<PAGE> 1
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, 1999
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 95-4039680
------------------------------- -------------------
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5933 W. CENTURY BLVD. 9TH, FLOOR
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 [ ]
1
<PAGE> 2
ASSOCIATED PLANNERS REALTY FUND
INDEX
PART I -- FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Item 1. Consolidated Financial Statements
Balance Sheets -- 3
September 30, 1999 and December 31, 1998
Statements of Partners' Equity -- 4
Nine Months Ended September 30, 1998 and 1999
Statements of Income -- 5
Three Months and Nine Months Ended
September 30, 1998 and 1999
Statements of Cash Flows -- 6
Nine Months Ended September 30, 1998 and 1999
Summary of Accounting Policies 7
Notes to Financial Statements 9
Item 2. Management's Discussion and Analysis of 13
Financial Condition and Results of Operations
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibit and Reports on Form 8-K 21
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
SEPTEMBER 30, 1999 December 31, 1998
(UNAUDITED)
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Rental real estate, less accumulated
depreciation (Note 1) $4,417,329 $5,606,662
Cash and cash equivalents 8,058 257,749
Other assets 26,841 42,494
- ----------------------------------------------------------------------------------------------
Total assets $4,452,228 $5,906,905
==============================================================================================
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Accounts payable
Trade $ 11,204 $ 10,914
Related Party (Note 3) 6,877 14,425
Notes payable (Note 2) 1,414,342 1,439,198
Security deposits and prepaid rent 26,226 30,020
- ----------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,458,649 1,494,557
Minority Interest -- 193,782
PARTNER'S EQUITY (NOTES 4 AND 5)
Limited partners:
$1,000 stated value per unit - authorized
7,500 units; issued and outstanding 7,499 2,923,284 4,164,156
General partner 70,295 54,410
- ----------------------------------------------------------------------------------------------
TOTAL PARTNERS' EQUITY 2,993,579 4,218,566
- ----------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $4,452,228 $5,906,905
==============================================================================================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
LIMITED PARTNERS
---------------------------- GENERAL
TOTAL UNITS AMOUNT PARTNER
----------- ----- ----------- --------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1998 $ 4,218,566 7,499 $ 4,164,156 $ 54,410
Net income 387,886 -- 340,499 47,387
Distributions to limited partners (1,581,371) -- (1,581,371) --
Distributions to general partner (31,502) -- -- (31,502)
----------- ----- ----------- --------
BALANCE AT SEPTEMBER 30, 1999 $ 2,993,579 7,499 $ 2,923,284 $ 70,295
=========== ===== =========== ========
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<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>
See accompanying notes to financial statements.
4
<PAGE> 5
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
==============================================================================================================
THREE MONTHS Three Months NINE MONTHS Nine Months
ENDED Ended ENDED Ended
SEPTEMBER 30, September 30, SEPTEMBER 30, September 30,
1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Rental $77,108 $179,606 $353,981 $526,359
Gain on sale of property
(Note 1) -- -- 380,849 --
Interest 90 2,247 13,766 7,203
- --------------------------------------------------------------------------------------------------------------
77,198 181,853 748,596 533,562
- --------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSE
Operating 21,245 29,019 42,943 97,359
Property taxes 15,180 10,357 36,156 35,683
Property management fees
(Note 3(c)) 3,877 9,026 17,714 25,246
General and administrative 14,792 5,012 81,790 50,889
Depreciation and amortization 31,847 41,834 95,540 124,449
Interest expense (Note 2) 32,305 33,040 86,567 105,575
- --------------------------------------------------------------------------------------------------------------
119,246 128,288 360,710 439,201
- --------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS (42,048) 53,565 387,886 94,361
Minority interest in net loss
(income) of joint ventures -- (3,306) -- (2,061)
- --------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $(42,048) $50,259 $387,886 $92,300
==============================================================================================================
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT (Note 5) $(5.43) $5.53 $45.41 $9.58
==============================================================================================================
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
====================================================================================================================
NINE MONTHS Nine Months
ENDED Ended
SEPTEMBER 30, 1999 September 30, 1998
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (UNAUDITED) (Unaudited)
- --------------------------------------------------------------------------------------------------------------------
CASH FLOW PROVIDED BY OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 387,886 $ 92,300
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 95,540 124,449
Gain on sale of property (380,849) --
Minority interest in net income (loss) -- 2,061
Increase (decrease) from changes in:
Other assets 15,654 (14,197)
Accounts payable (7,258) 2,745
Security deposits and prepaid rents (3,794) 4,978
- --------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 107,179 212,336
- --------------------------------------------------------------------------------------------------------------------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
Proceeds from sale of rental real estate 1,283,129 --
Tenant improvement additions -- (7,850)
- --------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 1,283,129 (7,850)
- --------------------------------------------------------------------------------------------------------------------
CASH FLOWS USED IN FINANCING ACTIVITIES
Repayment of notes payable (24,856) (22,702)
Distribution of minority interest (2,270) (7,135)
Distributions to limited partners (1,581,371) (257,891)
Distributions to general partner (31,502) (28,654)
- --------------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (1,639,999) (316,382)
- --------------------------------------------------------------------------------------------------------------------
NET CASH (DECREASE) IN CASH AND CASH EQUIVALENTS (249,691) (111,896)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 257,749 287,641
- --------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,058 $ 175,745
====================================================================================================================
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 7
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 an
emphasis on properties located in California and 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 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.
