apartments and the expected increase at Hidden Valley and higher
rental rates should continue through 1999 and improve cash flow from
operations.
Subsequent to year end, the Partnership has sold Market Square
Shopping Center and the Colony Apartments. The Partnership re-
negotiated the mortgage on the Hidden Valley Exchange Shopping
Center. In addition, the Partnership has refinanced the Cascade
Apartments. These transactions will reduce the required loan
payments and improve the cash flow of the Partnership.
The Cascade Apartments refinancing included the obtaining of a
$2,400,000 loan with interest at 8.375% which is due with a ten year
term. The annual debt service remains consistent with the previous
loan.
The General Partners' believe that as a result of expected higher
occupancies, increasing rental rates, and decreasing operating
expenses the Partnership will realize improving liquidity. This
trend, plus the disposition of marginal properties, should result in
improved liquidity in 1999.
During 1997,the Partnership's primary source of cash flow was from
operations, which provided $218,000 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 trend of higher occupancy levels and higher rental rates
that began several years ago should continue through 1998 and improve
cash flow from operations.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.--Cont'd.
Liquidity and Sources of Capital--Cont'd.
Anticipating expenditures during 1999 include re-roofing Cascade
Apartments and tenant improvements at Hidden Valley Shopping Center
due to new leases and expansion of existing tenants. Tenant
improvement expenses are projected to be approximately $20,000.
Occupancy at Hidden Valley is expected to increase from 67% to 75%
during 1999.
During 1996, the Partnership's primary source of cash flow 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, of which $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 General Partners' believe that sufficient working capital will
be available to fund known, on-going operating and capital
expenditure requirements for the Partnership during 1999. 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.
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 $2,577,000, plus accrued interest of $19,000 and a second
mortgage of $969,000, plus accrued interest of $86,000. The fund's
basis in the property at the time of the foreclosure, net of
depreciation and other items, was $3,565,000. The Partnership
recorded a one-time gain on the foreclosure in the amount of $90,000.
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.
<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' have evaluated the property portfolio and
have determined it was prudent to offer to dispose of one or some
of the properties. The Partnership sold the Colony Apartments in
early 1999 and released the underperforming Market Square
Shopping Center. The gain on the sale and the elimination of the
underperforming property will improve operating results and
liquidity in 1999. 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. The General Partners and SPECS have modified their
software so that the computer systems are functioning properly
with respect to dates in the year 2000 and thereafter (the "Year
2000 Issue"). During 1999, the General Partners and SPECS,
Inc. did install a Year 2000 compliant software system, on the
properties. The cost of the conversion was not material. The
General Partners believe that with the modifications to existing
software and the conversion to the new software, the Year 2000
Issue did not and will not pose significant operational problems
for its computer systems.
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
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 in
calendar 1999.
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, 2000.
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, 2001 to affect its financial statements.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.--Cont'd.
Quantitative and Qualitative Disclosure about Market
Risk
The Partnership is exposed to interest rate changes
primarily as a result of its real estate mortgages.
The Partnership's interest rate risk management
objective is to limit the impact of interest rate
changes on earnings and cash flows and to lower its
overall borrowing costs. To achieve its objectives,
the Partnership borrow at fixed rates. The Partnership
does not enter into derivative or interest rate
transactions for any purpose.
Item 8. Financial Statements and Supplementary Data.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
Index
Page
Report of Independent Certified Public
Accountants 15
Financial Statements:
Consolidated Balance Sheets - December 31,
1998 and 1997 16-17
Consolidated Statements of Operations -
Years Ended December 31, 1998, 1997
and 1996 18
Consolidated Statements of Partnership Capital
(Deficit)-
Years Ended December 31, 1998, 1997
and 1996 19
Consolidated Statements of Cash Flows -
Years Ended December 31, 1998,
1997 and 1996 20-21
Notes to Consolidated Financial Statements 22-34
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
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, 1998 and
1997, 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, 1998. 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.
