<PAGE> 1
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
FOR THE FISCAL YEAR ENDED DECEMBER 31, 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, (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) (Zip Code)
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 Regulation 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> 2
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.
PART I
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, 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, 1998, 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 which was sold in May 1995 to an unrelated party. 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 was located in Washington.
At December 31, 1998, all of the Partnership's remaining properties are being
held for sale. Two of the properties were sold during January 1999 (see Note 9).
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.
The 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.
1
<PAGE> 3
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.
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 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, 1998, the
building was 100% occupied and the average rent per occupied square foot was
$1.07. Building 5 also contains 6,944 rental square feet. As of December 31,
1998, 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:
BUILDING 3
John Powell & Associates: 84.7% of rentable square footage; rent is $77,145 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 $12,000 per year (17.5% of total
rent for the building). Lease expires January 31, 1999.
2
<PAGE> 4
BUILDING 5
Synteract: 100% of rentable square footage; Rent is $104,160 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.
The 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.
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"), occupies a larger, newly
constructed space, under 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 1998 rental income
represented 21.8% of the total Partnership consolidated rental revenue.
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 space 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.
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.
3
<PAGE> 5
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.
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.
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. 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 May 15, 1999. Countrywide has no option to
extend the lease. Countrywide's 1998 rental revenue represented 40.7% of the
total Partnership consolidated rental revenue.
The average monthly rent per occupied square foot is approximately $.80
($20,923 per month) up until May 15, 1999. The lease is a "triple net" lease,
requiring the tenant to pay insurance, taxes, maintenance, and all other
operating costs.
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, that the property is adequately insured. The property is
managed by WCRM.
SUMMARY
At December 31, 1998, all of the Partnership's remaining properties are being
held for sale. The Santa Fe Business Park properties were sold during January
1999. There is no assurance that the remaining properties will be sold during
1999.
As of December 31, 1998, the combined occupancy rate of all the Partnership's
properties, was 98%. It is the opinion of the General Partner, that all
properties are adequately covered by insurance.
4
<PAGE> 6
The schedule below indicates the average annual occupancy rate expressed as a
percentage of rentable square feet for the last five years:
<TABLE>
<CAPTION>
SHAW VILLA
SANTA FE BUSINESS SHOPPING PACIFIC BELL
YEAR PARK - 2 PROPERTIES CENTER BUILDING
------------------------------------------------------------------------------
<S> <C> <C> <C>
1998 Bldg. #3 = 100% 91% 100%
Bldg. #5 = 100%
1997 Bldg. #3 = 100% 100% 100%
Bldg. #5 = 100%
1996 Bldg. #3 = 76% 100% 100%
Bldg. #5 = 92%
1995 Bldg. #3 = 66% 81% 100%
Bldg. #5 = 82%
1994 Bldg. #3 = 0% 76% 100%
Bldg. #5 = 80%
</TABLE>
The total original acquisition cost to the Partnership of each property and the
dates of acquisition were as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
DESCRIPTION COST DATE
---------------------------------------------------------------------------------------------
<S> <C> <C>
Santa Fe Business Park (Building 3) (sold January 6, 1999) $ 705,918 12/31/86
Santa Fe Business Park (Building 5) (sold January 8, 1999) $ 861,410 12/31/86
Shaw Villa Shopping Center $ 2,854,221 01/23/87
Pacific Bell Building $ 2,616,523 11/12/87
Shurguard Mini-warehouse (Sold May 15, 1995) $ 1,603,144 05/09/88
---------------------------------------------------------------------------------------------
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
5
<PAGE> 7
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
At December 31, 1998, there were 7,499 limited partnership units outstanding and
627 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, 1998.
Distributions totaling $257,891, $214,471 and $236,894, were made to limited
partners in 1998, 1997, and 1996, 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 $54,126, $12,069 and $59,838, in 1998, 1997, and 1996. The
General Partner distributions totaled $28,654, $23,831 and $26,321, for 1998,
1997, and 1996. In addition, $153,730 ($20.50/limited partnership unit) in
distributions were paid to unit holders subsequent to the year-end on February
12, 1999. Additionally, $1,427,642 (ranging from $191.03 to $188.52 per limited
partnership unit), in distributions were paid to unit holders as of the record
date of February 15, 1999 for the sale of the Encinitas properties which were
sold in January 1999.
