FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-16805
ASSOCIATED PLANNERS REALTY FUND
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-4036980
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5933 W. CENTURY BLVD., SUITE 900
LOS ANGELES, CALIFORNIA 90045
(Address of principal executive offices)
(Zip Code)
(310) 670-0800
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
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ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 1. FINANCIAL STATEMENTS
In the opinion of the General Partner of Associated Planners Realty Fund
(the "Partnership"), all adjustments necessary for a fair presentation of the
Partnership's results for the three and nine months ended September 30, 1998
and 1997, have been made in the following financial statements which are
normal and recurring in nature. However, such financial statements are
unaudited and are subject to any year-end adjustments that may be necessary.
BALANCE SHEETS
SEPTEMBER 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997
<CAPTION>
SEPTEMBER 30, 1998 December 31, 1997
<S> <C> <C>
ASSETS
Rental real estate, less accumulated
Depreciation (Note 2) $5,648,496 $5,765,095
Cash and cash equivalents 175,745 287,641
Other assets 54,009 39,812
TOTAL ASSETS $5,878,250 $6,092,548
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Accounts payable:
Trade $20,246 $16,152
Related party (Note 3) 12,026 13,375
Notes payable (Note 4) 1,447,115 1,469,817
Security deposits and prepaid rent 37,232 32,254
TOTAL LIABILITIES 1,516,619 1,531,598
Minority interest 199,667 204,741
PARTNERS' EQUITY (NOTES 6 AND 7)
Limited partners:
$1,000 stated value per unit - authorized
7,500 units; issued and outstanding 7,499 4,116,979 4,303,000
General partner 44,985 53,209
TOTAL PARTNERS' EQUITY 4,161,964 4,356,209
TOTAL LIABILITIES AND PARTNERS' EQUITY $5,878,250 $6,092,548
</TABLE>
[FN]
See accompanying notes to financial statements.
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ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
<CAPTION>
LIMITED PARTNERS GENERAL
TOTAL UNITS AMOUNT PARTNER
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1997 $4,356,209 7,499 $4,303,000 $53,209
Net income 92,300 -- 71,870 20,430
Distributions to limited partners (257,891) -- (257,891) --
Distributions to general partner (28,654) -- -- (28,654)
BALANCE AT SEPTEMBER 30, 1998 $4,161,964 7,499 $4,116,979 $44,985
</TABLE>
<TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<CAPTION>
LIMITED PARTNERS GENERAL
TOTAL UNITS AMOUNT PARTNER
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996 $4,392,108 7,499 $4,350,158 $41,950
Net income 154,231 -- 127,670 26,561
Distributions to limited partners (214,472) -- (214,472) --
Distributions to general partner (23,830) -- -- (23,830)
BALANCE AT SEPTEMBER 30, 1997 $4,308,037 7,499 $4,263,356 $44,681
</TABLE>
[FN]
See accompanying notes to financial statements
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ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<CAPTION>
THREE THREE NINE NINE
MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
30, 1998 30, 1997 30, 1998 30, 1997
<S> <C> <C> <C> <C>
REVENUES:
Rental $179,606 $187,440 $526,359 $585,633
Interest 2,247 2,491 7,203 7,100
181,853 189,931 533,562 592,733
COST AND EXPENSES:
Operating 29,019 39,462 97,359 109,088
Property taxes 10,357 9,410 35,683 28,466
Property management fees-Note3(c) 9,026 9,413 25,246 29,218
General and administrative 5,012 13,287 50,889 40,668
Depreciation 41,834 41,250 124,449 123,752
Interest expense 33,040 33,710 105,575 101,603
128,288 146,532 439,201 432,795
LESS: MINORITY INTEREST IN NET
(INCOME) OF JOINT VENTURE (3,306) (1,597) (2,061) (5,707)
NET INCOME $50,259 $41,802 $92,300 $154,231
NET INCOME PER
LIMITED PARTNERSHIP UNIT $5.53 $4.52 $9.58 $17.03
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
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ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
<S> <C> <C>
Cash Flow from operating activities:
Net income $92,300 $154,231
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 124,449 123,752
