<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1998
Commission File Number 33-06419-A
CONDEV LAND GROWTH FUND '86, LTD.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-2766359
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(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
2479 Aloma Avenue
Winter Park, Florida 32792
(Address of principal executive offices)
Registrant's telephone number, including area code: (407) 679-1748
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 report), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO .
------ ------
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CONDEV LAND GROWTH FUND '86, LTD.
INDEX
PART I. FINANCIAL INFORMATION:
Statement of Assets, Liabilities and
Partner's Capital - March 31, 1998
and December 31, 1997 1
Statement of Income & Expense -
Three Months Ended March 31, 1998
and March 31, 1997 2
Statement of Cash Flows -
Three months ended March 31, 1998
and March 31, 1997 3
Notes to Financial Statements 4 - 6
Management's Discussion and Analysis
of Financial Condition and Results of Operations 6 - 7
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings 8
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 9
First Quarter 1998 report to Limited Partners 10
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PART I. FINANCIAL INFORMATION
CONDEV LAND GROWTH FUND '86, LTD.
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
MARCH 31, 1998 AND DECEMBER 31, 1997
ASSETS
--------------
March 31, 1998 December 31, 1997
-------------- -----------------
(Unaudited) *
Cash & Cash Equivalents $ 12,264 $ 19,062
Accounts Receivable 1,682 1,682
Land, at Cost (Note 2) 1,449,438 1,450,453
Investment in Joint
Venture (Note 3) 1,530,093 1,533,035
Organization Costs, Net 20,794 20,794
---------- ----------
Total Assets $3,014,271 $3,025,026
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Deposits on land $ 7,100 $ 2,100
Accounts Payable - 1,242
---------- ----------
Total Liabilities 7,100 3,342
Partners' Capital -
General Partner 3,360 3,505
Limited Partners 3,003,811 3,018,179
---------- ----------
Total Partners' Capital $3,007,171 $3,021,684
---------- ----------
Total Liabilities and
Partners' Capital $3,014,271 $3,025,026
========== ==========
* Condensed from audited financial statements
The accompanying notes are an integral part of these financial statements
1
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CONDEV LAND GROWTH FUND '86, LTD.
STATEMENT OF INCOME AND EXPENSE
THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
(UNAUDITED)
March 31, 1998 March 31, 1997
-------------- --------------
INCOME
- ------
Interest and Other Income $ 43 $ 895
---------- ---------
Total Income $ 43 $ 895
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OPERATING EXPENSES
- ------------------
Professional Services 9,200 9,554
Equity in loss of joint venture 1,475 1,561
Management Fees 2,124 0
Other Expense 1,279 91
Office Expense 478 2,440
---------- ----------
Total Operating Expense $ 14,556 $ 13,646
---------- ----------
Net Income/(Loss) $ (14,513) $ (12,751)
========== ==========
The accompanying notes are an integral part of these financial statements
2
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CONDEV LAND GROWTH FUND '86, LTD.
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
<TABLE>
<CAPTION>
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net Income (Loss) $ (14,513) $ (12,751)
Adjustments to reconcile net loss
to net cash used for operating activities:
Equity in loss of Joint Venture, net 1,475 1,561
Gain on land sale 0 0
Cash used for changes:
Deposits on land 5,000 -
Accounts payable (1,242) -
Accounts Receivable (-) (63)
Net cash used in operating activities: (9,280) (11,253)
Cash flows from investing activities:
Land development costs 1,015 (13,856)
Investment in Joint Venture 1,467 (22,715)
Proceeds from land sale 0 0
---------- ----------
Net cash from investing activities: 2,482 (36,571)
----------
Cash flows from financing activities:
Distributions to partners (0) (0)
Net cash used in financing activities: (0) (0)
Net increase (decrease) in cash (6,798) (47,824)
Cash and cash equivalents at beginning of year 19,062 144,871
---------- ----------
Cash and cash equivalents at end of period $ 12,264 $ 97,047
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements
3
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CONDEV LAND GROWTH FUND '86, LTD.
NOTES TO FINANCIAL STATEMENTS
Note 1 BASIS OF PRESENTATION
---------------------
The accompanying financial statements, in the opinion of Condev
Associates, the general partner of Condev Land Growth Fund '86,
Ltd., reflect all adjustments (which include only normal
recurring adjustments) necessary to a fair statement of the
financial position, the results of operations and the changes in
cash position for the periods presented. For a full description
of accounting policies, see notes to financial statements in the
1996 annual report on Form 10-K.
Note 2 INVESTMENT IN LAND:
-------------------
At March 31, 1998, land consisted of the following:
2.83 acre parcel (zoned commercial) in
southeast Orange County, Florida $ 330,011(a)
7.00 acre parcel (zoned commercial) in
Brevard County, Florida 420,503(b)
5.39 acre parcel (zoned commercial) in
Orange County, Florida 698,924(c)
-----------
$ 1,449,438
===========
(a) On June 27, 1997, the Partnership executed an Option contract
providing for Amoco Oil Company to acquire this parcel. The
Option has been extended to May 4, 1998 upon receipt of an
additional non-refundable deposit of $5,000.