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 permitted the Partnership to operate more efficiently with lower
Partnership operating expenses. These semi-annual distributions 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 1998, 1997 and 1996 are summarized
below:
<TABLE>
<CAPTION>
UNITS TOTAL
RECORD DATE DATE PAID PER UNIT OUTSTANDING PAID
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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 76,489
12/31/97 02/06/98 20.39 7,499 152,905
06/30/98 08/10/98 14.00 7,499 104,986
12/31/98 02/12/99 20.50 7,499 153,730
</TABLE>
Distributions are made based on income from operations, before depreciation and
amortization, available as a result of the previous six months of operations.
6
<PAGE> 8
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>
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operations for the years ended
December 31:
Revenues $ 728,167 $ 802,528 $ 722,358 $ 639,039 $ 754,950
Net income 148,902 202,403 177,055 276,874 217,892
Net income per Limited Partner 15.88 22.31 19.69 33.23 24.45
Unit*
Distributions per Limited Partner 34.39 39.79 33.65 235.94 46.50
Unit*
Financial position at December 31,
Total assets $5,906,905 $6,092,548 $6,146,615 $6,011,070 $6,255,376
Partners' equity 4,218,566 4,356,209 4,392,108 5,985,898 5,985,898
</TABLE>
*Net income and distributions per limited partner unit were based on the
weighted average number of outstanding units.
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 or implied by such forward-looking statements.
RESULTS OF OPERATIONS - 1998 VS. 1997
Operations for the year ended December 31, 1998 reflect an entire period of
operations for the four properties owned and operated by the Partnership.
Rental revenue decreased by $74,211 (9%) from 1997 to 1998, due primarily to the
occupancy decrease in the 187 Calle Magdalena property. This property was
converted from multi-tenant executive suites to a single tenant occupancy.
Interest income remained comparable, only decreasing $150, from 1997 to 1998.
The Partnership's overall costs and expenses decreased in 1998 as compared to
1997. Total expenses decreased from $593,093 in 1997 to $572,424 in 1998, a
$20,669 (3%) decrease. Interest expense increased $14,201 (10%) as a result of
an additional month of mortgage interest expense being accrued in 1998 as
compared to 1997. Depreciation and amortization expense remained consistent
between 1997 and 1998. Operating expenses decreased $40,805 (17%) as a result of
a decrease in salaries and payroll, utilities and consulting expenses, primarily
attributed to the change in the 187 Calle Magdalena property. General and
administrative costs increased $4,653 (9%) due to higher fees.
Net income in 1998 decreased by $53,501 (26%) compared to net income in 1997. On
an operating cash flow basis (net income plus depreciation expense) the
Partnership realized $315,185 in 1998, as compared to $367,404 in 1997.
7
<PAGE> 9
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)
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.
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 cash flow 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.
LIQUIDITY AND CAPITAL RESOURCES
During the year ended December 31, 1998, the Partnership made distributions to
the limited partners and the general partners totaling $286,545 of which $28,640
constituted a return of capital. Distributions of $286,545 compared favorably to
the $315,185 in cash generated from property operations (net income plus
depreciation expense). On February 12, 1999, the Partnership made a distribution
to limited partners totaling $153,730 or $20.50 per limited partnership unit.
Additionally, the partnership distributed $17,800 to the minority interest
partner during the year ended December 31, 1998. 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 with the first
record date and payment date being December 31, 1997 and February 6, 1998,
respectively. This change 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.
8
<PAGE> 10
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)
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.
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,
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,
subsequent to year-end 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
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.
During the year ended December 31, 1998, the General Partner earned partnership
management fees of $28,654. Subsequent to year-end, the General Partner received
a partnership management fee of $17,681. 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 thirteen 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. 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.
9
<PAGE> 11
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)
CASH FLOWS 1998 VS. 1997
Cash and cash equivalents decreased $29,892 for the year ended December 31, 1998
compared to a $81,228 increase for the year ended December 31, 1997. The
decrease in cash resources is primarily due to the increase in distributions to
the limited partners and the general partners in 1998 as compared to 1997. Cash
provided from operating activities increased by $312,922 during 1998 with the
largest contributor being a $315,185 in cash basis net income. In contrast,
during 1997, cash provided by operating activities increased $384,184 with the
largest contributor being $367,404 in cash basis net income. Investing
activities resulted in a $7,850 decrease in cash during 1998 due to improvements
made to 187 Calle Magdalena property. In contrast, 1997 investing activities
decreased $20,980 due to tenant improvements relating to the Shaw Villa Shopping
Center property. Cash from financing activities decreased $334,964 in 1998 due
to $304,345 being distributed to limited, general and minority partners and
$30,619 used as payment on the note payable. In contrast, cash provided by
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 payment on the note payable.
