UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-16805
ASSOCIATED PLANNERS REALTY FUND, (a California Limited Partnership)
(Exact name of registrant as specified in its charter)
California 95-4036980
State or other jurisdiction of (IRS Employer
incorporation or organization identification)
5933 West Century Blvd., 9th Floor, Los Angeles, CA 90045-5454
(Address of principal executive offices)
Registrant's telephone number, including area code (310) 670-0800
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports 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 Regulations S-K is not contained herein, and will not be contained, to
the best of the 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 [ ]
<PAGE>
PART I
Certain statements in the Annual Report on Form 10-K, particularly under
Items 1 through 8, constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such
forward-looking statements involve known and unknown risks, uncertainties, and
other factors which may cause the actual results, performance or achievements of
the Partnership to be materially different from any future results, performance
or achievements, expressed or implied by such forward-looking statements.
ITEM 1. BUSINESS
Associated Planners Realty Fund (the "Partnership"), was organized in
November 1985, under the California Revised Limited Partnership Act. The
General Partner is West Coast Realty Advisors, Inc. ("WCRA"), a California
corporation.
The Partnership was organized for the purpose of investing in, holding, and
managing improved, unleveraged income-producing property, such as residential
properties, office buildings, commercial buildings, industrial properties, mini-
warehouse facilities, and shopping centers ("Properties"), which are believed to
have potential for cash flow and capital appreciation. The Partnership intended
on owning and operating such Properties for investment over an anticipated
holding period of approximately five to ten years. At December 31, 1997, the
Partnership had no employees.
The Partnership's principal investment objectives are to invest the net
proceeds in real properties which will:
1. Preserve and protect the Partnership's invested capital;
2. Provide for cash distributions from operations;
3. Provide gains through potential appreciation; and
4. Generate federal income tax deductions so that a portion of cash
distributions may be treated as a return of capital for tax
purposes and, therefore, may not represent taxable income to the
Limited Partners.
The Partnership acquired an 81.2% interest in two office buildings on
December 31, 1986 in a joint venture with a related party, a 100% interest in a
shopping center on January 23, 1987, a 100% interest in a commercial office
building on November 12, 1987, and a 100% interest in a mini-warehouse facility
on May 9, 1988. The terms of the joint venture call for Associated Planners
Realty Fund to receive 81.2% of the operating profits and depreciation expense
on the property. Upon disposition of the property, the Partnership will be
entitled to 81.2% of the proceeds received from the sale of the property. All
properties are located in California except for the mini-warehouse which is
located in Washington. The mini-warehouse was sold in May 1995 to a unrelated
party (See Item 7 - Management's Discussion And Analysis of Financial Condition
And Results of Operations).
The ownership and operation of any income-producing real estate is subject to
those risks inherent in all real estate investments. These include national and
local economic conditions, the supply of and demand for similar types of real
property, competitive marketing conditions, zoning changes, possible casualty
losses, and increases in real estate taxes, assessments, and operating expenses,
as well as others.
<PAGE>
The Partnership is subject to competitive conditions that exist in the local
markets where it operates rental real estate. These conditions are discussed in
Item 2-- "Properties".
The Partnership is operated by the General Partner, subject to the terms of the
Amended and Restated Agreement of Limited Partnership. The Partnership has no
employees, and all administrative services are provided by WCRA.
ITEM 2. PROPERTIES
The properties acquired and disposed of by the Partnership are described
below:
SANTA FE BUSINESS PARK
On December 31, 1986, the Partnership purchased two out of six office buildings
("Building 3" and "Building 5"), located in a complex known as Santa Fe Business
Park (the "Park"). The Park is located in Encinitas, California, near the
intersection of Encinitas Boulevard and Interstate 5. The existence of a major
highway (Interstate 5) near the office park makes it a desirable and accessible
location for tenants. As the Partnership owns two of six buildings that make up
Santa Fe Business Park, it is subject to competition from the other four
buildings in the complex.
The buildings were acquired in a joint venture with Prado Land Company (Prado),
a California General Partnership, which is an affiliate of the General Partner.
The Partnership has an 81.2% interest in the buildings and related profits and
losses, and Prado has an 18.8% interest.
The Park was completed in 1982, and is situated on 163,765 square feet of land.
The buildings are two-story, constructed with steel and wood frames, with
exterior walls of concrete and wood. There is extensive use of windows in the
modern design, and ample parking is available around both buildings.
Building 3 contains 6,944 rentable square feet. As of December 31, 1997, the
building was 100% occupied and the average rent per occupied square foot was
$1.07. Building 5 contains 6,944 rental square feet. As of December 31, 1997,
the occupancy rate was 100%, and the average monthly rent per occupied square
foot was approximately $1.25.
Tenants occupying more than 10% of square footage and more than 10% of total
revenue of Building 3 and Building 5 are noted below:
<PAGE>
Building 3
John Powell & Associates: 84.7% of rentable square footage; rent is $73,047 per
year (82.5% of total rent for the building and 13.2% of total Partnership
consolidated rental revenue). Lease expires January 31, 2001.
CSP: 15.3% of rentable square footage; Rent is $15,533 per year (17.5% of
total rent for the building). Lease expires January 31, 1999.
Building 5
Synteract: 100% of rentable square footage; Rent is $96,718 per year (100% of
total rent for the building and 17.9% of total Partnership consolidated rental
revenue). Lease expires January 20, 2003.
The building and improvements are depreciated over 5 to 19 years using a
straight-line method for both financial and income tax reporting purposes. The
financial and income tax basis for the property are the same. In the opinion of
the General Partner, the property is adequately insured. The property is
managed by West Coast Realty Management, Inc. ("WCRM"), an affiliate of the
General Partner.
Pending Transactions
The Partnership is attempting to sell the two office buildings located in
Encinitas, California (179 and 187 Calle Magdalena). The net proceeds from such
sales will be distributed to the limited partners and General Partner in
accordance with the terms of the Partnership Agreement. The cost basis of these
properties are:
179 Calle Magdalena $ 705,918
187 Calle Magdalena 853,560
SHAW VILLA SHOPPING CENTER
On January 23, 1987, the Partnership purchased the Shaw Villa Shopping Center
(the "Center"), a 12,678 net leasable square foot shopping center located in
Clovis, California.
The Center was completed in 1978, and is situated on 69,260 square feet of land.
The Center consists of two buildings of 8,250 and 4,428 square feet each.
Stores range in size from 1,000 to 3,000 square feet in the larger building.
There are ninety-two parking spaces available within the Center.
Wherehouse Entertainment, Inc. (the "Wherehouse"), (a nationally known
audio/video store) occupied the entire smaller building under a lease that
expired January 1994, and continues to lease the building on a month to month
basis for $3,540 a month ($0.80 per square foot plus a percentage of rent based
on taxable sales). On June 15, 1995, The Wherehouse moved into a larger space
(4,000 square feet) and began paying rent at the rate of $4,000 per month on a
month-to-month basis. On November 4, 1995, the Wherehouse moved into a larger,
newly constructed space, and signed a lease which runs through October 31, 2010,
and calls for minimum monthly rent of $10,588 per month. No other tenant
besides Wherehouse Entertainment, Inc., occupies 10% or more of the rental
square footage of the Shaw Villa Shopping Center. The Wherehouse's 1997
rental income represented 21.8% of the total Partnership consolidated rental
revenue.
<PAGE>
In January 1995, the Partnership closed escrow on a parcel of land adjacent to
the Shaw Villa Shopping Center. The purchase price of the land was $206,749,
including a $13,102 acquisition fee paid to the Advisor. The purchase was
financed using $23,602 in cash, and the remainder financed by a one year
construction loan provided by Valliwide Bank of Fresno. The total construction
loan commitment was for $1,365,000 which matured on October 5, 1996. Borrowings
on the construction loan totaled $1,225,950. The constructions amortization was
interest only with payments of $89,045 paid during the nine months ended
September 30, 1996. The construction was completed during 1995 and total
construction costs of $1,372,900 were allocated to land, building and
improvements. Included in the construction cost was $87,838 of capitalized
construction loan interest.