(b) In October, 1997 the Partnership entered into an Agreement
with a nationally recognized fast food restaurant franchisee for
the sale of approximately 1 acre of this parcel. All required
permits have been applied for, and closing is expected to occur
on May 14, 1998. In addition, on February 13, 1998 the
Partnership contracted with developer of retail centers for the
sale of the balance of this parcel. The contract calls for a 180-
day inspection period, followed by a 120-day period in which to
obtain all required development permits. Subject to extension to
allow additional time to obtain permits, closing is scheduled for
December, 1998.
(c) During the third quarter of 1997, the Partnership entered
into two contracts for the remaining 5.39 acres at this location.
Closing on both transactions is scheduled for May, 1998.
4
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Note 3 INVESTMENT IN JOINT VENTURE:
----------------------------
The Partnership owns a 59% interest in West 50 Joint Venture (A
Florida Joint Venture) whose purpose is to acquire and hold a
133-acre parcel of land in Lake County, Florida for investment
purposes. The remaining 41% interest is owned by Condev West 50,
Ltd., an affiliate of the general partner. The operations of
West 50 Joint Venture consist primarily of professional services
and real estate taxes. The Partnership's investment is carried at
its equity in the net underlying assets. A summary of the
assets, liabilities, and venturers' capital of West 50 Joint
Venture as of March 31, 1998 is as follows:
<TABLE>
<CAPTION>
Assets
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<S> <C>
Cash $ 9,137
Investment in land 2,664,594
----------
$2,673,731
==========
Liabilities and Venturers' Capital
----------------------------------
Liabilities
-----------
Mortgage note payable $ 80,865
Other liabilities 1,000
----------
Total liabilities 81,865
Venturers' capital
------------------
Venturers' capital 2,594,366
Current profit (loss) (2,500)
----------
Total Venturers' capital 2,591,866
Total liabilities and venturers' capital $2,673,731
==========
</TABLE>
Note 4 DISTRIBUTIONS TO PARTNERS:
--------------------------
Pursuant to the partnership agreement, cash flow generated each
year by the Partnership is to be distributed 99% to the limited
partners and 1% to the general partner. There were no cash flow
distributions during the first three months of 1998.
Pursuant to the partnership agreement, proceeds realized from the
sale of properties, after the establishment of reserves for
future operating costs, are to be distributed at least annually.
During the first three months of 1998
5
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there were no distributions to limited partners as there were no
sales of land.
Note 5 RELATED PARTY TRANSACTIONS:
---------------------------
The Partnership Agreement provides for the reimbursement to the
general partner of administrative expenses incurred in the direct
operation of the partnership. For the three months ended March
31, 1998, $2,124 was reimbursed to the general partner for direct
expenses incurred.
When properties are sold, under certain circumstances an
affiliate of the general partner may be paid real estate
commissions in amounts customarily charged by others rendering
similar services with such commissions plus commissions paid to
nonaffiliates not to exceed 10% of the gross sales price. No
real estate commissions have been paid to the general partner or
any affiliate of the general partner during the first three
months of 1998.
The general partner is obligated to loan up to $100,000 to the
Partnership during its term to meet working capital requirements.
The General Partner has previously advanced $156,048.27 of
working capital to the Partnership, which advance was repaid in
December, 1993. Since the General Partner has met its obligation
to advance funds, it is not required to make further advances.
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
During the quarter ended March 31, 1998, the Partnership
continued to manage the portfolio properties with the objective
of selling the properties at fair market prices. As of March
31, 1998, the Partnership had five contracts for sale of three
properties.
Results of Operations
---------------------
Total revenues for the three months ended March 31, 1998 were $
43, compared with total revenues of $ 895 for the three months
ended March 31, 1997. Income is generated from short-term cash
investments, and income can be expected to fluctuate, depending
on the level of cash reserves in the Partnership and prevailing
interest rates. Operating expenses (excluding equity in the
losses of the Partnership's joint venture) for the three months
ended March 31, 1998 were $13,081, a slight increase from $12,085
for the three months ended March 31, 1997. However, management
fees were not accounted for during the 1997 quarter. Such fees
totaled $2,124 during the first quarter of 1998. In both periods,
operating expenses represent the normal costs of operating the
Partnership and managing the Partnership properties.
6
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West 50 Joint Venture, in which the Partnership holds a 59%
interest, had a loss of $2,500 for the three months ended March
31, 1998 compared with a loss of $2,646 for the three months
ended March 31, 1997. However, as discussed under Liquidity and
-------------
Capital Resources and West 50 Joint Venture below, the joint
----------------- ---------------------
venture has borrowed money under a secured line of credit with a
commercial bank to pay for engineering, planning and construction
expenses related to the extension of water and sewer facilities
to the property. Therefore, future results will be impacted by
interest charges incurred on outstanding debt. These additional
expenses are expected to be offset by higher sales prices for the
Joint Venture's land.