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, 1998 and 1997, and the
results of its operations and its cash flows for each of the three
years in the period ended December 31, 1998 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, LLP
St. Louis, Missouri
February 17, 1999
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED BALANCE SHEETS
December 31,
1998 1997
ASSETS
INVESTMENT PROPERTIES (Notes B, C and L)
Land and buildings $11,766,260 $11,750,152
Furniture, fixtures and equipment 957,325 910,967
12,723,585 12,661,119
Less accumulated depreciation and
allowance for losses 5,595,492 5,191,706
7,128,093 7,469,413
Cash 237,790 217,424
Rents and other receivables, less
allowance of $28,886 in 1998 and
$36,950 in 1997 (Notes F and I) 94,583 15,425
Debt issuance costs, net of accumulated
amortization of $102,232 in 1998 and
$95,733 in 1997 135,195 124,284
Commercial commissions, deposits and
other 18,833 7,415
Restricted deposits 49,777 20,626
536,178 385,174
$ 7,664,271 $ 7,854,587
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED BALANCE SHEETS--CONT'D.
December 31,
1998 1997
LIABILITIES AND PARTNERSHIP CAPITAL (DEFICIT)
Mortgage Debt (Note C and L) $ 8,130,362 $ 8,246,116
Accrued interest 216,262 93,187
Accounts payable and accrued
expenses (Note G) 196,813 83,055
Due to related parties (Note D) 146,613 136,646
Unearned revenue 9,635 9,561
Tenant security deposits 53,439 56,924
TOTAL LIABILITIES 8,753,124 8,625,489
Commitments and Contingencies (Notes F, I and L)
PARTNERSHIP CAPITAL (DEFICIT)
General Partners
Capital contribution 1,000 1,000
Partnership deficit (66,986) (63,806)
(65,986) (62,806)
Limited Partners
Capital contributions 5,608,838 5,608,838
Partnership deficit (6,631,705) (6,316,934)
(1,022,867) (708,096)
TOTAL PARTNERSHIP CAPITAL (DEFICIT) (1,088,853) (770,902)
$ 7,664,271 $ 7,854,587
See notes to consolidated financial statements
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
1998 1997 1996
REVENUES
Rents $ 1,644,364 $ 2,081,994 $ 2,224,610
Interest 3,967 3,944 4,990
Maintenance escalations 111,545 62,293 68,992
1,759,876 2,148,231 2,298,592
OPERATING AND ADMINISTRATIVE
EXPENSES
Property operating
expenses 638,399 756,849 753,457
General and administrative
expenses 35,017 47,655 50,846
Professional services (Note D) 142,415 70,091 89,990
Management fees (Note D) 82,703 104,534 102,613
Depreciation & amortization 410,375 557,765 623,856
1,308,909 1,536,894 1,620,762
NET OPERATING INCOME 450,967 611,337 677,830
NON-OPERATING (EXPENSES)
Interest (768,918) (1,002,804) (1,202,257)
(317,951) ( 391,467) ( 524,427)
EXTRAORDINARY ITEM
Gain on foreclosure (Note J) 89,719 -
PARTNERSHIP LOSS $ (317,951) $ (301,748) $ (524,427)
Allocation of loss:
General Partners $ (3,180) $ (3,017) $ (5,244)
Limited Partners (314,771) (298,731) (519,183)
$ (317,951) $ (301,748) $ (524,427)
Partnership loss per
limited partnership unit
Operating Loss $ (12.65) $ (15.58) $ (20.88)
Extraordinary Gain --- 3.57 ---
$ (12.65) $ (12.01) $ (20.88)
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF PARTNERSHIP CAPITAL (DEFICIT)
Years Ended December 31, 1998, 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) (298,731) (301,748)
Balances at December 31, 1997 (62,806) (708,096) (770,902)
Partnership loss (3,180) (314,771) (317,951)
Balances at December 31, 1998 $ (65,986) $ (1,022,867) $ (1,088,853)
See notes to consolidated financial statements
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
1998 1997 1996
OPERATING ACTIVITIES
Partnership loss $ (317,951) $ (301,748) $ (524,427)
Adjustments to reconcile
partnership loss to net
cash provided by operating
activities:
Depreciation and
amortization 410,375 557,765 623,856
Gain on Foreclosure --- (89,719) ---
Provisions for losses
on rents and other
receivables 15,426 31,550 44,725
Changes in assets and
liabilities:
Rents and other
receivables (94,585) (36,739) (36,610)
Prepaid expenses --- 368 7,889
Commercial commissions,
deposits and other (11,418) 9,600 (2,445)
Accounts payable
and accrued expenses 113,758 1,348 (133,830)
Accrued interest 123,075 73,009 33,950
Unearned revenue 74 (8,672) 59,250
Tenant security
deposits (3,485) (18,561) (3,898)
NET CASH PROVIDED BY
OPERATING ACTIVITIES 235,269 218,201 68,460
INVESTING ACTIVITIES
Improvements to investment
properties (62,466) (69,991) (199,542)
Restricted deposits (29,150) (30,906) 58,194
NET CASH USED IN
INVESTING ACTIVITIES (91,616) (100,897) (141,348)
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS--CONT'D.
