<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended SEPTEMBER 30, 1996
Commission File Number 2-94725
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
Indicate by check mark whether the registrant (1) has filed all documents and
reports required to be filed 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 SEPTEMBER 30, 1996
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets, September 30, 1996 and December 31, 1995. . . . . . . . . . . . . . . . . . 1
Statements of Operations,
Nine and Three Months Ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . 2
Statement of Partners' Equity (Deficiency),
Nine Months Ended September 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . 3
Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . 4
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 3
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
(Unaudited) (Audited)
-------------- --------------
<S> <C> <C>
RENTAL PROPERTY, at cost (Notes 1 and 3)
Land $ - $ 2,170,920
Buildings - 12,360,101
Furniture and equipment - 835,000
-------------- --------------
- 15,366,021
Less accumulated depreciation - (4,430,896)
-------------- --------------
- 10,935,125
-------------- --------------
CASH AND CASH EQUIVALENTS (Note 1) 1,992,796 442,803
-------------- --------------
RESTRICTED CASH (Note 1) - 5,236,780
-------------- --------------
INVESTMENT IN LIMITED PARTNERSHIP (Note 2)
OTHER ASSETS:
Due from rental agent, including restricted
cash held for security deposits and reserves
of $68,163 at December 31, 1995 - 114,728
Other receivables and prepaid expenses (Note 5) 86,735 96,525
-------------- --------------
86,735 211,253
-------------- --------------
TOTAL ASSETS $ 2,079,531 $ 16,825,961
============== ==============
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Mortgage notes payable (Note 3) $ - $ 9,649,180
Accounts payable and accrued expenses (Notes 1 and 5) 892 406,383
Accrued interest payable (Note 1) - 1,226,835
Liability for earthquake loss (Note 1) - 5,363,547
Tenant security deposits - 31,028
-------------- --------------
892 16,676,973
-------------- --------------
COMMITMENTS AND CONTINGENCIES (Notes 5 and 6)
PARTNERS' EQUITY 2,078,639 148,988
-------------- --------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 2,079,531 $ 16,825,961
============== ==============
</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
NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
Nine months Three months Nine months Three months
ended ended ended ended
Sept. 30, 1996 Sept. 30, 1996 Sept. 30, 1995 Sept. 30, 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
RENTAL OPERATIONS:
Revenues
Rental income $ 246,417 $ - $ 506,300 $ 172,554
Other income 7,050 - 23,360 6,229
-------------- ------------- ------------- -------------
253,467 - 529,660 178,783
-------------- ------------- ------------- -------------
Expenses
Operating expenses 178,621 - 373,972 133,431
Management fees - affiliate in 1995 (Note 5) 8,871 - 24,663 (7,668)
Depreciation 34,872 - 104,616 34,872
General and administrative expenses 12,180 - 27,790 8,070
Interest expense (Notes 1 and 3) 360,093 - 256,949 85,383
-------------- ------------- ------------- -------------
594,637 - 787,990 254,088
-------------- ------------- ------------- -------------
Loss from rental operations (341,170) - (258,330) (75,305)
-------------- ------------- ------------- -------------
PARTNERSHIPS OPERATIONS:
Interest income ( Note 5 ) 160,123 40,298 15,427 3,997
-------------- ------------- ------------- -------------
Expenses
General and administrative expenses 20,696 8,587 34,105 11,475
Professional fees (Note 5) 107,966 8,600 44,613 9,842
-------------- ------------- ------------- -------------
128,662 17,187 78,718 21,317
-------------- ------------- ------------- -------------
Income (loss) from partnership operations 31,461 23,111 (63,291) (17,320)
-------------- ------------- ------------- -------------
GAIN (LOSS) ON SALE OF RENTAL PROPERTIES
(Note 1) 2,239,360 (41,623) - -
-------------- ------------- ------------- -------------
NET INCOME (LOSS) $ 1,929,651 $ (18,512) $ (321,621) $ (92,625)
============== ============= ============= =============
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP INTEREST (Note 5) $ 90 $ (1) $ (16) $ (5)
============== ============= ============= =============
</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)
NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
PARTNERSHIP INTERESTS,
September 30, 1996 1 21,500 21,501
============ ============ ============
EQUITY (DEFICIENCY), January 1, 1996 $ (184,571) $ 333,559 $ 148,988
Net income for the nine months
ended September 30, 1996 19,297 1,910,354 1,929,651
------------ ------------ ------------
EQUITY (DEFICIENCY), September 30, 1996 $ (165,274) $ 2,243,913 $ 2,078,639
============ ============ ============
</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
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,929,651 $ (321,621)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 34,872 104,616
Gain on sale of rental properties (2,239,360) -
Changes in operating assets and liabilities:
(Increase) decrease in:
Due from affiliated rental agent 114,728 (24,108)
Other receivables and prepaid expenses 9,790 1,680
(Decrease) increase in:
Accounts payable and accrued expenses (405,491) 80,004
Accrued interest payable (1,226,835) -
Tenant security deposit (31,028) -
------------ ------------
Net cash used in operating activities (1,813,673) (159,429)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (increase) in restricted cash 5,236,780 (79,346)
Decrease in liability for earthquake loss (5,363,547) 79,346
Proceeds from sale of rental properties 13,139,613 -
------------ ------------
Net cash provided by investing activities 13,012,846 -
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on mortgage notes payable (9,649,180) (27,411)
------------ ------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,549,993 (186,840)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 442,803 659,440
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,992,796 $ 472,600
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for interest $ 360,093 $ 256,949
============ ============
</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
SEPTEMBER 30, 1996
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, 1995 of REAL American Properties (the
"Partnership"). 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 NAPICO, 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 September 30, 1996, and the results of
operations for the nine and three months then ended and changes in
cash flows for the nine months then ended.