PRESENTATION OF INTERIM INFORMATION
In the opinion of the General Partner of Associated Planners Realty Fund (the
"Partnership"), the accompanying unaudited financial statements include all
normal adjustments considered necessary to present fairly the financial position
as of September 30, 1999, and the results of operations and cash flows for the
three and nine months ended September 30, 1999 and 1998. Interim results are not
necessarily indicative of results for a full year.
The financial statements and notes are presented as permitted by Form 10-Q, and
do not contain certain information included in the Partnership's audited
consolidated financial statements and notes for the fiscal year ended December
31, 1999.
RENTAL REAL ESTATE AND DEPRECIATION
Assets are stated at cost. Depreciation is computed using the straight-line
method over estimated useful lives ranging from 5 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.
7
<PAGE> 8
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
RENTAL INCOME
Rental revenue is recognized on a straight-line basis to the extent rental
revenue is deemed collectible.
STATEMENTS OF CASH FLOWS
For the purposes 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 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.
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT
Net income (loss) per limited partnership unit is calculated by dividing the
limited partners share of net income by the weighted average number of limited
partnership units outstanding for the period.
8
<PAGE> 9
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1998
NOTE 1 -- RENTAL REAL ESTATE HELD FOR SALE
As of September 30, 1999, the Partnership has interests in the following two
rental real estate properties.
<TABLE>
<CAPTION>
Location (Property Name) Date Purchased Cost
====================================================================================================================
<S> <C> <C>
Clovis, California January 23, 1987 $ 2,854,221
Simi Valley, California November 12, 1987 2,616,522
</TABLE>
The major categories of property are:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999 December 31, 1998
====================================================================================================================
<S> <C> <C>
Land $1,631,966 $2,361,894
Building and Improvements 3,792,117 4,629,518
Furniture and Fixtures 46,660 46,660
- -------------------------------------------------------------------------------------------------------------------
5,470,743 7,038,072
Less accumulated depreciation (1,053,414) (1,431,410)
- -------------------------------------------------------------------------------------------------------------------
Net rental real estate held for sale $4,417,329 $5,606,662
====================================================================================================================
</TABLE>
Two office buildings located in Encinitas, California (179 and 187 Calle
Magdalena) were sold to unaffiliated buyers during January 1999 at a sales price
of $775,000 and $900,000, respectively. The net proceeds received from the sale
equaled $576,977 and $670,698, respectively, which was distributed to the
limited partners and the General Partner in accordance with the terms of the
Partnership Agreement. The Partnership also recognized a gain of $193,886 and
$186,963, respectively from the sale.
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:
Two tenants accounted for 63% and 31%, respectively, of total rental revenue for
the nine months ended September 30, 1999;
Four tenants accounted for 41%, 22%, 18% and 13%, respectively, of total rental
revenue for the nine months ended September 30, 1998;
9
<PAGE> 10
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
AND DECEMBER 31, 1998 (CONTINUED)
NOTE 2 -- NOTES PAYABLE
In October 1996, the Partnership obtained permanent financing secured by a first
deed of trust from a major insurance company to replace the construction loan on
the Shaw Villa Shopping Center in Clovis, California. 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 $13,593. The note
payable balance is $1,414,342 and $1,447,115 at September 30, 1999 and 1998.