Construction at the shopping center was completed in two phases. First, 4,000
square feet of additional space was erected on the new parcel, adjacent to an
existing building at Shaw Villa. Construction of this phase was completed June
1, 1995. The Wherehouse then moved into this space on June 15, 1995. The
space occupied by the Wherehouse was then remodeled and expanded by
approximately 3,900 square feet, for a total of 8,272 square feet. This
construction was completed by November 1, 1995. The Wherehouse was then
relocated to the remodeled space on November 4, 1995, and the Partnership was in
a position to lease the new 4,000 square foot space. As of December 31, 1997,
the Partnership has thus far been successful in obtaining new tenants for the
4,000 square foot space.
In October 1996, the Partnership obtained permanent financing from a major
insurance company to replace the construction loan with a twenty year loan. The
terms of the loan are as follows: Principal - $1,500,000; Interest Rate of
9.1% fixed for five years then may be adjusted to the weekly average of the
five - year Treasury Note yield for the seventh week prior to the Adjustment
Date (5th anniversary date) plus 250 basis points, but in no event less than the
existing rate, nor to exceed the maximum rate allowed by law; Amortized over 20
years; due November 1, 2006; and current monthly payments of principal, interest
and property taxes of $14,919.
In August 1995, Wherehouse Entertainment (the parent company of the
Wherehouse), sought protection under Chapter 11of the Bankruptcy Code and
emerged from Bankruptcy on February 1, 1997. The terms of the Partnership's
lease with the Wherehouse remains unchanged. Despite this filing, the
Wherehouse store in the Shaw Villa Center has continued to operate and the
Partnership has continued to collect rental payments. The Wherehouse has
contacted the Partnership about a possible reduction in rent for the new
enlarged space. The Partnership reimbursed the Wherehouse $165,000 for tenant
improvement costs and move-in expenses.
This Center is dependent upon the vitality of the consumer market in the general
area. There are several other small shopping centers in the area, similar to
the one owned by the Partnership. A large enough customer base exists for the
retail and service business in the general area. Although all areas of
California have occasionally been affected by economic slowdowns, layoffs, plant
closings and military cutbacks, these economic factors are not expected to
significantly impact the occupancy of the shopping center.
<PAGE>
The building and improvements are depreciated over 31.5 to 40 years using a
straight-line method for both financial and income tax reporting purposes. The
financial and income tax basis of the property are the same. In the opinion of
the General Partner, the property is adequately insured. The property is
managed by WCRM.
Pending Transactions
The Partnership is attempting to sell the Shaw Villa Shopping Center located in
Clovis, California. The net proceeds from a sale will be distributed to the
limited partners and General Partner in accordance with the Partnership
Agreement. The cost basis of this property is $2,854,221.
PACIFIC BELL BUILDING, SIMI FREEWAY COMMERCE CENTER
On November 12, 1987, the Partnership purchased the Pacific Bell Building
located in the Simi Freeway Commerce Center in Simi Valley, California.
The building's construction was completed in 1986, though the sole tenant,
Pacific Bell, did not occupy the building until August 1987. The building
provides 26,154 rentable square feet and is centrally located on the property's
2.06 acres of land.
In August 1995, as part of a general Company-wide consolidation, Pacific
Bell vacated the property. In November 1995, a subsidiary of Pacific Bell moved
into a small portion of the property (1,700 square feet). Pacific Bell
continued to pay its lease obligation on a regular basis.
Countrywide Inc. subleases the property from Pacific Bell through September 15,
1998. Countrywide has no option to extend the lease. Countrywide's 1997 rental
revenue represented 40.7% of the total Partnership consolidated rental revenue.
The average monthly rent per occupied square foot was approximately $.76
($19,780 per month) up until September 15, 1998. The lease is a "triple net"
lease, requiring Countrywide to pay insurance, taxes, maintenance, and all other
operating costs.
<PAGE>
The building and improvements are depreciated over 31.5 to 40 years using
a straight-line method for both financial and income tax reporting purposes.
The financial and income tax bases of the property are the same. In the opinion
of the General Partner, the property is adequately insured. The property is
managed by WCRM.
SHURGARD MINIWAREHOUSE
On May 9, 1988, the Partnership purchased the Shurgard Mini-warehouse located
in Puyallup, Washington.
The building's construction was completed in 1978. The property is located
on 2.76 acres of land, and has 485 storage spaces providing 44,040 square feet
of rentable area. The property contains four separate single story storage
buildings and a small building in the front which serves as the office and
living quarters for the on-site manager. A network of asphalt driveways
connects the storage buildings. There is ample parking available, the open area
in the front is landscaped with grass, trees, and shrubs, and a computerized
gate provides security access to the storage buildings. The General Partner
engaged Shurgard Capital Management Corporation to manage this property.
On May 15, 1995, the Shurgard Mini-Warehouse was sold to Shurgard Storage
centers, Inc. ("the Buyer"). The gross sales price was $1,550,000, and the
Partnership received $1,510,976 in net proceeds. Net proceeds are calculated as
the gross sale price of $1,550,000 less $23,486 in excise taxes paid to the
State of Washington, less $4,332 in miscellaneous escrow closing costs, less
$11,206 in prepaid user rents, net of rent receivable and property taxes,
attributable to the Partnership. Net sales proceeds for tax reporting purposes
are $1,522,182. The amount of consideration received from the sale of the
property was arranged through an arms-length negotiation process with the Buyer.
The sale was consummated for cash without the use of seller provided financing,
or other installment sale techniques. The Buyer of the property is an
affiliate of the company who sold the property to the Partnership in 1987. The
sale of the Shurgard property resulted in a $116,749 gain on sale.
The building and improvements were depreciated over 31.5 to 40 years using a
straight-line method for both financial and income tax reporting purposes. The
financial and income tax basis for the property were the same.
SUMMARY
As of December 31, 1997, the combined occupancy rate of all the Partnership's
properties, was 100%. In the opinion of the General Partner, all properties are
adequately covered by insurance.
The schedule below indicates the average annual occupancy rate expressed as a
percentage of rentable square feet for the last five years:
<PAGE>
Year Santa Fe Business Park Shaw Pacific Shurgard
- 2 properties Villa Bell Mini-
Shopping Building warehouse
Center
1997 Bldg.#3 = 100% 100% 100% n/a
Bldg.#5 = 100%
1996 Bldg.#3 = 76% 100% 100% n/a
Bldg.#5 = 92%
1995 Bldg.#3 = 66% 81% 100% n/a
Bldg.#5 = 82%
1994 Bldg.#3 = 0% 76% 100% 85%
Bldg.#5 = 80%
1993 Bldg.#3 = 0% 92% 100% 80%
Bldg.#5 = 62%
The total original acquisition cost to the Partnership of each property and
the dates of acquisition were as follows:
Description Acquisition Acquisition
Cost Dates
Santa Fe Business Park (Building 3) $ 705,918 12/31/86
Santa Fe Business Park (Building 5) 853,560 12/31/86
Shaw Villa Shopping Center 2,854,221 01/23/87
Pacific Bell Building 2,616,523 11/12/87
Shurgard Mini-warehouse (Sold May 15, 1995) 1,603,144 05/09/88
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
At December 31, 1997, there were 7,499 limited partnership units outstanding
and 674 unit holders of record. The units sold are not freely transferable and
no public market for the sold units presently exists or is likely to develop.
There are no units available for sale at December 31, 1997.
Distributions totaling $214,471, $236,894 and $1,769,282, were made to
limited partners in 1997, 1996, and 1995, and were made to unit holders of
record at the end of the calendar quarters indicated below. These distributions
constituted a return of capital of $12,069, $59,838 and $1,492,408, in 1997,
1996, and 1995. The General Partner distributions totaled $23,831, $26,320 and
$35,953, for 1997, 1996, and 1995. In addition, $152,905 in distributions were
paid to unit holders subsequent to the year-end on February 6, 1998.