ORGANIZATION
The Partnership was formed under the California Limited Partnership
Act on March 9, 1984. The general partners are National Partnership
Investments Corp. ("NAPICO"), a California corporation, and Real
Estate Services XIII Inc., a Delaware corporation. Casden Investment
Corporation owns 100 percent of NAPICO's stock. LB I Group Inc. owns
100 percent of the stock of Real Estate Services XIII Inc. The
Partnership was formed to invest in a diversified portfolio of five
residential apartment projects, one of which was foreclosed on by the
lender in 1993. Two of the Partnership's properties were contributed
to a separate unaffiliated limited partnership in 1992, and were
subsequently sold by such limited partnership in 1995 as more
particularly described in Note 2. The remaining two apartment
complexes were sold in April and May 1996. Accordingly, the
Partnership's sole assets as of September 30, 1996 consist of cash, a
contingent note receivable from the purchaser of the Partnership's
Northridge property, and an interest in a publicly traded real estate
investment trust described below. After the interest in the real
estate investment trust is converted to cash (Note 2), NAPICO intends
to cause the Partnership to dissolve in accordance with the
Partnership Agreement.
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 Partnership's 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 allocated 90 percent to the limited partners as a
group and 10 percent to the general partners.
Net proceeds from sale or refinancing are distributed 100 percent to
the limited partners until they have received 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.
5
<PAGE> 8
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
RENTAL PROPERTY AND DEPRECIATION
There are no remaining rental properties owned by the Partnership,
therefore no rental property cost and accumulated depreciation are
included in the September 30, 1996 financial statements.
At December 31, 1995, the rental properties were stated at cost.
Depreciation was provided on the straight-line method over the
estimated useful lives of the buildings and equipment. The buildings
and furniture and equipment were depreciated over 30 years and 5
years, respectively.
On January 17, 1994, the Partnership's property located in
Northridge, California sustained major damage due to the severe
earthquake in the Los Angeles area and the entire property was vacated
and remained vacant from the time of the earthquake until the time of
sale. The casualty insurance policy insuring the Northridge property
covered to a limited extent property damage and loss of rental income
due to the earthquake. 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 an
affiliate of NAPICO.
In November 1995, the Partnership received a final settlement payment
from its insurance company in the amount of $1,368,000 related to the
earthquake loss. This amount was held in an escrow account by the
Northridge property lender. Pursuant to the terms of the loan
documents between the Partnership and the lender, the lender had a
security interest in and other rights to the insurance proceeds. All
insurance proceeds were included in restricted cash and liability for
earthquake loss at December 31, 1995. Unpaid interest of $1,345,000
and property taxes of $354,000 relating to the Northridge property
were accrued as of December 31, 1995.
On May 15, 1996, the Partnership sold the Northridge property. The
Partnership realized a gain of approximately $1,796,000, net of
additional costs of $41,623 recognized in the third quarter of 1996.
Pursuant to a contingent note received from the purchaser at the
closing, the Partnership is entitled to additional proceeds under
certain conditions.
On April 19, 1996, the Partnership sold West Colonial Apartments for
$4,070,000 and realized and a gain of approximately $444,000.
6
<PAGE> 9
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Partnership authorized a $1,526,500 distribution to the limited
partners, which is expected to be made in November 1996. This
distribution represents proceeds received from the sale of West
Colonial and Northridge Apartments.
