FORM 10-K
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| ANNUAL REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended December 31, 1999
OR
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from _________ to
_________.
Commission File number 0-15755
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FJS PROPERTIES FUND I, L.P.
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(Exact name of registrant as specified in its charter)
Delaware 13-3252067
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
264 Route 537 East, Colts Neck, NJ 07722
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(Address of principalexecutive offices) (Zip Code)
Registrant's telephone number, including area code 732-542-9209
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Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
NONE N/A
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Securities registered pursuant to Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
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(Title of Class)
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
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. [ ]
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days. N/A No public market exists.
Documents Incorporated by Reference
Prospectus of Registrant, dated June 10, 1985, as supplemented by Supplement
dated November 7, 1985, filed pursuant to Rule 424 under the Securities Act of
1933. Annual Report on Form 10-K of Registrant for the fiscal years ended
December 31, 1986 through December 31, 1998, filed pursuant to section 13 or
15(d) of the Securities Exchange Act of 1934, but each only to the extent
expressly incorporated by reference in Parts I, II and III. Forms 8-K and 8-K/A
filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on
December 13, 1999, and December 23, 1999, respectively.
<PAGE>
PART I
Item 1. Business
Registrant is a Delaware limited partnership formed as of October 5,
1984. FJS Properties, Inc., a Delaware corporation and an affiliate of First
Jersey Securities, Inc. ("First Jersey" or the "Underwriter"), is the general
partner ("General Partner") of the Registrant.
Reference is made to the Prospectus (the "Prospectus") of Registrant
dated June 10, 1985, as supplemented by a Supplement (the "Supplement"), dated
November 7, 1985, which have been filed pursuant to rule 424 under the
Securities Act of 1933, as amended, each of which is incorporated herein by
reference. The Prospectus was filed as part of Registrant's Registration State
ment on Form S-11, pursuant to which 100,000 Units of Limited Partnership
Interest (the "Units") were registered. On May 1, 1986, the sole closing of the
Units, the Registrant received $8,391,500 in Gross Proceeds from the sale of
16,783 Units to investors. Registrant paid $671,320 in underwriting commissions
to First Jersey and a total of $419,575 in organization and offering expenses to
the General Partner.
Registrant owns and operates one 312 unit garden apartment complex, the
Pavilion Apartments ("Pavilion"), located in West Palm Beach, Florida. The
description of the acquisition is set forth in the Prospectus under "Property
Acquisitions" and is incorporated herein by reference. Registrant will not
invest in or acquire any other properties.
For the years ended December 31, 1999, 1998 and 1997, revenues from
Pavilion accounted for approximately 99.4%, 98.4%, and 98.7% respectively of
Registrant's gross revenues.
Competition
The real estate business is highly competitive and Pavilion has active
competition from similar properties in the vicinity. Registrant will also
experience competition for potential buyers at such time as it seeks to sell
Pavilion.
Employees
Services are performed by Registrant's employees at Pavilion by ten
full-time and one part-time on site personnel. The personnel are under the
direct supervision of a local unaffiliated management company which in turn is
supervised by the General Partner. Salaries for such on-site personnel are paid
by Registrant or by the local unaffiliated management company from fees received
from Registrant. The General Partner also provides certain supervisory property
management services to Registrant under a management agreement.
Page 1
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Tax Legislation
The Tax Reform Act of 1986 (the "1986 Act"), which was enacted on
October 22, 1986, requires that losses from "passive activities" (which includes
any rental activity) may only offset income from "passive activities" Passive
losses in excess of passive income are suspended and are carried over to future
years when they may be deducted against passive income generated by the
Partnership in such year (including gain recognized on the sale of the
Partnership's assets) or against passive income derived by Unitholders from
other sources.
The Revenue Act of 1987 (the "1987 Act") was enacted on December 22,
1987 and provides certain adverse tax consequences for "publicly traded
partnerships." A "publicly traded partnership" is defined as a partnership whose
interests are traded on an established securities market or readily tradable on
a secondary market (or the substantial equivalent thereof). Such a partnership
will be taxed as a corporation (unless at least 90% of its gross income is
derived from certain passive sources, such as real property rents, dividends or
interest) and each tax-exempt entity acquiring an interest in any such
partnership after December 17, 1987 will have all of its share of the
partnership's income attributable to interests acquired after such date treated
as unrelated business income. In addition, the income from such a partnership
would be treated as other than passive income, and losses from any such
partnership could only be offset by income from the same partnership.
The Revenue Act of 1987 adopted provisions which have an adverse impact
on in vestors in a "publicly traded partnership." A "publicly traded
partnership" is a partnership whose interests are traded on an established
securities market or readily tradable on a secondary market (or the substantial
equivalent thereof). If the Partnership were classified as such, (i) it may be
taxed as a corporation, (ii) qualified plans and other entities exempt from
taxation acquiring interests in the Partnership after December 17, 1987 would
have to treat income derived from the Partnership as unrelated business income,
with the result that the limited partnership interests would be less attractive
to tax-exempt investors (and therefore could be less marketable) or (iii) income
derived from an investment in the Partnership would be treated as other than
passive income, in which case losses from the Partnership could only be offset
by income from the same partnership. The IRS has established alternative safe
harbors that allow interests in a partnership to be transferred or redeemed in
certain circumstances without causing the partnership to be characterized a
"publicly traded partnership." Interests in the Partnership are not listed or
quoted for trading on an established securities exchange. However, it is
possible that transfers of interests could occur in a secondary market in
sufficient amount and frequency to cause the Partnership to be treated as a
"publicly traded partnership." The Partnership has adopted a policy of
prohibiting transfers in secondary market transactions unless, notwithstanding
such transfers, the Partnership will satisfy at least one of the safe harbors.
Such a restriction could impair the ability of an investor to liquidate its
investment quickly. It is anticipated that such policy will remain in effect
until such time, if ever, as further clarification of the Revenue Act of 1987
permits the Partnership to lessen the scope of these restrictions. The General
Partner, if so authorized, will take such steps as are necessary, if any, to
prevent the reclassification of the Partnership as a "publicly traded
partnership."
Page 2
<PAGE>
Item 2. Properties
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The sole property owned and operated by Registrant is the Pavilion
Apartments (the "Project"), a 312 Unit garden apartment complex located at 401
Executive Center Drive, West Palm Beach, Florida. Registrant will not acquire or
invest in any other properties. Registrant acquired a 50% interest in the
Pavilion on December 31, 1984, and the remaining 50% on January 1, 1985. It owns
Pavilion in fee ownership, subject to a first mortgage.
Pavilion, constructed in 1972, is located on a 15 acre tract and
consists of 312 apartment units containing 286,500 square feet of rentable area
in 11 low-rise buildings. Rental units are available in one, two and three
bedroom plans. There are 108 one-bedroom apartments, 44 two- bedroom apartments
with one bath, 116 two-bedroom apartments with two baths, and 44 three- bedroom
apartments. Ground amenities include a heated swimming pool, lighted tennis
courts, basketball and shuffle-board courts, and a clubhouse with game room,
saunas, lounge and outdoor barbecues. An equipped children's playground is also
provided.
The apartments in the Project are available for rent to residential
tenants, generally under one year leases. No tenant occupies more than one
apartment in the Pavilion except for the West Palm Beach Recovery Center which
occupies 8 Units. Each of such units was leased at the then current market
rents. With substantially all tenants occupying their apartments under one year
leases, it is anticipated that leases for all apartments will expire each year.
The current rent schedule for leases is as follows:
Unit Size1 Monthly Rent2
1 BR/1B $549/$569
2 BR/1B $649/$669
2 BR/2B $669/$689
3 BR/2B $769/$789
In the opinion of the management of Registrant, the Project is
adequately covered by insurance.
