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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended DECEMBER 31, 1997
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 33762
(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 December 31, 1997
UNITS OF LIMITED PARTNERSHIP 22,309
INTEREST: $250.00 PER UNIT
There are no documents incorporated by reference herein. Exhibit
Index is on page 12 of this report.
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PART I
ITEM 1. BUSINESS
General
Pioneer Western Properties Income Fund Limited Partnership (the
"Partnership") was formed pursuant to the Uniform Limited
Partnership Law of the State of Florida on August 14, 1986. The
Partnership currently owns three apartment complexes
("Properties") -- Creek Ridge Apartments in Knoxville, Tennessee;
Foxwood Apartments in Augusta, Georgia; and Pleasant Terrace
Apartments in Knoxville, Tennessee. The Partnership does not
intend to acquire any additional properties.
The Partnership's registration with the Securities and Exchange
Commission was declared effective on December 30, 1986 at which
date the Partnership offered up to 40,000 units of Limited
Partnership interests at $250 per unit, with a minimum purchase
price of 12 units ($3,000) or 8 units ($2,000) for an Individual
Retirement Account. The Partnership commenced operations on April
7, 1987 when the initial $1,586,250 was released from escrow and
130 investors were admitted as Limited Partners. The Partnership
continued to raise funds from investors through the public
offering of its units until October 7, 1988 when 22,309 units had
been sold with an aggregate purchase price of $5,567,250.
Investors were admitted as Limited Partners upon acceptance of
their subscriptions by the Corporate General Partner. Limited
Partners are not required to make any additional capital
contributions.
The Corporate General Partner is Pioneer Western Properties
Corporation ("PWPC"). The Individual General Partner was Joseph
A. Barringer until he assigned his interest in the Partnership to
PWPC effective January 13, 1989. The executive offices of the
Corporate General Partner and the Partnership are located at 3001
Executive Drive, Suite 260, Clearwater, Florida, 33762 and their
telephone number is (813) 573-1201. For further discussion
regarding the sale of the Corporate General Partner, see Item 13,
"Certain Relationships and Related Transactions," on page 11.
Current Operations
The overall average occupancy for the Partnership's three
Properties for 1997 was approximately 92% as compared to 89% for
1996. Market rents did not change in 1997 compared to year end
1996 rents. Property operating expenses increased during 1997
primarily due to refurbishing costs at all properties. Mortgage
interest in 1997 decreased due to the refinancing in April 1996.
Furnishings (principally carpets and appliances) were replaced on
a routine basis as necessary at all Properties throughout 1997.
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Competition and Markets
In operating the Properties, the Partnership has competition from
numerous other apartments in the respective areas. The Creek
Ridge Apartments and the Pleasant Terrace Apartments are located
1.1 miles from each other in the western area of Knoxville,
Tennessee, and compete with approximately 12 apartment complexes
in the surrounding marketplace. The Foxwood Apartments in the
soutwest area of Augusta, Georgia, competes with four apartment
complexes. Refer to Item 2 for occupancy information on the
Properties.
Changes in Tax Laws
The effect of operations of the Partnership on the limited
partners is significantly affected by the federal income tax
laws, particularly the provisions of the Internal Revenue Code of
1986, as amended. The Tax Reform Act of 1986 made significant
changes in federal taxation, including changes in individual tax
rates, depreciation, capital gains treatment, limitation on
passive losses and the elimination of investment tax credit.
The federal tax laws are constantly subject to change by Congress
and the interpretations of the Code may be modified or affected
by judicial decisions or by the Treasury Department in its
regulations and rules. Any such changes may have an impact on the
Partnership.
Management and Employees
The Partnership has no employees. Property (site) management
services during 1997 were provided by LEDIC Management Group,
Inc., an unaffiliated property management company located in
Memphis, Tennessee. On-site representatives were employed by
LEDIC and the Partnership reimbursed LEDIC for the direct payroll
cost of these employees. LEDIC employed approximately eight
individuals in connection with the operations of the Properties.
Prior to January 1, 1996, property (site) management services for
the Properties was provided by Edgemark Management Corporation
(EMC), an affiliate of PWPC.
The Corporate General Partner provides partnership management
services and EMC provides project management services.
Industry Segments and Foreign Operations
The Partnership is engaged in only one line of business in one
industry segment as described above. The Partnership does not
have any foreign operations.
