FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter ended June 30, 2000
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Commission file number 0-14269
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SIERRA PACIFIC PENSION INVESTORS `84
(A LIMITED PARTNERSHIP)
State of California 33-0043952
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
5850 San Felipe, Suite 450
Houston, Texas 77057
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(Address of principal executive (Zip Code)
offices)
Registrant's telephone number,
including area code: (713) 706-6271
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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 for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]. No [ ].
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements are submitted in the next pages:
PAGE
NUMBER
Balance Sheets - June 30, 2000 and December 31, 1999 4
Statements of Operations - For the Six Months and Three Months
Ended June 30, 2000 and 1999 5
Statements of Changes in Partners' Equity - For the Year Ended
December 31, 1999 and for the Six Months Ended June 30, 2000 6
Statements of Cash Flows - for the Six Months Ended June 30, 2000
and 1999 7
Notes to Financial Statements 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(a) OVERVIEW
The following discussion should be read in conjunction with the Sierra Pacific
Pension Investors '84's (the Partnership) Financial Statements and Notes thereto
appearing elsewhere in this Form 10-Q.
The Partnership currently owns one property, Sierra Valencia (the Property). In
addition, the Partnership holds a 69.83% interest in Sierra Mira Mesa Partners
(SMMP), which is maintained on the equity method of accounting.
(b) RESULTS OF OPERATIONS
Rental income for the six months ended June 30, 2000 decreased by approximately
$47,000, or 15%, when compared to the corresponding period in 1999, principally
due to a decrease in occupancy from 100% at June 30, 1999 to 84% at June 30,
2000. Rental income for the three months ended June 30, 2000 decreased by
approximately $52,000, or 30%, primarily as a result of the decrease in
occupancy. Further, common area maintenance fee billings were lower during the
second quarter of 2000 compared to the second quarter of the prior year.
2
<PAGE>
Interest income for the six months and three months ended June 30, 2000,
decreased by approximately $33,000, or 29%, and by approximately $12,000, or
22%, respectively, in comparison to the same period in the prior year. In May
1999, the Partnership received a $943,000 principal payment on its trust deed
note receivable.
Operating expenses decreased by approximately $12,000, or 5%, for the six months
ended June 30, 2000, principally as a result of lower administrative costs and
legal expenses. This decrease was partially offset by an increase in property
taxes accrued during the period. Operating expenses for the three months ended
June 30, 2000 decreased by approximately $18,000, or 17%, principally due to the
decrease in administrative and legal costs. This decrease was partially offset
by higher accounting and auditing costs incurred during the quarter.
Depreciation and amortization expenses for the six months and three months ended
June 30, 2000 decreased by approximately $64,000, or 46%, and by approximately
$32,000, or 46%, respectively, in comparison to the corresponding period in
1999, primarily due to fully depreciated capitalized tenant improvements.
The Partnership's share of unconsolidated joint venture income increased by
approximately $53,000, or 29%, for the six months ended June 30, 2000, when
compared to the same period in the 1999. This increase in income generated by
SMMP was in large part attributable to its share of Sorrento II Partners' (SIIP)
income. SIIP, which SMMP accounts for as an unconsolidated joint venture
investment on the equity method, recorded an increase in income due to, among
other factors, higher common area maintenance fees recovery revenue and a
decrease in operating expenses during the six months ended June 30, 2000.
(c) LIQUIDITY AND CAPITAL
The Partnership received a $943,000 principal payment on its trust deed note
receivable in May 1999. These funds were principally used to satisfy the
liquidity requirements of SMMP.
As of June 30, 2000, the Partnership is in an illiquid position. Total cash and
billed receivables amount to approximately $43,000 compared to approximately
$128,000 of accrued and other liabilities. The Partnership anticipates cash
required to meet debt obligations, operating expenses and costs for the
construction of new tenant space will be funded from the operations of the
Property and distributions from SMMP.
Inflation:
The Partnership does not expect inflation to be a material factor in its
operations in 2000.