First Mortgage: The existing first mortgage affecting the Project is
held of record by Greenwich Capital Financial Products, Inc., and serviced by
Bank United of Texas FSB, Houston, Texas. As of December 31, 1999, the mortgage
had an unpaid principal balance of approximately $4,644,938. This mortgage was
closed on March 31, 1994, and refinanced the former first mortgage held by The
Bank of Tokyo. At that time, a new loan secured by a first mortgage on the
project was obtained from the Long Beach Bank, FSB, Orange, California, in the
amount of $5,000,000. This
- --------
1BR = Bedroom; B = Bathroom
2Range of rents/unit's rent varies depending on location of unit in the Project.
Page 3
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loan provides for a term of ten (10) years with an interest rate of 9.75% per
annum. The loan is repayable in equal monthly installments of $44,556.87 for
principal and interest, with a balloon payment due in March 2004. At maturity a
balance of approximately $4,215,000 will be due. The loan requires deposits with
the lender for real estate taxes, insurance premiums, a debt service reserve of
one month's payment, as well as deposits for replacement reserves for the
project. These deposits are held in interest bearing accounts for the benefit of
Registrant. The loan was not prepayable during the first five years of its term,
and thereafter is prepayable with payment of a penalty based upon a "rate
protection" formula for the lender. The loan requires consent of the holder to
the transfer or sale of the Pavilion Apartments and to certain transfers of
ownership interests in Registrant. For the complete terms and provisions of this
loan see Exhibits 10(m) through 10(s).
The following table sets forth the components of the Pavilion Apartments
upon which depreciation, for Federal Tax purposes, is taken:
Item Tax Basis Rate Method Life
---- --------- ---- ------ ----
Building $6,897,424 4% - 5% ACRS 18 yrs
Improvements $528,798 Fully SL 10 yrs
Depreciated
Improvements $224,322 3.6% MACRS 27.5 yrs
Improvements $124,430 1.6% - 2.8% MACRS 27.5 yrs
Improvements $157,938 0.2% - 1.3% MACRS 27.5 yrs
Furniture/Fixtures $1,048,378 Fully ACRS 5 yrs
Depreciated
Furniture/Fixtures $6,635 Fully MACRS 7 yrs
Depreciated
Furniture/Fixtures $10,905 8.9% MACRS 7 yrs
Furniture/Fixtures $10,336 12.5% MACRS 7 yrs
Furniture/Fixtures $65,649 19.2% MACRS 5 yrs
Furniture/Fixtures $117,749 32.0% MACRS 5 yrs
Furniture/Fixtures $140,787 20.0% MACRS 5 yrs
Page 4
<PAGE>
Ad Valorem Real Estate taxes for the 1999 calendar year were in the
amount of $162,571.50 which was based upon an assessed valuation of $6,500,000
and the following millage rates:
Taxing Authority: Millage
rate:
County 4.6000
School State 5.9620
School Local 2.6250
City of West Palm Beach 8.3129
So Fl Water Management Dist. 0.5970
Children's Services Council 0.4696
F.I.N.D. 0.0440
PBC Health Care District 0.9750
Everglades Construction Project 0.1000
County - Debt 0.3456
School - Debt 0.4560
City of West Palm Beach - Debt 0.5239
Total: 25.0110
In addition a non-advalorem assessment of $17,723.30 was levied by the
Solid Waste Authority against the Pavilion. The aggregate tax of $180,294.80 was
paid in the discounted amount of $173,083.01 in December 1999.
Item 3. Legal Proceedings
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There are no material legal proceedings pending against or involving
Registrant or Pavilion.
Item 4. Submission of Matters to a Vote of Security Holders
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No matters were submitted to a vote of security holders during the 1999
calendar year.
Page 5
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PART II
Item 5. Market for Registrant's Securities and Related Security Holder Matters
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Units of the Registrant are not publicly traded nor is it anticipated
that a public trading market will develop for the Units. On and as of December
31, 1997, beneficial interests in an aggregate of 1,843 Units were acquired from
the unaffiliated holders thereof, by three third parties at a price of $75 per
Unit, pursuant to a tender offer filed with the Securities and Exchange
Commission. As of March 15, 2000, there were approximately 674 holders owning an
aggregate of 16,788 Units. The General Partner has established a policy of
limiting transfers of Units in secondary market transactions unless,
notwithstanding such transfers, the Partnership will satisfy one or more
applicable safe harbors prescribed by the Internal Revenue Service to avoid
having the Partnership classified as a publicly traded partnership which could
have adverse tax effects on limited partners. In order to comply with the safe
harbor provisions, the transfer of Units may be restricted.
There were no distributions per Unit of Registrant during the 1985
fiscal year. The Registrant distributed $3.01 per Unit for the 1986 fiscal year,
$4.63 per Unit for 1987, $6.59 per Unit for 1988, $14.72 per Unit for 1989,
$7.75 per Unit for 1990, and $1.97 per Unit for the first quarter of 1991. There
were no distributions made for the second, third or fourth quarters of 1991, for
1992, or for 1993. Distributions aggregating $5.19 and $5.64 per Unit were
distributed for 1994 and 1995 respectively, and a distribution of $1.54 was made
for the first quarter of 1996. No distributions were made for the remaining
quarters of 1996, during which period all available cash flow was utilized for
work being done on the Pavilion Apartments. Distributions of $1.30, $2.40 and
$1.83 were made for the first three quarters of 1997 respectively. No
distribution was made for the fourth quarter of 1997 as all available cash flow
was utilized for capital improvements at the Pavilion Apartments. Distributions
of $2.70, $2.62, $0.91 and $2.19 (disbursed in February 1999) were made for the
respective quarters of 1998. A distribution of $2.29 per Unit was made in May
1999, for the first quarter of 1999. No distributions were made for the second,
third or fourth quarters of 1999, during which period all available cash flow
was utilized for capital improvements at the Pavilion Apartments.
There are no material legal restrictions set forth in Registrant's
Limited Partnership Agreement, annexed to the Prospectus as Exhibit A thereto
("Partnership Agreement"), upon Reg istrant's present or future ability to make
distributions.
Page 6
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Item 6. Selected Financial Information
------------------------------
The information set forth below presents selected financial data of
Registrant. Additional financial information is set forth in the audited
financial statements and footnotes contained herein.
Years Ended
December 31,
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Total Assets $6,910,861 $7,076,729 $7,258,818 $7,448,953 $7,756,871
Mortgage Note Payable$4,644,938 $4,722,579 $4,793,033 $4,856,968 $4,914,986
Rental Revenue $2,189,322 $2,081,901 $2,040,543 $1,852,877 $1,841,892
Interest Expense - $456,410 $463,687 $470,769 $476,199 $481,611
Mortgages
Net Profit [Loss] ($50,566) $34,952 ($50,582) ($270,996) ($121,682)
Net Cash Provided by $335,890 $233,979 $280,140 $51,495 $116,822
Operating Activities
Net Cash [Used] in ($423,155) ($134,645) ($80,481) ($10,336) ($2,687)
Investing Activities -
Capital Expenditures
Net Cash [Used] in ($153,611) ($176,098) ($157,710) ($89,899) ($146,425)
Financing Activities
Profit (Loss) Per ($2.98) $2.06 ($2.98) ($15.98) ($7.18)
Limited Partnership
Unit
Distributions Per $4.48 $6.23 $5.53 $1.88 $5.53
Limited Partnership
Unit
Weighted Average 16,788 16,788 16,788 16,788 16,788
Number of Limited
Partnership Units
Outstanding
Page 7
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Conditions and
Results of Operations
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Liquidity and Capital Resources
As of the present date, Registrant owns one Property, the Pavilion
Apartments, and does not intend to acquire any other property.