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ITEM 2. PROPERTIES
As of December 31, 1997, the Partnership owned three apartment
complexes (referred to herein collectively as the "Properties"):
1.Creek Ridge Apartments, Knoxville, Tennessee, is a 95 unit
apartment complex that was acquired by the Partnership on March
31, 1987.
2.Foxwood Apartments, Augusta, Georgia, is a 104 unit
apartment complex that was acquired by the Partnership on October
1, 1987.
3.Pleasant Terrace Apartments, Knoxville, Tennessee, is a 64
unit apartment complex that was acquired by the Partnership on
May 1, 1988 from PWPC for approximately $1,187,000.
CREEK RIDGE APARTMENTS, KNOXVILLE, TENNESSEE
General
The Creek Ridge Apartment complex is situated on approximately
9.9 acres in Knox County, Tennessee, and was constructed in 1973.
The following is a description of the units (monthly rental rates
as of February 1997):
Advertised
Net Rentable Number Monthly
Unit Type Area (S.F.) of Units Rent
One Bed/One Bath 750 24 $350
Two Bed/One Bath 1,000 69 420
Three Bed/Two Bath 1,400 2 515
The Creek Ridge Apartment complex consists of five two-story
buildings. The development features a classical architectural
design with brick veneer construction. Additional architectural
features include wooden balconies for upper level units and
concrete patios for lower level units. Adequate parking spaces
are provided. The amenities at the complex include laundry
facilities, a swimming pool, and a tennis court. Each apartment
unit includes a range and oven, refrigerator, dishwasher,
disposal and wall-to-wall carpeting. Forty-eight percent of the
units contain central heating and air conditioning.
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CREEK RIDGE APARTMENTS, KNOXVILLE, TENNESSEE (continued)
Occupancy and Rental Rates for the Past Five Years
The average occupancy rates for Creek Ridge Apartments for each
of the past five years were as follows: 1997-92%; 1996-95%; 1995-
95%; 1994-96%; and 1993-96%.
The average monthly (market) rental amount per square foot for
each of the past five years was as follows: 1997-$.43; 1996-$.43;
1995-$.48; 1994-$.45; and 1993-$.43.
FOXWOOD APARTMENTS, AUGUSTA, GEORGIA
General
Foxwood Apartments is situated on approximately 8.55 acres in
Richmond County, Georgia, and was constructed in 1972.
The following is a description of the units (monthly rental rates
as of February 1997):
Advertised
Net Rental Number Monthly
Unit Type Area (S.F.) of Units Rent
One Bed/One Bath 884 24 $375
Two Bed/One Bath 984 80 425
The Foxwood Apartment complex consists of 13 two-story buildings
each containing eight garden-type units. The buildings are of
frame construction with brick exterior. The roofs are a flat
mansard design. Each unit has a sliding glass door which opens
onto a patio or balcony. The amenities at the complex include
laundry facilities, a swimming pool, and a lighted tennis court.
Each apartment unit includes a dishwasher, disposal, frost-free
refrigerator, range and oven, and wall-to-wall carpeting.
Adequate parking spaces are provided.
Occupancy and Rental Rates for the Past Five Years
The average occupancy rates for Foxwood Apartments for each of
the past five years were as follows: 1997-96%; 1996-85%; 1995-
89%; 1994-89%; and 1993-92%.
The average monthly (market) rental amount per square foot for
each of the past five years was as follows: 1997-$.43; 1996-$.43;
1995-$.42; 1994-$.42; and 1993-$.41.
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PLEASANT TERRACE APARTMENTS, KNOXVILLE, TENNESSEE
General
The Pleasant Terrace Apartment complex is situated on
approximately 5.62 acres in Knox County, Tennessee, and was
constructed in 1973.
The following is a description of the units (monthly rental rates
as of February 1997):
Advertised
Net Rental Number Monthly
Unit Type Area (S.F.) of Units Rent
One Bed/One Bath 650 24 $325
Two Bed/One Bath 850 32 375
Three Bed/One Bath 1,300 1 650
Duplexes 400-750 6 245
House 1,500 1 450
The Pleasant Terrace complex consists of six two-story buildings,
three duplexes, containing a total six rental units, and one free-
standing house. The development features include concrete patios
for lower level units. Adequate parking spaces are provided. The
amenities at the complex include a swimming pool, laundry
facilities and cable TV availability. Each apartment unit
includes a range and oven, refrigerator, disposal and wall-to-
wall carpeting.
