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, 1995,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 0-16877
FOX STRATEGIC HOUSING INCOME PARTNERS,
(a California Limited Partnership)
(Exact name of Registrant as specified in its charter)
CALIFORNIA
(State or other jurisdiction of 94-3016373
incorporation or organization) (I.R.S. Employer Identification No.)
One Insignia Financial Plaza
P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (864) 239-1000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited
Partnership Units
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 ____
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 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. [ X ]
No market for the Limited Partnership Units exists and therefore a market
value for such Units cannot be determined.
DOCUMENTS INCORPORATED HEREIN BY REFERENCE:
(1) Prospectus of Registrant dated March 24, 1987, and thereafter
supplemented incorporated in Parts I and IV.
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
PART I
ITEM 1. BUSINESS.
Fox Strategic Housing Income Partners, a California Limited Partnership
(the "Registrant") was organized in June 1984 as a California limited
partnership under the Uniform Limited Partnership Act of the California
Corporations Code. Fox Partners VIII, a California general partnership,
is the general partner of the Registrant. The general partners of Fox
Partners VIII are Fox Capital Management Corporation ("FCMC"), a
California corporation, and Fox Realty Investors ("FRI"), a California general
partnership.
The Registrant's Registration Statement, filed pursuant to the Securities
Act of 1933 (No. 33-8481), was declared effective by the Securities and
Exchange Commission on March 24, 1987. The Registrant marketed its
securities pursuant to its Prospectus dated March 24, 1987, and
thereafter supplemented (hereinafter the "Prospectus"). This Prospectus was
filed with the Securities and Exchange Commission pursuant to Rule 424(b) of
the Securities Act of 1933.
The principal business of the Registrant is to acquire, manage and
ultimately sell income-producing real properties, consisting of multi-family
residential properties and mobile home communities. The Registrant is a
"closed" limited partnership real estate syndicate of the unspecified asset
type. For a further description of the business of the Registrant see the
sections entitled "Risk Factors" and "Investment Objectives and Policies" of
the Prospectus.
Beginning in April 1987, the Registrant offered $100,000,000 in
Limited Partnership Assignee Units. The offering closed in January 1989
with $26,111,000 sold. The net proceeds of this offering were used to
acquire one mobile home park and two apartment buildings which are
described in "Item 2." The mobile home park was sold in June 1994. the
Registrant's original property portfolio was geographically diversified
with properties acquired in three states. See "Item 2" below for a
description of the Registrant's properties.
The Registrant is involved in only one industry segment, as
described above. The business of the Registrant is not seasonal. The
Registrant does not engage in any foreign operations or derive revenues
from foreign sources.
Both the income and expenses of operating the properties in which
the Registrant has an ownership interest are subject to factors outside
of the Registrant's control, such as oversupply of similar rental
facilities as a result of overbuilding, increases in unemployment or
population shifts, changes in zoning laws or changes in patterns of needs of
the users. Expenses, such as local real estate taxes and management
expenses, are subject to change and cannot always be reflected in rental
increases due to market conditions or existing leases. The profitability
and marketability of developed real property may be adversely affected by
changes in general and local economic conditions and in prevailing interest
rates, and favorable changes in such factors will not necessarily enhance
the profitability or marketability of such property. Even under the most
favorable market conditions there is no guarantee that any property which
is owned by the Registrant can be sold by it or, if sold, that such sale can
be made upon favorable terms.
It is possible that legislation on the state or local level may be
enacted in states where the Registrant's properties are located which
may include some form of rent control. There have been, and it is possible
there may be other Federal, state and local legislation and
regulations enacted relating to the protection of the environment. The
general partner is unable to predict the extent, if any, to which such new
legislation or regulations might occur and the degree to which such existing
or new legislation or regulations might adversely affect the properties
owned by the Registrant.
The Registrant monitors its properties for evidence of
pollutants, toxins and other dangerous substances, including the presence
of asbestos. In certain cases environmental testing has been performed,
which resulted in no material adverse conditions or liabilities. In no case
has the Registrant received notice that it is a potentially responsible party
with respect to an environmental clean up site.
The Registrant maintains property and liability insurance on the
properties and believes such coverage to be adequate.
The Registrant is affected by and subject to the general competitive
conditions of the residential real estate industry. In addition, each of
the Registrant's properties competes in an area which normally contains
numerous other properties which may be considered competitive.
The Registrant has made no formal assessment of the ultimate
attainment of the investment objective of capital growth which is dependent
upon the ultimate realizable value of the properties and upon the market
conditions which exist at the time of sale. See "Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations"
for further information on the Registrant's ability to meet its investment
objectives.
Property Matters
Lakewood Village Mobile Home Park located in Melbourne, Florida,
was sold on June 20, 1994 for $7,400,000. After payment of mortgage
principal, accrued interest, prepayment fees, and closing costs, the
proceeds to the Registrant were approximately $4,007,000. The gain on the
sale was approximately $1,528,000.
Employees
Management services are performed for the Registrant at its properties
by on-site personnel all of whom are employees of NPI-AP Management, L.P.,
an affiliate of the Managing General Partner ("NPI-AP"), which directly
manages the Registrant's properties. All payroll and associated expenses
of such on-site personnel are fully reimbursed by the Registrant to NPI-AP.
