<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended SEPTEMBER 30, 1996
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 33-8230
PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
FLORIDA 59-2703685
(State or other jurisdiction of (IRS Employer Identification #)
incorporation or organization)
3001 EXECUTIVE DRIVE, SUITE 260, CLEARWATER, FL 34622
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (813) 573-1201
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:
NONE
(Title of class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports),and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
There is no market for the registrant's securities and,
therefore, aggregate market value of the holdings of
non-affiliates cannot be determined.
Number of Units
Title of Each Class At September 30, 1996
UNITS OF LIMITED PARTNERSHIP 22,309
INTEREST: $250.00 PER UNIT
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PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
INDEX
Page Number
PART I FINANCIAL INFORMATION
Item 1. The Partnership's Financial Statements
Balance Sheets as of September 30, 1996 and 3
December 31, 1995
Statements of Income for the nine months 4
ended September 30, 1996 and 1995
Statements of Income for the three months 5
ended September 30, 1996 and 1995
Statements of Changes in Partners' 6
Capital for the period December 31, 1994
to September 30, 1996
Statements of Cash Flows for the nine 7-8
months ended September 30, 1996 and 1995
Notes to Financial Statements 9-11
Item 2. Management's Discussion and Analysis of 12-13
Financial Condition and Results of Operations
PART II OTHER INFORMATION 13
Signatures 14
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PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
BALANCE SHEETS
September 30, December 31,
1996 1995
(unaudited)
Assets
Investments in real estate:
Land $ 680,000 $ 680,000
Buildings and furnishings,
net of accumulated depreciation
of $1,516,930 and $1,382,155 4,257,206 4,355,153
4,937,206 5,035,153
Cash and cash equivalents 163,257 251,812
Investment securities (held-
to-maturity) 166,615 199,386
Insurance receivable 125,000 125,000
Other assets 145,019 44,308
$5,537,097 $5,655,659
Liabilities and Partners' Capital
Liabilities:
Accounts payable and
accrued expenses $ 128,290 $ 88,879
Accrued litigation reserve 125,000 125,000
Tenant security deposits 35,544 35,670
Mortgages on real estate 1,191,769 1,277,164
Total liabilities 1,480,603 1,526,713
Partners' Capital:
General partner 25,375 22,998
Limited partners 4,031,119 4,105,948
Total partners' capital 4,056,494 4,128,946
$5,537,097 $5,655,659
See Notes to Financial Statements.
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PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
STATEMENTS OF INCOME
Nine Months Ended September 30,
1996 1995
(unaudited) (unaudited)
Revenues:
Rental income $789,598 $806,623
Interest 13,233 14,149
802,831 820,772
Expenses:
Operating 450,868 437,600
General and administrative 29,371 26,681
Depreciation 134,775 125,172
Interest 82,893 95,568
697,907 685,021
Income before extraordinary
item 104,924 135,751
Extraordinary item - loss from
early extinguishment of debt (27,376) -
Net income $ 77,548 $135,751
Net income allocable to:
General partner $ 3,877 $ 6,788
Limited partners $ 73,671 $128,963
Earnings (loss) per limited partnership
unit (based on an average
22,309 limited partnership
units each period):
Income before
extraordinary item $ 4.47 $ 5.78
Extraordinary item $ (1.17) $ -
Net income $ 3.30 $ 5.78
See Notes to Financial Statements.
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PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
STATEMENTS OF INCOME
Three Months Ended September 30,
1996 1995
(unaudited) (unaudited)
Revenues:
Rental income $257,236 $266,952
Interest 2,496 6,789
259,732 273,741
Expenses:
Operating 167,053 150,117
General and administrative 7,864 7,652
Depreciation 44,925 40,650
Interest expense 21,724 31,437
241,724 229,856
Net income $ 18,008 $ 43,885
Net income allocable to:
General partner $ 900 $ 2,194
Limited partners $ 17,108 $ 41,691
Earnings per limited partnership
unit (based on an average
22,309 limited partnership
units each period):
Net income $ .77 $ 1.87
See Notes to Financial Statements.
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PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIOD FROM DECEMBER 31, 1994 TO September 30, 1996
Limited General
Partners Partner Combined
Balance at December 31, 1994 $4,157,355 $ 17,283 $4,174,638
Distributions ($8.88 per avg
limited partnership unit) ( 198,001) ( 2,000) ( 200,001)
Net income 146,594 7,715 154,309
Balance at December 31, 1995 $4,105,948 $ 22,998 $4,128,946
Distributions ($6.66 per avg
limited partnership unit) ( 148,500) ( 1,500) ( 150,000)
Net income 73,671 3,877 77,548
Balance at September 30, 1996 $4,031,119 $ 25,375 $4,056,494
See Notes to Financial Statements.