As of May 1, 1986, Registrant admitted as Limited Partners
purchasers of 16,783 Units. Total capital raised was $8,391,500. In addition,
Registrant received accrued interest on the escrow account in the amount of
$82,471. Thus proceeds from the admission of Limited Partners aggregated
$8,473,971.
The Pavilion Apartments are owned by Registrant subject to a first
mortgage loan in the original principal amount of $5,000,000. This loan was
obtained from Long Beach Bank in March 1994, to refinance the previous first
mortgage affecting the property. (See "First Mortgage" above for a description
of the terms of this loan).
Registrant anticipates that cash flow from Pavilion should be
sufficient to permit the Partnership to make the monthly payments on the first
mortgage due prior to maturity and to meet Registrant's monthly operating
expenses, however, should there be a significant decrease in Pavilion's
occupancy or rental rates, or should there be a significant increase in capital
repair/replacement requirements that can be funded from available cash flow and
current reserves, there can be no assurance that Registrant would be able to
obtain sufficient funds to make such payments.
Registrant distributed $3.01 per Unit for the 1986 fiscal year,
$4.63 per Unit for 1987, $6.59 per Unit for 1988, $14.72 per Unit for 1989,
$7.75 per Unit for 1990, and $1.97 per Unit for the first quarter of 1991. There
were no distributions made for the second, third or fourth quarters of 1991, for
1992, or for 1993. Distributions aggregating $5.19 and $5.64 per Unit were made
for 1994 and 1995 respectively, and a distribution of $1.54 was made for the
first quarter of 1996. No distributions were made for the remaining quarters of
1996. The reduction in distributions in the years from 1989 through 1991,
resulted from decreasing interest rates and the reduced occupancy levels which
the Pavilion Apartments experienced. When there was cash flow available for
distribution during 1992 and 1993, no distributions were made to retain
available cash which might be required for use in connection with the
refinancing of the existing first mortgage. During the last three quarters of
1996 all available cash flow was utilized for work being done on the Pavilion
Apartments. Distributions of $1.30, $2.40 and $1.83 were made for the first
three quarters of 1997 respectively. No distribution was made for the fourth
quarter of 1997 as all available cash flow was utilized for capital improvements
at the Pavilion Apartments. Distributions of $2.70, $2.62, $0.91 and $2.19
(disbursed in February 1999) were made for the respective quarters of 1998.(See
"Operations - 1998 Fiscal Year" below). A distribution of $2.29 was disbursed in
May 1999, for the first quarter of the year. No distributions were made for the
subsequent quarters as all cash flow was utilized for capital improvements at
the Pavilion Apartments. (See "Operations - 1999 Fiscal Year" below).
Page 8
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OPERATIONS
Registrant has operated the Pavilion Apartments, located in West
Palm Beach, Florida, since January 1985.
Management Agreement
The Pavilion Apartments are currently managed by M.L. Property
Management Inc., an unaffiliated property manager, under a five year agreement
as extended in January 1999. The agreement will also terminate on the earlier
sale or disposition of the Pavilion Apartments.
1999 Fiscal Year
Rental Revenue for the year ended December 31, 1999, was $2,189,322
as compared with $2,081,901 for the 1998 calendar year. The increase in income
in 1999 reflected increased rental rates for apartments at the project as well
as reduced vacancies and rental allowances, which while in a reduced amount,
were still being utilized to attracted tenants to the Pavilion. Occupancy rates
at the project held in the low to mid 90% range for the 1999 year. As of
February 29, 2000, the Pavilion Apartments had 12 apartments out of 312
available for rent. These 12 apartments represent 10 of nineteen presently
vacant apartments and 2 additional apartments where the tenants have given
notice of their intent to vacate. Eight of the vacant apartments have already
been rented, while the remaining vacant unit is the model apartment. The
nineteen apartments presently vacant equates to a physical occupancy of 93.9%.
Operating Expenses, consisting mainly of real estate taxes, repairs
and maintenance and utilities, increased in 1999 to $716,919 as compared to the
1998 cost of $625,402. This increase reflected increases in amounts spent on
Replacements, Repairs and Maintenance, as well as increased costs for Water and
Sewer and Landscaping. These were offset somewhat by a decrease in Real Estate
Taxes as a result of a reduced assessed valuation of the project.
General and Administrative Expenses for 1999 increased to $752,824
from $689,444 in 1998. This increase resulted from increases in court costs and
eviction expenses as well as increased costs for security services.
Capital Improvements and Replacements
Page 9
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During 1999, in addition to items which were expensed under Cost of
Rental Income, substantial sums were spent on capital improvements, upgrades and
replacements at the Pavilion Apartments. Among these items were the following:
Aggregate
Item Expenditures
Furniture & Fixtures
Carpeting $95,877
Copy Machine $2,332
Security Cameras $1,393
Stoves/Refrigerators/Dishwashers $41,185
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Total: $140,787
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Building Improvements
Aluminum Roof Coating $21,935
Bathroom Tile Replacements $140,933
Counter Tops $16,514
Entrance Gates $6,480
Miscellaneous Interior Improvements $26,538
Parking Lot $4,785
Roof Repairs $38,228
Sewer Replacement $22,647
Sidewalk Replacements $4,308
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Total: $282,368
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Aggregate 1999 Capital Expenditures $423,155
========
Funds for these expenditures were provided from Cash Flow from the
Pavilion Apartments for the last three quarters of the year and from cash
reserves on hand.
Future Capital Improvement and Replacements
It is anticipated that substantial additional funds will be expended
for capital improvements during 2000 and subsequent years in order to keep the
Pavilion Apartments competitive in the rental market. Funds for such items may
be provided from sources such as Partnership cash reserves and cash flow from
the Pavilion Apartments. To the extent these sources are insufficient to
complete work which may be required, the Partnership may be forced to explore
outside sources of financing. There can be no assurance that sufficient
financing can be obtained to complete such work, and the Pavilion Apartments'
ability to compete in the rental market may be adversely affected.
Page 10
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In addition to regular ongoing replacements of items such as
carpeting and appliances, other major capital items which may be required to be
completed during the next few years, include but may not be limited to the
following:
Estimated
Potential
Project Costs
Roof Replacements - all buildings $500,000
Asphalt Overlay for parking Lots $105,000
Shower Tile & Pan Replacements $145,000
Sprinkler System Replacement $55,000
1998 Fiscal Year
Rental Revenue for the year ended December 31, 1998, was $2,081,901
as compared with $2,040,543 for the 1997 calendar year. The increase in income
in 1998 reflected increased rental rates for apartments at the project as
reduced by slightly increased vacancies at the property. Rental allowances, were
still being utilized to attracted tenants to the Pavilion, and were in
substantially the same amounts as experienced in the prior year. Occupancy rates
at the project held in the low to mid 90% range for the 1998 year. As of March
15, 1999, the Pavilion Apartments had sixteen apartments out of 312 available
for rent. These sixteen apartments represent seven of nine presently vacant
apartments and nine additional apartments where the tenants have given notice of
their intent to vacate. Two of the vacant apartments have already been rented.
The nine apartments presently vacant equates to a physical occupancy of 97.1%.
Operating Expenses, consisting mainly of real estate taxes, repairs
and maintenance and utilities, decreased in 1998 to $625,402 as compared to the
1997 cost of $665,541. This decrease principally reflected reductions in Real
Estate Taxes as a result of a reduced assessed valuation of the project, as well
as a reduction in replacements at the Pavilion.