Occupancy and Rental Rates for the Past Five Years
The average occupancy rates for Pleasant Terrace Apartments for
each of the past five years were as follows: 1997-88%; 1996-90%;
1995-96%; 1994-93%; and 1993-96%.
The average monthly (market) rental amount per square foot for
each of the past five years was as follows: 1997-$.45; 1996-$.45;
1995-$.49; 1994-$.47; and 1993-$.43.
ITEM 3. LEGAL PROCEEDINGS
In November 1994, the Partnership received an unfavorable ruling
from the Circuit Court for Knox County, Tennessee, Case No. 2-598-
90, in the class action brought by former and present tenants of
Creek Ridge Apartments against the Partnership, PWPC, Evans
Realty, Inc. (former property manager) and Joseph Dixon. The
action was filed on July 31, 1990 in Knox County, Tennessee. The
plaintiffs were seeking damages of $6 million for damages they
allege they suffered resulting from a fire which destroyed one of
the apartment buildings on August 11, 1989. The court awarded
$300,000 to the plaintiffs. As of December 31, 1996, the
remaining settlement amount totaled $50,000 and was fully
accrued. The Partnership also accrued an additional $120,000 for
separate pending litigation of the same nature.
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ITEM 3. LEGAL PROCEEDINGS (continued)
These amounts were covered by the Partnership's insurance carrier
and, accordingly, a receivable for these amounts was recorded at
December 31, 1996. All claims were settled by the insurance
carrier in January 1997.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during
the fourth quarter of 1997 by means of a proxy solicitation or
otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
There is presently no public market for the Limited Partnership
interests in the Partnership, and is not anticipated that any
public market will develop. As of December 31, 1997, there were
512 Limited Partners in the Partnership.
ITEM 6. SELECTED FINANCIAL DATA
The following is an unaudited schedule of selected financial data
for the Partnership as of and for the years ended December 31,
1997, 1996, 1995, 1994, and 1993. The information below should be
read in conjunction with the financial statements and related
notes thereto and Management's Discussion and Analysis of
Financial Condition and Results of Operations included as Item 7
in this Form 10-K.
(in thousands, except for per unit data)
1997 1996 1995 1994 1993
Operating Results
Revenues $ 1,136 $1,066 $1,101 $1,113 $1,091
Income before
extraordinary loss 146 170 154 173 162
Extraordinary loss - (27) - - -
Net income 146 143 154 173 162
Income (loss) per unit(1):
Income before
extraordinary loss 6.21 7.23 6.57 7.36 6.91
Extraordinary loss - (1.16) - - -
Net income 6.21 6.07 6.57 7.36 6.91
Distributions
per unit (1) 8.88 8.88 8.88 7.99 7.10
Net cash
provided by
operating
activities 344 309 344 376 344
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ITEM 6. SELECTED FINANCIAL DATA (continued)
(in thousands, except for per unit data)
1997 1996 1995 1994 1993
Financial Condition
Total assets 5,304 5,484 5,656 6,009 5,693
Mortgage notes
payable 1,159 1,185 1,277 1,350 1,416
(1)Per unit share data based upon 22,309 Limited Partnership
units outstanding for the years ended December 31, 1997,
1996, 1995, 1994 and 1993.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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. The Partnership raised a total of
$5,567,250 in 1987 and 1988 which was invested in three
Properties (after deduction of sales commissions, certain fees
and a working capital reserve). The Partnership does not intend
to acquire any additional properties.
Results of Operations
1997 Compared to 1996
Net income increased to $145,816 for the year ended December 31,
1997 from $142,511 for the year ended December 31, 1996. Income
from operations (before extraordinary item, depreciation,
amortization, and interest income and expense) was $397,817 in
1997 compared to $443,551 in 1996. Rental income increased in
1997 due to decreased vacancies at Foxwood Apartments. Operating
expenses increased in 1997 due to refurbishing costs (labor and
materials)at all Properties to maintain their marketable
condition. Interest expense decreased due to the debt refinancing
in April 1996.