The Partnership began paying distributions on a semi-annual basis with the
first record date and payment date being December 31, 1997 and February 6, 1998.
This change will permit the Partnership to operate more efficiently with lower
Partnership operating expenses. These semi-annual distributions will include
cash distributions for the previous six months of operations. The decrease in
1997 distributions was because the third and fourth quarter distributions were
paid in February 1998, as the Partnership converted to a semi-annual
distribution payment method. If the third quarter distribution for 1997 had
been paid in 1997, total distributions for the year would have been
approximately $221,980.
The limited partner distribution amounts for 1997, 1996 and 1995 are
summarized below:
Record Date Date Paid Per Unit Units Total Paid
Outstanding
12/31/94 02/03/95 $10.00 7,499 $ 74,990
03/31/95 07/07/95 182.69-207.39* 7,499 1,506,817
06/30/95 11/06/95 7.50 7,499 56,243
09/30/95 11/06/95 7.50 7,499 56,242
12/31/95 02/06/96 7.14 7,499 53,543
03/31/96 04/30/96 8.15 7,499 61,117
06/30/96 08/06/96 8.15 7,499 61,117
09/30/96 11/05/96 8.15 7,499 61,117
12/31/96 02/03/97 9.20 7,499 68,991
03/31/97 05/09/97 9.20 7,499 68,991
06/30/97 08/05/97 10.20 7,499 76,490
* Pertains to distribution of proceeds from the sale of the Shurgard property.
Distributions are made based on income from operations, before depreciation
and amortization.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data should be read in conjunction with the financial
statements and related notes and Item 7--"Management Discussion and Analysis of
Financial Condition and Results of Operations" appearing elsewhere in this
report.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Operations for the years ended December 31,:
Revenues $802,528 $722,358 $639,039 $ 754,950 $ 861,238
Net Income 202,403 177,055 276,874 217,892 302,687
Net Income per Limited Partner Unit * 22.31 19.69 33.23 24.45 34.60
Distributions per Limited Partner Unit * + 39.79 33.65 235.94 46.50 47.50
Financial position at December 31:
Total Assets 6,092,548 6,146,615 6,011,070 6,255,376 6,459,247
Partners' Equity 4,356,209 4,392,108 4,478,268 5,985,898 6,116,709
</TABLE>
[FN]
*Net income and distributions per limited partner unit were based on the
weighted average number of outstanding units.
+ Approximately $10.20 per limited partner unit was paid in February 1998 -
representing the third quarter 1997 distribution.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Certain statements in the Management Discussion and Analysis constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking
statements involve known and unknown risks, uncertainties, and other factors
which may cause the actual results, performance or achievements of the
Partnership to be materially different from any future results, performance or
achievements, expressed of implied by such forward-looking statements.
RESULTS OF OPERATIONS - 1997 VS. 1996
Operations for the year ended December 31, 1997 reflect an entire period of
operations for the four properties owned and operated by the Partnership.
Rental revenue increased $78,845 (11%) from 1996 to 1997, due to increased
occupancy of the Santa Fe Business Park Building, and the Shaw Villa Shopping
Center. Interest income increased $1,325 (15%) during 1997 as compared to 1996
due primarily to a large amount of funds held from approximately July 1, to
December 31,1997 as a result of the Partnership electing to pay distributions
semi-annually instead of quarterly.
<PAGE>
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
The Partnership overall costs and expenses increased in 1997 as compared to
1996. Total expenses increased from $561,288 in 1996 to $593,093 in 1997, a
$31,805 (5.7%) increase. This increase was the result of increases in two major
expense categories, offset by a decrease in operating and general and
administrative expenses. Interest expense increased $34,731 (35%) as a result
of interest charges incurred after the completion of construction at the Clovis,
California property. Depreciation and amortization expense increased $34,696
(26.6%) due to the completion of the construction in progress of the Clovis
property. Operating expenses decreased $28,783 (10.6%) as a result of lower
repairs and maintenance, leasing commissions and property insurance expense.
General and administrative costs decreased $8,839 (15%) due to lower general
partnership insurance costs and lower legal and accounting expenses.
Net income for 1997 was $25,348 (14%) higher than in 1996. This increase can
be attributed to increased occupancy at the Santa Fe Business Properties and the
Shaw Villa Shopping Center Property. On an operating cashflow basis (net income
plus depreciation expense) the Partnership realized $367,404 in 1997, compared
to $307,360 in 1996. This $60,044 (20%) increase is primarily due to the
increased occupancy at the Santa Fe Business Park Building and the Shaw Villa
Shopping Center.
RESULTS OF OPERATIONS - 1996 VS. 1995
Operations for the year ended December 31, 1996 reflect an entire period of
operations for the four Partnership properties.
Rental revenue increased $95,247 (15%) from 1995 to 1996, due to increased
occupancy of the Santa Fe Business Park Building, offset by the sale of the
Shurgard Mini-Warehouse facility on May 15, 1995, which resulted in
approximately a $165,000 decrease in rental revenue. Interest income decreased
$11,928 (57%) during 1996 as compared to 1995 due primarily to a large amount
of funds held from approximately May 16 to July 7,1995 as a result of the sale
of the Shurgard property. In addition, the sale of the Shurgard property in May
1995 resulted in a $116,749 gain on sale, which increased net income for the
year ended December 31, 1995 to $276,874, or 36% higher than the year ended
December 31, 1996 level.
The Partnership's overall costs and expenses increased in 1996 as compared to
1995. These totaled $561,288--a $90,724 (19.3%) increase from 1995's level of
$470,564. This increase was the result of increases in three major expense
categories, offset by a decrease in general and administrative expenses.
Interest expense increased $100,420 (100%) as a result of interest charges
incurred after the completion of construction at the Clovis, California
property. Property operating costs increased $11,740 (4.5%) primarily due to an
increase in property management fees and repairs and maintenance in connection
with the Clovis property. Depreciation expense increased $7,939 (6.5%) due to
the completion of the construction in progress of the Clovis property, offset
by the sale of the Shurgard property in 1995. The construction was completed
during 1995 and total construction costs of $1,372,000 was allocated to land,
building and improvements. General and administrative costs decreased $29,277
(33%) due to lower general partnership insurance costs and lower partnership
management fees.
<PAGE>
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
The net result to net income for 1996 from these variances, was a $99,819
(36%) decrease. This decrease can be attributed to the gain of $116,749 on the
sale of the Shurgard property in May 1995, offset by increased occupancy at the
Santa Fe Business Park Building. On an operating cashflow basis (net income
plus depreciation expense, less the gain on sale of property) the Partnership
realized $282,491 in 1995, compared to $307,360 in 1996. This $24,869 increase
is primarily due to the increased occupancy at the Santa Fe Business Park
Building.
LIQUIDITY AND CAPITAL RESOURCES
During the year ended December 31, 1997, the Partnership made distributions to
the general and limited partners totaling $238,302 of which $35,899 constituted
a return of capital. Distributions of $238,302 compared favorably to the
$367,404 in cash generated from property operations (net income plus
depreciation expense). On February 6, 1998, the Partnership made a distribution
to limited partners totaling $152,905. Additionally, the partnership
distributed $15,709 to the minority interest partner during the year ended
December 31, 1997. Distributions are determined by management based on cash
flow and the liquidity position of the Partnership. It is the intention of
management to make semi-annually distributions of cash, subject to the
maintenance of reasonable reserves.
The Partnership began paying distributions on a semi-annual basis and made
related payments on February 6, 1998. This change will permit the Partnership
to operate more efficiently with lower Partnership operating expenses. These
semi-annual distributions will include cash distributions for the previous six
months of operations. The decrease in 1997 distributions was because the third
and fourth quarter distributions were paid in February 1998, after the
Partnership converted to a semi-annual distribution payment method. If the
third quarter distribution for 1997 had been paid in 1997, total distributions
for the year would have been approximately $221,980.
