<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
FOR QUARTER ENDED JUNE 30, 1995
COMMISSION FILE NUMBER 2-94725
REAL AMERICAN PROPERTIES
(FORMERLY, HUTTON/REAL AMERICAN PROPERTIES)
A CALIFORNIA LIMITED PARTNERSHIP
I.R.S. EMPLOYER IDENTIFICATION NO. 95-3906164
9090 Wilshire Blvd., Suite 201
Beverly Hills, Calif. 90211
Registrant's Telephone Number,
Including Area Code (310) 278-2191
Securities Registered Pursuant to
Section 12(b) or 12(g) of the Act
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed with the Commission by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve 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> 2
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1995
PART I. FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<S> <C>
Item 1. Financial Statements
Balance Sheets, June 30, 1995 and December 31, 1994 . . . . . . . . . . . . . . . . . . . . 1
Statements of Operations,
Six and Three Months Ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . 2
Statement of Partners' Equity,
Six Months Ended June 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Statements of Cash Flows
Six Months Ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . 4
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Management's Analysis and Discussion of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
<PAGE> 3
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
JUNE 30, 1995 AND DECEMBER 31, 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
(Unaudited) (Audited)
------------ -----------
<S> <C> <C>
RENTAL PROPERTY, at cost
Land $ 2,170,920 $ 2,170,920
Buildings 12,360,101 12,360,101
Furniture and equipment 835,000 835,000
----------- -----------
15,366,021 15,366,021
Less accumulated depreciation (4,361,154) (4,291,410)
----------- -----------
11,004,867 11,074,611
----------- -----------
CASH AND CASH EQUIVALENTS 506,135 659,440
----------- -----------
RESTRICTED CASH 3,883,748 3,861,813
----------- -----------
INVESTMENT IN LIMITED PARTNERSHIP
OTHER ASSETS:
Due from affiliated rental agent 112,955 136,340
Other receivables and prepaid expenses 36,327 37,447
----------- -----------
149,282 173,787
----------- -----------
$15,544,032 $15,769,651
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Mortgage notes payable $ 9,667,049 $ 9,687,439
Accounts payable and accrued expenses 986,013 984,180
Tenant security deposits 26,132 26,132
Liability for earthquake loss 4,010,515 3,988,580
----------- -----------
14,689,709 14,686,331
PARTNERS' EQUITY 854,323 1,083,320
----------- -----------
$15,544,032 $15,769,651
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
SIX AND THREE MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
Six months Three months Six months Three months
ended ended ended ended
June 30, 1995 June 30, 1995 June 30, 1994 June 30, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
RENTAL OPERATIONS
Revenues
Rental income $ 333,746 $ 169,668 $ 377,570 $ 160,424
Other income 17,131 8,156 24,318 10,513
--------- --------- --------- ---------
350,877 177,824 401,888 170,937
--------- --------- --------- ---------
Expenses
Operating expenses 240,541 87,288 259,902 95,366
Management fees-affiliate 32,331 13,607 22,111 8,766
Depreciation 69,744 34,872 69,742 34,871
General and administrative 19,720 10,460 23,368 10,608
Interest expense 171,566 (62,934) 177,024 86,680
Provision for earthquake loss - - 400,000 150,000
--------- --------- --------- ---------
533,902 83,293 952,147 386,291
--------- --------- --------- ---------
(Loss) income from rental operations (183,025) 94,531 (550,259) (215,354)
--------- --------- --------- ---------
PARTNERSHIP OPERATIONS
Revenue--interest and other income 11,430 10,682 6,248 2,920
--------- --------- --------- ---------
Expenses
General and administrative 22,630 12,139 25,757 13,730
Professional fees 34,772 19,862 21,871 2,282
--------- --------- --------- ---------
57,402 32,001 47,628 16,012
--------- --------- --------- ---------
Loss from partnership operations (45,972) (21,319) (41,380) (13,092)
--------- --------- --------- ---------
NET (LOSS) INCOME $(228,997) $ 73,212 $(591,639) $(228,446)
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENT OF PARTNERS' EQUITY (DEFICIENCY)
SIX MONTHS ENDED JUNE 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
--------- --------- ----------
<S> <C> <C> <C>
PARTNERSHIP INTERESTS
at June 30, 1995 21,500
==========
EQUITY (DEFICIENCY),
at January 1, 1995 $(175,228) $1,258,548 $1,083,320
Net loss for the six months
ended June 30, 1995 (2,290) (226,707) (228,997)
--------- ---------- ----------
EQUITY (DEFICIENCY),
at June 30, 1995 $(177,518) $1,031,841 $ 854,323
========= ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION> 1995 1994
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(228,997) $(591,639)
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation 69,744 69,742
(Increase) decrease in:
Due from rental agent 23,385 48,865
Other receivables and prepaid expenses 1,120 -
Increase (decrease) in:
Accounts payable and accrued expenses 1,833 865
Liability for earthquake loss 21,935 400,000
--------- ---------
Net cash used in operating activities (110,980) (72,167)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable (20,390) (18,348)
Increase in restricted cash (21,935) -
--------- ---------
(42,325) (18,348)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (153,305) (90,515)
CASH AND CASH EQUIVALENTS, beginning of period 659,440 689,136
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 506,135 $ 598,621
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 7
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The information contained in the following notes to the financial
statements is condensed from that which would appear in the annual
audited financial statements; accordingly, the financial statements
included herein should be reviewed in conjunction with the financial
statements and related notes thereto contained in the annual report
for the year ended December 31, 1994 of REAL American Properties (the
"Partnership") (formerly Hutton/REAL American Properties). Accounting
measurements at interim dates inherently involve greater reliance on
estimates than at year end. The results of operations for the interim
periods presented are not necessarily indicative of the results for
the entire year.