General and Administrative Expenses for 1998 decreased to $689,444
from $711,626 in 1997. This decrease resulted principally from insurance costs
which showed a reduction as a result of better rates from a change in the
company providing such coverage to the Project.
In connection with the Tender Offer made by unaffiliated third
parties in December 1997 for Units of Limited Partnership Interests of
Registrant, other income of $10,300 for transfer fees was received, and expenses
of $13,200 for administrative fees and disbursements in connection with the
preparation of required Securities and Exchange Commission filings and
subsequent mailings to Limited Partners were incurred. This resulted in the net
Other Expenses of $2,900 which appears in 1998.
Page 11
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INFLATION
As of the present date, inflation has not had a major impact on the
operations of the Partnership. It is anticipated that future increases in
operating expenses will be offset if not exceeded by corresponding increases in
operating income.
YEAR 2000 ISSUES
Registrant experienced no negative operational consequences of Year
2000 issues.
Page 12
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Item 8. Financial Statements and Supplementary Data
FJS Properties Fund I, L.P.
Financial Statements
INDEX
Page
Number
Report of Independent Certified Public Accountants....................14
Financial statements
Balance Sheets as of December 31, 1999 and 1998..................15
Statements of Operations for the years ended
December 31, 1999, 1998 and 1997.......................16
Statements of Partners' Capital [Deficit] for the years ended
December 31, 1999, 1998 and 1997.......................17
Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997 .....................18
Notes To Financial Statements ................................19-23
Report of Independent Certified Public Accountants
on Supplementary Financial Information.................24
Real Estate and Accumulated Depreciation..............................25
Page 13
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of FJS Properties Fund I, L.P.
We have audited the accompanying balance sheets of FJS Properties Fund I, LP as
of December 31, 1999 and 1998, and the related statements of operations,
partners' capital (deficit), and cash flows for each of the three years in the
period ended December 31, 1999. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on 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 are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
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 FJS Properties Fund I, LP as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999, in conformity
with generally accepted accounting principles.
BUCHBINDER TUNICK & COMPANY LLP
Boca Raton, Florida
February 24, 2000
Page 14
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FJS PROPERTIES FUND I, L.P.
Balance Sheets
December 31, 1999 and 1998
1999 1998
----
ASSETS
Current assets:
Cash and cash equivalents $ 217,906 $ 458,782
Cash - escrow 119,379 148,617
Cash - security deposits 132,748 125,397
Other current assets 22,268 25,752
---------- --------
Total current assets 492,301 758,548
---------- --------
Property investment:
Land 2,296,804 2,296,804
Buildings 6,569,125 6,569,125
Furniture, fixtures and improvements 2,376,165 1,953,010
---------- ---------
Totals - at cost 11,242,094 10,818,939
Less: accumulated depreciation (5,073,750) (4,772,099)
------------- ------------
Property investment - net 6,168,344 6,046,840
------------ -----------
Other assets 250,216 271,341
------------ ------------
Total assets $ 6,910,861 $ 7,076,729
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
Accounts payable $ 108,403 $ 66,582
Accrued interest 37,740 38,371
Other accrued expenses 6,755 6,826
Due to related party 16,689 19,707
Tenant security deposits payable 132,748 125,397
Mortgage payable - current portion 85,557 77,641
Deferred income - current portion 7,143 7,143
-------- --------
Total current liabilities 395,035 341,667
-------- --------
Long-term liabilities:
Mortgage payable - non-current portion 4,559,381 4,644,938
Deferred income - non-current portion 17,857 25,000
--------- ---------
Total long-term liabilities 4,577,238 4,669,938
----------- -----------
Partners' capital (deficit):
General partner (1,216,473) (1,215,207)
Limited partners 3,155,061 3,280,331
------------ ------------
Total partners' capital (deficit) 1,938,588 2,065,124
------------ ------------
Total liabilities and partners' capital (deficit) $ 6,910,861 $ 7,076,729
============ ============
See notes to financial statements.
Page 15
<PAGE>
FJS PROPERTIES FUND I, L.P.
Statement of Operations
For the years ended December 31, 1999, 1998 and 1997
1999 1998 1997
---- ---- ----
Revenue:
Rental $ 2,189,322 $ 2,081,901 $ 2,040,543
Interest 12,324 23,664 25,836
----------- ----------- -----------
Total Revenue 2,201,646 2,105,565 2,066,379
----------- ----------- -----------
Expenses:
Operating 716,919 625,402 665,541
General and administrative 752,824 689,444 711,626
Interest 456,410 463,687 470,769
Depreciation and amortization 326,059 289,180 269,025
Other --- 2,900 ---
---------- ---------- -- -------
Total expenses 2,252,212 2,070,613 2,116,961
----------- --------- ---------
Net income (loss) $ (50,566) $ 34,952 $ (50,582)
=========== =========== ==========
Income (loss) per limited partnership unit$ (2.98) $ 2.06 $ (2.98)
=========== =========== ==========
Distributions per limited partnership unit$ 4.48 $ 6.23 $ 5.53
========== =========== ==========
Weighted average number of limited
partnership units outstanding 16,788 16,788 16,788
========== =========== ==========
See notes to financial statements.
Page 16
<PAGE>
FJS PROPERTIES FUND I, L.P.
Statements of Partners' Capital (Deficit)
For the years ended December 31, 1999, 1998 and 1997
General Limited
Partner Partners Total
Partners' capital (deficit)
- December 31, 1996 $ (1,213,057) $3,493,233 $2,280,176
Net (loss) for the year ended
December 31, 1997 (506) (50,076) (50,582)
Distributions to Partners (938) (92,837) (93,775)
---------- --------- --------
Partners' capital (deficit)
- December 31, 1997 (1,214,501) 3,350,320 2,135,819
Net income for the year ended
December 31, 1998 350 34,602 34,952
Distributions to Partners (1,056) (104,591) (105,647)
---------- --------- ---------
Partners' capital (deficit)
- December 31, 1998 (1,215,207) 3,280,331 2,065,124
Net (loss) for the year ended
December 31, 1999 (506) (50,060) (50,566)
Distributions to Partners (760) (75,210) (75,970)
---------- --------- ---------
Partners' capital (deficit)
- December 31, 1999 $ (1,216,473) $ 3,155,061 $ 1,938,588
============= =========== ===========
See notes to financial statements.
Page 17
<PAGE>
FJS PROPERTIES FUND I, L.P.
Statements of Cash Flows
For the years ended December 31, 1999, 1998 and 1997
1999 1998 1997
---- ---- ----
Operating activities:
Net income (loss) $(50,566) $ 34,952 $ (50,582)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation 301,651 264,772 244,617
Amortization 24,408 24,408 24,408
Deferred income (7,143) (7,143) (7,143)
Changes in assets and liabilities:
Decrease (increase) in escrow 29,238 (50,956) 85,214
(Increase) in security deposits (7,351) (3,519) (711)
Decrease (increase) in other current assets 3,484 10,219 (34,541)
(Increase) in other assets (3,283) (4,954) (6,420)
Increase (decrease) in accounts payable
and accrued expenses 41,119 (30,888) 16,673
(Decrease) increase in due to related party (3,018) (6,431) 7,914
Increase in tenant security deposits payable 7,351 3,519 711
------ -------- ---------
Net cash provided
by operating activities 335,890 233,979 280,140
-------- ------- ---------
Investing activities:
Capital expenditures (423,155) (134,645) (80,481)
------------------------------
Net cash (used in) investing activities (423,155) (134,645) (80,481)
--------- -------------------
Financing activities:
Principal payments on mortgages (77,641) (70,451) (63,935)
Cash distributions to Partners (75,970) (105,647) (93,775)
--------- -------------------
Net cash (used in) financing activities (153,611) (176,098) (157,710)
--------- ---------- ----------
Net (decrease) increase in cash
and cash equivalents (240,876) (76,764) 41,949
Cash and cash equivalents - beginning of year 458,782 535,546 493,597
--------- ------- ---------
Cash and cash equivalents - end of year $217,906 $458,782 $ 535,546
======== ======== =========
Supplemental disclosure of cash flow information:
Interest paid $457,043 $464,260 $ 470,790
======== ======== =========
See notes to financial statements.