Minority interest in net income 2,061 5,707
Increase (decrease) from changes in:
Other assets (14,197) (18,126)
Accounts payable 2,745 12,998
Security deposits and prepaid rents 4,978 (3,282)
Net cash provided by operating activities 212,336 275,280
Cash flows used in investing activities:
Tenant improvement additions (7,850) (20,980)
Net cash (used in) investing activities (7,850) (20,980)
Cash flows used in financing activities:
Repayment of notes payable (22,702) (20,734)
Distributions to minority interest (7,135) (11,848)
Distributions to general partners (28,654) (23,830)
Distributions to limited partners (257,891) (214,472)
Net cash (used in) financing activities (316,382) (270,884)
Net (decrease) in cash and cash equivalents (111,896) (16,584)
Cash and cash equivalents at beginning of period 287,641 206,413
CASH AND CASH EQUIVALENTS AT END OF PERIOD $175,745 $189,829
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(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
emphasis on properties located in California. The Partnership purchased such
properties on an all cash basis or operated them on a moderately leveraged
basis, and originally intended on owning and operating such properties for
investment over an anticipated holding period of approximately five to ten
years.
BASIS OF PRESENTATION
The consolidated financial statements do not give 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 REAL ESTATE AND DEPRECIATION
Assets are stated at cost. Depreciation is computed using the straight-line
method over estimated useful lives ranging from five to 35 years.
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 INCOME
Rental revenue is recognized on a straight-line basis to the extent that
rental revenue is deemed collectible.
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ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
STATEMENTS OF CASH FLOWS
For the purpose of the statements of cash flows, the Partnership considers
cash in the bank and all highly liquid investments purchased with original
maturities of three months or less, to be cash and cash equivalents.
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
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
EARNINGS (LOSS) PER UNIT
On March 3, 1997, the FASB issued Statement of Financial Accounting Standards
No. 128 - Earnings per unit (SFAS 128). This pronouncement provides a
different method of calculating earnings per unit than is currently used in
accordance with APB 15, Earnings per Unit. SFAS 128 provides for the
calculation of Basic and Diluted earnings per unit. Basic earnings per unit
includes no dilution and is computed by dividing income available to common
unitholders by the weighted average number of common units outstanding for the
period. Diluted earnings per unit reflects the potential dilution of
securities that could unit in the earnings of the entity, similar to fully
diluted earnings per unit. Except where the provisions of the Securities and
Exchange Commission's Staff Accounting Bulletin No. 98 are applicable, common
unit 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 Partnership had
adopted this pronouncement during the fiscal year ended December 31, 1997.
The adoption of SFAS 128 does not effect earnings per unit for the fiscal
year ended December 31, 1997 and prior years.
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
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
Partnership has not determined the effect on its financial position or results
of operations, if 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 unitholders. 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 Partnership has not
determined the effect on its financial position or results of operations, if
any, from the adoption of this statement.
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1997
NOTE 1- NATURE OF PARTNERSHIP
The Partnership began accepting subscriptions 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 or loss allocations varying
from 1% to 15% and 1% depreciation and amortization allocations in accordance
with the partnership agreement.