In the opinion of the the Partnership, the accompanying unaudited
financial statements contain all adjustments (consisting primarily of
normal recurring accruals) necessary to present fairly the financial
position of the Partnership as of June 30, 1995, and the results of
operations and changes in cash flow for the six months then ended.
ORGANIZATION
The Partnership was formed under the California Limited Partnership
Act on March 9, 1984. The Partnership was formed to invest in a
diversified portfolio of apartment complexes and had invested in five
residential apartment projects, one of which was foreclosured by the
lender in 1993. The general partners are National Partnership
Investments Corp. ("NAPICO"), a California corporation, and Real
Estate Services XIII Inc. ("Real Estate"), a Delaware corporation.
Casden Investment corporation owns 100 percent of NAPICO's stock.
The Partnership offered 45,000 limited partnership interests ("Units")
at $1,000 each, of which 21,500 were sold through a public offering.
The terms of the Amended and Restated Certificate and Agreement of
Limited Partnership (the "Partnership Agreement") provide, among other
things, for allocation to the partners of profits, losses and any
special allocations with respect thereto. Under the terms of the
Partnership Agreement, cash available for distribution is to be
allocated 90 percent to the limited partners as a group and 10 percent
to the general partners.
Net proceeds from sale or refinancing is distributed 100 percent to
the limited partners until an amount equal to the aggregate adjusted
capital values, as defined, plus a cumulative non-compounded 8 percent
annual return. The balance is distributed 85 percent to the limited
partners and 15 percent to the general partners.
Losses are allocated 99 percent to the limited partners and 1 percent
to the general partners.
5
<PAGE> 8
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RENTAL PROPERTY AND DEPRECIATION
Rental property is stated at cost. Depreciation is provided on the
straight-line method over the estimated useful lives of the buildings
and equipment.
<TABLE>
<CAPTION>
Asset Estimated Useful Lives
----- ----------------------
<S> <C>
Buildings 30 years
Furniture and equipment 5 years
</TABLE>
On January 17, 1994, the Northridge rental property sustained major
damage due to the severe earthquake in the Los Angeles area. The
current operations of the property have been materially affected since
the Los Angeles County building inspectors have declared the building
unsafe for habitation. Accordingly, the entire property has been
vacated since the earthquake. The property is covered by insurance,
which covers to a limited extent, among other things, property damage
and loss of rentals. In August 1994, a partial settlement for
property damage in the amount of approximately $3,909,000 was
allocated to the Partnership under a master umbrella insurance policy,
covering earthquake damage for this and other properties managed by a
related party. These insurance proceeds plus related interest earned
of $146,193, net of earthquake related costs incurred of $171,445 are
included in restricted cash as of June 30, 1995. In addition, the
Partnership is still negotiating with the insurance company for claims
relating to the remaining property damage which is estimated at
approximately $1,250,000, net of the 8.5 percent independent
adjustor's fee, which has not been reflected in the financial
statements. An amount of approximately $127,000 was accrued on the
financial statements as of December 31, 1994 to provide for the
estimated loss to be incurred by the Partnership. At June 30, 1994,
the Partnership estimated the loss to be $400,000. This amount,
along with the insurance proceeds, is included in liability for
earthquake loss on the accompanying balance sheet as of June 30, 1995.
In addition, interest in the amount of approximately $596,000,
relating to the first and second mortgages on the Northridge property,
and other costs of approximately $291,000 have been accrued and
included in accounts payable and accrued expenses as of June 30, 1995.