Years Ended December 31,
1998 1997 1996
FINANCING ACTIVITIES
Borrowings under
debt arrangements $ - $ - $ 2,017,300
Debt issuance costs (17,500) (30,632) (13,842)
Advances (to) from
related parties 9,967 79,230 6,494
Principal payments on
debt (115,754) (155,452) (1,891,504)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (123,287) (106,854) 118,448
INCREASE IN CASH 20,366 10,450 45,560
CASH BEGINNING OF YEAR 217,424 206,974 161,414
CASH END OF YEAR $ 237,790 $ 217,424 $ 206,974
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 and balance sheet of these
single asset partnerships have been consolidated with the
Partnership. All significant inter-company transactions have been
eliminated.
Investment Properties--Investment properties consist of two
residential complexes and two commercial shopping centers and are
stated at cost. In accordance with the Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
the Partnership records impairment losses on long-lived assets used
in operations when events and circumstances indicate the assets might
be impaired and the undiscounted cash flows estimated to be generated
by those assets are less than the carrying amounts of those assets.
Costs of investment properties that have been permanently impaired
have been written down to appraised value. No adjustments for
impairment of value were necessary for the years ending December 31,
1998 or 1997.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D.
NOTE A--SIGNIFICANT ACCOUNTING POLICIES--CONT'D
Revenue Recognition--The Partnership has leased substantially all of
its investments in real estate under operating leases. Revenue is
recognized in the month earned for rent.
Advertising Costs--The Partnership expenses advertising costs as
incurred.
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.
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.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D.
NOTE A--SIGNIFICANT ACCOUNTING POLICIES--CONT'D
New Accounting Standards--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 does not expect this
SOP to have a significant effect on its financial position or
operating results when it becomes effective.
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 as amended is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000.
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, 2001 to affect its financial
statements.
Reclassification--Certain reclassifications have been made to the
1996 and 1997 Financial Statement. 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,
1998 1997
Cost (including capital
improvements subsequent
to acquisition):
The Colony Apartments $ 6,408,150 $ 6,380,600
Cascade Apartments 2,739,952 2,713,277
Hidden Valley Exchange S.C. 2,135,648 2,130,407
Market Square Shopping Center 1,437,163 1,434,163
Other 2,672 2,672
12,723,585 12,661,119
Less
Accumulated depreciation (5,190,492) (4,786,706)
Allowance for losses (405,000) (405,000)
$ 7,128,093 $ 7,469,413
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 $403,786,
$525,259 and $589,250 for the years ended December 31, 1998,
1997, and 1996.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D.
NOTE C--MORTGAGE DEBT
Non-recourse mortgage debt consists of the following:
December 31,
1998 1997
Collateralized by Investment Property
First Mortgages
Hidden Valley Exchange S.C. $ 801,190 $ 807,348
The Market Square/Hidden Valley 1,553,631 1,577,536
The Colony Apts. 3,577,418 3,619,623
Cascade Apts. 1,788,123 1,831,609
Second Mortgages
The Market Square/Hidden Valley 410,000 410,000
$ 8,130,362 $ 8,246,116
Hidden Valley Exchange Shopping Center (Hidden Valley) and Market Square
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 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 loan was due on June 25, 1998, and as
discussed in Note L, was paid subsequent to December 31, 1998.
The Partnership is in violation of covenants on 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.
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. As discussed in Note L, this mortgage
was paid off subsequent to December 31, 1998.
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 $645,844, $1,037,713 and $1,168,308 during
1998, 1997, and 1996, respectively.
Maturities of mortgage debt are as follows:
Year
1999 $ 2,294,599
2000 881,288
2001 1,551,247
2002 69,110
2003 69,110
Thereafter 3,265,008
TOTAL $ 8,130,362
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D.