Page 18
<PAGE>
FJS PROPERTIES FUND I, L.P.
Notes to Financial Statements
December 31, 1999, 1998 and 1997
Note 1 - Organization
FJS Properties Fund I, LP (the "Partnership") was formed under the
Delaware Revised Uniform Limited Partnership Act on October 5,1984. The
Partnership owns and operates the Pavilion, a 312 unit garden apartment
complex in West Palm Beach, Florida. The Partnership operates under one
reportable segment.
Note 2 - Significant Accounting Policies
Loan Acquisition Fees
The Partnership amortizes fees incurred in connection with mortgage
refinancings utilizing the straight-line method over the term of the
related mortgage, which is currently ten years.
Income Taxes
The Partnership is treated as a partnership for federal income tax
purposes. The Partnership will make no provision for income taxes because
all income and losses will be allocated to the Partners for inclusion in
their respective tax returns.
Property Investment and Depreciation
Property, improvements, furniture, and equipment are carried at cost and
depreciated over their estimated useful lives. The cost of maintenance and
repairs are expensed as incurred, whereas significant betterments and
renewals are capitalized. The Partnership depreciates buildings using the
straight-line method over 30 years. Furniture and fixtures and
improvements are depreciated using the straight-line method over periods
from 3 to 10 years.
Depreciation expense for the years ended December 31, 1999, 1998, and 1997
was $301,651, $264,772, and $244,617, respectively.
For tax purposes, the Partnership depreciates residential real property
using the 18 year accelerated depreciation method for property placed in
service prior to May 8, 1985. In accordance with ongoing changes in the
Internal Revenue Code, the Partnership will utilize the depreciation
method, which, in the opinion of the Managing General Partner, will be the
most beneficial to the Partnership.
Revenue Recognition
Rental, interest, and other income are recorded on the accrual method of
accounting.
Cash Equivalents
The Partnership considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.
Page 19
<PAGE>
FJS PROPERTIES FUND I, L.P.
Notes to Financial Statements (Continued)
December 31, 1999, 1998 and 1997
Concentration of Credit Risk
Financial instruments that subject the Partnership to concentrations of
credit risk include cash. The Partnership had amounts on deposit with
financial institutions which are approximately $270,000, $454,000 and
$471,000 in excess of the amounts insured for December 31, 1999, 1998 and
1997, respectively. The Partnership does not require collateral for
financial instruments.
Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
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 statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Advertising
The Partnership expenses advertising cost as incurred. Advertising expense
for the years ended December 31, 1999, 1998, and 1997 was $36,321,
$36,773, and $36,063, respectively.
Impairment
Certain long-term assets of the Partnership, including property and
furniture and fixtures, are reviewed at least annually as to whether their
carrying value has become impaired, pursuant to guidance established in
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." Management considers assets to be impaired if the carrying
value exceeds the future projected cash flows from the related operations
(undiscounted and without interest charges). If impairment is deemed to
exist, the assets will be written down to fair value or projected
discounted cash flows from related operations. Management also reevaluates
the periods of amortization to determine whether subsequent events and
circumstances warrant revised estimates of useful lives.
Page 20
<PAGE>
FJS PROPERTIES FUND I, L.P.
Notes to Financial Statements (Continued)
December 31, 1999, 1998 and 1997
Note 3 - Partnership Agreement
Pursuant to the terms of the Partnership Agreement, which expires December
31, 2009, the General Partner is liable for all general obligations of the
Partnership to the extent not paid by the Partnership. The Limited
Partners are not liable for expenses, liabilities, or obligations of the
Partnership beyond the amount of their contributed capital. In addition,
adjusted cash from operations is allocated, after payment of the
Partnership Management Fee to the Managing General Partner, 99% to the
Limited Partners, and 1% to the General Partner.
Taxable income and loss are allocated 99% to the Limited Partners and 1%
to the General Partner subsequent to the release of the Limited Partners'
funds to the Partnership, which occurred on May 1, 1986. Prior to the
release of funds, taxable income and loss were allocated 99% to the
General Partner and 1% to the Original Limited Partner.
Allocations of net income or loss among the Partners in the accrual basis
financial statements will be in conformity with the allocations of taxable
income or loss from operations.
Note 4 - Other Assets
A summary of other assets is as follows:
1999 1998
Cash in escrow - replacement reserves $ 124,183 $ 120,900
Loan acquisition fees - net of amortization
of $139,847, and $115,439 at December
31, 1999 and 1998, respectively 104,248 128,656
Deposits 21,785 21,785
---------- ----------
$ 250,216 $ 217,341
Note 5 - Mortgage Payable
The Partnership has a loan of $5,000,000 that is serviced by Bank United
of Texas, that is collateralized by a first mortgage lien on the property
and all personal property and income from the project. This loan is for a
term of ten years with an interest rate of 9.75% per annum. The loan is
repayable in equal monthly installments of $44,557 for principal and
interest with a balloon payment due in ten years. The loan requires
deposits with the lender for real estate taxes, insurance premiums, a debt
service reserve of one month's payment, as well as deposits for
replacement reserves for the project. These amounts are included in cash
escrow and other assets on the balance sheet.
Page 21
<PAGE>
FJS PROPERTIES FUND I, L.P.
Notes to Financial Statements (Continued)
December 31, 1999, 1998 and 1997
At December 31, 1999 maturities of the mortgage payable are as follows:
2000 $ 85,557
2001 94,282
2002 103,897
2003 114,492
2004 4,246,710
----------
Total mortgage payable $4,644,938
==========
The fair value of the Partnership's mortgage payable, which is determined
by discounting expected cash flows based on the Partnership's projected
current incremental borrowing rate, is approximately equal to the current
obligation.
Note 6 - Related Party Transactions
The Managing General Partner, pursuant to the Partnership Agreement, has
earned Property Management Fees of $107,540, $103,806, and $101,144 for
the years ended December 31, 1999, 1998, and 1997, respectively, of which,
$86,103, $83,045, and $80,915, respectively, was paid to an unaffiliated
Florida based management company. These fees are based on a percentage of
gross rental income as defined in the agreement.
Also pursuant to the Partnership Agreement the Managing General Partner
has earned Partnership Management Fees of $3,172, $6,673, and $3,912, for
the years ended December 31, 1999, 1998, and 1997, respectively, which
represents 4% of adjusted cash flow as defined in the agreement.
Additionally, in accordance with provisions of the Partnership Agreement,
the Partnership has agreed to pay to the Managing General Partner,
administrative service fees. These fees amounted to $27,000 for the year
ended December 31, 1999, and $24,000 in each of the years ended December
31, 1998 and 1997.
The Managing General Partner received distributions from cash flows of
$760, $1,056, and $938, during the years ended December 31, 1999, 1998,
and 1997, respectively.
In addition, the Managing General Partner received $9,000 in 1998 for
additional administrative services.
Page 22
<PAGE>
FJS PROPERTIES FUND I, L.P.