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 net income. In contrast, during 1996
cash provided by operating activities increased $293,801 with the largest
contributor being $307,360 in cash basis net 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.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standard No. 133 (SFAS 133), "Accounting for
Derivative Instruments and Hedging Activities," issued by the Financial
Accounting Standards Board is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The
Partnership does not expect adoption to have any effect on its financial
position, results of operations and cash flows.
10
<PAGE> 12
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)
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 General Partner 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 shareholder servicing), and embedded
computer chips, networks and telecommunications equipment and end products. The
General Partner 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 General Partner'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 General Partner. However, despite the
General Partner's efforts to address the year 2000 impact on its internal
systems, the General Partner 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
General Partner are not materially affected by the year 2000 issue, the General
Partner could be affected through disruption in the operations of the
enterprises with which the General Partner interacts.
11
<PAGE> 13
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Certified Public Accountants ...........................13
Consolidated Balance Sheets - December 31, 1998 and 1997 .....................14
Consolidated Statements of Income for the years ended
December 31, 1998, 1997 and 1996 ..............................15
Consolidated Statements of Partners' Equity for the years ended
December 31, 1998, 1997 and 1996...............................16
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996 ..............................17
Summary of Accounting Policies ............................................18-19
Notes to Consolidated Financial Statements ................................20-23
Financial Statement Schedules
Schedule III-Real Estate and Accumulated Depreciation .........28
Schedule IV-Mortgage Loan on Real Estate ......................29
</TABLE>
12
<PAGE> 14
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, 1998 and 1997 and the related consolidated
statements of income, partners' equity, and cash flows for each of the three
years in the period ended December 31, 1998. 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 audits 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.
As discussed in Note 8, all of the Partnership's remaining properties are held
for sale as of December 31, 1998. The General Partner plans to liquidate the
Partnership after the final property is sold. The financial statements do not
contain any adjustments that might result from the liquidation of the
Partnership.
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, 1998 and 1997, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1998 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 22, 1999
13
<PAGE> 15
ASSOCIATED PLANNERS REALTY FUND AND CONSOLIDATED ENTITIES
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Rental real estate held for sale, less accumulated
depreciation (Notes 2 and 8) $5,606,662 $5,765,095
Cash and cash equivalents 257,749 287,641
Other assets 42,494 39,812
- ------------------------------------------------------------------------------------------
Total assets $5,906,905 $6,092,548
==========================================================================================
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Accounts payable:
Trade $ 10,914 $ 16,152
Related party (Note 5(d)) 14,425 13,375
Notes payable (Note 3) 1,439,198 1,469,817
Security deposits and prepaid rent 30,020 32,254
- ------------------------------------------------------------------------------------------
Total liabilities 1,494,557 1,531,598
- ------------------------------------------------------------------------------------------
MINORITY INTEREST 193,782 204,741
Contingencies (Note 8)
PARTNERS' EQUITY (Notes 6 and 7):
Limited partners:
$1,000 stated value per unit - authorized 7,500 units;
issued and outstanding 7,499 4,164,156 4,303,000
General partner 54,410 53,209
- ------------------------------------------------------------------------------------------
Total partners' equity 4,218,566 4,356,209
- ------------------------------------------------------------------------------------------
Total liabilities and partners' equity $5,906,905 $6,092,548
==========================================================================================
</TABLE>
See accompanying summary of accounting policies and
notes to consolidated financial statements.