1996 Compared to 1995
The refinancing and early extinguishment of debt in 1996
discussed below resulted in an extraordinary loss of $27,376
which decreased net income to $142,511 for the year ended
December 31, 1996 from $154,309 for the year ended December 31,
1995. Income before extraordinary item increased to $169,887 for
the year ended December 31, 1996 from $154,309 for the year ended
December 31, 1995 due to a decrease in operating expenses and
interest expense.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
Results of Operations (continued)
1996 Compared to 1995 (continued)
Income from operations (before extraordinary item, depreciation,
and interest income and expense) was $443,551 in 1996 compared to
$440,485 in 1995. Rental income decreased in 1996 due to
increased vacancies at Foxwood Apartments. Operating expenses
decreased in 1996 due to lower contract labor (refurbishing)
costs.
Liquidity and Capital Resources
In April 1996, the Partnership refinanced its mortgage debt on
Creek Ridge Apartments using the proceeds to payoff the old
mortgage and early extinguish the outstanding mortgage debt on
Foxwood Apartments. The interest rate on the Partnership's
mortgage debt was reduced to 8% and monthly debt service was
reduced by $6,617. At December 31, 1997, the Partnership had cash
of $210,094 which increased $39,174 since December 31, 1996.
The Partnership has its excess cash invested in marketable debt
securities.
The Corporate General Partner believes that liquid assets
available are adequate to meet future liquidity and capital
expenditure requirements. Future cash distributions will depend
on factors such as cash generated from operations, property
sales, debt repayment and capital improvements. Cash
distributions of $200,001 were paid each year during 1997, 1996
and 1995, and $50,000 was paid in the first quarter of fiscal
1998 for fourth quarter 1997 operations.
Accounting Matters
During 1997, the Financial Accounting Standards Board issued the
following statements:
No. 128 Earnings Per Share
No. 129 Disclosure of Information about Capital Structure
No. 130 Reporting Comprehensive Income
No. 131 Disclosures about Segments of an Enterprise and
Related Information
The adoption of Statement No.'s 128 and 129 in 1997 did not
effect the computation of amounts and disclosures provided in the
financial statements. The adoption of Statement No.'s 130 and 131
is not expected to materially affect the Partnership's financial
statements or disclosures.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is included in Item 14(a)
of this report on Form 10-K. The selected quarterly financial
data and all other schedules are omitted because they are not
applicable.
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ITEM 9. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Partnership engaged LEDIC Management Group, Inc.
headquartered in Memphis, Tennessee, to provide property
management and accounting services effective January 1, 1996. The
books and records are being maintained in Memphis and the
Corporate General Partner elected to engage a Memphis firm to
provide audit and tax services. Accordingly, Price Waterhouse LLP
(Tampa, Florida) was dismissed as the independent accountants for
the Partnership by letter dated September 20, 1996.
The report by Price Waterhouse LLP on the Partnership's financial
statements as of and for the year ended December 31, 1995 was
unqualified and was not modified as to uncertainty, audit scope,
or accounting principles.
The Partnership is a limited partnership and, therefore, does not
have any officers or directors. All management functions of the
Partnership are performed by the Corporate General Partner who
elected to make the change.
There were no disagreements with Price Waterhouse LLP for the
year ended December 31, 1995 on any matter of the accounting
principles or practices, financial statement disclosure, or
auditing scope or procedure nor any "reportable events" prior to
the change.
Rhea & Ivy, P.L.C. (Memphis, Tennessee) was engaged by the
Partnership by letter dated September 20, 1996. The Partnership
did not consult Rhea & Ivy, P.L.C. prior to their engagement
regarding the application of accounting principles to a specified
transaction or the type of audit opinion that might be rendered
on the Partnership's financial statements.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership is a limited partnership and, therefore, does not
have any officers or directors. All management functions of the
Partnership are performed by the Corporate General Partner. The
following persons are serving as officers, directors or key
employees of PWPC:
Name Age Title
Craig D. Caldwell 48 Director and Vice President
Rand E. McNeal 45 Director, President and
Chief Executive Officer
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(continued)
Craig D. Caldwell, served as Vice President of Westland Insurance
Brokers, a California corporation and a regional commercial
insurance agency until February 1991. Mr. Caldwell also
previously served as Vice President of Fund Administration for
the Consolidated Capital Companies until August 1983, which was
at the time the nation's largest real estate syndicator on a new
capital raised basis. He was also Assistant Treasurer of
Consolidated Capital Special Trust and Consolidated Capital
Income Trust, which at the time were the two largest publicly
traded real estate investment trusts on a capital raised basis
involved in mortgage lending. Also, Mr. Caldwell was a tax
manager at Price Waterhouse and while working there for six
years, he specialized in real estate tax matters. Mr. Caldwell
has successfully converted a number of San Francisco apartment
buildings to condominiums and is a Certified Public Accountant
and a licensed real estate broker. Mr. Caldwell graduated from
UCLA with a bachelor's degree in economics and a masters degree
in business administration in 1971 and 1972, respectively. In
1976, he also graduated from USC with a masters degree in
business taxation. Mr. Caldwell presently owns fifty percent of
the outstanding stock of Edgemark Group, Inc., the parent of
PWPC.