The carrying amount of the loan is a reasonable estimate of fair value of the
permanent 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, 1999 are as follows:
<TABLE>
<S> <C>
1999 (three months).................... $ 8,668
2000 .................................. 36,705
2001 .................................. 40,187
2002 .................................. 44,002
2003 .................................. 48,177
Thereafter ............................ 1,236,603
----------
Total $1,414,342
==========
</TABLE>
10
<PAGE> 11
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
AND DECEMBER 31, 1998 (CONTINUED)
NOTE 3 -- RELATED PARTY TRANSACTIONS
(a) For Partnership management services provided to the Partnership, the General
Partner is entitled to receive 10% of all distributions of cash from operations.
These amounts totaled $0 for the quarter ended September 30, 1999 and $0 for the
quarter ended September 30, 1998, and $31,502 for the nine months ended
September 30, 1999 and $28,654 for the nine months ended September 30, 1998.
(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 three months ended September 30,
1999 and September 30, 1998, and $6,000 for the nine months ended September 30,
1999 and 1998.
(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 $3,877 for the quarter ended September 30, 1999, and
$9,026 for the quarter ended September 30, 1998, and $17,714 for the nine months
ended September 30, 1999 and $25,246 for the nine months ended September 30,
1998.
NOTE 4 -- NET INCOME AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT
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 1999 and 1998.
The Limited Partner cash distributions, computed in accordance with the
Partnership Agreement, were as follows:
11
<PAGE> 12
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
AND DECEMBER 31, 1998 (CONTINUED)
NOTE 4 -- NET INCOME AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP LIST
(CONTINUED)
<TABLE>
<CAPTION>
Outstanding Amount Total
Record Date Units Per Unit Distribution
================================================================================================
<S> <C> <C> <C>
March 19, 1999 7,499 $191.03 to $188.52 $1,427,641
December 31, 1998 7,499 $20.50 153,730
- ------------------------------------------------------------------------------------------------
Total $1,581,371
================================================================================================
September 30, 1998 7,499 $14.00 $104,986
December 31, 1997 7,499 20.39 152,905
- ------------------------------------------------------------------------------------------------
Total $257,891
================================================================================================
</TABLE>
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 has permitted 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.
NOTE 5 -- LIQUIDATION OF PARTNERSHIP
At September 30, 1999, all of the Partnership's remaining properties are being
held for sale. The General Partner plans to liquidate the Partnership after the
final property is sold. There is no assurance that the remaining properties will
be sold and the Partnership will be liquidated during 1999. The financial
statements do not contain any adjustments that might result from the liquidation
of the Partnership.
12
<PAGE> 13
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 or 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 intended to own and operate 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.
13
<PAGE> 14
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
INTRODUCTION (CONTINUED)
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, 1999 VS. NINE MONTHS
ENDED SEPTEMBER 30, 1998
Operations for the nine months ended September 30, 1999, reflect an entire
period of operations for all the Partnership's properties, except for the two
properties located in Encinitas, California which were sold in January 1999.
Net income for the nine months ended September 30, 1999 of $387,886 was higher
than the net income for the nine months ended September 30, 1998 of $92,300 due
primarily to a $380,849 gain recognized from the sale of the Encinitas,
California properties.
Rental revenue decreased $172,378 (32.7%) due primarily to the sale of the two
properties located in Encinitas, California and the vacancy of the Simi Valley
property since May 31, 1999. Interest income increased $6,563 (91.1%) during the
nine months ended September 30, 1999 as compared to the nine months ended
September 30, 1998 due primarily to funds held from approximately January 8,
1999 to March 19, 1999 as a result of proceeds received from the sale of the two
properties located in Encinitas, California.
14
<PAGE> 15
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, 1999 VS. NINE MONTHS
ENDED SEPTEMBER 30, 1998 (CONTINUED)
Interest expense decreased $19,008 (18.0%) as a result of larger amounts being
allocated to principal as the loan on the Shaw Villa Shopping Center approaches
maturity. Operating expenses decreased $54,416 (55.9%) from the nine months
ended September 30, 1998 to September 30, 1999 primarily due to the January 1999
sale of two properties located in Encinitas, California. General and
administrative expenses increased $30,901 (60.7%) due to higher legal and
accounting expenses, and disposition fees related to the sale of the two
Encinitas, California properties. Depreciation expense decreased $28,909 (23.2%)
during the nine months ended September 30, 1999 compared to the nine months
ended September 30, 1998 primarily due to the sale of the Encinitas properties
during January 1999.