Notes to Financial Statements (Continued)
December 31, 1999, 1998 and 1997
Note 7 - Income Taxes
The reconciliation of net income (loss) as reported in the statements of
operations and as would be reported for tax purposes for the years ended
December 31, 1999, 1998, and 1997, are as follows:
December 31,
------------
1999 1998 1997
------ ------ -----
Net income (loss) -
statement of operations $ (50,566) $ 34,952 $ (50,582)
Tax depreciation in excess
of book depreciation (67,099) (71,010) (60,049)
------------ ---------- ----------
Net (loss) for tax purposes $ (117,665) $ (36,058) $ (110,631)
=========== ========== ==========
Page 23
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON SUPPLEMENTARY FINANCIAL INFORMATION
To the Partners of
FJS Properties Fund I, LP
We have audited the financial statements of FJS Properties Fund I, LP as of
December 31, 1999 and 1998, and for each of the three years in the period ended
December 31, 1999, and have issued our report thereon dated February 24, 2000.
Our audits also included the financial statement Schedule III of FJS Properties
Fund I. LP. This financial statement schedule is the responsibility of the
Partnership's management. Our responsibility is to express an opinion based on
our audits. In our opinion, such financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
BUCHBINDER TUNICK & COMPANY LLP
Boca Raton, Florida
February 24, 2000
Page 24
<PAGE>
FJS PROPERTIES FUND I, LP
Schedule III - Real Estate and Accumulated Depreciation
Initial Cost to Partnership
Costs
Buildings, Capitalized
Furniture, Subsequent
Fixtures, to Acquisition
and
Description Encumbrances Land Improvements Improvements
- ------------------- -------------- ------------ ------------- -------------
Pavilion Apartments
West Palm Beach,
Florida $ 4,644,938 $ 2,296,804 $ 7,196,789 $ 1,748,501
=========== =========== =========== ===========
Gross Amount at Which
Carried at Close of Period
----------
<TABLE>
Life on
Which
Depreciation
Buildings, Year in Latest
Furniture, of Income
Fixtures, and (1) (2) Accumulated Construc- Date Statement is
Description Land Improvements Total Depreciation tion Acquired Computed
- ------------------ ---------- ----------------------- ----------- ------------------ -----------
Pavilion Apartments
West Palm Beach,
<S> <C> <C> <C> <C> <C> <C>
Florida $2,296,804 $8,945,290$11,242,094 $5,073,750 1972 1/85 3-30 yrs
========== ==========
(1) The aggregate cost for federal income tax purposes is $9,333,351.
(2) A reconciliation of the carrying amount of land, buildings and improvements
as of December 31, 1999, 1998, and 1997 is as follows:
</TABLE>
Cost as of December 31,
1999 1998 1997
---------------------------- -------------
Balance at beginning of year $ 10,818,939 $ 10,684,294 $ 10,603,813
Improvements 423,155 134,645 80,481
------------ ------------ ------------
Balance at end of year $ 11,242,094 $ 10,818,939 $ 10,684,294
============ ============ ============
(3) A reconciliation of accumulated depreciation for the years ended December
31, 1999, 1998, and 1997 is as follows:
Cost as of December 31,
1999 1998 1997
---------------------------- -------------
Balance at beginning of year $ 4,772,099 $ 4,507,327 $ 4,262,710
Expense 301,651 264,772 244,617
----------- ----------- -----------
Balance at end of year $ 5,073,750 $ 4,772,099 $ 4,507,327
=========== =========== ===========
See independent accountants' report on supplementary financial information.
Page 25
<PAGE>
Item 9. Changes In and Disagreements With Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
On December 13, 1999, by mutual agreement, Registrant and Moore Stephens P.C.
("Moore Stephens") agreed to the replacement of Moore Stephens as Registrant's
independent accountants for the audit of Registrant's financial statements.
Registrant was previously advised by the staff of the Securities and Exchange
Commission (the "Commission") that in the staff's opinion, Moore Stephens may
not be independent of the Partnership, as required by law, in that a member of
the audit firm had a relationship with an entity which is a holder of
Registrant's Limited Partnership Interests. Neither the Staff letter, nor any
other information available to Registrant indicated that there was any
inaccuracy in the "audited" financial statements. The staff further advised that
for this reason, Registrant's financial statements for the three years ended
December 31, 1998, are considered by the staff to be unaudited. Moore Stephens
had advised Registrant that it disagrees with the staff's position and believes
that it was at all times independent with respect to Registrant's audits.
Excluding this issue, the staff has not alleged any inaccuracies in Registrant's
financial statements.
Registrant filed a Form 8-K on December 13, 1999, and a Form 8-K/A
on December 23, 1999 - both with reference to the Registrant's change of
independent accountants/independent auditors. Reference is hereby made to these
Forms 8-K and 8-K/A for further information regarding this change.
PART III
Item 10. Directors and Executive Officers of the Registrant
Registrant has no officers or directors. FJS Properties, Inc., the
General Partner, manages and controls the Registrant's affairs and has general
responsibility and ultimate authority in all matters affecting its business. The
names and ages of, as well as the positions held by, the officers and directors
of the General Partner are as follows:
NAME AGE OFFICES HELD SERVED AS AN
OFFICER AND/OR
DIRECTOR SINCE
A Andrew C. Alson 54 President and Director 1/85
Lawrence E. Bathgate II 60 Director 10/84
There are no family relationships between any executive officer or
director and any other executive officer or director of the General Partner.
Andrew C. Alson is a director and President of the General Partner.
Until May, 1995, Mr. Alson was a Director of and until January 1, 1993, was
President and Chief Executive Officer of PriMedex Health Systems, Inc. ("PMDX"),
a public company which is principally engaged through its wholly-owned
subsidiary, RadNet Management, Inc. in the healthcare services industry. Until
June 16, 1994, Mr. Alson, as a designee of PMDX, also served as a director of
ImmunoTherapeutics, Inc. ("IMNO"). IMNO is a publicly owned development stage
Minnesota based company which is engaged in the research and development of
immunotherapeutic drugs, primarily for the treatment of cancer. Mr. Alson is an
attorney admitted to the bar of the State of New York, and is a graduate of the
University of Pennsylvania and the Fordham University School of Law.
Lawrence E. Bathgate, II is a director of the General Partner. Mr.
Bathgate is the senior partner of Bathgate, Wegener & Wolf, P.A., a law firm in
Lakewood, New Jersey. Mr.
Page 26
<PAGE>
Bathgate is a graduate of Villanova University, Villanova, Pennsylvania and
Rutgers Law School, Newark, New Jersey. Mr. Bathgate also engages in extensive
real estate and other investment activities. Mr. Bathgate owns 20% of the common
stock of the General Partner. Mr. Bathgate is a director of Carson, Inc., a
publicly held company listed on the New York Stock Exchange.
All of the directors will hold office until the next annual meeting
of the stockholders of the General Partner and until their successors are
elected and qualified.
Other controlling individuals:
On August 7, 1995, Robert E. Brennan, the owner of 80% of the common
stock of the General Partner filed a voluntary petition for relief in the United
States Bankruptcy Court for the District of New Jersey under Chapter 11 of the
Bankruptcy Code.
On June 10, 1997, United States Bankruptcy Judge Kathryn C. Ferguson
appointed Donald F. Conway, C.P.A. as the Trustee in the Chapter 11 Bankruptcy
Proceeding involving Robert E. Brennan as Debtor, pending in the United States
Bankruptcy Court for the District of New Jersey (Case No 95-35502).
By virtue of his appointment as Trustee, Mr. Conway is empowered to
vote (and with the approval of the Court), to sell Mr. Brennan's Common Stock
and to direct the disposition of the sale proceeds. As a result Mr. Conway, in
his capacity as Trustee, may be deemed the beneficial owner of such shares and a
controlling person of FJS Properties, Inc. and Registrant.