Management uses cash as its primary measure of the Partnership's liquidity. The
amount of cash that represents adequate liquidity for a real estate limited
partnership, in the short-term and long-term, depends on several factors. Among
them are:
1. Relative risk of the partnership;
2. Condition of the partnership's properties;
3. Stage in the partnership's life cycle (e.g., money-raising,
acquisition, operating or disposition phase); and
4. Distributions to partners.
The Partnership believes that it has the ability to generate sufficient cash to
meet both short-term and long-term liquidity needs, based upon the above four
factors.
The first factor refers to the risk of Partnership's investments. The
Partnership's investments in properties were paid for in cash or on a moderately
leveraged basis.
<PAGE>
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
The second factor relates to the condition of the Partnership's properties. All
Partnership properties are in good condition. There is no foreseeable need to
increase reserves to fund deferred or unusual maintenance and repair
expenditures.
The third factor relates to life cycle. The Partnership completed its funding
and acquisition of properties in previous years. Thus, the Partnership is in
the property operating stage. As part of these operating activities, the
partnership was involved in purchasing and developing the aforementioned parcel
in Clovis, California in 1994 and 1995. This activity is expected to enhance
rental revenues and increase the value of the Shaw Villa Shopping Center. The
Partnership believes that cash flows provided by operating activities will
continue.
The fourth factor relates to Partnership distributions. The Partnership is
currently making semi-annual distributions from operations. Such distributions
are subject to payments of Partnership expenses and reasonable reserves for
expenses, maintenance, and replacements. In addition, at least six months of
cash profits are left in the Partnership's balance sheet at each quarter end,
since the Partnership makes distributions to the limited partners one month
after each record date of June 30, and December 31. The General Partner
believes that the Partnership will have the ability to meet its cash
requirements in both the short-term and long-term.
The Partnership began making distributions on a semi-annual basis and related
payments were made on February 6, 1998. This change will permit the Partnership
to operate more efficiently with lower Partnership operating expenses. These
semi-annual distributions will include cash distributions for the previous six
months of operations.
The Partnership is attempting to sell the two office buildings located in
Encinitas, California (179 and 187 Calle Magdalena), and the Shaw Villa Shopping
Center located in Clovis, California. The net proceeds from such sales will be
distributed to the limited partners and General Partner in accordance with the
terms of the Partnership Agreement. The cost basis of these properties are:
179 Calle Magdalena $ 705,918
187 Calle Magdalena 853,560
Shaw Villa Shopping Center 2,854,221
During the year ended December 31, 1997, the General Partner earned partnership
management fees of $23,831. Subsequent to year-end, the General Partner
received a partnership management fee of $16,989. Partnership management fees
were paid and calculated in accordance with the partnership agreement.
The Tax Reform Acts of 1986 and 1987 and the Revenue Reconciliation Acts of
1990 and 1993 did not have a material impact on the Partnership's operations.
<PAGE>
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
Slowdowns in the economy, inflation and changing prices have had a nominal
effect on the Partnership's revenues and income from continuing operations.
During the twelve years of the Partnership's existence, inflationary pressures
in the U.S. economy have been minimal, and this has been consistent with the
experience of the Partnership in operating rental real estate in California.
The Partnership has several lease clauses with its tenants that will help
alleviate much of the negative impact of inflation. Among these are:
A. Several month-to-month leases at the Santa Fe Business Park allow
the Partnership to raise rents on a monthly basis.
B. Triple net leases at the Shaw Villa Shopping Center and Pacific
Bell Building which give the Partnership an ability to pass on
higher operating costs to its tenants.
CASH FLOWS 1997 VS. 1996
Cash and cash equivalents increased $81,228 for the year ended December 31, 1997
compared to a $103,113 increase for the year ended December 31, 1996. The
continued increase in cash resources is primarily due to increased occupancy at
the Santa Fe Business Park and Shaw Villa Shopping Center properties and due to
the Partnership paying distributions semi-annually instead of quarterly
beginning with the first payment on February 6, 1998. Cash provided from
operating activities increased by $384,184 during 1997 with the largest
contributor being $367,404 in cash basis income. In contrast, during 1996 cash
provided by operating activities increased $293,801 with the largest contributor
being $307,360 in cash basis income. Investing activities resulted in a $20,980
decrease in cash during 1997 due to tenant improvements relating to the Shaw
Villa Shopping Center. In contrast, 1996 investing activities decreased
$195,740 due to tenant improvements relating to the Shaw Villa Shopping Center
property. Cash from financing activities decreased $281,976 in 1997 due to
$254,011 being distributed to the limited, general and minority interest
partners and $27,965 used as payments on notes payable. In contrast, cash
provided by financing activities increased $5,052 during 1996 due to $271,832 in
proceeds received from the refinancing of the Shaw Villa Shopping Center
construction loan, offset by $266,780 being distributed to the limited, general
and minority interest partners.
CASH FLOWS 1996 VS. 1995
Cash and cash equivalents increased $103,113 for the year ended December 31,
1996 as compared to a $67,073 increase for the year ended December 31, 1995.
Net cash from operating activities was $130,242 (31%) lower due primarily to
changes in various asset and liability account balances that resulted in an
increase in cash of $293,801 for the year ended December 31, 1996. Investing
activities resulted in a $195,741 decrease in cash as compared to a $201,584
increase in 1995. The 1996 decrease was due to the tenant improvements relating
to the Shaw Villa property and 1995's increase was due to cash received from
the sale of the Shurgard property ($1,522,182) exceeding cash applied towards
construction of the improvements at Shaw Villa ($1,389,009). Cash from
financing activities increased $5,053 in 1996 as opposed to a decrease of
$558,554 in 1995. This was due to the cash used for distributions to limited
and general partners, less proceeds from the construction loan in 1995.
<PAGE>
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
PENDING TRANSACTIONS
The Partnership is attempting to sell the two office buildings located in
Encinitas, California (179 and 187 Calle Magdalena), and the Shaw Villa Shopping
Center located in Clovis, California. The net proceeds from such sales will be
distributed to the limited partners and General Partner in accordance with the
terms of the Partnership Agreement. The cost basis of these properties are:
179 Calle Magdalena $ 705,918
187 Calle Magdalena 853,560
Shaw Villa Shopping Center 2,854,221
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 130 (SFAS No. 130) "Reporting
Comprehensive Income," issued by the Financial Accounting Standards Board is
effective for financial statements with fiscal years beginning after December
15, 1997. Earlier application is permitted. SFAS No. 130 establishes standards
for reporting and display of comprehensive income and its components in a full
set of general-purpose financial statements. The Company has not determined the
effect on its financial position or results of operations, is any, from the
adoption of this statement.
Statement of Financial Accounting Standards No. 131 (SFAS No. 131), "Disclosure
about Segments of an Enterprise and Related Information," issued by the
Financial Accounting Standards Board is effective for financial statements with
fiscal years beginning after December 15, 1997. The new standard requires that
public business enterprises report certain information about operating segments
in complete sets of financial statements of the enterprises and in condensed
financial statements of interim periods issued to shareholders. It also
requires that public business enterprises report certain information about their
products and services, the geographic areas in which they operate and their
major customers. The Company has not determined the effect on its financial
position or results of operations, if any, from the adoption of this statement.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Report of Independent Certified Public Accountants 16
Consolidated Balance Sheets - December 31, 1997 and 1996 17
Consolidated Statements of Income for the years ended
December 31, 1997, 1996 and 1995 18
Consolidated Statements of Partners' Equity for the years ended
December 31, 1997, 1996 and 1995 19
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 20-21
Summary of Accounting Policies 22-23
Notes to Consolidated Financial Statements 24-29
Financial Statement Schedules
Schedule III - Real Estate and Accumulated Depreciation 35
Schedule IV - Mortgage Loans on Real Estate 36
<PAGE>
Report of Independent Certified Public Accountants
Associated Planners Realty Fund
(a California limited partnership)
Los Angeles, California
We have audited the accompanying consolidated balance sheets of Associated
Planners Realty Fund (a California limited partnership) and consolidated
entities, as of December 31, 1997 and 1996 and the related consolidated
statements of income, partners' equity, and cash flows for each of the three
years in the period ended December 31, 1997. We have also audited the schedules
listed in the accompanying index. These consolidated financial statements and
schedules are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements and schedules 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 consolidated financial statements and
schedules are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements and schedules. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Associated Planners
Realty Fund (a California limited partnership) and consolidated entities, at
December 31, 1997 and 1996, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles.