Rand E. McNeal, served as Vice President of PWPC from July 1985
until May 20, 1988, when he was elected President and Chief
Executive Officer, and served as a Director of PWPC from July
1985 until July 1989 and was reappointed as director in March
1991. Since May 1988, Mr. McNeal has also served as Vice
President of Pioneer Western Corporation and has held various
director and officer positions with affiliates of PWPC. Mr.
McNeal is a Certified Public Accountant, a licensed real estate
broker, a licensed mortgage broker and formerly served as the
Chief Financial Officer of Trusty-Baldasare, a Florida-based real
estate developer, from December 1980 until he joined PWPC in
1985. Mr. McNeal was employed by Price Waterhouse from 1974 to
1979. Mr. McNeal presently owns fifty percent of the outstanding
stock of Edgemark Group, Inc., the parent company of PWPC.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership is a limited partnership and, therefore, has no
officers or directors. Thus, the Partnership pays no executive
compensation. None of the officers or directors of the Corporate
General Partner received any renumeration from the Partnership in
1997. As the Managing General Partner, the Corporate General
Partner is entitled to receive a share in revenues, to be
compensated for services provided on a competitive basis and to
be reimbursed for certain direct expenses and certain general and
administrative expenses. (See Item 13, "Certain Relationships and
Related Transactions," below.)
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL INTEREST
OWNERS AND MANAGEMENT
No Limited Partner owns 5% or more of the outstanding units. The
Corporate General Partner directly owns 144 Limited Partnership
units (.65%) and the officers and directors of the Corporate
General Partner own or control another 516 Limited Partnership
units (2.31%) as of December 31, 1997. The Corporate General
Partner is not aware of any arrangements other than those
disclosed herein which may at a subsequent date result in a
change of control of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporate General Partner was a wholly-owned subsidiary of
Enstar Financial Services, Inc. On March 19, 1991, Enstar
Financial Services, Inc. sold 100% of the outstanding stock of
PWPC to Edgemark Group, Inc. The Corporate General Partner
retained its existing management.
The Corporate General Partner received cash distributions
totalling $2,000 and management fees totalling $11,289 (1% of
specified revenues) from the Partnership during the year ended
December 31, 1997. No director or officer of the Corporate
General Partner, nor any associate of them, was indebted to the
Partnership at any time during the year ended December 31, 1997.
Effective January 1, 1996, the Corporate General Partner engaged
LEDIC Management Group, Inc. (not affiliated with the Corporate
General Partner) as subagent for the property (site) management
of the Properties for a fee of 4% of specified revenues. Prior to
this date, Edgemark Management Corporation (EMC), an affiliate of
the Corporate General Partner, provided property (site) and
project management services for a fee of 5% of specified
revenues. EMC received project management fees totalling $12,755
(1% of specified revenues) during the year ended December 31,
1997.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 10-K
Page
Reference
(a)(1)Financial Statements
Report of Independent Accountants
as of and for the years ended
December 31, 1997, 1996 and 1995 15
Balance Sheets as of December 31, 1997 and 1996 16
Statements of Income for the years ended
December 31, 1997, 1996 and 1995 17
Statements of Changes in Partners' Capital
for the years ended December 31, 1997,
1996 and 1995 18
Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 19-20
Notes to Financial Statements 21-25
(a)(2)Schedules
All schedules and other financial statements have been
omitted because they are not required or because the
information is presented in the financial statements or
related notes.
(b) Reports on Form 8-K
No filings of Form 8-K were made during the last quarter of
1997.