NOTE D--RELATED PARTY TRANSACTIONS
SPECS, Inc., a Kansas Corporation in which the individual
General Partner had a minority interest during 1996 and 1997 and owned 100%
in 1998, 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,
1998 1997 1996
Property management fees $ 82,703 $104,534 $102,613
Professional Services 70,418 66,931 47,168
$153,121 $171,465 $149,781
The General Partners are entitled to receive a Partnership Management Fee
equal to 5% of Cash Flow From Operations (as defined) for managing the day
to day operations of the Partnership excluding those related to Hidden
Valley and The Market Management Fee is equal to 3% of Cash Flow From
Operations. Management Fees due to SPECS, Inc. were $1,192 and $7,257 for
the years ending December 31, 1998 and 1997.
Amounts due from (to) related parties consist of the following:
Years Ended December 31,
1998 1997
SIR, Inc. $ 30,198 $ 28,063
Secured Investment Resources
Fund, L.P. II (94,623) (5,000)
Secured Investment Resources
Fund, L.P. III --- (85,693)
SPECS, Inc. (82,188) (74,016)
Due From (To) Related Parties $ (146,613) $ (136,646)
<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 1999. The primary sources of working
capital during 1999 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 for 1999 operations. Occupancy levels
on the remaining commercial property has improved and is requiring less
tenant improvement costs and leasing commission expense. The remaining
residential property is expected to maintain, if not increase, its level of
occupancy and income during 1999. Management believes revenue will increase
from 1998 levels because of leasing activity and increased rental rates. It
is anticipated that property operating expenses in 1999 will increase only
slightly from those amounts which were incurred during 1998 producing net
operating income before depreciation for both properties.
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,
1998 1997
Vendor accounts payable $ 33,452 $ 9,528
Property taxes 83,232 21,123
Professional fees 75,292 32,354
Utilities 4,837 13,420
Accrued Payroll and taxes 0 6,630
$ 196,813 $ 83,055
As of December 31, 1998, 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,
1998 1997
Financial reporting basis:
Total assets $ 7,664,271 $ 7,854,587
Total liabilities (8,753,124) (8,625,489)
Total Partners' capital (deficit) $(1,088,853) $ (770,902)
Tax basis:
Total assets $ 6,431,315 $ 6,800,719
Total liabilities (8,724,082) ( 8,740,592)
Total Partners' capital (deficit) $(2,292,767) $ (1,939,873)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D.
NOTE H--INCOME TAX--CONT'D
Years Ended December 31,
1998 1997 1996
Partnership loss-financial
reporting purposes $ (317,951) $ (301,748) $ (524,427)
Book versus tax differences
due to:
Unearned revenue 73 (106,573) -
Gain on foreclo (89,719) -
Depreciation and
amortization (55,055) (64,940) (69,531)
Provision for doubtful
accounts (5,400) (14,850)
Other 20,039 (67,879) 59,251
(34,943) (334,511) (25,130)
Partnership loss-federal
income tax purposes $ (352,894) $ (636,259) $ (549,557)
<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 on
commercial properties as of December 31, 1998 are as follows:
Year
1999 $ 152,784
2000 92,680
2001 49,845
2002 9,429
2003 --
Thereafter --
Total $ 304,738
NOTE J--GAIN ON FORECLOSURE
On August 27, 1997 foreclosure proceedings were instituted against the
Partnership 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
Partnership'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 Partnership'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 $ 8,130,362 $8,004,132
NOTE L--SUBSEQUENT EVENT
In January 1999 the Partnership consummated a settlement agreement in which
it sold the Colony Apartments and transferred ownership of the Market
Square Shopping Center to its lender. The sale price of the Colony
Apartments was $5,530,000 which resulted in a gain on the sale of
approximately $850,000. As a result of the transfer of the Market Square
Shopping Center, in exchange for debt reduction, the Partnership expects to
realize an additional gain of approximately $500,000.
<PAGE>
Item 9. Changes in and Disagreements with Registrant's
Certifying Accountants on Accounting and Financial
Disclosure.
None.
<PAGE>
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 61, 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 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). 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, 1998, these partnerships, including Secured Investment Resources
Fund, L.P., have raised a total of $60,709,750.