NOTE 2- RENTAL REAL ESTATE
The Partnership currently has interests in the following four rental real
estate properties. Two are wholly-owned and two are jointly owned by the
Partnership (81.2%) and Prado Land Company, an affiliate (18.8%):
Location (Property Name) Date Purchased Cost
Encinitas, California
(179 Calle Magdalena) December 31, 1986 $ 705,918
Encinitas, California
(187 Calle Magdalena) December 31, 1986 861,410
Clovis, California January 23, 1987 2,854,221
Simi Valley, California November 12, 1987 2,616,523
The major categories of property are:
September 30, 1998 December 31, 1997
Land $2,361,894 $2,361,894
Building and Improvements 4,629,518 4,621,668
Furniture and Fixtures 46,660 46,660
7,038,072 7,030,222
Less accumulated depreciation 1,389,576 1,265,127
Net rental real estate $5,648,496 $5,765,095
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1997
NOTE 2- RENTAL REAL ESTATE (CONTINUED)
A significant portion of the Partnership's rental revenue was earned from a
tenant whose individual rent represented more than 10% of total rental
revenue. Specifically:
Four tenants accounted for 41%, 22%, 18% and 13% of total rental revenue
in 1998;
Four tenants accounted for 41%, 22%, 18% and 13% of total rental revenue
in 1997;
Two tenants accounted for 34% and 18% of total rental revenue in 1996;
NOTE 3 - RELATED PARTY TRANSACTIONS
(a) For Partnership management services rendered to the Partnership, the
General Partner is entitled to receive 10% of all distributions of cash from
operations. These amounts totaled $11,665 for the quarter ended September
30, 1998 and $8,499 for the quarter ended September 30, 1997, and $28,654 for
the nine months ended September 30, 1998 and $23,830 for the nine months ended
September 30, 1997.
(b) For administrative services provided to the Partnership, the General
Partner is entitled to reimbursement for the cost of certain personnel and
relevant expenses. These amounts totaled $3,000 for the quarter ended
September 30, 1998 and September 30, 1997, and $9,000 for the nine months
ended September 30, 1998 and 1997.
(c) Property management fees incurred, in accordance with the Partnership
Agreement, to West Coast Realty Management, Inc., an affiliate of the
corporate General Partner, totaled $9,026 for the quarter ended September 30,
1998, and $9,413 for the quarter ended September 30, 1997, and $25,246 for
the nine months ended September 30, 1998 and $29,218 for the nine months
ended September 30, 1997.
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1997 (Continued)
NOTE 4- NOTES PAYABLE
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 by a one year construction
loan from Valliwide Bank of Fresno. The total construction loan commitment
was for $1,365,000 that matured on October 5, 1996. The construction was
completed during 1995 and total construction costs of $1,372,900 was
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 and interest of $14,919. The note payable balance is $1,447,115 at
September 30, 1998.
The carrying amount is a reasonable estimate of fair value of the construction
loan payable because the interest rates approximate the borrowing rates
currently available for mortgage loans with similar terms and average
maturities.
The aggregate annual future maturities at September 30, 1998 are as follows:
1998 ..................................$ 7,917
1999 .................................. 33,524
2000 .................................. 36,706
2001 .................................. 40,189
2002 .................................. 44,002
Thereafter ..........................1,284,777
Total $1,447,115
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1997 (Continued)
NOTE 5- NET INCOME AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP LIST
The Net Income per Limited Partnership Unit was computed in accordance with
the partnership agreement using the weighted average number of outstanding
limited partnership units of 7,499 for 1998 and 1997.
The Limited Partner cash distributions, computed in accordance with the
Partnership Agreement, were as follows:
Outstanding Amount Total
Record Date Units Per Unit Distribution
June 30, 1998 7,499 $ 14.00 $104,986
December 31, 1997 7,499 20.39 152,905
June 30, 1997 7,499 10.20 76,490
March 31, 1997 7,499 9.20 68,991
December 31, 1996 7,499 9.20 68,991
Total $472,363
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.
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S 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.
INTRODUCTION
Associated Planners Realty Fund (the "Partnership") was organized in November
1985, under the California Revised Limited Partnership Act. The Partnership
began offering units for sale on March 28, 1986. As of December 27, 1987, the
Partnership had raised $7,499,000 in gross capital contributions. The
Partnership netted approximately $6,720,000 after sales commissions and
syndication costs.
The Partnership was organized for the purpose of investing in, holding, and
managing improved, leveraged income-producing property, such as residential
property, office buildings, commercial buildings, industrial properties, and
shopping centers. The Partnership originally intended on owning and operating
such properties for investment over an anticipated holding period of
approximately five to ten years.
The Partnership's principal investment objectives are to invest in rental real
estate 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 during the early
years of property operations, 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.