Liquidity and Capital Resources at March 31, 1998
-------------------------------------------------
Total assets decreased slightly from $3,025,026 at December 31,
1997 to $3,014,270 at March 31, 1998. This reflects the net
results of operations for the period. Assets can be expected to
decline in the future as properties are sold and distributions
are made to limited partners. The Partnership currently holds 5
contracts for sale of portfolio properties, four of which are
expected to close during the second quarter of 1998.
Liquidity remained at a very low level. Cash and equivalents
decreased from $19,062 at 1997 year-end to $12,264 at March 31,
1998. As provided in the Partnership Agreement, the general
partner intends to add to reserves from the net proceeds of
closings anticipated during the second quarter of 1998.
West 50 Joint Venture
---------------------
The area of Lake County, Florida in which the West 50 Joint
Venture's 132.7-acre parcel is located has experienced heightened
activity in recent months, with significant new residential
development beginning in the immediate area. The City of Clermont
has committed to extend sewer and water facilities to one such
development which is directly across from the property on the
south side of State Road 50. In order to insure that the Joint
Venture's property will have adequate sewer and water capacity
for future development of its property, the Joint Venture has
entered into an agreement with the City of Clermont to upgrade
the facilities being installed. The Joint Venture has paid
$38,623 to the City of Clermont as its share of the requested
upgrades. In addition, the Partnership has engaged an engineer to
design the extension of sewer and water utilities on to the site.
The Joint Venture has arranged a $500,000 secured line of credit
with a commercial bank to pay for the Joint Venture's cost of
these improvements. Borrowings under the line of credit will be
repaid from future land sales.
7
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PART II
Item 1. LEGAL PROCEEDINGS
-----------------
As of March 31, 1998, there were no legal proceedings in
process, nor to the knowledge of the general partner, threatened
against the Partnership
Item 6. EXHIBITS AND REPORTS ON FORM 8-K:
---------------------------------
(A) Exhibits
First Quarter 1998 Report to Limited Partners
(B) Reports on Form 8-K
There were no reports of Form 8-K for the period ended March 31,
1998
8
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CONDEV LAND FUND II, LTD.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned.
CONDEV LAND GROWTH FUND `86, LTD.
BY: Condev Associates, General Partner
April 24, 1998 /s/ Robert N. Gardner
- ---------------------- ----------------------------------
DATE Robert N. Gardner, Partner
April 24, 1998 /s/ Joseph J. Gardner
- ---------------------- ----------------------------------
DATE Joseph J. Gardner, Partner
9
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April 14, 1998
Condev Land Growth Fund '86, Ltd.
First Quarter 1998
Dear Limited Partner:
The financial statement, on the reverse side hereof, shows a net loss for the
three months ended March 31, 1998 of $ . This represents the normal income
less costs of operating the partnership and managing the portfolio properties.
There were no sales of property during the first three months of 1998. As of
March 31, 1998, the net asset value per unit of limited partner interest was
$400.51. The following is a brief description of the status of each of the
partnership's four remaining properties:
Curry Ford Road/Chickasaw Trail. The Option contract providing for Amoco Oil
- -------------------------------
Company to acquire this parcel was extended to May 4, 1998 upon receipt of an
additional non-refundable deposit of $5,000. The sale is expected to close on
May 4 or Amoco will forfeit all deposits made to date.
Woodbury Road/East Colonial Drive. As previously reported, this property is
- ---------------------------------
currently under contract to two separate purchasers. Both projects are in the
final permitting stage, and closings are scheduled for May, 1998.
NASA Causeway, Titusville. The contract for the sale of approximately 1 acre of
- -------------------------
this site with a nationally known fast food restaurant continues to progress
towards closing. The current closing date is May 14, 1998, subject to the Buyer
obtaining final development permits by that time. In February 1998, the
Partnership entered into a contract for the sale of the remaining 6 acres at
this location with a shopping center developer who intends to build a retail
center on the site. The contract calls for a 180-day inspection period, followed
by a 120-day period in which to obtain all required development permits. Subject
to extension to allow additional time to obtain permits, closing is currently
scheduled for December 1998.
West Hwy 50, Lake County. During the quarter, the Partnership concluded its
- ------------------------
negotiations with the City of Clermont to upgrade sewer and water facilities to
meet the future development needs of this site, and the improvements are
currently underway. This has generated considerable purchaser interest in the
site. We are still working with Lake County to agree on a development plan so we
can grade the site and sell smaller parcels to the growing number of potential
users for land in this location.
Sincerely yours,
CONDEV ASSOCIATES
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 12,264 97,047
<SECURITIES> 0 0
<RECEIVABLES> 1,682 63
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 1,449,438 1,415,092
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 3,014,271 3,055,069
<CURRENT-LIABILITIES> 7,100 0
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 3,007,171 3,055,069
<TOTAL-LIABILITY-AND-EQUITY> 3,014,271 3,055,069
<SALES> 0 0
<TOTAL-REVENUES> 43 895
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 14,556 13,646
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (14,513) (12,751)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (14,513) (12,751)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (14,513) (12,751)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