The Partnership is continuing negotiations with the first mortgage
lender, who has a security interest in the insurance proceeds, and is
finalizing an agreement as to the disbursement of insurance proceeds,
in the event that the Northridge property is rebuilt. Concurrently
therewith, an application for a new loan with the existing first
mortgage lender is being submitted. The Partnership has received
approval of repair design plan and specifications by the Los Angeles
Department of Building and Safety. The Partnership, the lenders and
structural engineers are assessing the best course of action to pursue
with respect to rebuilding Northridge. If the insurance proceeds are
not adequate to repair the building, the lender could foreclose on the
building and claim the insurance proceeds held by the Partnership.
6
<PAGE> 9
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RENTAL PROPERTY AND DEPRECIATION (CONTINUED)
Substantially all of the apartment units in the Partnership's
apartment projects are leased on a month-to-month basis.
AMORTIZATION OF LOAN FEES
Loan fees are being amortized on the straight-line method over a
fifteen-year period.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and bank certificates of
deposit, with an original maturity of three months or less.
NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIP
In September 1992, the Partnership completed an exchange transaction
involving the Del Coronado I and II properties. The Partnership
transferred the Del Coronado properties to an unaffiliated Arizona
limited partnership, 843 South Longmore Limited Partnership, in
exchange for a subordinated 20 percent limited partnership interest in
the Arizona limited partnership. In August 1995, the Del Coronado
properties were sold by the Local Operating General Partner to a REIT.
The proceeds will be in the form of the REIT stock, currently valued
at approximately $680,000, but which cannot be redeemed for one year
and which may be subject to change. The investment in the limited
partnership is being carried at a zero balance.
NOTE 3 - MORTGAGE NOTES PAYABLE
Mortgage notes payable consist of notes bearing interest at rates
ranging from 9.25 percent to 10.7 percent per annum. Monthly
payments of principal and interest range from approximately $3,400 to
$53,500. The notes have maturity dates from November 1995 to August
1996 and are secured by deeds of trust on the rental properties.
In February 1994, the Partnership ceased making payments to the
mortgage lender of the Northridge property, pending negotiations
regarding the major damage sustained during the January 17, 1994
earthquake. (see Note 1).
NOTE 4 - INCOME TAXES
No provision has been made for income taxes in the accompanying
financial statements as such taxes, if any, are the liability of the
individual partners.
7
<PAGE> 10
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
NOTE 5 - RELATED PARTY TRANSACTIONS
a. Sales commissions were paid to an affiliate of Lehman Brothers
Inc. (formerly E.F. Hutton & Company Inc.) of 8 percent per
unit on units sold subject to any quantity discounts to
individual investors for substantial purchases. Total sales
commissions earned and charged to partners' equity as offering
expenses amounted to $1,720,000.
b. Acquisition fees of $1,793,976 were paid to the general
partners and have been capitalized as part of the acquisition
costs of rental properties in the accompanying financial
statements.
c. The Partnership had entered into an agreement with affiliates
of NAPICO to manage the operations of the West Colonial and
Northridge rental properties owned by the Partnership. The
agreements are on a month-to-month basis and provides, among
other things, for a management fee equal to 5% of gross
rentals and other collections for West Colonial and
approximately $2,450 per month for an eighteen-month period,
starting February 1994, as compensation for continuing
property management services and reconstruction oversight at
the Northridge property damaged by the earthquake which
represents 3.5 percent of insurance proceeds allocable to lost
rents net of adjuster's fees. Management fees charged to
rental operations under these agreements were approximately
$32,000 and $22,000 for the six months ended June 30, 1995 and
1994, respectively. As of July 24, 1995, management of West
Colonial was transferred to an indpendent property management
firm. The affiliated property management contract for
Northridge has been extended until reconstruction commences,
at which time property management shall be transferred to an
independent management firm.
d. The Partnership reimburses NAPICO for certain expenses. The
reimbursement to NAPICO of $6,293 was paid and included in the
Partnership's operating expenses in the first six months of
1995.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Under the terms of the Partnership Agreement, the Partnership may be
obligated to the General Partners or their affiliates for the
following fees:
a. A liquidation fee equal to 15 percent of the net proceeds from
sale or refinancing of a project. No part of such fee shall
be paid unless and until the Limited Partners have first
received certain amounts as stated in the Partnership
Agreement.
b. Certain other fees may be payable, under certain
circumstances, as described in the Prospectus and the
Partnership Agreement.