3
<PAGE>
SIERRA PACIFIC PENSION INVESTORS '84
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
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<TABLE>
<CAPTION>
JUNE 30, 2000
(UNAUDITED) DECEMBER 31, 1999
-------------------- --------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents ........................................................... $ 11,115 $ 31,562
Receivables:
Note receivable, net of deferred gain of $132,471 ................................ 1,459,139 1,459,139
Unbilled rent .................................................................... 44,306 44,708
Billed rent ...................................................................... 31,718 2,762
Interest ......................................................................... 79,581 0
Income-producing property - net of
accumulated depreciation and valuation
allowance of $2,836,134 and $2,864,363
respectively ...................................................................... 1,152,855 1,174,239
Investment in unconsolidated joint venture .......................................... 7,286,134 7,303,940
Other assets - net of accumulated amortization
of $170,301 and $172,144, respectively ............................................ 941,152 791,968
-------------------- --------------------
Total Assets ........................................................................ $ 11,006,000 $ 10,808,318
==================== ====================
LIABILITIES AND PARTNERS' EQUITY
Accrued and other liabilities ....................................................... $ 127,733 $ 122,891
Notes payable ....................................................................... 1,358,189 1,398,368
-------------------- --------------------
Total Liabilities ................................................................... 1,485,922 1,521,259
-------------------- --------------------
Partners' equity (deficit):
General Partner ................................................................... (184,026) 0
Limited Partners:
80,000 units authorized,
77,000 issued and outstanding ................................................... 9,704,104 9,287,059
-------------------- --------------------
Total Partners' equity .............................................................. 9,520,078 9,287,059
-------------------- --------------------
Total Liabilities and Partners' equity .............................................. $ 11,006,000 $ 10,808,318
==================== ====================
</TABLE>
SEE ACCOMPANYING NOTES
4
<PAGE>
SIERRA PACIFIC PENSION INVESTORS '84
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
AND FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
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<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- ----------------------------
2000 1999 2000 1999
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Rental income .................................................. $ 272,542 $ 319,871 $ 124,057 $ 176,212
Interest income ................................................ 79,586 112,399 39,793 51,311
------------ ------------ ------------ ------------
Total revenues ........................................ 352,128 432,270 163,850 227,523
------------ ------------ ------------ ------------
EXPENSES:
Operating expenses ............................................. 213,674 225,780 85,600 103,604
Depreciation and amortization .................................. 73,957 138,033 37,602 69,684
Interest expense ............................................... 64,682 69,274 32,114 34,505
------------ ------------ ------------ ------------
Total costs and expenses .............................. 352,313 433,087 155,316 207,793
------------ ------------ ------------ ------------
(LOSS) INCOME BEFORE GAIN FROM
PROPERTY DISPOSITION ........................................... (185) (817) 8,534 19,730
GAIN FROM PROPERTY DISPOSITION ................................... 0 83,315 0 83,315
------------ ------------ ------------ ------------
(LOSS) INCOME BEFORE PARTNERSHIP'S
SHARE OF JOINT VENTURE INCOME .................................. (185) 82,498 8,534 103,045
PARTNERSHIP'S SHARE OF UNCONSOLIDATED
JOINT VENTURE INCOME ........................................... 233,204 180,217 105,878 121,547
------------ ------------ ------------ ------------
NET INCOME ....................................................... $ 233,019 $ 262,715 $ 114,412 $ 224,592
============ ============ ============ ============
Net income per limited partnership unit .......................... $ 3.00 $ 3.41 $ 1.48 $ 2.92
============ ============ ============ ============
</TABLE>
SEE ACCOMPANYING NOTES
5
<PAGE>
SIERRA PACIFIC PENSION INVESTORS '84
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1999 AND
FOR THE SIX MONTHS ENDED JUNE 30, 2000
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<TABLE>
<CAPTION>
LIMITED PARTNERS TOTAL
---------------------------- GENERAL PARTNERS'
PER UNIT TOTAL PARTNER EQUITY
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Proceeds from sale of
partnership units ................................................ $ 250.00 $ 19,418,250 $ 19,418,250
Underwriting commissions
and other organization expenses .................................. (37.34) (2,894,014) (2,894,014)
Repurchase of 665 partnership units ................................ (0.03) (151,621) (151,621)
Cumulative net (loss) income
(to December 31, 1998) ........................................... (75.23) (5,792,901) $ 133,334 (5,659,567)
Cumulative distributions
(to December 31, 1998) ........................................... (21.43) (1,650,006) (133,334) (1,783,340)