Also, in our opinion, the schedules presents fairly, in all material respects,
the information set forth therein
BDO SEIDMAN, LLP
Los Angeles, California
January 29, 1998
16
<TABLE>
Associated Planners Realty Fund and Consolidated Entities
(A California Limited Partnership)
Consolidated Balance Sheets
<CAPTION>
December 31, 1997 1996
<S> <C> <C>
Assets
Rental real estate, less accumulated
depreciation (Note 2) $5,765,095 $5,909,116
Cash and cash equivalents 287,641 206,413
Other assets 39,812 31,086
Total assets $6,092,548 $6,146,615
Liabilities and Partners' Equity
Liabilities
Accounts payable:
Trade $16,152 $4,989
Related party (Note 5(d)) 13,375 6,894
Notes payable (Note 3) 1,469,817 1,497,782
Security deposits and prepaid rent 32,254 31,424
Total liabilities 1,531,598 1,541,089
Minority interest 204,741 213,418
Partners' equity (Notes 6 and 7)
Limited partners:
$1,000 stated value per unit - authorized
7,500 units; issued and outstanding 7,499 4,303,000 4,350,158
General partner 53,209 41,950
Total partners' equity 4,356,209 4,392,108
Total liabilities and partners' equity $6,092,548 $6,146,615
</TABLE>
[FN]
See accompanying summary of accounting policies and notes to consolidated
financial statements.
17
<PAGE>
<TABLE>
Associated Planners Realty Fund and Consolidated Entities
(A California Limited Partnership)
Consolidated Statements of Income
<CAPTION>
Years ended December 31, 1997 1996 1995
<S> <C> <C> <C>
Revenues
Rental (Notes 2 and 4) $792,222 $713,377 $618,130
Interest 10,306 8,981 20,909
802,528 722,358 639,039
Costs and expenses
Operating 242,731 271,514 259,774
General and administrative 50,210 59,049 88,326
Depreciation and amortization 165,001 130,305 122,366
Interest expense 135,151 100,420 ---
Loss on government securities --- --- 98
593,093 561,288 470,564
Income from operations 209,435 161,070 168,475
Gain on sale of property --- --- 116,749
Minority interest in net loss
(income) of joint ventures (Note 5(c)) (7,032) 15,985 (8,350)
Net income $202,403 $177,055 $276,874
Net income per limited partnership
unit (Note 6) $22.31 $19.69 $33.23
</TABLE>
[FN]
See accompanying summary of accounting policies and notes to consolidated
financial statements.
18
<PAGE>
<TABLE>
Associated Planners Realty Fund and Consolidated Entities
(A California Limited Partnership)
Consolidated Statements of Partners' Equity
Years Ended December 31, 1997, 1996 and 1995
<CAPTION>
Limited Partners General
Total Units Amount Partner
<S> <C> <C> <C> <C>
Balance, January 1, 1995 $ 5,985,898 7,499 $ 5,653,977 $ 331,921
Net income for the year 276,874 --- 249,187 27,687
Distribution to limited partners (1,769,282) --- (1,769,282) ---
Distribution to general partner (15,222) --- --- (15,222)
Balance, December 31, 1995 4,478,268 7,499 4,133,882 344,386
Net income for the year 177,055 --- 147,622 29,433
Distribution to limited partners (236,894) --- (236,894) ---
Distribution to general partner (26,321) --- --- (26,321)
Reallocation of capital (Note 7) --- --- 305,548 (305,548)
Balance, December 31, 1996 4,392,108 7,499 4,350,158 41,950
Net income for the year 202,403 --- 167,313 35,090
Distribution to limited partners (214,471) --- (214,471) ---
Distribution to general partner (23,831) --- --- (23,831)
Balance, December 31, 1997 $4,356,209 7,499 $4,303,000 $53,209
</TABLE>
[FN]
See accompanying summary of accounting policies and notes to consolidated
financial statements.
19
<PAGE>
<TABLE>
Associated Planners Realty Fund and Consolidated Entities
(A California Limited Partnership)
Consolidated Statements of Cash Flows
<CAPTION>
Increase (Decrease) in Cash and Cash Equivalents
Years ended December 31, 1997 1996 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $202,403 $177,055 $276,874
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 165,001 130,305 122,366
Gain on sale of property --- --- (116,749)
Minority interest in net (loss) income 7,032 (15,985) 8,350
Increase(decrease) from changes in operating
assets and liabilities:
Government securities --- --- 55,554
Other assets (8,726) 33,003 48,624
Accounts payable - trade 11,163 2,621 (21,587)
Accounts payable - related party 6,481 (19,774) 26,567
Security deposits and prepaid rent 830 (13,424) 24,745
Other liabilities --- --- (701)
Net cash provided by operating activities 384,184 293,801 424,043
Cash flows from investing activities:
Proceeds from sale of property --- --- 1,522,182
Rental real estate improvements (20,980) (195,740) (1,389,009)
Additions to construction in progress --- --- 68,411
Net cash provided by (used in) investing (20,980) (195,740) 201,584
activities
</TABLE>
20
<PAGE>
<TABLE>
Associated Planners Realty Fund and Consolidated Entities
(A California Limited Partnership)
Consolidated Statements of Cash Flows (cont.)
<CAPTION>
Increase (Decrease) in Cash and Cash Equivalents
Years ended December 31, 1997 1996 1995
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from refinancing construction loan $ --- $ 271,832 $ 1,225,950
Distributions to limited partners (214,471) (236,894) (1,769,282)
Distributions to general partners (23,831) (26,321) (15,222)
Distributions to minority interest (15,709) (3,565) ---
Payments on notes payable (27,965) --- ---
Net cash provided by (used in) financing (281,976) 5,052 (558,554)
activities
Net increase in cash and cash equivalents 81,228 103,113 67,073
Cash and cash equivalents, beginning of year 206,413 103,300 36,227
Cash and cash equivalents, end of year $287,641 $206,413 $103,300
</TABLE>
[FN]
See accompanying summary of accounting policies and notes to consolidated
financial statements.
Supplemental disclosure of non-cash information:
Construction loan extingusihment --- $1,225,950 ---
Notes payable origination --- $1,497,782 ---
21
<PAGE>
Associated Planners Realty Fund and Consolidated Entities
(A California Limited Partnership)
Summary of Accounting Policies
Business Associated Planners Realty Fund (the "Partnership"),
a California limited partnership, was formed on
November 19, 1985 under the Revised Limited
Partnership Act of the State of California. The
Partnership was formed to acquire income-producing
real property throughout the United States with an
emphasis on properties located in California and the
southwestern states. The Partnership purchased these
properties on an all cash basis or on a moderately
leveraged basis and intended on owning and operating
such properties for investment over an anticipated
holding period of approximately five to ten years.
Basis of The consolidated financial statements do not give
Presentation effect to any assets that the partners may have
outside of their interest in the partnership, nor
to any personal obligations, including income
taxes, of the partners.
The consolidated financial statements include the
accounts of Associated Planners Realty Fund and
all joint ventures in which it has a majority
interest.
Rental Assets are stated at cost. Depreciation is
Real computed using the straight-line method over
Estate estimated useful lives ranging from 5 to 35 years.
and
Depreciation In the event that facts and circumstances indicate
that the cost of an asset may be impaired, an
evaluation of recoverability would be performed.