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
INTRODUCTION (CONT.)
The ownership and operation of any income-producing real estate is subject to
those risks inherent in all real estate investments, including national and
local economic conditions, the supply and demand for similar types of
properties, competitive marketing conditions, zoning changes, possible
casualty losses, increases in real estate taxes, assessments, and operating
expenses, as well as others.
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 West Coast Realty
Advisors, Inc., the General Partner.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1998 VS. NINE MONTHS
ENDED SEPTEMBER 30, 1997
Operations for the nine months ended September 30, 1998 reflect an entire
period of operations for the four properties owned by the Partnership. During
1998, the 187 Calle Magdalena building located in the Santa Fe Business Park
was converted from executive suites to a single occupying tenant. While
initially this change has had the effect of decreasing rental revenue, the
partnership anticipates that operating costs reductions in subsequent periods
will more than offset such reduced revenue.
Rental revenue decreased $59,274 (10%) due primarily to the successful phase
out of the small tenants at the Santa Fe Business Park properties. Interest
income increased $103 (1.5%) as a result of the Partnership investing more
excess funds in money market accounts during the nine months ended September
30, 1998 as compared to the nine months ended September 30, 1997.
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1998 VS. NINE MONTHS
ENDED SEPTEMBER 30, 1997 (CONT.)
The Partnership's overall costs and expenses decreased for the nine months
ended September 30, 1998 compared to the nine months ended September 30,
1997. Total expenses decreased from $432,795 as of September 30, 1997 to
$439,201 as of September 30, 1998, a $6,406 (1.5%) increase. This increase
was the result increases in property taxes, interest expense, depreciation
and general & administrative expenses offset by decreases in operating costs
and property management fees.
Property management fees decreased $3,972 (13.6%) as a result of lower rental
revenue collected during the nine months ended September 30, 1998 compared to
the nine months ended September 30, 1997. Operating expenses decreased
$11,729 (10.8%) due to lower payroll, utilities and consulting expenses paid
during the nine months ended September 30, 1998 compared to the nine months
ended September 30, 1997. Property taxes increased $7,217 (25.4%) primarily
due to an increase in property taxes in connection with the Shaw Villa
Shopping Center. Interest expense increased $3,972 (3.9%) as a result of
interest charges incurred after the completion of construction at the Shaw
Villa Shopping Center. Depreciation expense increased $697 (.6%) as a result
of $7,850 in fixed asset additions during the nine months ended September 30,
1998. General and administrative expenses increased $10,221 (25.1%)
primarily due to an increase in legal and accounting expenses.
Net income for the nine months ended September 30, 1998 was $61,931 (40.2%)
lower than the nine months ended September 30, 1998. This decrease can be
attributed to the successful phase out of the small tenants at the Santa Fe
Business Park properties as well as a reduction to Countrywide's monthly rent
payment.
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1998 VS. THREE MONTHS
ENDED SEPTEMBER 30, 1997
Operations for the quarter ended September 30, 1998 reflect an entire period
of operations for the four properties owned by the Partnership. During 1998,
the 187 Calle Magdalena building located in the Santa Fe Business Park was
converted from executive suites to a single occupying tenant. While
initially this change has had the effect of decreasing rental revenue, the
partnership anticipates that operating costs reductions in subsequent
quarters will more than offset such reduced revenue.
Rental revenue decreased $7,834 (4.2%) due primarily to the successful phase
out of the small tenants at the Santa Fe Business Park properties. Interest
income decreased $244 (9.8%) during the quarter ended September 30, 1998 as
compared to the quarter ended September 30, 1997 due to lower cash balances
maintained in money market accounts.
The Partnership's overall costs and expenses decreased for the quarter ended
September 30, 1998 compared to the quarter ended September 30, 1997. Total
expenses decreased from $146,532 as of September 30, 1997 to $128,288 as of
September 30, 1998, a $18,244 (12.5%) decrease. This decrease was the result
of decreases in four major expense categories, offset by increases in
depreciation expense and property taxes.