(c) Exhibits
Exhibit
Number Exhibit
3.1 Second Amended and Restated Certificate of
Limited Partnership (incorporated by reference from
Form 10-K filed for the year ended December 31, 1989)
16.1 Letter regarding change in certifying accountant
- filed herewith.
<PAGE>
PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(a Florida Limited Partnership)
Financial Statements
For the Years Ended December 31, 1997, 1996 and 1995
<PAGE>
To the Partners
Pioneer Western Properties
Income Fund Limited Partnership
Report of Independent Accountants
We have audited the accompanying balance sheets of Pioneer
Western Properties Income Fund Limited Partnership (a Florida
Limited Partnership) as of December 31, 1997 and 1996, and the
related statements of income, changes in partners' capital, and
cash flows for the years then ended. These financial statements
are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements based on our audits. The financial statements of
Pioneer Western Properties Income Fund Limited Partnership as of
December 31, 1995 were audited by other auditors whose report
dated February 2, 1996, expressed an unqualified opinion on those
statements.
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 financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the 1997 and 1996 financial statements referred
to above present fairly, in all material respects, the financial
position of Pioneer Western Properties Income Fund Limited
Partnership as of December 31, 1997 and 1996, and the results of
its operations and its cash flows for each of the two years in
the period ended December 31, 1997 in conformity with generally
accepted accounting principles.
Rhea & Ivy, P.L.C.
Memphis, Tennessee
January 27, 1998
<PAGE>
PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
BALANCE SHEETS
December 31, 1997 and 1996
1997 1996
Assets
Investments in real estate:
Land $ 680,000 $ 680,000
Buildings and furnishings,
net of accumulated depreciation
of $1,726,567 and $1,561,855 4,128,816 4,221,642
4,808,816 4,901,642
Cash 210,094 170,920
Marketable debt securities 175,000 168,798
Insurance receivable - 170,000
Other assets 110,337 72,288
$5,304,247 $5,483,648
Liabilities and Partners' Capital
Liabilities:
Accounts payable and
accrued expenses $ 93,122 $ 19,990
Accrued litigation reserve - 170,000
Tenant security deposits 34,975 36,751
Mortgage on real estate 1,158,879 1,185,451
Total liabilities 1,286,976 1,412,192
Partners' Capital:
General partner 33,415 28,124
Limited partners 3,983,856 4,043,332
Total partners' capital 4,017,271 4,071,456
$5,304,247 $5,483,648
See Notes to Financial Statements.
<PAGE>
PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
STATEMENTS OF INCOME
For the Three Years Ended December 31, 1997, 1996 and 1995
1997 1996 1995
Revenues:
Rental income $1,124,987 $1,052,908 $1,084,410
Interest 10,976 12,723 16,196
1,135,963 1,065,631 1,100,606
Expenses:
Operating 670,627 565,602 608,613
General and administrative 56,543 43,755 35,312
Depreciation and amortization 169,101 179,700 175,799
Interest 93,876 106,687 126,573
990,147 895,744 946,297
Income before extraordinary
item 145,816 169,887 154,309
Extraordinary item - loss
from early extinguishment
of debt - (27,376) -
Net income $ 145,816 $ 142,511 $ 154,309
Net income allocable to:
General partner $ 7,291 $ 7,126 $ 7,715
Limited partners $ 138,525 $ 135,385 $ 146,594
Earnings (loss) per limited
partnership unit (based on
an average 22,309 limited
partnership units each
year):
Income before
extraordinary item $ 6.21 $ 7.23 $ 6.57
Extraordinary item $ - $ (1.16) $ -
Net income $ 6.21 $ 6.07 $ 6.57
See Notes to Financial Statements.
<PAGE>
PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
A Florida Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Three Years Ended December 31, 1997, 1996 and 1995
Limited General
Partners Partner Combined
Balance at January 1, 1995 $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 ($8.88 per avg
limited partnership unit) ( 198,001) ( 2,000) (200,001)
Net income 135,385 7,126 145,511
Balance at December 31, 1996 4,043,332 28,124 4,071,456
Distributions ($8.88 per avg
limited partnership unit) ( 198,001) ( 2,000) (200,001)
Net income 138,525 7,291 145,816
Balance at December 31, 1997 $ 3,983,856 $ 33,415 $4,017,271
See Notes to Financial Statements.