NET LOSS PER LIMITED PARTNERSHIP INTEREST
Net loss per limited partnership interest was computed by dividing the
limited partners' share of net loss by 21,500, the number of limited
partnership interests outstanding for the periods presented.
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
843 South Longmore Limited Partnership. In August 1995, the Del
Coronado properties were sold by 843 South Longmore Limited
Partnership to an affiliate of Equity Residential Properties ("EQR"),
a publicly held Real Estate Investment Trust ("REIT"). The net
proceeds of $5,682,262 paid to 843 South Longmore Limited Partnership
was in the form of limited partnership units in the operating
partnership controlled by the REIT. Of the net proceeds, the
Partnership received an allocation of 23,524 units, which were
converted to REIT stock and sold in November 1996 at prices ranging
from $37.875 to $38.125 per share, or approximately $891,000
(excluding brokerage commissions), on the New York Stock Exchange.
NOTE 3 - MORTGAGE NOTES PAYABLE
The Partnership had three notes payable separately secured by its two
remaining properties as of December 31, 1995, as follows:
7
<PAGE> 10
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996
NOTE 3 - MORTGAGE NOTES PAYABLE (CONTINUED)
a. The Northridge property was encumbered as of December 31, 1995
by a first deed of trust securing a note in the approximate
principal balance of $6,073,000, and a second deed of trust in
the approximate principal balance of $410,000. The first note
bore interest at 9.25% per annum and was payable in monthly
installments of approximately $53,500. The entire balance of
the note was due and payable on or before August 1, 1996. The
Northridge second note bore interest at 10% per annum and was
payable in monthly installments of approximately $3,400. The
entire balance of the Northridge second note matured on
November 15, 1995. In February 1994, the Partnership ceased
making payments to both of the lenders with respect to the
Northridge property. Both the first and second notes were
repaid upon the sale of the property in May 1996, however, the
second note was paid at a discount of approximately $100,000.
b. The West Colonial Apartments was encumbered by a first deed of
trust securing a note in the approximate principal balance of
$3,167,000 as of December 31, 1995. The note bore interest at
10.7% per annum and was payable in monthly installments of
approximately $32,000. The entire balance of the note was due
and payable on or before July 31, 1996. The loan was repaid
upon sale of the property on April 19, 1996.
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.
NOTE 5 - RELATED PARTY TRANSACTIONS
a. The Partnership had entered into agreements with an affiliate
of NAPICO to manage the operations of the West Colonial and
Northridge rental properties owned by the Partnership. The
agreements changed to a month-to-month basis and provided,
among other things, for a management fee equal to 5% of gross
revenue for West Colonial through July 23, 1995 and
approximately $2,450 per month for the Northridge property
through the date of sale. Management fees charged by the
NAPICO affiliate under these agreements were approximately
$9,800 and $32,000 for the nine months ended September 30,
1996 and 1995, respectively. Included in the management fees
is approximately $9,800 with respect to the Northridge
property in 1996 which has been included in earthquake costs.
On July 24, 1995, management of West Colonial was transferred
to an independent property management firm. The management
agreement was on a month-to-month basis and provided for a
management fee of 3.5% of gross revenue, equal to $8,900 for
the nine months ended September 30, 1996.
Included in other receivables and prepaid expenses at
September 30, 1996 and December 31, 1995, is $86,194 due from
the affiliated company of NAPICO that served as the rental
agent for a property that was owned by the Partnership.
8
<PAGE> 11
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996
NOTE 5 - RELATED PARTY TRANSACTIONS
b. The Partnership reimburses NAPICO for certain expenses. The
reimbursement to NAPICO was $4,196 and $9,440 for the nine
months ended September 30, 1996 and 1995, respectively and is
included in the Partnership's operating expenses.
c. Under the terms of the Partnership Agreement, the Partnership
may be obligated to pay the general partners or their
affiliates a liquidation fee equal to 15% of the net proceeds
from sale or refinancing of a project. No part of such fee
shall be paid unless the limited partners have first received
certain amounts as stated in the Partnership Agreement.
d. Certain other fees may be payable to the general partners,
under certain circumstances, as stated in the Partnership
Agreement.
e. Pursuant to a Memorandum of Understanding entered into on
August 11, 1995, an affiliate of NAPICO that served as the
management company for properties owned by the Partnership,
paid $66,706 to the Partnership on May 1, 1996. Such amount
represents interest on Partnership funds maintained in a
master disbursement account by the management company. In
addition, on May 1, 1996 the Partnership reimbursed Real
Estate Services XIII Inc. $50,000 for professional fees, which
were estimated to have been paid on behalf of the Partnership
in connection with issues raised in the Memorandum of
Understanding.