------------ ------------ ------------ ------------
Partners' equity - January 1, 1999 ................................ 115.97 8,929,708 0 8,929,708
Net income ......................................................... 4.64 357,351 357,351
------------ ------------ ------------ ------------
Partners' equity - January 1, 2000 (audited) ...................... 120.61 9,287,059 0 9,287,059
Transfer among general partner and limited partners ................ 2.42 186,356 (186,356) 0
Net income (unaudited) ............................................. 3.00 230,689 2,330 233,019
------------ ------------ ------------ ------------
Partners' equity (deficit) - June 30, 2000 (unaudited) ............. $ 126.03 $ 9,704,104 $ (184,026) $ 9,520,078
============ ============ ============ ============
</TABLE>
SEE ACCOMPANYING NOTES
6
<PAGE>
SIERRA PACIFIC PENSION INVESTORS '84
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
(UNAUDITED) (UNAUDITED)
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................................................... $ 233,019 $ 262,715
Adjustments to reconcile net income
to cash used in operating activities:
Depreciation and amortization .......................................................... 73,957 138,033
Partnership's share of unconsolidated joint
venture income ....................................................................... (233,204) (180,217)
Gain from property disposition ......................................................... 0 (83,315)
Increase in rent receivable ............................................................ (28,554) (18,435)
Increase in interest receivable ........................................................ (79,581) (16,610)
Increase in other assets ............................................................... (175,735) (321,786)
Increase (decrease) in accrued and other liabilites .................................... 4,842 (33,849)
--------------- ---------------
Net cash used in operating activities .................................................. (205,256) (253,464)
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property additions ........................................................ (24,012) (114,476)
Payments received on note receivable ................................................... 0 943,413
--------------- ---------------
Net cash (used in) provided by investing activities .................................... (24,012) 828,937
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable .................................................... (40,179) (42,231)
Capital contributions to unconsolidated joint venture .................................. (34,000) 0
Distributions from unconsolidated joint venture ........................................ 283,000 0
Loan to affiliate ...................................................................... 0 (466,283)
--------------- ---------------
Net cash provided by (used in) financing activities .................................... 208,821 (508,514)
--------------- ---------------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS ................................................................... (20,447) 66,959
CASH AND CASH EQUIVALENTS - Beginning of period
Beginning of period .................................................................... 31,562 10,122
--------------- ---------------
CASH AND CASH EQUIVALENTS - End of period
End of period .......................................................................... $ 11,115 $ 77,081
=============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for real estate taxes ...................................... $ 56,324 $ 50,396
=============== ===============
Cash paid during the period for interest ............................................... $ 65,257 $ 69,863
=============== ===============
</TABLE>
See Accompanying Notes
7
<PAGE>
SIERRA PACIFIC PENSION INVESTORS `84
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
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1. BASIS OF FINANCIAL STATEMENTS
In the opinion of Sierra Pacific Pension Investors `84's (the Partnership)
management, these unaudited financial statements reflect all adjustments which
are necessary for a fair presentation of its financial position at June 30, 2000
and results of operations and cash flows for the periods presented. All
adjustments included in these statements are of a normal and recurring nature.
These financial statements should be read in conjunction with the financial
statements and notes thereto contained in the Annual Report of the Partnership
for the year ended December 31, 1999.
2. RELATED PARTY TRANSACTIONS
Included in the financial statements for the six months ended June 30, 2000 and
1999 are affiliate transactions as follows:
June 30
-----------------------
2000 1999
-----------------------
Management fees $ 7,882 $ 9,689
Administrative fees 37,881 55,320
Construction fees 0 2,131
3. INVESTMENT IN UNCONSOLIDATED JOINT VENTURE
Sierra Mira Mesa Partners (SMMP) was formed in 1985 between the Partnership and
Sierra Pacific Development Fund II (SPDFII), an affiliate, to develop and
operate the real property known as Sierra Mira Mesa, an office building, located
in San Diego, California. The Partnership's initial ownership interest in SMMP
was 49%; the remaining 51% was owned by SPDFII. Effective December 31, 1996, the
general partners amended the partnership agreement to allow for adjustments in
the sharing ratio each year based upon the relative net contributions and
distributions since inception of each general partner. At June 30, 2000 the
Partnership's interest in SMMP was 69.83%; the remaining 30.17% interest is
owned by SPDFII.