<PAGE>
PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Three Years Ended December 31, 1997, 1996 and 1995
1997 1996 1995
Operating activities:
Net income $ 145,816 $ 142,511 $ 154,309
Adjustments to reconcile net
income to net cash provided
by operating activities:
Extraordinary item - 27,376 -
Depreciation 164,712 179,700 175,799
Amortization 4,389 - -
Changes in assets and
liabilities:
Insurance receivable 170,000 (45,000) 250,000
Other assets (42,438) 27,455 (1,577)
Accounts payable and
accrued expenses 73,132 (68,889) 2,505
Tenant security deposits (1,776) 1,081 12,860
Accrued litigation reserve (170,000) 45,000 (250,000)
Total adjustments 198,019 166,723 189,587
Net cash provided by
operating activities 343,835 309,234 343,896
Investing activities:
Capital additions (71,886) (46,189) (48,068)
Purchase of debt securities (175,000) (168,798) (199,386)
Maturity of debt securities 168,798 199,386 -
Net cash used in
investing activities (78,088) (15,601) (247,454)
(continued on next page)
<PAGE>
PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS -- continued
1997 1996 1995
Financing activities:
Proceeds from mortgage
refinancing - 1,200,000 -
Loan fees paid - (55,435) -
Premiums on early
extinguishment of debt - (27,376) -
Principal payments on mortgages (26,572) (1,291,713) (72,714)
Distributions to partners (200,001) (200,001) (200,001)
Net cash used in financing
activities (226,573) (374,525) (272,715)
Net increase (decrease) in cash 39,174 (80,892) (176,273)
Cash:
Beginning of period 170,920 251,812 428,085
End of period $ 210,094 $ 170,920 $ 251,812
Supplemental disclosures
of cash flow information:
Cash paid during the period for
interest $ 93,876 $ 105,154 $ 127,134
See Notes to Financial Statements.
<PAGE>
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. The purpose of the Partnership is to purchase and operate
existing income producing multi-family properties through the
year ended December 31, 2036, unless terminated earlier in
accordance with the provisions of the partnership agreement.
Prior to January 1989, the General Partners were Pioneer Western
Properties Corporation (PWPC), the Corporate General Partner, and
Joseph A. Barringer, the Individual General Partner. Mr.
Barringer withdrew as the Individual General Partner in January
1989 and assigned his general partner interest to PWPC. On March
19, 1991, Enstar Financial Services, Inc. sold 100% of the
outstanding stock of PWPC to Edgemark Group, Inc.
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.
Note (2) Summary of Significant Accounting Policies
Basis of Presentation
The Partnership's accounting records are maintained on an accrual
basis of accounting in accordance with generally accepted
accounting principles.
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.
<PAGE>
PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Note (2) Summary of Significant Accounting Policies (continued)
Allocation of Profits and Losses
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 sales: (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 over the taxable income from
operations allocated to the general partner; (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.
Rental Income
Rental agreements are generally for one-year periods and are
accounted for as operating leases. Rental income is reported as
earned over the term of the lease. A provision of uncollectible
rents is recognized against income as needed and amounted to
$31,884, $47,996, and $57,346 in 1997, 1996, and 1995,
respectively.
Investments in Real Estate
Buildings and furnishings are stated at cost less accumulated
depreciation. Buildings and improvements are depreciated on the
straight-line method over 40 years; the furnishings are
depreciated on straight-line and 150% declining balance methods
over 10 years; and property improvements are depreciated on the
straight-line method over 20 years.
Management reviews its long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying
value of an asset may not be recoverable in accordance with the
provisions of SFAS No. 121. There were no events or changes in
circumstances that indicate impairment as of December 31, 1997 or
1996.
<PAGE>
PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Note (2) Summary of Significant Accounting Policies (continued)
Other Assets
The Partnership's other assets are comprised of the following:
December 31,
1997 1996
Escrow deposits $ 57,825 16,853
Prepaid insurance 1,466 -
Deferred loan costs, net 51,046 55,435
$110,337 $ 72,288
Deferred loan costs are amortized on the straight-line method
over the mortgage loan period.
Syndication Costs
Syndication and offering costs were charged against limited
partners' equity at inception of the Partnership.