Mr. Conway, age 59, is currently and since 1995 has been a principal
of Druker, Rahl & Fein, Business Consultants and Certified Public Accountants,
with offices in Princeton, New Jersey. From 1988 until 1995, Mr. Conway was the
Senior Manager of the Insolvency and Reorganization and Sports and Entertainment
practice of Withum, Smith & Brown, a Princeton, New Jersey certified public
accounting firm.
Compliance with Section 16(a) of the Exchange Act
Based solely upon a review of Forms 3 and 4 (17 CFR 249.103 and
249.104) and any amendments thereto furnished to Registrant under Rule 16a-3(d)
(17 CFR 240.16a-3(e) or written representations received by Registrant that no
Forms 5 were required, Registrant believes that other than as hereinafter noted
there were no officers, directors or beneficial owners of more than 10% of any
class of equity securities of Registrant registered pursuant to Section 12, that
failed to file on a timely basis any reports required by Section 16(a) during
the most recent fiscal years. As noted above, as of June 10, 1997, Donald F.
Conway may be deemed a beneficial owner of 80% of the general partner of
Registrant and a controlling person of FJS Properties, Inc. and Registrant. Mr.
Conway has advised that no filings were required for a one year period after
such appointment, and it would appear that a filing was required to have been
made in June 1998. Registrant has not been advised of any filings by Mr. Conway
as of March 15, 2000.
Item 11. Executive Compensation
The Registrant is not required to pay and did not pay any
remuneration to the officers and directors of the General Partner. See Item 12,
"Certain Relationships and Related Transactions."
Page 27
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The Family Trust, a New Jersey trust, which was established by
Robert Brennan, but as to which Mr. Brennan is neither a Trustee nor a
Beneficiary, owns 1,558 Units (9.28%). No other person was known by Registrant
to own beneficially more than 5% of the outstanding Units of Registrant. No
directors, officers or partners of the General Partner own Units of Registrant
except for the five Units owned by Mr. Bathgate, as the initial limited partner.
Ownership of more than 5% of Registrant:
(1) Title of Class (2) Name and (3) Amount and (4) Percent of Class
Address of nature of Beneficial
Beneficial Owner Ownership
---------------- --------- ------------
Units of Limited The Family Trust 1,558 Units - legal 9.28%
Partnership 340 North Avenue and beneficial
Cranford, NJ 07016 owner
As of March 1, 2000, Robert E. Brennan, Chapter 11 Debtor and
Lawrence E. Bathgate, II were the sole shareholders of the common stock of the
General Partner, owning 80% and 20% respectively. As described above under Item
10, Donald F. Conway, CPA, has been appointed as Trustee in the Chapter 11
Bankruptcy Proceeding involving Robert E. Brennan as Debtor. Mr. Conway is
empowered to vote (and with the approval of the Court), to sell Mr. Brennan's
Common Stock and to direct the disposition of the sale proceeds. As a result Mr.
Conway, in his capacity as Trustee, may be deemed a beneficial owner of such
shares and a controlling person of FJS Properties, Inc. and Registrant.
Page 28
<PAGE>
Item 13. Certain Relationships and Related Transactions
During Registrant's fiscal years ended December 31, 1999, 1998 and,
1997, the General Partner and certain affiliated entities have earned or
received compensation or payments for services from Registrant or its General
Partner as follows:
Reimbursement/Compensation
Name of Recipient Capacity in Which served or 1999 1998 1997
- ----------------- Payment Received
---------------- ---- ---- ----
FJS Properties, Inc.General Partner3 $760 $1,056 $938
Partnership Management Fee $3,172 $6,673 $3,912
Property Management Fee4
$21,508 $20,760 $20,229
Administrative Expenses5 $27,000 $24,000 $24,000
Tender Offer Administrative
Fees6 $0 $9,000 $0
-------- --------- ---------
Table Continued on next Page.
- --------
3 Represents the General Partner's interest in Adjusted Cash From Operations.
Under Registrant's Partnership Agreement 99% of the Net Income and Net Loss of
Registrant was allocated to the Limited Partners and 1% was allocated to the
General Partner. Pursuant thereto, for the years ended December 31, 1999, 1998,
and 1997, ($1,177), $360, and ($1,106) of the Registrant's taxable income (loss)
was allocated to FJS Properties, Inc. For further information, reference is made
to the material contained in the Prospectus under the heading "MANAGEMENT
COMPENSATION."
4 The following property management fees were applicable to the years 1999, 1998
and 1997:
YEAR Aggregate ManagementRetained by General Paid to local
Fee Partner unaffiliated
management company
1999 $107,540 $21,508 $86,032
1998 $103,805 $20,760 $83,045
1997 $101,144 $20,229 $80,915
- --------- ------------------- ----------------- ------------------
In addition, the local unaffiliated management company received construction
supervision fees of $8,068 during 1999, and $2,748 during 1998, for supervision
of outside construction work at the Pavilion Apartments.
5 Represents administrative fees for the respective years for preparation of the
annual Forms 10K, quarterly Forms 10Q, and the Form 8-K of December, 1999, for
Registrant for filing with the Securities and Exchange Commission. Such charges
are in accordance with and pursuant to ss.10.1.3(b) of the Partnership Agreement
of Registrant and do not exceed 90% of the amount Registrant would be required
to pay to independent parties for comparable administrative services in the same
geographic location.
6 Represents administrative fees for review of tender offer filings,
preparation, filing and mailings of required responsive Securities and Exchange
Commission Filings and materials for mailings to Limited Partners. As provided
in the Partnership Agreement of Registrant such fees do not exceed 90% of the
amount Registrant would be required to pay to independent parties for comparable
administrative services in the same geographic location.
Page 29
<PAGE>
Name of Recipient Capacity in Which served or 1999 1998 1997
- ----------------- --------------------------- ---- ---- ----
Payment Received
----------------
Lawrence E. Bathgate II Initial Limited Partner7 $22 $31 $28
Other Officers/Directors Officer/Director of General $0 $0 $0
of General Partner Partner
In addition, certain officers and directors of the General Partner
receive compensation from the General Partner and/or its affiliates (but not
from Registrant) for services performed for various affiliated entities, which
may include services performed for Registrant.
- --------
7 Represents distribution of Adjusted Cash From Operations attributable to the
five Units Owned by Mr. Bathgate. For the years ended December 31, 1999, 1998,
and 1997, ($34.69), $10.63, and ($32.62) of the Registrant's taxable income
(loss) was allocated to his Units.
Page 30
<PAGE>
PART IV
Item 14. Exhibits Financial Statement Schedules, and Reports On Form 8-K
---------------------------------------------------------------
(a) 1&2 Financial Statements: See Index to Financial Statements in
Item 8.
(a) 3 Exhibits:
3.4 (a) Agreement of Limited Partnership, dated as of April 30,
1985, incorporated by reference to Exhibit A to the Prospectus
of Registrant dated June 10, 1985 included in Registrant's
Registration Statement on Form S-11 (Reg. No. 2-93980).
(b) Amendment to Agreement of Limited Partnership dated as
of October 22, 1985 incorporated by reference to Exhibit 3A.1
to Registrant's Registration Statement on Form S-11 (Reg. No.
2-93980).
(c) Amendment to Agreement of Limited Partnership dated
as of October 22, 1985, incorporated by reference to
Exhibit 3.4(c) to Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1986 (File
No 2-93980).
(d) Amendment to Agreement of Limited Partnership, dated
as of March 24, 1987, incorporated by reference to
Exhibit 3.4(d) to Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1987 (File
No 2-93980).