NOTE 6 - CONTINGENCIES
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 NAPICO, the claims will not
result in any material liability to the Partnership.
NOTE 7 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure about
Fair Value of Financial Instruments," requires disclosure of fair
value information about financial instruments. The carrying amount of
assets and liabilities reported on the balance sheets that require
such disclosure approximates fair value due to their short-term
maturity.
9
<PAGE> 12
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
SEPTEMBER 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS
OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
The Partnership 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's primary sources of funds are income from rental operations
and interest income on money market funds and certificates of deposit.
The Partnership acquired five apartment complexes since its inception, one of
which was foreclosed by the lender in 1993. In 1992, two of the Partnership's
properties (the Del Coronado Properties) were contributed to 843 South Longmore
Limited Partnership, an unaffiliated limited partnership, and such buildings
were thereafter sold by said partnership for REIT shares in August of 1995.
The Partnership's remaining two apartment complexes of West Colonial and
Northridge were sold in April 1996 and May 1996, respectively.
In August 1995, the Del Coronado properties were sold by 843 South Longmore
Limited Partnership to an affiliate of Equity Residential Properties ("EQR"), a
publicly held Real Estate Investment Trust ("REIT"). The net proceeds of
$5,682,262 paid to 843 South Longmore Limited Partnership was in the form of
limited partnership units in the operating partnership controlled by the REIT.
Of the net proceeds, the Partnership received an allocation of 23,524 units,
which were converted to REIT stock and sold in November 1996 at prices ranging
from $37.875 to $38.125 per share, or approximately $891,000 (excluding
brokerage commissions), on the New York Stock Exchange.
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 West Colonial apartment project were leased on a month-to-month basis. The
Partnership's statements of operations included rental operations through the
day the properties were sold.
10
<PAGE> 13
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
SEPTEMBER 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS
OF OPERATIONS (CONTINUED)
RESULTS OF OPERATION (CONTINUED)
On January 17, 1994, the Northridge rental property sustained major damage due
to the severe earthquake in the Los Angeles area and the entire property was
vacated and remained vacant from the time of the earthquake until the time of
sale. The casualty insurance policy insuring the Northridge property covered,
to a limited extent, property damage and loss of rentals as a result of the
earthquake. 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 of NAPICO.
In November 1995, the Partnership received a final settlement from its
insurance company in the amount of $1,368,000 related to the earthquake loss.
This amount was held in an escrow account by the Northridge property lender
until the time of sale. Pursuant to the terms of the loan documents between
the Partnership and the lender, the lender had a security interest in and other
rights to the insurance proceeds. All insurance proceeds were included in
restricted cash and liability for earthquake loss at December 31, 1995. Unpaid
interest of $1,345,000 and property taxes of $354,000 relating to the
Northridge property were accrued as of December 31, 1995.
On May 15, 1996, the Partnership sold the Northridge property. The Partnership
realized a net gain of approximately $1,796,000, net of additional costs of
$41,623 recognized in the third quarter of 1996. The Partnership may be
entitled to additional proceeds from property tax refunds and/or a contingent
promissory note from the buyer of the Northridge property.
On April 19, 1996, the Partnership sold West Colonial Apartments for $4,070,000
and realized a gain of approximately $444,000.
Partnership operations consist primarily of interest ficates of deposit and
other temporary investment of funds. Included in interest income for the nine
months ended September 30, 1996 is $66,706 in interest related to funds
maintained in the master disbursement account and received on May 1, 1996.
Operating expenses of the Partnership consist substantially of recurring
general and administrative expenses and professional fees for services rendered
to the Partnership. Included in professional fees in 1996 is $50,000 paid to
Real Estate Services XIII Inc. as reimbursement for professional fees paid on
behalf of the Partnership in connection with issues raised in the Memorandum of
Understanding.
The Partnership did not make cash distributions during the first nine months of
1996.
11
<PAGE> 14
REAL AMERICAN PROPERTIES
(A CALIFORNIA LIMITED PARTNERSHIP)
SEPTEMBER 30, 1996
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
As of September 30, 1996, NAPICO was a plaintiff or a defendant in several
lawsuits. None of these suits were related to the Partnership.
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)
SEPTEMBER 30, 1996
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 SHEETS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,992,796
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,079,531
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,079,531
<CURRENT-LIABILITIES> 892
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,078,639
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</TABLE>