Marketable Debt Securities
The Partnership invests excess cash in government securities that
are considered to be "held-to-maturity" and, therefore, stated at
amortized cost. At December 31, 1997 and 1996, the following
securities were owned:
Maturity
Description Principal Rate Date
1997
Federal Home Loan Bank $175,000 5.72% 7/98
1996
U.S. Treasury Bill $169,000 5.46%(yield) 1/97
The fair value of the above securities approximates carrying
value due to their short-term maturity. There were no sales or
transfers of securities classified as "held-to-maturity" during
any year in the three year period ended December 31, 1997.
<PAGE>
PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Note (2) Summary of Significant Accounting Policies (continued)
Income Taxes
No provision has been made for income taxes as the tax effect of
the Partnership's activities accrues to the Partners.
Note (3) Investments in Real Estate
The cost and accumulated depreciation of the Partnership's
properties at December 31, 1997, is as follows:
Buildings
and Accumulated
Land Furnishings Total Depreciation
Creek Ridge
Apartments $230,000 $1,985,624 $2,215,624 $ 612,193
Foxwood
Apartments 315,000 2,650,814 2,965,814 775,645
Pleasant Terrace
Apartments 135,000 1,218,945 1,353,945 338,729
Total $680,000 $5,855,383 $6,535,383 $1,726,567
Note (4) Mortgage on Real Estate
In April 1996, the Partnership completed a refinancing of the
mortgage debt on Creek Ridge Apartments. 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 that was extinguished
early was approximately $497,000 plus approximately $19,000 in
premiums and $3,000 of accrued interest.
<PAGE>
PIONEER WESTERN PROPERTIES INCOME FUND LIMITED PARTNERSHIP
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Note (4) Mortgage on Real Estate (continued)
The 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.
Aggregate principal payments due on the mortgage debt are as
follows:
1998 $ 28,777
1999 31,165
2000 33,752
2001 36,554
2002 39,588
Thereafter 989,043
$1,158,879
Management estimates that the fair value of the mortgage debt
approximates carrying value based upon the Partnership's
effective borrowing rate for issuance of debt with similar terms
and remaining maturities.
Note (5) Commitments and Contingencies
In November 1994, the Partnership received an unfavorable ruling
related to litigation surrounding a fire at Creek Ridge
Apartments. As of December 31, 1996, the remaining settlement
amount totaled $50,000 and was accrued. The Partnership also
accrued an additional $120,000 for separate pending litigation of
the same nature. These amounts were covered by the Partnership's
insurance carrier and, accordingly, an insurance receivable for
these amounts was recorded at December 31, 1996. All claims were
settled by the insurance carrier in January 1997.
Note (6) Related Party Transactions
The Partnership incurred $11,289, $10,538, and $10,844 in
partnership management fees for services provided by the
Corporate General Partner for 1997, 1996 and 1995, respectively.
Effective January 1, 1996, the Corporate General Partner engaged
LEDIC Management Group, Inc. (not affiliated with the Corporate
General Partner) as subagent for the property (site) management
of the Partnership's properties. Prior to this date, Edgemark
Management Corporation (EMC), an affiliate of the Corporate
General Partner, provided property (site) and project management
services. EMC continues to provide project management services.
EMC earned project management fees in the amount of $12,755 and
$10,671 in 1997 and 1996, respectively. EMC earned project and
property (site) management fees in the amount of $54,221 from the
Partnership in 1995, and administrative services fees (for tax
services)in the amount of $4,000 in 1995. EMC also received a
loan brokerage fee of $12,000 in 1996.
<PAGE>
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
March 5, 1998 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.
March 5, 1998 By: Craig D. Caldwell
Craig D. Caldwell, Director of PWPC
March 5, 1998 By: Rand E. McNeal
Rand E. McNeal, President and CEO
<PAGE>
Exhibit 16.1
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We have read Item 4 of Pioneer Western Properties Income Fund
Limited Partnership's Form 8-K, dated September 24, 1996 and are
in agreement with the statements contained therein.
Very truly yours,
Price Waterhouse, LLP
Tampa, Florida
September 24, 1996
<PAGE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 210,094
<SECURITIES> 175,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,535,383
<DEPRECIATION> 1,726,567
<TOTAL-ASSETS> 5,304,247
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,304,247
<SALES> 0
<TOTAL-REVENUES> 1,135,963
<CGS> 0
<TOTAL-COSTS> 896,271
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 93,876
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 145,816
<EPS-PRIMARY> 6.21
<EPS-DILUTED> 6.21
</TABLE>