During the nine months ended September 30, 1999, the Partnership distributed
$1,612,873 to the general and limited partners and $2,270 to the minority
interest partner, as compared to the nine months ended September 30, 1998 when
the Partnership distributed $286,545 to the general and limited partners and
$7,185 to the minority interest partner. This increase was primarily due to the
Partnership selling the two properties located in Encinitas, California in
January 1999. Cash basis net income for the nine months ended September 30, 1999
was $102,577. This was derived by adding depreciation and amortization expense
to net income, less the gain on sale of properties. In contrast, cash basis
income for the nine months ended September 30, 1998 was $216,749.
Overall the Partnership generated $102,577 in cash basis net income from
operations before depreciation expense of $95,540 and $380,849 gain from the
sale of the Encinitas, California properties for the nine months ended September
30, 1999. In contrast, for the nine months ended September 30, 1998, the
Partnership generated cash basis net income of $216,749 before depreciation
expense of $124,449. Net income per limited partnership unit increased from
$9.58 in 1998 to $45.41 in 1999. The weighted average number of limited
partnership units outstanding remained unchanged at 7,499.
15
<PAGE> 16
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, 1999 VS. THREE MONTHS
ENDED SEPTEMBER 30, 1998
Operations for the quarter ended September 30, 1999 reflect an entire period of
operations for the two remaining properties owned by the Partnership. In
contrast, the quarter ended September 30, 1998 reflected operations for the four
properties owned for the period. This change can be attributed to the sale in
January 1999 of the two properties located in Encinitas, California.
Rental revenue decreased $102,498 (57.1%) due to the sale of the two properties
located in Encinitas, California and due to the vacancy of the Simi Valley
property since May 31, 1999. Interest income decreased $2,157 (96.0%) during the
quarter ended September 30, 1999 as compared to the quarter ended September 30,
1998 due to lower cash balances maintained in money market accounts.
Interest expense decreased $735 (2.2%) as a result of larger amounts being
allocated to principal as the loan on the Shaw Villa Shopping Center approaches
maturity. Operating expenses decreased $7,774 (26.7%) from the quarter ended
September 30, 1998 to September 30, 1999 primarily due to the January 1999 sale
of two properties located in Encinitas, California. General and administrative
expenses increased $9,780 (195.1%) due to higher legal and accounting expenses
and partnership business insurance expenses during the quarter ended September
30, 1999 compared to the quarter ended September 30, 1998. Depreciation expense
decreased $9,987 (23.9%) during the quarter ended September 30, 1999 compared to
the quarter ended September 30, 1998 primarily due to the sale of the Encinitas
properties during January 1999.
During the quarter ended September 30, 1999 and 1998, the Partnership made no
distributions to the general partner, limited partners and minority interest
partners. This was primarily due to the Partnership paying distributions on a
semi-annual basis. This change has permitted 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.
16
<PAGE> 17
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, 1999 VS. THREE MONTHS
ENDED SEPTEMBER 30, 1998 (CONTINUED)
Overall the Partnership generated $10,201 in cash basis net loss from operations
before depreciation expense of $31,847 for the quarter ended September 30, 1999.
In contrast, for the quarter ended September 30, 1998, the Partnership generated
cash basis net income of $92,093 before depreciation expense of $41,834. Net
income (loss) per limited partnership unit decreased from $5.53 in 1998 to
$(5.43) in 1999. The weighted average number of limited partnership units
outstanding remained unchanged at 7,499.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 1999 the Partnership made
distributions to the general and limited partners totaling $1,612,873, of which
approximately $1,506,012 constituted a return of capital, primarily due to the
proceeds distributed of $1,427,641 related to the sale of the two properties
located in Encinitas, California. The remaining distribution of $153,730 or
$20.50 per limited partnership unit compares unfavorably to the $190,529 in cash
generated from property operations (net income plus depreciation expense) for
the six months ended December 31, 1998 on which such distributions were based.
Additionally, the partnership distributed $31,502 to the general partner and
$2,270 to the minority interest partner during the nine months ended September
30, 1999.
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. Distribution to partners.
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.
17
<PAGE> 18
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The second factor relates to the condition of the Partnership's properties. All
Partnership properties are in good condition, except for the Simi Valley
property that is vacant as of November 1999. This property may require tenant
improvements for a prospective new tenant in the near future. Therefore, the
Partnership could withhold payment of all or a portion of distributions, if
necessary, in order to rebuild cash reserve balances.