If an evaluation is required, the estimated future
undiscounted cash flows associated with the asset
would be compared to the carrying amount to
determine if a write-down to market value is
required.
Rental Rental revenue is recognized on a straight-line
Income basis to the extent that rental revenue is deemed
collectible.
Investments The difference between historical cost and market
value are reported as unrealized gains or losses in
the consolidated statements of income.
For the purposes of the statements of cash flows,
Statements the Partnership considers cash in the bank and all
of highly liquid investments purchased with original
Cash maturities of three months or less, to be cash and
Flows cash equivalents.
Use of The preparation of financial statements in
Estimates 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.
22
<PAGE>
Associated Planners Realty Fund and Consolidated Entities
(A California Limited Partnership)
Summary of Accounting Policies
Earnings
(Loss) Per On March l3, 1997, the FASB issued Statement of ngs
Share per share (SFAS 128). This pronouncement
provides a different method of calculating
earnings per share than is currently used in
accordance with APB 15, Earnings per Share. SFAS
128 provides for the calculation of Basic and
Diluted earnings per share. Basic earnings per
share includes no dilution and is computed by
dividing income available to common shareholders
by the weighted average number of common shares
outstanding for the period. Diluted earnings per
share reflects the potential dilution of
securities that could share in the earnings of
the entity, similar to fully diluted earnings per
share. Except where the provisions of the
Securities and Exchange Commission's Staff
Accounting Bulletin No. 98 are applicable, common
share equivalents have been excluded in all years
presented in the Statements of Operations when
the effect of their inclusion would be anti-
dillutive. SFAS 128 is effective for fiscal years
and interim periods after December 15, 1997;
early adoption is not permitted. The Company has
adopted this pronouncement during the fiscal year
ended December 31, 1997. The adoption of SFAS
128 does not effect earnings per share for fiscal
year ended December 31, 1997 and prior years.
New
Accounting
Pronouncements Statement of Financial Accounting Standards No.
130 (SFAS No. 130) "Reporting Comprehensive
Income," issued by the Financial Accounting
Standards Board is effective for financial
statements with fiscal years beginning after
December 15, 1997. Earlier application is
permitted. SFAS No. 130 establishes standards
for reporting and display of comprehensive income
and its components in a full set of general-
purpose financial statements. The Company has
not determined the effect on its financial
position or results of operations, is any, from
the adoption of this statement.
Statement of Financial Accounting Standards No.
131 (SFAS No. 131), "Disclosure about Segments of
an Enterprise and Related Information," issued by
the Financial Accounting Standards Board is
effective for financial statements with fiscal
years beginning after December 15, 1997. The new
standard requires that public business
enterprises report certain information about
operating segments in complete sets of financial
statements of the enterprises and in condensed
financial statements of interim periods issued to
shareholders. It also requires that public
business enterprises report certain information
about their products and services, the geographic
areas in which they operate and their major
customers. The Company has not determined the
effect on its financial position or results of
operations, if any, from the adoption of this
statement.
23
<PAGE>
Associated Planners Realty Fund and Consolidated Entities
(A California Limited Partnership)
Notes to Consolidated Financial Statements
1. Nature of The Partnership began accepting subscriptions
Partnership in March 1986 and completed its funding in
December 1987.
Under the terms of the partnership agreement,
the General Partner, West Coast Realty
Advisors, is entitled to cash distributions
ranging from 10% to 15%. The General Partner
is also entitled to net income (loss)
allocations varying from 1% to 15% and 1%
depreciation and amortization in accordance
with the partnership agreement.
2. Rental The Partnership currently has interests in the
Real following four rental real estate properties of
Estate which two are wholly-owned and two are jointly
owned by the Partnership (81.2%) and an
affiliate (18.8%):
Location (Property Name) Date Purchased Cost
Encinitas, California
(179 Calle Magdelena) December 31, 1986 $ 705,918
Encinitas, California
(187 Calle Magdelena) December 31, 1986 853,560
Clovis, California January 23, 1987 2,854,221
Simi Valley, California November 12, 1987 2,616,523
The major categories of property are:
December 31, 1997 1996
Land $2,361,894 $2,361,894
Buildings and improvements 4,621,668 4,600,688
Furniture and fixtures 46,660 46,660
7,030,222 7,009,242
Less accumulated depreciation1,265,127 1,100,126
Net rental real estate $5,765,095 $5,909,116
24
<PAGE>
Associated Planners Realty Fund and Consolidated Entities
(A California Limited Partnership)
Notes to Consolidated Financial Statements
2. Rental The General Partner of Associated Planners
Real Realty Fund made a decision to attempt to sell
Estate three of the Partnership's four remaining
(Continued) properties. The two office buildings located
in Encinitas, California (179 and 187 Calle
Magdalena), and the Shaw Villa Shopping Center
located in Clovis, California will attempted to
be sold, and the net proceeds from such sales
will be distributed to the limited partners and
General Partner in accordance with the terms of
the Partnership Agreement. The cost basis of
these properties are:
179 Calle Magdalena $ 705,918
187 Calle Magdalena 853,560
Shaw Villa Shopping Center 2,854,221
The amounts for the Calle Magdalena property
represent the 81.2% interest that the
Partnership owns as part of a joint venture
with an affiliate (the affiliate will be
selling its interest as well). There is no
debt on the Encinitas properties, and the Shaw
Villa is encumbered by an assumable loan that
will have a balance of $1,469,817 as of
December 31, 1997.
A significant portion of the Partnership's
rental revenue was earned from tenants whose
individual rents represent more than 10% of
total rental revenue. Specifically:
Four tenants accounted for 41%, 22%, 18% and 13% in 1997;
Two tenants accounted for 34% and 18% in 1996;
One tenant accounted for 38% in 1995;
25
<PAGE>
Associated Planners Realty Fund and Consolidated Entities
(A California Limited Partnership)
Notes to Consolidated Financial Statements
3.Notes In January 1995, the Partnership closed escrow
Payable on a parcel of land adjacent to the Shaw Villa
Shopping Center. The purchase price of the
land was $206,749, including a $13,102
acquisition fee paid to the Advisor. The
purchase was financed using $23,602 in cash,
and the remainder by a one year construction
loan from Valliwide Bank of Fresno. The total
construction loan commitment was for $1,365,000
and matured on October 5, 1996. Borrowings on
the construction loan totaled $1,225,950 as of
December 31, 1995. The construction loan
amortization was interest only with payments of
$89,045 paid during the year ended December 31,
1996. The construction was completed during
1995 and total construction cost of $1,372,900
were allocated to land, building and
improvements. Included in construction costs
is $87,838 in construction loan interest that
was capitalized.
In October 1996, the Partnership obtained
permanent financing from a major insurance
company to replace the construction loan with a
twenty year loan. The terms of the loan are as
follows: Principal - $1,500,000; Interest
Rate of 9.1% fixed for five years then may be
adjusted to the weekly average of the five
year Treasury Note yield for the seventh week
prior to the Adjustment Date (5th anniversary
date) plus 250 basis points, but in no event
less than the existing rate, nor to exceed the
maximum rate allowed by law; Amortized over
twenty years; due November 1, 2006; and current
monthly payments of principal, interest and
property taxes of $14,919. The note payable
balance is $1,497,782 and $1,469,817 at
December 31, 1996 and 1997.
The carrying amount of the loan is a reasonable
estimate of fair value because the interest
rates approximate the borrowing rates currently
available for mortgage loans with similar terms
and average maturities.
The aggregate annual future maturities at
December 31, 1997 are as follows:
YearEnding December 31, 1997
1998 ...........................$30,619
1999 ........................ 33,524
2000 ........................... 36,706
2001 ........................... 40,189
2002 ........................... 44,002
Thereafter ........ 1,284,777
Total $1,469,817
26
<PAGE>
Associated Planners Realty Fund and Consolidated Entities
(A California Limited Partnership)
Notes to Consolidated Financial Statements
4. Future As of December 31, 1997, future minimum rental
Minimum income under existing leases, excluding month
Rental to month rental agreements, that have
Income remaining noncancelable terms in excess of one
year are as follows:
Year Ending December 31, Amount
1998 $ 650,251
1999 460,191
2000 466,631
2001 316,792
2002 272,834
Thereafter 1,145,611
Total $3,312,310
Future minimum rental income does not include
lease renewals or new leases that may result
after a noncancelable-lease expires.