14
<PAGE> 16
ASSOCIATED PLANNERS REALTY FUND AND CONSOLIDATED ENTITIES
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years ended December 31, 1998 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Rental (Notes 2 and 4) $ 718,011 $ 792,222 $ 713,377
Interest 10,156 10,306 8,981
- -----------------------------------------------------------------------------------------------
728,167 802,528 722,358
- -----------------------------------------------------------------------------------------------
COST AND EXPENSES
Operating (Note 5) 201,926 242,731 271,514
General and administrative (Note 5) 54,863 50,210 59,049
Depreciation and amortization 166,283 165,001 130,305
Interest expense 149,352 135,151 100,420
- -----------------------------------------------------------------------------------------------
572,424 593,093 561,288
- -----------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 155,743 209,435 161,070
MINORITY INTEREST IN NET LOSS (INCOME) OF JOINT
VENTURES (Note 5 (c)) (6,841) (7,032) 15,985
- -----------------------------------------------------------------------------------------------
NET INCOME $ 148,902 $ 202,403 $ 177,055
===============================================================================================
NET INCOME PER LIMITED PARTNERSHIP UNIT (Note 6) $ 15.88 $ 22.31 $ 19.69
===============================================================================================
</TABLE>
See accompanying summary of accounting policies and
notes to consolidated financial statements.
15
<PAGE> 17
ASSOCIATED PLANNERS REALTY FUND AND CONSOLIDATED ENTITIES
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
Limited Partners
---------------------------- General
Units Amount Partner Total
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1996 7,499 $ 4,133,882 $ 344,386 $ 4,478,268
Net income for the year -- 147,622 29,433 177,055
Distribution to limited partners (Note 6) -- (236,894) -- (236,894)
Distribution to general partners -- -- (26,321) (26,321)
Reallocation of capital (Note 7) -- 305,548 (305,548) --
- --------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1996 7,499 4,350,158 41,950 4,392,108
Net income for the year -- 167,313 35,090 202,403
Distribution to limited partners (Note 6) -- (214,471) -- (214,471)
Distribution to general partners -- -- (23,831) (23,831)
- --------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1997 7,499 4,303,000 53,209 4,356,209
Net income for the year -- 119,047 29,855 148,902
Distribution to limited partners (Note 6) -- (257,891) -- (257,891)
Distribution to general partners -- -- (28,654) (28,654)
- --------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1998 7,499 $ 4,164,156 $ 54,410 $ 4,218,566
========================================================================================================
</TABLE>
See accompanying summary of accounting policies and
notes to consolidated financial statements.
16
<PAGE> 18
ASSOCIATED PLANNERS REALTY FUND AND CONSOLIDATED ENTITIES
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Years ended December 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 148,902 $ 202,403 $ 177,055
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 166,283 165,001 130,305
Minority interest in net (loss) income 6,841 7,032 (15,985)
Increase (decrease) from changes in operating assets and
liabilities:
Other assets (2,682) (8,726) 33,003
Accounts payable - trade (5,238) 11,163 2,621
Accounts payable - related party 1,050 6,481 (19,774)
Security deposits and prepaid rent (2,234) 830 (13,424)
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 312,922 384,184 293,801
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Rental real estate improvements (7,850) (20,980) (195,740)
- ------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (7,850) (20,980) (195,740)
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from refinancing construction loan -- -- 271,832
Distributions to limited partners (257,891) (214,471) (236,894)
Distributions to general partners (28,654) (23,831) (26,321)
Distributions to minority interest (17,800) (15,709) (3,565)
Payments on notes payable (30,619) (27,965) --
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (334,964) (281,976) 5,052
- ------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (29,892) 81,228 103,113
CASH AND CASH EQUIVALENTS, beginning of year 287,641 206,413 103,300
- ------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of year $ 257,749 $ 287,641 $ 206,413
==================================================================================================================
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
Construction loan extinguishment -- -- 1,225,950
Notes payable origination $ -- $ -- $ 1,497,782
Cash paid for interest $ 138,438 $ 135,151 $ 100,420
==================================================================================================================
</TABLE>
See accompanying summary of accounting policies and
notes to consolidated financial statements.
17
<PAGE> 19
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 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 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.
RENTAL INCOME
Rental revenue is recognized on a straight-line basis to the extent that rental
revenue is deemed collectible and collection is probable.
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 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.
18
<PAGE> 20
ASSOCIATED PLANNERS REALTY FUND AND CONSOLIDATED ENTITIES
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
NET INCOME PER LIMITED PARTNERSHIP UNIT
Net income 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.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standard No. 133 (SFAS 133), "Accounting for
Derivative Instruments and Hedging Activities," issued by the Financial
Accounting Standards Board is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The
Partnership does not expect adoption to have any effect on its financial
position, results of operations and cash flows.
19
<PAGE> 21
ASSOCIATED PLANNERS REALTY FUND AND CONSOLIDATED ENTITIES
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 (loss) allocations varying from
1% to 15% and 1% depreciation and amortization in accordance with the
partnership agreement.