Operating expenses decreased $10,443 (26.5%) due to lower payroll, property
legal and common area maintenance expenses paid during the quarter ended
September 30, 1998 compared to the quarter ended September 30, 1997. General
and administration expenses decreased $8,275 (62.3%) due to lower partnership
legal and accounting and partnership insurance expenses during the quarter
ended September 30, 1998 compared to the quarter September 30, 1997. Property
management fees decreased $387 (4.1%) as a result of lower rental revenue
collected during the quarter ended September 30, 1998 compared to the quarter
September 30, 1997. Interest expense decreased $656 (2%) as a result of
larger amounts being allocated to principal as the loan on the Shaw Villa
Shopping Center approaches maturity. Property taxes increased $947 (10.1%)
primarily due to an increase in property taxes in connection with the Shaw
Villa Shopping Center. Depreciation expense increased $584 (1.4%) as a
result of $7,850 in fixed asset additions during the nine months ended
September 30, 1998.
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1998 VS. THREE MONTHS
ENDED SEPTEMBER 30, 1997 (CONT.)
Net income for the quarter ended September 30, 1998 was $8,457 (20.2%) higher
than the quarter ended September 30, 1997. This increase can be attributed
to the successful phase out of the small tenants at the Santa Fe Business
Park properties, offset by a reduction to Countrywide's monthly rent payment.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 1998 the Partnership made
distributions to the general and limited partners totaling $169,894 and
$116,651 (for the record dates of December 31, 1997 and June 30, 1998,
respectively), of which approximately $152,600 constituted a return of
capital. Distributions of $169,894 and $116,651 compared favorably to the
$172,473 and $124,656 in cash generated from property operations (net income
plus depreciation expense), for the six months ended December 31, 1997 and
June 30, 1998 on which such distributions were based. On February 6, 1998
and on August 10, 1998 the Partnership made distributions to limited partners
totaling $152,905 and $104,986, respectively. Additionally, the partnership
distributed $16,989 and $11,665 to the general partner and $3,659 and $3,476
to the minority interest in certain joint ventures during the nine months
ended September 30, 1998 for the record dates of December 31, 1997 and June
30, 1998, respectively. Distributions are determined by management based on
cash flow and the liquidity position of the Partnership and anticipated
occupancy of the properties. It is the intention of management to make
semi-annual distributions of cash, subject to 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.
Management uses cash as its primary measure of a 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:
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
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. Distribution 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.
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.
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONT.)
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 861,410
Shaw Villa Shopping Center 2,854,221
During the nine months ended September 30, 1998, the General Partner earned
partnership management fees of $28,654. 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.
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:
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.
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
CASH FLOWS - NINE MONTHS ENDED SEPTEMBER 30, 1998 VS. NINE MONTHS ENDED
SEPTEMBER 30, 1997
Cash and cash equivalents decreased $111,896 for the nine months ended
September 30, 1998 compared to a $16,584 decrease for the nine months ended
September 30, 1997. The continued decrease in cash resources is primarily
due to distributions in excess of current earnings and fixed asset additions
in the Santa Fe Business Park property. Cash provided from operating
activities increased by $212,336 for the nine months ended September 30,
1998, with the largest contributor being $216,749 in cash basis net income.
In contrast, during the nine months ended September 30, 1997, cash provided
from operating activities amounted to $275,280 with the largest contributor
being $277,983 in cash basis net income. Investing activities resulted in a
$7,850 decrease in cash resources during the nine months ended September 30,
1998 due to tenant improvements relating to the Santa Fe Business Park
property. In contrast, the nine months ended September 30, 1997 resulted in
a $20,980 decrease in investing activities due to tenant improvements
relating to the Santa Fe Business Park property. Cash from financing
activities decreased $316,382 during the nine months ended September 30, 1998
due to $293,680 being distributed to the limited, general and minority
interest and $22,702 used as payments on notes payable. In contrast, cash
used in financing activities for the nine months ended September 30, 1997
decreased $270,884 due to $250,150 being distributed to the limited, general
and minority interest partners and $20,734 used as payments on notes payable.