NOTE 7 - LITIGATION
Except as set forth in item 3, NAPICO is a plaintiff in various
lawsuits and has also been named as defendant in other lawsuits
arising from transactions in the ordinary course of business. In the
opinion of management and NAPICO, the claims will not result in any
material liability to the Partnership.
8
<PAGE> 11
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
JUNE 30, 1995
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS
OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
RAP received a total of $10,750,000 in subscriptions for units of limited
partnership interests (at $1,000 per unit) during the period September 12, 1985
to February 28, 1986, pursuant to a registration statement on Form S-11.
$10,750,000 in subscriptions were received pursuant to the exercise of warrants
and the sale of additional limited partnership interests from April 1, 1986 to
May 31, 1986.
The Partnership acquired five apartment complexes since inception, one of which
was foreclosed by the lender in 1993. The Partnership remains invested in four
apartment complexes. Two of these remaining buildings were contributed to a
separate limited partnership in 1992.
The Partnership's primary sources of funds are income from rental operations
and interest income on money market funds and certificates of deposit.
In 1994 and 1993, the Partnership advanced funds to partially cover the
operating deficits of the West Colonial property in the amount of $16,000 and
$35,000, respectively. Such advances have been funded from the Partnership's
working capital reserve.
RESULTS OF OPERATIONS
Rental operations consist primarily of rental income and depreciation expense,
debt service, and normal operating expenses to maintain the properties.
Depreciation is provided on the straight-line method over the estimated useful
lives of the buildings and equipment. Substantially all of the rental units in
the apartment projects are leased on a month-to-month basis.
On January 17, 1994, the Northridge rental property sustained major damage due
to the severe earthquake in the Los Angeles area. The current operations of
the property have been materially affected since the Los Angeles County
building inspectors have declared the building unsafe for habitation.
Accordingly, the entire property has been vacated since the earthquake. The
property is covered by insurance, which covers to a limited extent, among other
things, property damage and loss of rentals. In August 1994, a partial
settlement for property damage in the amount of approximately $3,909,000 was
allocated to the Partnership under a master umbrella insurance policy, covering
earthquake damage for this and other properties managed by a related party.
These insurance proceeds plus related interest earned of $146,193, net of
earthquake related costs incurred of $171,445 are included in restricted cash
as of June 30, 1995. In addition, the Partnership is still negotiating with
the insurance company for claims relating to the remaining property damage
which is estimated at approximately $1,250,000, net of the 8.5 percent
independent adjustor's fee, which has not been reflected in the financial
statements. An amount of approximately $127,000 was accrued on the financial
statements as of December 31, 1994 to provide for the estimated loss to be
incurred by the Partnership. This amount, along with the insurance proceeds,
is included in liability for earthquake loss on the
9
<PAGE> 12
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
JUNE 30, 1995
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS
OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS (CONTINUED)
accompanying balance sheet as of June 30, 1995. In addition, interest in the
amount of approximately $596,000, relating to the first and second mortgages on
the Northridge property, and other costs of approximately $291,000 have been
accrued through June 30, 1995, and are included in accounts payable and accrued
expenses as of June 30, 1995 (See Note 3).
The Partnership is continuing negotiations with the first mortgage lender, who
has a security interest in the insurance proceeds, and is finalizing an
agreement as to the disbursement of insurance proceeds, in the event that the
Northridge property is rebuilt. Concurrently therewith, an application for a
new loan with the existing first mortgage lender is being submitted. The
Partnership has received approval of repair design plan and specifications by
the Los Angeles Department of Building and Safety. The Partnership, the
lenders and structural engineers are assessing the best course of action to
pursue with respect to rebuilding Northridge. As compensation for continuing
property management services and reconstruction oversight, the managing agent,
which is an affiliate of NAPICO, will be paid a total of approximately $45,000
for the eighteen-month period from February 1994 through July 1995. For the
six months ended June 30, 1995, $14,850 has been paid. If the insurance
proceeds are not adequate to repair the building, the lender could foreclose on
the building and claim the insurance proceeds held by the Partnership.
Occupancy at West Colonial Village averaged 91 percent during the first six
months of 1995, a 3 percent decrease in occupancy compared to the same period
in 1994. The property operated at a cash deficit of approximately $14,000
(excluding depreciation and principal payments on the mortgage) during the
first six months of 1995. In July 1995, the Partnership engaged an independent
real estate brokerage firm to market the sale of West Colonial Village.
Partnership operations consist primarily of interest income earned on
certificates of deposit and other temporary investment of funds not required
for investment in projects. Operating expenses of the Partnership consist
substantially of recurring general and administrative expenses and professional
fees for services rendered to the Partnership.