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PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
Nine Months Ended September 30,
1996 1995
(unaudited) (unaudited)
Operating activities:
Net income $ 77,548 $ 135,751
Adjustments to reconcile net
income to net cash provided
by operating activities:
Extraordinary item 27,376 -
Depreciation 134,775 125,172
Changes in assets and
liabilities:
Insurance receivable - 250,000
Other assets (45,276) (17,237)
Accounts payable and
accrued expenses 39,411 67,054
Tenant security deposits (126) 9,485
Accrued litigation reserve - (250,000)
Total adjustments 156,160 184,474
Net cash provided by
operating activities 233,708 320,225
Investing activities:
Capital additions (36,828) (35,103)
Purchase of debt securities (166,615) (198,465)
Maturity of debt securities 199,386 -
Net cash used in
investing activities (4,057) (233,568)
(continued on next page)
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PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS -- continued
Nine Months Ended September 30,
1996 1995
(unaudited) (unaudited)
Financing activities:
Proceeds from mortgage
refinancing, net of loan fees 1,144,565 -
Premiums on early
extinguishment of debt (27,376) -
Principal payments on mortgages (1,285,395) (53,903)
Distributions to partners (150,000) (150,000)
Net cash used in financing
activities (318,206) (203,903)
Net decrease in cash
and cash equivalents (88,555) (117,246)
Cash and cash equivalents:
Beginning of period 251,812 428,085
End of period $ 163,257 $ 310,839
Supplemental disclosures
of cash flow information:
Cash paid during the period for
interest $ 82,893 $ 95,984
See Notes to Financial Statements.
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PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 1 - Partnership Organization and Operations
Pioneer Western Properties Income Fund Limited Partnership (the
Partnership), a Florida limited partnership, was formed in
August, 1986. On December 30, 1986, the Securities and Exchange
Commission declared the Partnership's registration statement,
which contemplated the sale of $10 million in limited partner
interests, to be effective. In April, 1987 the Partnership
reached the minimum of 6,000 units sold and commenced its
operations. The offering period ended in October, 1988 with
22,309 units sold and proceeds of $5,567,250.
The purpose of the Partnership is to purchase and operate
existing income producing multi-family residential properties in
the Southeastern United States through the year ended
December 31, 2036, unless terminated earlier in accordance with
provisions of the partnership agreement. On March 19, 1991,
Enstar Financial Services, Inc. sold 100% of the outstanding
stock of Pioneer Western Properties Corporation (PWPC), the
Partnership's Corporate General Partner, to Edgemark Group, Inc.
The Corporate General Partner retained its existing management
and is headquartered in the Clearwater, Florida area.
Note 2 - Basis of Presentation
The accompanying financial statements are unaudited and have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to the Quarterly Report on Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
These financial statements should be read in conjunction with
the financial statements and notes thereto included in the
Partnership's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995. These financial statements reflect,
in the opinion of management, all adjustments necessary
for a fair presentation of the interim financial statements.
All such adjustments are of a normal and recurring nature.
The process of preparing financial statements in conformity with
generally accepted accounting principles requires the use of
estimates and assumptions regarding certain types of assets,
liabilities, revenues, and expenses. Such estimates primarily
relate to unsettled transactions and events as of the date of the
financial statements. Accordingly, upon settlement, actual
results may differ from estimated amounts.
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PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Allocations and Distributions
Profits and losses of the Partnership, other than those
attributable to capital items or the disposition of substantially
all of the Partnership's property, are allocated 95% to the
limited partners and 5% to the general partner. Profits and
losses of the partnership attributable to capital items or the
disposition of substantially all of the Partnership's property
are to be distributed as follows: (1) to previously allocated
tax loss from sale; (2) to limited partners in an amount equal to
the excess of cash available for distribution received by them
over the taxable income from operations allocated to them; (3) to
the limited partners in an amount equal to the excess of the 8%
cumulative priority return to which they are entitled over the
cash available for distribution received by them; (4) to the
general partner in an amount equal to the excess of the cash
available for distribution received by them over the taxable
income from operations allocated to them; (5) 80% to the limited
partners and 20% to the general partner.
Cash available for distribution will be paid 99% to the limited
partners and 1% to the general partner until the limited partners
have received their 8% annual priority return, and 95% to the
limited partners and 5% to the general partner, thereafter.
Investments in Real Estate
Apartment buildings and furnishings are stated at cost less
accumulated depreciation. The buildings and improvements are
depreciated on a straight line method over 40 years; furnishings
are depreciated on straight line and declining balance methods
over 10 years; and property improvements are depreciated on a
straight line method over 20 years.
Cash Equivalents
The Partnership considers all short-term highly liquid
instruments with an original maturity of three months or less
when purchased to be cash equivalents.
Income Taxes
No provision has been made for income taxes since the tax effect
of the Partnership's activities accrues to the partners.