The third factor relates to life cycle. The Partnership completed its funding,
acquisition and operating stages of properties in previous years. Thus, the
Partnership is in the disposition stage. As part of the disposition stage, the
Partnership has attempted to list each property for sale. Additionally, in
January 1999 the Partnership sold the two properties located in Encinitas,
California to unaffiliated buyers for sales price of $775,000 and $900,000,
respectively. The proceeds from these property sales were distributed to the
limited and general partners in March 1999 in accordance with the Partnership
Agreement.
The fourth factor relates to Partnership distributions. The Partnership is
attempting to pay semi-annual distributions from operations. However,
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 attempts to make 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.
During the nine months ended September 30, 1999, the General Partner earned
partnership management fees of $31,502. Partnership management fees were paid
and calculated in accordance with the partnership agreement.
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 fourteen 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:
18
<PAGE> 19
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
A. Triple net leases at the Shaw Villa Shopping Center which give
the Partnership an ability to pass on higher operating costs to
its tenants.
The General Partner is attempting to sell the remaining two properties owned by
the Partnership. Once the sale of the Shaw Villa Shopping Center and Simi Valley
properties are sold, the net proceeds will be distributed to the limited and
general partners in accordance with the partnership agreement, and the
partnership will then be terminated and dissolved.
CASH FLOWS -- NINE MONTHS ENDED SEPTEMBER 30, 1999 VS. NINE MONTHS ENDED
SEPTEMBER 30, 1998
Cash and cash equivalents decreased $249,691 for the nine months ended September
30, 1999 compared to a $111,896 decrease for the nine months ended September 30,
1998. The continued decrease in cash resources is primarily due to distributions
in excess of current earnings and the distribution of proceeds from the sale of
the two properties located in Encinitas, California. Cash provided from
operating activities increased by $107,179 for the nine months ended September
30, 1999, with the largest contributor being $483,426 in cash basis net income,
offset by $380,849, resulting from the gain on the sale of the Encinitas,
California, for the nine months ended September 30, 1999. In contrast, during
the nine months ended September 30, 1998, cash provided from operating
activities amounted to $212,336 with the largest contributor being $216,749 in
cash basis net income. Investing activities resulted in a $1,283,129 increase in
cash resources during the nine months ended September 30, 1999 due to proceeds
from the sale of the two properties located in Encinitas, California. In
contrast, the nine months ended September 30, 1998 resulted in a $7,850 decrease
in investing activities due to tenant improvements relating to the Santa Fe
Business Park property. Cash from financing activities decreased $1,639,999
during the nine months ended September 30, 1999 due to $1,615,143 being
distributed to the limited, general and minority interest and $24,856 used as
payments on notes payable. In contrast, cash used in financing activities for
the nine months ended September 30, 1998 decreased $316,382 due to $293,680
being distributed to the limited, general and minority interest partners and
$22,702 used as payments on notes payable.
19
<PAGE> 20
ASSOCIATED PLANNERS REALTY FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
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.
20
<PAGE> 21
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
None
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.
- Exhibit 27 -- Financial Data Schedule
(b) Reports on Form 8-K
None
21
<PAGE> 22
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)
By: WEST COAST REALTY ADVISORS, INC.
A California Corporation,
General Partner
November 15, 1999 /s/ JOHN R. LINDSEY
----------------------------------------
John R. Lindsey
Vice President/Treasurer
(Principal Financial Officer)
November 15, 1999 /s/ W. THOMAS MAUDLIN JR.
----------------------------------------
W. Thomas Maudlin Jr.
President of General Partner
22
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 8,058
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,328
<PP&E> 5,470,743
<DEPRECIATION> (1,053,414)
<TOTAL-ASSETS> 4,452,228
<CURRENT-LIABILITIES> 44,307
<BONDS> 1,414,342
0
0
<COMMON> 0
<OTHER-SE> 2,993,579
<TOTAL-LIABILITY-AND-EQUITY> 4,452,228
<SALES> 353,981
<TOTAL-REVENUES> 748,596
<CGS> 274,143
<TOTAL-COSTS> 274,143
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 86,567
<INCOME-PRETAX> 387,886
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 387,886
<EPS-BASIC> 45.41
<EPS-DILUTED> 45.41
</TABLE>