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
Partnership has not determined the effect on its financial position or
results of operations, is any, from the adoption of this statement.
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS (CONT.)
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 unitholders. 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 Partnership has not
determined the effect on its financial position or results of operations, if
any, from the adoption of this statement.
IMPACT OF YEAR 2000
Many existing computer systems and applications, and other control devices,
use only two digits to identify a year in the date field, without considering
the impact of the upcoming change in the century. As a result, such systems
and applications could fail or create erroneous results unless corrected so
that they can process data related to the Year 2000. The Partnership relies on
its systems, applications and devices in operating and monitoring all major
aspects of its business, including financial systems (such as general ledger,
accounts receivable, accounts payable and unitholder servicing), and embedded
computer chips, networks and telecommunications equipment and end products.
The Partnership also relies, directly and indirectly, on external systems of
business enterprises such as its advisor, lessees, suppliers, creditors,
financial organizations, and of governmental entities for accurate exchange of
data. The Partnership's current estimate is that the costs associated with the
Year 2000 issue will not have a material adverse effect on the results of
operations or financial position of the Partnership. However, despite the
Partnership's efforts to address the Year 2000 impact on its internal systems,
the Partnership may not have fully identified such impact or whether it can
resolve it without disruption of its business and without incurring
significant expense. In addition, even if the internal systems of the
Partnership are not materially affected by the Year 2000 issue, the
Partnership could be affected through disruption in the operations of the
enterprises with which the Partnership interacts.
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
PART II
O T H E R I N F O R M A T I O N
ITEM 1.LEGAL PROCEEDINGS
The Partnership was named as a defendant in CARMEN MARGALA V. DAVID L.
MURDOCK, WILBUR HORWITZ, ASSOCIATED PLANNERS REALTY FUND AND DOES 1-100,
INCLUSIVE. The lawsuit was filed on July 31, 1997 and served on the
Partnership on November 14, 1997.
The plaintiff alleged breach of contract, fraud and deceit, intentional
misrepresentation, conversion, interference with third party economic benefit
and sexual harassment. All defendants denied the allegations in their
entirety.
After a lengthy and contentious discovery process, the trial court
dismissed the entire case on May 8, 1998. Plaintiff's motion for a re-hearing
on the merits was denied on July 30, 1998. It is unknown whether plaintiff
will pursue a further appeal.
ITEM 2.CHANGES IN SECURITIES
None
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5.OTHER INFORMATION
None
ITEM 6.EXHIBIT AND REPORTS ON FORM 8-K
(a) Information required under this section has been included in the
financial statements.
(b) Reports on Form 8-K
None
<PAGE>
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
S I G N A T U R E S
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.
ASSOCIATED PLANNERS REALTY FUND
A California Limited Partnership
(Registrant)
November 10, 1998 By: WEST COAST REALTY ADVISORS, INC.
A California Corporation,
General Partner
W. Thomas Maudlin Jr.
President
November 10, 1998
John R. Lindsey
Vice President/Treasurer
<TABLE> <S> <C>
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<CIK> 0000785791
<NAME> ASSOCIATED PLANNERS REALTY FUND L.P.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 175,745
<SECURITIES> 0
<RECEIVABLES> 11,895
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 216,918
<PP&E> 7,038,072
<DEPRECIATION> (1,389,576)
<TOTAL-ASSETS> 5,878,250
<CURRENT-LIABILITIES> 269,171
<BONDS> 1,447,115
0
0
<COMMON> 0
<OTHER-SE> 4,161,964
<TOTAL-LIABILITY-AND-EQUITY> 5,878,250
<SALES> 526,359
<TOTAL-REVENUES> 533,562
<CGS> 335,687
<TOTAL-COSTS> 335,687
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 105,575
<INCOME-PRETAX> 92,300
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 92,300
<EPS-PRIMARY> 9.58
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