<PAGE>
PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
Note 3 - Debt
In April 1996, the Partnership completed a refinancing of the
mortgage debt on Creek Ridge Apartments which had a substantial
principle payment maturing on November 1, 1997. The net proceeds
were as follows (in thousands):
Amount of new debt $1,200
Payoff "old" mortgage
including premiums
and accrued interest (761)
Loan fees and escrow (79)
$ 360
The net proceeds of approximately $360,000 plus other
available funds were used to payoff the mortgage debt
on Foxwood Apartments. The amount of the mortgage debt on
Foxwood Apartments that was extinguished early was
approximately $497,000 plus approximately $19,000 in
premiums and $3,000 of accrued interest. The new
mortgage debt on Creek Ridge Apartments is payable in
monthly installments of principal and interest (8%)
through May 1, 2016 (20 years); is collateralized by real
property; and is subject to prepayment penalties.
Note 4 - Commitments and Contingencies
In November 1994, the Partnership received an unfavorable
ruling related to litigation surrounding a fire at Creek
Ridge Apartments. As of September 30, 1996, the remaining
settlement amount totaled $50,000 and has been accrued. The
Partnership has also accrued an additional $75,000 for separate
pending litigation of the same nature. These amounts will be
covered by the Partnership's insurance and, accordingly, an
insurance receivable for these amounts has been recorded
at September 30, 1996.
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PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Analysis of Financial Condition
The Partnership's business is to make investments in existing
income producing multi-family residential properties in the
southeastern United States. The Partnership's objectives are to
preserve and protect the Partnership's invested capital, to
provide partially tax-deferred distributions of cash from
operations on a quarterly basis and to achieve capital
appreciation.
As of September 30, 1996, 89% of the Partnership's total assets
were invested in the Partnership's real estate portfolio which
consisted of Creek Ridge Apartments and Pleasant Terrace
Apartments located in Knoxville, Tennessee, and Foxwood Apartments
located in Augusta, Georgia.
Results of Operations
The Partnership produced gross rental income of $257,236
during the three months ended September 30, 1996 compared to
gross rental income of $266,952 during the same period of 1995.
Related operating and general and administrative expenses were
$174,917 and $157,769 for the three months ended September 30, 1996
and 1995, respectively. Net rental income decreased approximately
25% to $82,319 for the three months ended September 30, 1996 from
$109,183 for the same period in 1995 as a result of decreased
occupancy and increased repairs and maintenance costs.
Depreciation and amortization increased to $44,925 for the three
months ended September 30, 1996 from $40,650 for the same period
in 1995. Interest expense decreased to $21,882 for the three
months ended September 30, 1996 from $31,437 for the same period
in 1995 as a result of the refinancing in April 1996.
The Partnership's properties maintained stable occupancy
during the first six months ended June 30, 1996 at a rate of 89%,
but occupancy decreased slightly for the three months ended
September 30, 1996.
<PAGE>
PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- CONTINUED
Income before extraordinary item and cash flows provided
by operations for the nine months ended September 30, 1996
were $104,924 and $233,708, respectively, compared with a net
income of $135,751 and operating cash flow of $320,225 during
the same period in 1995.
Results for the nine months ended September 30, 1996 included
an extraordinary loss in the amount of $27,376 related to a
mortgage debt refinancing and early extinguishment of other
existing mortgage debt.
Liquidity and Capital Resources
The refinancing completed in April 1996 provided the Partnership
with approximately 72% of the funds necessary to early extinguish
other existing mortgage debt. The combined monthly installments
of the old mortgages were $16,654, as compared to monthly
installments of $10,037 under the new mortgage debt.
Excess Partnership capital funds were invested at money market
and United States Treasury Bill rates and are considered adequate
by management to fund the Partnership's activities including
capital improvements scheduled for the Partnership's properties.
PART II OTHER INFORMATION
No other information need be reported.
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PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
SIGNATURES
Pursuant to the requirements of Section 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.
Pioneer Western Properties Income Fund
Limited Partnership,
a Florida limited partnership (Registrant)
By: Pioneer Western Properties Corporation
("PWPC"), its Corporate General Partner
November 14,1996 By: Rand E. McNeal
Rand E. McNeal, President and CEO
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
November 14, 1996 By: Craig D. Caldwell
Craig D. Caldwell, Director of PWPC
November 14, 1996 By: Rand E. McNeal
Rand E. McNeal, Principal Executive
Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 163,257
<SECURITIES> 166,615
<RECEIVABLES> 125,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,454,136
<DEPRECIATION> 1,516,930
<TOTAL-ASSETS> 5,537,097
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,537,097
<SALES> 0
<TOTAL-REVENUES> 789,598
<CGS> 0
<TOTAL-COSTS> 615,014
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 82,893
<INCOME-PRETAX> 104,924
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 27,376
<CHANGES> 0
<NET-INCOME> 77,548
<EPS-PRIMARY> 3.30
<EPS-DILUTED> 3.30
</TABLE>