(e) Amendment No. 1 to Amended and Restated Certificate
of Limited Partnership, dated as of August 17, 1987,
incorporated by reference to Exhibit 3.4(e) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987 (File No 2-93980).
10. (a) Acquisition and Disposition Agreement dated as of May
2, 1986 between Registrant and FJS Properties, Inc., incorpo
rated by reference to Exhibit 10A to Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1986 (File
No. 2- 93980).
(b) Management Services Agreement dated as of May 2, 1986
between Registrant and FJS Properties, Inc., incorporated by
reference to Exhibit 10B to Registrant's Annual Report on Form
Page 31
<PAGE>
10-K for the fiscal year ended December 31,1986
(File No.2-93980).
(c) Contract for Sale and Purchase dated December 17, 1984,
between Rockwell Investments, Ltd. and Registrant, incorpo
rated by reference to Exhibit 10D to Registrant's Registration
Statement on Form S-11 (Reg. No. 2-93980.)
(d) Contract for Sale and Purchase dated December 17, 1984,
between Vinsteve Investments Inc., Jimstein Investments, Ltd.,
Barwell Corporation, N.W. and Registrant, incorporated by ref
erence to Exhibit 10E to Registrant's Registration Statement on
Form S-11 (Reg. No. 2-93980.)
(e) Mortgage and Security Agreement dated September 9,
1987, by FJS Properties Fund I, L.P., as mortgagor, and
The Bank of Tokyo, Ltd., Miami Agency, as mortgagee,
incorporated by ref erence to Exhibit 10(g) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987 (File No 2- 93980).
(f) Mortgage Note, dated September 9, 1987, by FJS
Properties Fund I, L.P. as maker to The Bank of Tokyo,
Ltd., Miami Agency, as payee in the principal amount of
$5,000,000, incor porated by reference to Exhibit 10(h)
to Registrant's Annual Re port on Form 10-K for the
fiscal year ended December 31, 1987 (File No 2-93980).
(g) Modification of Note, Mortgage and Assignment
Agreement, dated as of September 9, 1992, between FJS
Properties Fund I, L.P. as Mortgagor, and The Bank Of
Tokyo, Ltd., Miami Agency, as Mortgagee incorporated by
reference to Exhibit 10(g) to Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1987
(File No 0-15755).
(h) Modification of Note, Mortgage and Assignment
Agreement, dated as of November 10, 1992, between FJS
Properties Fund I, L.P. as Mortgagor, and The Bank Of
Tokyo, Ltd., Miami Agency, as Mortgagee incorporated by
reference to Exhibit 10(h) to Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1987
(File No 0-15755).
(i) Modification of Note, Mortgage and Assignment Agreement,
dated as of March 31, 1993, between FJS Properties Fund I,
L.P. as Mortgagor, and The Bank of Tokyo, Ltd., Miami
Agency, as Mortgagee incorporated by reference to Exhibit 10(i)
Page 32
<PAGE>
to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987 (File No 0-15755).
(j) Renewal Note, dated March 31, 1993, made by FJS
Properties Fund I, L.P. to the Bank of Tokyo, Ltd
incorporated by reference to Exhibit 10(j) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987 (File No 0-15755).
(k) Property Management Agreement made as of December
1993, between FJS Properties Fund I, L.P., Owner, and
M.L. Property Management, Inc., Managing Agent,
incorporated by reference to Exhibit 10(k) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 (File No 0-15755).
(l) Third Modification of Note, Mortgage and Assignment
Agreement dated as of February 28, 1994, between FJS
Properties Fund I, L.P. and The Bank of Tokyo, Ltd.,
incor porated by reference to Exhibit 10(l) to
Registrant's Annual Re port on Form 10-K for the fiscal
year ended December 31, 1993 (File No 0-15755).
(m) Multifamily Note, dated March 29, 1994, made by FJS
Properties Fund I, L.P. to Long Beach Bank, FSB, in the
principal amount of $5,000,000, incorporated by
reference to Exhibit 10(m) to Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993
(File No 0-15755).
(n) Multifamily Mortgage, Assignment of Rents and
Security Agreement and Fixture Filing, dated March 29,
1994, made by FJS Properties Fund I, L.P. to Long Beach
Bank, FSB, incor porated by reference to Exhibit 10(n)
to Registrant's Annual Re port on Form 10-K for the
fiscal year ended December 31, 1993 (File No 0-15755).
(o) Assignment of Leases, dated March 29, 1994, made by
FJS Properties Fund I, L.P. to Long Beach Bank, FSB,
incorporated by reference to Exhibit 10(o) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 (File No 0-15755).
(p) Operations and Maintenance Agreement dated March 29,
1994, between FJS Properties Fund I, L.P. and Long Beach
Bank, FSB, incorporated by reference to Exhibit 10(p) to
Page 33
<PAGE>
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 (File No 0-15755).
(q) Debt Service Reserve Fund Security Agreement, dated
March 29, 1994, between FJS Properties Fund I, L.P. and
Long Beach Bank, FSB, incorporated by reference to
Exhibit 10(q) to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 (File No
0-15755).
(r) Replacement Reserve and Security Agreement, dated
March 29, 1994, between FJS Properties Fund I, L.P. and
Long Beach Bank, FSB, incorporated by reference to
Exhibit 10(r) to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 (File No
0-15755).
(s) Completion/Repair and Security Agreement, dated
March 29, 1994, between FJS Properties Fund I, L.P. and
Long Beach Bank, FSB, incorporated by reference to
Exhibit 10(s) to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 (File No
0-15755).
(t) Extension of Property Management Agreement dated as
of January 1, 1999, by and between FJS Properties Fund
I, L.P. and ML Property Management Inc., incorporated by
reference to Exhibit 10(t) to Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1998
(File No 0-15755).
(b) Reports on Form 8-K filed during the last quarter of the fiscal
year:
Form 8-K filed December 13, 1999, and Form 8-K/A filed
December 23, 1999 - both with reference to the Registrant's
change of independent accountants/independent auditors on
December 13, 1999.
Financial Statement Schedules Filed Pursuant to Item 13(B)
See Index to Financial Statements in Item 8.
Page 34
<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.
FJS PROPERTIES FUND I, L.P.
FJS PROPERTIES, INC.
General Partner
Dated: March 15, 2000 By: Andrew C. Alson
-------------------------
Andrew C. Alson, President
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities (with respect to the General Partner) and on
the dates indicated.
Dated: March 14, 2000 By: Lawrence E. Bathgate, II
-------------------------------
Lawrence E. Bathgate, II
Director of the General
Partner
Dated: March 15, 2000 By: Andrew C. Alson
-------------------------------
Andrew C. Alson, President
and Director of the General
Partner (Principal Executive
Officer and Principal
Financial Officer)
Page 35
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet and the consolidated statement of operations and is
qualified in its entirety by reference to said statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> Dec-31-1999
<CASH> 217,906
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 492,301
<PP&E> 11,242,094
<DEPRECIATION> 5,073,750
<TOTAL-ASSETS> 6,910,861
<CURRENT-LIABILITIES> 395,035
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,938,588
<TOTAL-LIABILITY-AND-EQUITY> 6,910,861
<SALES> 0
<TOTAL-REVENUES> 2,189,322
<CGS> 716,919
<TOTAL-COSTS> 1,078,883
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 456,410
<INCOME-PRETAX> (50,566)
<INCOME-TAX> 0
<INCOME-CONTINUING> (50,566)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (50,566)
<EPS-BASIC> (2.98)
<EPS-DILUTED> (2.98)
</TABLE>