NOTE 2--RENTAL REAL ESTATE
The Partnership currently has interests in the following four rental real estate
properties of which two are wholly-owned and two are jointly owned by the
Partnership (81.2%) and an affiliate (18.8%):
<TABLE>
<CAPTION>
Location (Property Name) Date Purchased Cost
-------------------------------------------------------------------------------
<S> <C> <C>
Encinitas, California (179 Calle December 31, 1986 $ 705,918
Magdelena)
Encinitas, California (187 Calle December 31, 1986 861,410
Magdelena)
Clovis, California January 23, 1987 2,854,221
Simi Valley, California November 12, 1987 2,616,523
</TABLE>
The major categories of property are:
<TABLE>
<CAPTION>
December 31, 1998 1997
-------------------------------------------------------------
<S> <C> <C>
Land $2,361,894 $2,361,894
Buildings and improvements 4,629,518 4,621,668
Furniture and fixtures 46,660 46,660
-------------------------------------------------------------
7,038,072 7,030,222
Less accumulated depreciation 1,431,410 1,265,127
-------------------------------------------------------------
Rental real estate, net $5,606,662 $5,765,095
=============================================================
</TABLE>
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:
Three tenants accounted for 20%, 14%, and 11% in 1998;
Four tenants accounted for 41%, 22%, 18% and 13% in 1997;
Two tenants accounted for 34% and 18% in 1996.
20
<PAGE> 22
ASSOCIATED PLANNERS REALTY FUND AND CONSOLIDATED ENTITIES
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3--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
Shaw Villa Shopping Center. 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 $1,439,198 and $1,469,817 at December 31, 1998 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, 1998 are as follows:
<TABLE>
<CAPTION>
Years ending December 31, Amount
------------------------------------------------------------------------------
<S> <C>
1999 $ 33,524
2000 36,705
2001 40,187
2002 44,002
2003 48,177
Thereafter 1,236,603
------------------------------------------------------------------------------
Total $ 1,439,198
==============================================================================
</TABLE>
NOTE 4--FUTURE MINIMUM RENTAL INCOME
As of December 31, 1998, future minimum rental income under existing leases,
excluding month to month rental agreements, that have remaining noncancelable
terms in excess of one year are as follows:
<TABLE>
<CAPTION>
Years ending December 31, Amount
-------------------------------------------------------------------------------
<S> <C>
1999 $ 293,469
2000 250,151
2001 212,197
2002 171,397
2003 171,581
Thereafter 1,011,542
-------------------------------------------------------------------------------
Total $ 2,110,337
===============================================================================
</TABLE>
Future minimum rental income does not include lease renewals or new leases that
may result after a noncancelable-lease expires.
21
<PAGE> 23
ASSOCIATED PLANNERS REALTY FUND AND CONSOLIDATED ENTITIES
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5--RELATED PARTY TRANSACTIONS
(a) In accordance with the partnership agreement, compensation earned by or
services reimbursed to the General Partner consisted of the following:
<TABLE>
<CAPTION>
Year ended December 31, 1998 1997 1996
------------------------------------------------------------------
<S> <C> <C> <C>
Partnership management fees $28,654 $23,831 $26,321
Administrative services:
Data processing 4,800 4,740 4,802
Postage 2,500 2,520 2,625
Investor processing 1,875 1,850 1,869
Investor Communications 1,475 1,575 1,333
Duplication 900 915 923
Miscellaneous 450 400 448
------------------------------------------------------------------
$40,654 $35,831 $38,321
==================================================================
</TABLE>
(b) Property management fees to West Coast Realty Management, Inc. ("WCRM"), an
affiliate of the General Partner, were $36,671, $39,593 and $35,501 for 1998,
1997 and 1996.
(c) Distributions of $17,800, $15,709 and $3,565 for 1998, 1997 and 1996 were
made to an affiliate in connection with the minority interest. The minority
interest in net (loss) income was $6,841, $7,032 and $(15,985) for 1998, 1997
and 1996.