5. Related (a) In accordance with the partnership
Party agreement, compensation earned by or services
Transactions reimbursed to the General Partner consisted of
the following:
Year ended December 31, 1997 1996 1995
Partnership management fees $23,831 $26,321 $35,953
Administrative services:
Data processing 4,740 4,802 4,609
Postage 2,520 2,625 2,782
Investor processing 1,850 1,869 1,844
Investor communications 1,575 1,333 1,383
Duplication 915 923 922
Miscellaneous 400 448 461
$35,831 $38,321 $47,954
27
<PAGE>
Associated Planners Realty Fund and Consolidated Entities
(A California Limited Partnership)
Notes to Consolidated Financial Statements
5. Related (b) Property management fees to West Coast
Party Realty Management, Inc. ("WCRM"), an affiliate
Transactions of the General Partner, were $39,593, $35,501
(Continued) and $22,930 for 1997, 1996 and 1995.
(c) Distributions of $15,709, $3,565 and $-0-
for 1997, 1996 and 1995 were made to an
affiliate in connection with the minority
interest. The minority interest in earnings
(loss) income was $7,032, $15,985 and $(8,350)
for 1997, 1996 and 1995.
(d) Related party accounts payable (receivable)
are as follows:
December 31, 1997 1996
West Coast Realty Advisors $ 3,000 $3,000
West Coast Realty Management 10,375 8,965
Prado Land Co. --- (5,071)
$13,375 $6,894
6. Net Income The Net Income per Limited Partnership Unit was
and Cash computed in accordance with the partnership
Distributions agreement using the weighted average number of
Per outstanding limited partnership units of 7,499
Limited for 1997, 1996 and 1995.
Partnership
Unit The Limited Partner cash distributions,
computed in accordance with the Partnership
Agreement, were as follows:
28
<PAGE>
Associated Planners Realty Fund and Consolidated Entities
(A California Limited Partnership)
Notes to Consolidated Financial Statements
6. Net Income Outstanding Amount Total
and Cash Units Per Unit Distribution
Distributions
Per Limited June 30, 1997 7,499 $10.20 $ 76,489
Partnership March 31, 1997 7,499 9.20 68,991
Unit December 31, 1996 7,499 9.20 68,991
(Continued)
Total $ 214,471
September 30, 1996 7,499 $ 8.15 $ 61,117
June 30, 1996 7,499 8.15 61,117
March 31, 1996 7,499 8.15 61,117
December 31, 1995 7,499 7.14 53,543
Total $ 236,894
September 30, 1995 7,499 $ 7.50 $ 56,242
June 30, 1995 7,499 7.50 56,243
March 31, 1995 7,499 10.00 74,990
December 31, 1994 7,499 10.00 74,990
Sub-total 262,465
Additional distribution
upon sale of property $182.69 - $207.39 1,506,817
Total $ 1,769,282
In the second half of 1997, the Partnership
began paying distributions on a semi-annual
basis and paid the December 31, 1997 six month
distribution on February 6, 1998. This change
will permit the Partnership to operate more
efficiently with lower Partnership operating
expenses. These semi-annual distributions will
include cash distributions for the previous six
months of operations.
7. Per the provisions of Section 11.1 (V)(ii) of
Reallocation the Partnership Agreement, the General Partner
of Partner determined that action was necessary to "cure
Balances the ambiguities" within the Agreement. The
ambiguity involved the treatment of the
partnership management fee, being paid to the
General Partner, as an expense of the
Partnership, as opposed to a general partner
withdrawal of capital. It was determined that
the partnership management fees shall be
treated as a withdrawal of capital in 1996 and
beyond with a retroactive reallocation of
capital for partnership management fees paid
prior to 1996. In order to properly reflect
the allocation, a transfer of $305,548 was made
from the General Partner's capital account to
the Limited Partners capital account during the
quarter ended March 31, 1996.
29
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
30
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership is managed by the General Partners. The Limited Partners
have no right to participate in the management of the Partnership or its
business. The General Partner is West Coast Realty Advisors, Inc., a California
corporation.
Resumes of the General Partners' principal officers and directors and a
description of the General Partners are set forth in the following paragraphs.
See description below.
WEST COAST REALTY ADVISORS, INC.
West Coast Realty Advisors, Inc. is a California corporation formed on May
10, 1983 for the purpose of structuring real estate programs and to act as
general partner of such programs. It is a subsidiary of Associated Financial
Group, Inc.
Philip N. Gainsborough (Born 1938) is Chairman and a Director of West Coast
Realty Advisors, Inc. He is also currently the President of Associated
Financial Group, Inc., Associated Securities Corp., Associated Planners
Insurance Services, Inc., and Associated Planners Investment Advisory, Inc. In
addition, from January 1981 to the present, he has served as President of
Gainsborough Financial Consultants, Inc., a financial planning firm located in
Los Angeles, California. From January 1981 to December 1982, Mr. Gainsborough
served as a Registered Principal of Private Ledger Financial Services, Inc.
From January 1977 to December 1980, he was employed by E.F.Hutton & Co. as a
Registered Representative.
W. Thomas Maudlin Jr. (Born 1936) is a Director and President of West Coast
Realty Advisors, Inc. ("WCRA"). He is also co-General Partner (with WCRA) of
the Partnership. Mr. Maudlin has been active in the real estate area for over
30 years, serving as co-developer of high-rise office buildings and
condominiums. He has structured transactions for syndicators in apartment
housing, including sale leaseback's, all-inclusive trust deeds, buying and
restructuring transactions to suit a particular buyer, and as a buyer acting as
a principal. Mr. Maudlin was co-developer of the Gateway Los Angeles office
building, a 165, 000 square foot, fourteen-story office building located in
West Los Angeles. Form 1980 to 1985, in partnership with the Muller Company, he
developed eleven acres in San Bernardino which include a 42,000-square foot
office building, a six-plex movie theater and two restaurants. From 1980 to
1985, Mr. Maudlin was involved in building in San Bernardino, California, a 134-
unit condominium development, a shopping center, and a restaurant in
Ventura. He is a graduate of the University of Southern California.
31
<PAGE>
Neal Nakagiri (Born 1954) serves as Executive Vice President, General
Counsel, Chief Operating Officer and Secretary of Associated Financial Group,
Inc. He is Vice President for two subsidiaries, Associated Securities Corp. and
Associated Planners Investment Advisory, Inc. He joined the "Associated" group
of companies in March 1985. He was Vice President of Compliance with Morgan,
Olmstead, Kennedy & Gardner from 1984 to 1985. He was First Vice President and
Director of Compliance with Jefferies and Co., Inc. from 1981 to 1984. He was
Vice President and Director of Compliance at W & D Securities, Inc. from 1980 to
1983. He was an Investigator with the National Association of Securities
Dealers, Inc. from 1976 to 1980. He has a B.A. degree in Economics from UCLA
(1976) and a J.D. from Loyola Law School of Los Angeles (1991). He is a member
of the California Bar and the Compliance and Legal Division of the Securities
Industry Association.
Michael G. Clark (Born 1956) is Senior Vice President/Treasurer of West
Coast Realty Advisors, Inc., Associated Financial Group, Inc., and Associated
Securities Corp. Prior to joining AFG in 1986, he served as Controller for
Quest Resources, a Los Angeles-based syndicator and operator of alternative
energy projects, from October 1984 to March 1986, and Assistant Controller for
Valley Cable T.V., from March 1982 through September 1984. In addition, Mr.
Clark served as an auditor for Arthur Young & Co. in Los Angeles, from July 1978
to March 1982. He is a graduate of the University of California, Santa Barbara
(BA) and California State University, Northridge (MS).