The Partnership did not make cash distributions during the first six months of
1995 and does not anticipate making any cash distributions in the future.
10
<PAGE> 13
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
JUNE 30, 1995
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of June 30, 1995, NAPICO was named as a plaintiff or a defendant in several
suits. None of these suits were related to the Partnership.
Real Estate, a General Partner of the Partnership and certain of its
affiliates, on their own behalf and on behalf of the Partnership and certain
other partnerships with which they are associated (collectively, the "Plaintiff
Partnerships") and NAPICO and certain of its affiliates, have entered into a
Memorandum of Understanding dated August 11, 1995. In addition to establishing
certain Partnership controls, the Memorandum of Understanding resolves and
settles various management and control issues which were under discussion for
some time and various claims which were raised in a lawsuit filed in the Los
Angeles Superior Court on June 9, 1995 by Real Estate, the Partnership and
others against NAPICO, among others ("the Lawsuit"). All parties entered into
the Memorandum of Understanding without any admission of wrongdoing or
liability by any defendant as to any claim in the Lawsuit, in a desire to avoid
continued litigation that would be expensive, time consuming and complex.
By virtue of the Memorandum of Understanding, the parties thereto have agreed,
among other things, that:
1. NAPICO has agreed to allow the accounting firm of Price
Waterhouse to complete its analysis of the books and records
of the Partnership including an analysis of the books and
records of the master disbursement account maintained by the
Partnership's property management company, Mayer Management,
Inc. ("MMI"). NAPICO has also agreed that it and its
affiliates, including MMI, will pay to the Partnership any
amounts (with interest thereon) properly determined to be owed
to the Partnership as a result of the Price Waterhouse
analysis.
2. The management of the West Colonial property will be performed
by HSC Real Estate Inc., a management company unaffiliated
with NAPICO pursuant to the Property Management Agreement
dated July 24, 1995, subject to certain agreed-upon
amendments.
3. The existing Property Management Agreement for the Northridge
property by and between the Partnership and MMI, shall be
extended until the earlier of the commencement of
reconstruction of the building or a the sale of the property
to an unaffiliated third party, subject to certain agreed-upon
amendments.
4. The Partnership will continue to retain Deloitte & Touche as
the Partnership's auditors for 1995, but will solicit
competitive bids from at least three Big Six accounting firms
for the Partnership's audit work beginning with fiscal year
1996 and at least every three (3) years thereafter.
5. The Partnership will employ an independent Cash Manager,
designated by Real Estate and approved by NAPICO, to perform
cash management services, including maintenance of the
Partnership's bank accounts and reserves, payment of property
management fees and other accounts payable, payments to
affiliates of NAPICO and payment of cash distributions, if any,
to the Limited Partners. NAPICO has agreed to prepare
detailed annual budgets to be approved by Real Estate and
thereafter used by the Cash Manager as a guide and control over
Partnership operations.
11
<PAGE> 14
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
JUNE 30, 1995
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS (CONTINUED)
6. The parties to the Memorandum of Understanding have agreed to
enter into a formal Settlement Agreement and, concurrently
therewith, (a) the plaintiffs in the Lawsuit will execute a
special release of the defendants with respect to the
allegations contained in the Lawsuit, (b) the defendants in
the Lawsuit will execute a special release of each plaintiff
in the Lawsuit that is a general partner of a Plaintiff
Partnership with respect to all claims which would have been
compulsory counterclaims thereunder, and (c) the defendants
will execute a special release of any claims, other than those
regarding specifically scheduled contractual relations, which
any defendant may have against this Partnership or any of the
other Plaintiff Partnerships.
7. Upon the uncured breach of certain provisions of the
Memorandum of Understanding, or upon a future breach of
NAPICO's fiduciary duties, Real Estate may cause NAPICO to
resign as a general partner of the Partnership and become a
limited partner thereof.
Any Limited Partner who desires a copy of the Memorandum of Understanding may
call Pat Toy at 1-800-666-6274 or by writing the Managing General Partner.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No exhibits are required per the provision of item 601 of
regulation S-K
12
<PAGE> 15
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
JUNE 30, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REAL AMERICAN PROPERTIES
(a California limited partnership)
By: National Partnership Investments Corp.
a General Partner
Date:
--------------------------------------
By:
--------------------------------------
Bruce Nelson
President
Date:
------------------------------------
By:
--------------------------------------
Shawn Horwitz
Executive Vice President and
Chief Financial Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PARTNERSHIP'S STATEMENTS OF EARNINGS AND BALANCE SHEET AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
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0
0
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</TABLE>