(d) Related party accounts payable are as follows:
<TABLE>
<CAPTION>
December 31, 1998 1997
------------------------------------------------------------
<S> <C> <C>
West Coast Realty Advisors, Inc. $ 3,000 $ 3,000
West Coast Realty Management, Inc. 11,425 10,375
------------------------------------------------------------
$14,425 $13,375
============================================================
</TABLE>
NOTE 6--NET INCOME AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP LIST
The Limited Partner cash distributions, computed in accordance with the
Partnership Agreement, were as follows:
<TABLE>
<CAPTION>
Outstanding Amount
Record Date Distribution Units Per Unit Total
-----------------------------------------------------------------------------
<S> <C> <C> <C>
June 30, 1998 7,499 14.00 $104,986
December 31, 1997 7,499 20.39 152,905
--------
Total $257,891
========
June 30, 1997 7,499 $ 10.20 $ 76,489
March 31, 1997 7,499 9.20 68,991
December 31, 1996 7,499 9.20 68,991
--------
Total $214,471
========
</TABLE>
22
<PAGE> 24
ASSOCIATED PLANNERS REALTY FUND AND CONSOLIDATED ENTITIES
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6--NET INCOME AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP LIST
(CONTINUED)
<TABLE>
<CAPTION>
Outstanding Amount
Record Date Distribution Units Per Unit Total
-----------------------------------------------------------------------------
<S> <C> <C> <C>
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
========
</TABLE>
In the second half of 1997, the Partnership began paying distributions on a
semi-annual basis. This change 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 7--REALLOCATION OF PARTNER BALANCES
Per the provisions of Section 11.1(V)(ii) of the Partnership Agreement, the
General Partner determined that action was necessary to "cure 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.
NOTE 8--LIQUIDATION OF PARTNERSHIP
At December 31, 1998, all of the Partnership's remaining properties are being
held for sale. Two of the properties was sold during January 1999 (see Note 9).
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.
NOTE 9--SUBSEQUENT EVENT
(a) The 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.
(b) On February 12, 1999, the Partnership distributed $153,730 to the unit
holders of record as of December 31, 1998. This represented the property
operating results for the six months ending December 31, 1998.
23
<PAGE> 25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
24
<PAGE> 26
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. ("WCRA") 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. Mr. Gainsborough 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"). 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 leasebacks, 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. From 1980 to 1985, in partnership with the Muller Company, he
developed eleven acres in San Bernardino which included 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 a 134-unit condominium development in
San Bernardino, California, a shopping center, and a restaurant in Ventura. He
is a graduate of the University of Southern California.
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.
25
<PAGE> 27
JOHN R. LINDSEY, (Born 1946) serves as Senior Vice President/Treasurer.
He is responsible for all facets of financial management of the Associated
Financial Group. Previously, Mr. Lindsey was a consultant specializing in
financial services, worked for a large financial institution and performed
audits and consulting assignments for Price Waterhouse. He is a Certified Public
Accountant and a member of the California Society of CPAs and the American
Institute of CPAs. He received a BS in Business Administration and Accounting
from the University of Southern California in 1968.
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.
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
from operations. For the year ended December 31, 1998, the amount paid the
General Partner was $28,654. 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, 1998, 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, 1998, WCRM
earned property management fees of $36,671 from the Partnership. On December 31,
1998, the Partnership was indebted to WCRM for $11,425, 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, 1998 this resulted in a $31,518 allocation of net income before
depreciation and a $1,663 allocation of depreciation or a net income allocation
of $29,855.
4. In connection with the joint venture in the Santa Fe Business Park
properties, the Partnership made distributions totaling $17,800 to Prado Land
Company, an affiliate of the General Partner's President, during the year ended
December 31, 1998. For the year ended December 31, 1998, Prado Land Company was
allocated $6,841 of net income for its minority interest in the joint venture's
earnings.