The consolidated financial statements of SMMP include the accounts of SMMP and
Sorrento I Partners, a majority owned California general partnership. Summarized
income statement information for SMMP for the six months ended June 30, 2000 and
1999 follows:
8
<PAGE>
Sierra Pacific Pension Investors '84
Notes to Financial Statements (Unaudited)
Page two
June 30
------------------------
2000 1999
------------------------
Rental income $ 1,096,679 $1,059,081
Total revenues 1,220,016 1,170,121
Operating expenses 446,008 361,757
Share of unconsolidated
joint venture income (loss) 81,931 (36,566)
Net income 326,619 269,349
As of June 30, 2000, SMMP holds a 43.92% interest in Sorrento II Partners
(SIIP), a California general partnership with Sierra Pacific Institutional
Properties V formed in 1993; a 5.08% interest in Sierra Creekside Partners
(SCP), a California general partnership with Sierra Pacific Development Fund
formed in 1994; and a 33.36% interest in Sierra Vista Partners (SVP), a
California general partnership with Sierra Pacific Development Fund III formed
in 1994.
Summarized income statement information for these Partnerships, which are
accounted for by SMMP under the equity method, for the six months ended June 30,
2000 and 1999 follows:
SCP SVP SIIP
-----------------------------------------------------------
June 30 June 30 June 30
-----------------------------------------------------------
2000 1999 2000 1999 2000 1999
-----------------------------------------------------------
Rental income $ 489,777 $ 448,066 $ 0 $ 0 $699,130 $554,777
Total revenues 489,777 448,066 0 11,907 710,335 554,777
Operating expenses 268,936 247,078 13,735 14,577 236,241 243,567
Extraordinary loss 46,020 0 0 0 0 0
Net (loss) income (149,586) (50,053) (13,735) (2,670) 214,281 (92,300)
4. PARTNERS' EQUITY
Equity and net income per limited partnership unit is determined by dividing the
limited partners' share of the Partnership's equity and net income by the number
of limited partnership units outstanding, 77,000.
During the quarter ended March 31, 2000, an amount was transferred between the
partners' equity accounts such that 99% of cumulative operating income, gains,
losses, deductions and credits of the Partnership is allocated among the limited
partners and 1% is allocated to the general partner. Management does not believe
that the effect of this transfer is significant.
5. PENDING TRANSACTION
CGS Real Estate Company, Inc. (CGS), an affiliate of the general partner, is in
the process of developing a plan pursuant to which the property owned by the
Partnership would be combined with the properties of other real estate
partnerships managed by CGS and its affiliates. These limited partnerships own
office properties, industrial properties, shopping centers, and residential
apartment properties. It is expected that the acquirer would in the future
qualify as a real estate investment trust. Limited partners would receive shares
of common stock in the acquirer, which would be listed on a national securities
exchange or the NASDAQ national market system.
9
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following Exhibits are filed herewith pursuant to Rule 601 of
Regulation S-K.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
----------- -----------------------------
27 Financial Data Schedule
(b) Reports on Form 8-K
A Form 8-K was filed in April 2000 reporting a change in the Partnership's
Certifying Accountant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report be signed on its behalf by the
undersigned thereunto duly authorized.
SIERRA PACIFIC PENSION INVESTORS `84
a Limited Partnership
S-P PROPERTIES, INC.
General Partner
Date: AUGUST 14, 2000 /s/ THOMAS N. THURBER
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Thomas N. Thurber
President and Director
Date: AUGUST 14, 2000 /s/ G. ANTHONY EPPOLITO
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G. Anthony Eppolito
Chief Accountant
10