ITEM 11. EXECUTIVE COMPENSATION
During its last calendar year, the Registrant paid no direct or indirect
compensation to directors or officers.
The Registrant has no annuity, pension or retirement plans, or
existing plan or arrangement pursuant to which compensatory payments are
proposed to be made in the future to directors or officers.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Registrant is a limited partnership and has no officers or directors.
The Registrant has no outstanding securities possessing general voting rights.
32
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Registrant was organized in November 1985 as a California Limited
Partnership. Its General Partner is WCRA. The Registrant has no executive
officers or directors. Philip N. Gainsborough, an officer of the General
Partner, made an original limited partnership contribution to the Partnership in
November 1985, which was subsequently paid back to him in March 1988 when the
Partnership met its minimum funding requirement. The General Partner and its
affiliates are entitled to compensation from the Partnership for the following
services rendered:
1. For Partnership management services rendered to the Partnership, the
General Partner is entitled to receive up to 10% of all distributions of cash
operations. For the year ended December 31, 1997, the amount paid to the
General Partner was $23,831. In addition, the General Partner is entitled to
reimbursement for certain public offering expenses, the cost of certain
personnel employed in the organization of the Partnership, and certain
administrative services performed by the General Partner. For the year ended
December 31, 1997, the Partnership reimbursed $12,000 to the General Partner for
these expenditures.
2. For property management services, the General Partner engaged WCRM an
affiliate of the General Partner. For the year ended December 31, 1997, WCRM
earned property management fees of $39,593 from the Partnership. On December
31, 1997, the Partnership was indebted to WCRM for $10,375, which was paid
subsequent to year-end.
3. The General Partner received a 10% allocation of net income before
depreciation and amortization and 1% of depreciation. For the year ended
December 31, 1997 this resulted in a $33,440 allocation of net income before
depreciation and a $1,650 allocation of depreciation or a net income allocation
of $35,090.
4. In connection with the joint venture in the Santa Fe Business Park
properties, the Partnership made distributions totaling $15,709 to Prado Land
Company, an affiliate of the General Partner's President, during the year ended
December 31, 1997. For the year ended December 31, 1997, Prado Land Company was
allocated $7,032 of net income for its minority interest in the joint venture's
earnings.
33
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The following financial statements of Associated Planners Realty Fund,
a California Limited Partnership, are included in Part II, Item 8:
Page
Report of Independent Certified Public Accountants........ 16
Consolidated Balance Sheets - - December 31, 1997 and 1996 .. 17
Consolidated Statements of Income for the years ended
December 31, 1997, 1996, and 1995 .................... 18
Consolidated Statements of Partners' Equity for the years ended
December 31, 1997, 1996, and 1995 .................... 19
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 ..................... 20-21
Summary of Accounting Policies ............................ 22-23
Notes to Consolidated Financial Statements ................. 24-29
2. FINANCIAL STATEMENT SCHEDULES
Schedule III --Real Estate and Accumulated Depreciation ... 35
Schedule IV --Mortgage Loan on Real Estate ................ 36
All other schedules have been omitted because they are either not
required, not applicable or the information has been otherwise supplied.
(b) REPORTS ON FORM 8-K
None
(c) EXHIBITS
None
34
<PAGE>
<TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1997
Information required by Rule 12-28 is as follows:
<CAPTION>
Initial Cost
Gross Amount at which
Cost Carried at Close of Period
Capitalized
Subsequent to Building Year
Building & Acquisition & Total Accumualted Construction Date
Description Emcumbrances Land Improvements Improvements Land Improvements Cost Depreciation Completed Acquired
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Santa Fe
Business Park
Encinitas, CA $ - $ 726,827 $798,427 $ 34,224 $ 729,928 $ 829,550 $1,559,478 $ 434,656 1982 12/86
Shaw Villa
Shopping Center
Clovis, CA 1,469,817 657,924 551,066 1,645,231 878,646 1,975,575 2,854,221 269,385 1978 1/87
Pacific Bell
Office Building
Simi Valley, CA - 753,320 1,863,203 - 753,320 1,863,203 2,616,523 561,086 1986 11/87
TOTAL $ 1,469,817 $2,138,071$3,212,696 $1,679,455 $2,361,894 $4,668,328 $7,030,222 $1,265,127
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATON (Continued) December 31, 1997
Information required by Rule 12-28 is as follows (Continued)
Life (Years)
on which
Depreciation is
Computed Building
Description and Improvements
<S> <C>
Santa Fe Business
Park, Encinitas, CA 5 - 19
Shaw Villa Shopping
Center, Clovis, CA 31.5 - 40
Pacific Bell Office
Building, Simi Valley, CA 31.5 - 40
A reconciliation of accumulated A reconciliation of cost for
depreciation for the years ending the years ending
December 31, 1995, 1996, 1997 December 31, 1995, 1996, 1997
follows: follows:
Balance at January 1,1995 ..... $ 1,081,028 Balance at January 1, 1995 ... $ 7,063,499
1995 Additions ................ 122,366 1995 Additions ............... 1,427,466
1995 Deletions ................ (233,574) 1995 Deletions .............. (1,677,464)
Balance at December 31, 1995... 969,820 Balance at December 31, 1995 . 6,813,501
1996 Additions ................ 130,306 1996 Additions ............... 195,741
Balance at December 31, 1996.. 1,100,126 Balance at December 31, 1996 . 7,009,242
1997 Additions ............... 165,001 1997 Additions ............... 20,980
Balance at December 31, 1997 . $1,265,127 Balance at December 31, 1997.. $ 7,030,222
</TABLE>
35
<PAGE>
<TABLE>
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE December 31, 1997
Information required by Rule 12-29 is as follows:
<CAPTION>
Final Periodic Delinquent
Interest Maturity Payment Prior Face Carrying Principal/
Description Rate Date Terms Liens Amount Amount Interest
<S> <C> <C> <C> <C> <C> <C> <C>
Monthly
Principal
& Interest
Shaw Villa Payments:
Shopping 9.1% 11/1/2006 Amortized None $1,500,000 $ 1,469,817 None
Center over
Clovis, CA 20 years;
Balloon
Payment @
Maturity
A reconciliation of mortgage loans payable for the years ended December 31,
1995, 1996 and 1997 as follows:
Balance at January 1, 1995 $ -
1995 Additions 1,225,950
1995 Paydowns
Balance at December 31, 1995 1,225,950
1996 Additions 1,500,000
1996 Paydowns (1,228,168)
Balance at December 31, 1996 1,497,782
1997 Paydowns (27,965)
Balance at December 31, 1997 $1,469,817
</TABLE>
36
<PAGE>
SIGNATURES
Pursuant to the requirements of the 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.
ASSOCIATED PLANNERS REALTY FUND
A California Limited Partnership
(Registrant)
W. THOMAS MAUDLIN JR.
(A General Partner)
By: West Coast Realty Advisors, Inc.
(A General Partner)
NEAL NAKAGIRI
(Director and Executive Vice President/General Counsel)
MICHAEL G. CLARK
(Vice President/Treasurer)
Date: March 1, 1998
37
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000785791
<NAME> ASSOCIATED PLANNERS REALTY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 287,641
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 327,453
<PP&E> 7,030,222
<DEPRECIATION> (1,265,127)
<TOTAL-ASSETS> 6,092,548
<CURRENT-LIABILITIES> 61,781
<BONDS> 1,674,558
0
0
<COMMON> 0
<OTHER-SE> 4,356,209
<TOTAL-LIABILITY-AND-EQUITY> 6,092,548
<SALES> 792,222
<TOTAL-REVENUES> 802,528
<CGS> 0
<TOTAL-COSTS> 457,942
<OTHER-EXPENSES> 7,032
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 135,151
<INCOME-PRETAX> 202,403
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 202,403
<EPS-PRIMARY> 22.31
<EPS-DILUTED> 22.31
</TABLE>