26
<PAGE> 28
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
Income Fund, a California Limited Partnership, are included in
PART II, ITEM 8:
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Certified Public Accountants ...................13
Consolidated Balance Sheets - December 31, 1998 and 1997 .............14
Consolidated Statements of Income for the years ended
December 31, 1998, 1997 and 1996 ................................15
Consolidated Statements of Partners' Equity for the years ended
December 31, 1998, 1997 and 1996.................................16
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996 ................................17
Summary of Accounting Policies ....................................18-19
Notes to Consolidated Financial Statements ........................20-23
2. FINANCIAL STATEMENT SCHEDULES
Schedule III--Real Estate and Accumulated Depreciation ...............28
Schedule IV--Mortgage Loan on Real Estate.............................29
</TABLE>
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
27
<PAGE> 29
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
INFORMATION REQUIRED BY RULE 12-28 IS AS FOLLOWS
<TABLE>
<CAPTION>
Cost Gross Amount at which
Initial Cost Capitalized Carried at Close of Period
---------------------------- Subsequent to ----------------------------
Building and Acquisition Building and
Description Emcumbrances Land Improvements Improvements Land Improvements
- -------------------------------------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Santa Fe
Business Park
Encinitas, CA $ -- $ 726,827 $ 798,427 $ 34,224 $ 729,928 $ 837,400
Shaw Villa
Shopping Center
Clovis, CA 1,439,198 657,924 551,066 1,645,231 878,646 1,975,575
Pacific Bell
Office Building
Simi Valley, CA -- 753,320 1,863,203 -- 753,320 1,863,203
- -----------------------------------------------------------------------------------------------------------
Total $1,439,198 $2,138,071 $3,212,696 $1,679,455 $2,361,894 $4,676,178
===========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Life (Years)
on which
Depreciation
is Computed
Year --------------
Total Accumulated Construction Date Building and
Description Cost Depreciation Completed Acquired Improvements
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Santa Fe
Business Park
Encinitas, CA $1,567,328 $ 473,538 1982 12-86 5-19
Shaw Villa
Shopping Center
Clovis, CA 2,854,221 341,417 1978 1-87 31.5-40
Pacific Bell
Office Building
Simi Valley, CA 2,616,523 616,455 1986 11-87 31.5-40
- ----------------------------------------------------------------------------------------------
Total $7,038,072 $1,431,410
===============================================
</TABLE>
<TABLE>
<S> <C>
A reconciliation of accumulated depreciation for the A reconciliation of cost for the years ending
years ending December 31, 1996, 1997 and 1998 follows: December 31, 1996, 1997 and 1998 follows:
Balance at January 1, 1996 $ 969,820 Balance at January 1, 1996 $6,813,502
1996 Depreciation 130,306 1996 Additions 195,740
---------- ----------
Balance at December 31, 1996 1,100,126 Balance at December 31, 1996 7,009,242
1997 Depreciation 165,001 1997 Additions 20,980
---------- ----------
Balance at December 31, 1997 1,265,127 Balance at December 31, 1997 7,030,222
1998 Depreciation 166,283 1998 Additions 7,850
---------- ----------
Balance at December 31, 1998 $1,431,410 Balance at December 31, 1998 $7,038,072
========== ==========
</TABLE>
28
<PAGE> 30
SCHEDULE IV - MORTGAGE LOAN ON REAL ESTATE DECEMBER 31, 1998
INFORMATION REQUIRED BY RULE 12-29 IS AS FOLLOWS
<TABLE>
<CAPTION>
Final Period 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
Payments:
Shaw Villa Amortized over
Shopping Center - 9.1% 11/1/2006 20 years; None $1,500,000 $1,439,198 None
Clovis, CA Balloon
Payment @ Maturity
- ------------------------------------------------------------------------------------------------------------
</TABLE>
A reconciliation of mortgage loan payable for the years ended December 31, 1996,
1997 and 1998 as follows:
<TABLE>
<S> <C>
Balance at January 1, 1996 $ 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
1998 Paydowns (30,619)
-----------
Balance at December 31, 1998 $ 1,439,198
===========
</TABLE>
29
<PAGE> 31
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)
/s/ W. THOMAS MAUDLIN Jr.
---------------------------------------
W. THOMAS MAUDLIN JR.
(A General Partner)
By: WEST COAST REALTY ADVISORS, INC.
(A General Partner)
/s/ JOHN R. LINDSEY
----------------------------------------
JOHN R. LINDSEY
(Vice President/Treasurer)
Date: March 30, 1999
30
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 257,749
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 300,243
<PP&E> 7,038,072
<DEPRECIATION> (1,431,410)
<TOTAL-ASSETS> 5,906,905
<CURRENT-LIABILITIES> 249,141
<BONDS> 1,439,198
0
0
<COMMON> 0
<OTHER-SE> 4,218,566
<TOTAL-LIABILITY-AND-EQUITY> 5,906,905
<SALES> 718,011
<TOTAL-REVENUES> 728,167
<CGS> 429,913
<TOTAL-COSTS> 429,913
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 149,352
<INCOME-PRETAX> 148,902
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 148,902
<EPS-PRIMARY> 15.88
<EPS-DILUTED> 15.88
</TABLE>