Item 11. Management Compensation
During 1998, The Partnership paid $82,703 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 Certified
Public Accountants 14
(ii) Consolidated Balance Sheets -
December 31, 1998 and 1997 15-16
(iii) Consolidated Statements of Operations -
Years Ended December 31, 1998,
1997 and 1996 17
(iv) Consolidated Statements of Partnership
Capital (Deficit)- Years ended December 31,
1998, 1997 and 1996 18
(v) Consolidated Statements of Cash Flows -
Years Ended December 31, 1998,
1997 and 1996 19-20
(vi) Notes to Consolidated Financial
Statements 21-33
(a)(2) The following Financial Statement Schedules are filed
as part of this report:
(i) Schedule II - Valuation and
Qualifying Accounts 40
<PAGE>
(ii) Schedule III - Real Estate and
Accumulated Depreciation 41-43
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.
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)
<PAGE>
Exhibit Number Description
(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 Market Square Shopping Center.
(viii)
(o) Assignment of Real Estate Contract (Market Square Shopping Center).
(viii)
(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)
(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.
<PAGE>
(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.
(xii)
(The remainder of this page intentionally left blank.)
<PAGE>
Secured Investment Resources Fund L.P.
Schedule II - Valuation and Qualifying Accounts
December 31, 1998
Balance at Additions Deductions Balance at
Beginning of Charged to Bad Debt End
Period Operations Write-Offs of Period
Allowance for Doubtful Accounts
For Years Ended December 31,
1998 36,950 15,426 23,490 28,886
1997 42,350 31,550 36,950 36,950
1996 57,200 44,725 59,575 42,350
<PAGE>
<TABLE>
<CAPTION>
Secured Investment Resources Fund, L.P.
Schedule III - Real Estate & Accumulated Depreciation
December 31, 1998
Initial 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 3,577,418 578,791 5,035,482 259,367 534,510 ---
Burlington, NC
Cascade Apts 1,788,123 389,924 1,903,915 254,347 191,766 ---
Topeka, KS
Strip Shopping Centers
Hidden Valley 801,190 293,715 1,775,991 --- 157,160 (91,218)
Independence MO
The Market Square 1,963,631 265,250 1,196,129 --- 19,653 (46,869)
Overland Park, KS
$ 8,130,362 $1,527,680 $ 9,911,517 $ 513,714 $ 908,761 $(138,087)
</TABLE>
<PAGE>
<TABLE>
Gross Amount at Which
Carried at Close of Period
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 5,275,102 554,257 6,408,150 2,738,329 16-Oct-85 30 Yrs (1)
Burlington, NC 5 Yrs (2)
Cascade Apartments 389,924 2,059,032 290,997 2,739,952 1,193,881 19-Dec-85 30 Yrs (1)
Topeka, KS 5 Yrs (2)
Strip Shopping Centers
Hidden Valley 293,715 1,733,915 108,018 2,135,648 780,979 30-Sep-85 30 Yrs (1)
Independence, MO 5 Yrs (2)
Market Square 265,250 1,170,531 1,381 1,437,163 879,631(3) 18-Nov-85 30 Yrs (1)
Overland Park, KS 5 Yrs (2)
$1,527,680 $10,238,580 $ 957,325 $12,723,585 $ 5,595,492
<FN>
(1) Estimated useful life of buildings.
(2) Estimated useful life of furniture and fixtures.
(3) Includes Allowance for Losses of $405,000.
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.
</TABLE>
<PAGE>
<TABLE>
Secured Investment Resources Fund, L.P.
Schedule III - Real Estate & Accumulated Depreciation--Continued
December 31, 1998
<S> <C> <C> <C> <C>
Furniture
Buildings & Fixtures &
Total Land Improvements Equipment
(c) Reconciliation of Real Estate Owned:
Balance at January 1, 1996 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
Additions during year:
Improvements 62,466 16,108 46,358
Balance at December 31, 1998 $12,723,585 $ 1,527,680 $10,238,580 $ 957,325
(D) Reconciliation of Accumulated Depreciation:
Balance at January 1, 1996 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
Additions during year:
Depreciation 403,786 348,339 55,447
Balance at December 31, 1998 $ 5,595,492 $ --- $ 4,634,265 $ 961,227
</TABLE>
(E) The total gross amount of real estate at December 31, 1998 includes
$971,323 of acquisition fees paid to affiliates.
<PAGE>
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.
<PAGE>
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: _______________
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: _______________
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.