Pursuant to a management agreement, NPI-AP provides certain property
management services to the Registrant in addition to providing on-site
management. NPI-AP Management, L.P., is a Delaware limited partnership,
whose general partner is NPI Property Management Corporation ("NPI
Management").
Change in Control
From March 1988 through December 1993, the Registrant's affairs were
managed by Metric Management, Inc. ("MMI") or a predecessor. On December
16, 1993, the services agreement with MMI was modified and, as a result
thereof, the Registrant's general partner assumed responsibility for real
estate advisory and asset management services to the Registrant. As
advisor, such affiliate provides all partnership accounting and
administrative services, investment management, and supervisory services over
property management and leasing.
On December 6, 1993, NPI Equity Investments II, Inc. ("NPI Equity
II") became the managing partner of FRI and assumed operational control
over FCMC. As a result, NPI Equity II indirectly became responsible for the
operation and management of the business and affairs of the Registrant
and the other investment partnerships sponsored by FRI and/or FCMC. NPI
Equity II is a wholly-owned subsidiary of National Property Investors,
Inc. ("NPI, Inc."). The individuals who had served previously as partners of
FRI and as officers and directors of FCMC contributed their general
partnership interests in FRI to a newly formed limited partnership,
Portfolio Realty Associates, L.P. ("PRA"), in exchange for limited
partnership interests in PRA. In the foregoing capacity, such partners
continue to hold indirectly certain economic interests in the Registrant
and such other investment partnerships, but ceased to be responsible for
the operation and management of the Registrant and such other
partnerships.
On October 12, 1994, NPI, Inc. sold one-third of the stock of NPI,
Inc. to an affiliate of Apollo Real Estate Advisors, L.P. ("Apollo").
Apollo was entitled to designate three of the seven directors of NPI Equity
II. In addition, the approval of certain major actions on behalf of the
Registrant required the affirmative vote of at least five directors of NPI
Equity II.
On August 17, 1995, the stockholders of NPI, Inc. entered into an
agreement to sell to IFGP Corporation, a Delaware corporation, an affiliate
of Insignia Financial Group, Inc. ("Insignia"), a Delaware corporation, all
of the issued and outstanding common stock of NPI, Inc. for an aggregate
purchase price of $1,000,000. NPI, Inc. is the sole shareholder of NPI
Equity II, the general partner of FRI, the entity which controls FCMC,
which are the general partners of Fox Partners VIII, the managing general
partner of the Registrant. The closing of the transactions contemplated by
the above mentioned agreement (the "Closing") occurred on January 19, 1996.
Upon the Closing, the officers and directors of NPI, Inc., NPI
Equity II and FCMC resigned and IFGP Corporation caused new officers and
directors of each of those entities to be elected. See "Item 10, Directors
and Executive Officers of the Registrant."
ITEM 2. PROPERTIES.
A description of the income-producing properties in which the Registrant
owns is as follows:
<TABLE>
<CAPTION>
DATE OF
NAME AND LOCATION (1) PURCHASE SIZE
--------------------- -------- ----
<S> <C> <C>
Wood View Apartments 09/87 180
Pinehurst Drive units
Atlanta, Georgia
Barrington Place Apartments 07/89 164
Detroit Road units
Westlake, Ohio
</TABLE>
____________
(1) Property is owned by the Registrant in fee.
See "Item 8, Consolidated Financial Statements and Supplementary
Data - Note 5" for information regarding the encumbrances to which the
properties of the Registrant are subject.
An occupancy summary is set forth in the chart following:
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
OCCUPANCY SUMMARY
Average
Occupancy Rate(%)
For the Year Ended
December 31,
--------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Wood View Apartments 97 97 91 92 91
Barrington Place Apartments 98 95 94 95 94
ITEM 3. LEGAL PROCEEDINGS.
There are no material pending legal proceedings to which the
Registrant is a party or to which any of its assets are subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders during the period
covered by this Report.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S EQUITY AND RELATED SECURITY HOLDER MATTERS.
The Limited Partnership Assignee Unit holders are entitled to certain
distributions as provided in the Partnership Agreement. Through December
31, 1995, Assignee Unit holders have received distributions from
operations of $343 to $431 for each $1,000 of original contribution based on
date of admission to Partnership. No market for Limited Partnership
Assignee Units exists nor is expected to develop.
During the years ended December 31, 1995 and 1994, the
Registrant has made the following cash distributions with respect to the
Units to holders thereof as of the dates set forth below in the amounts
set forth opposite such dates:
Distribution with
Respect to Quarter Ended Amount of Distribution Per Unit (*)
1995 1994
---- ----
March 31 $15.00 $15.00
June 30 $15.00 $15.00
September 30 - $15.00
December 31 - $15.00
(*) The amounts listed represent distributions of cash from operations
and cash from sales. (See "Item 7, Management's Discussion and Analysis
of Financial Condition and Results of Operations," for information
relating to the Registrant's future distributions.)
As of March 1, 1996, the approximate number of holders of Limited
Partnership Assignee Units was 1,657.
ITEM 6. SELECTED FINANCIAL DATA.
The following represents selected financial data for the Registrant, for the
years ended December 31, 1995, 1994, 1993, 1992 and 1991. The data should
be read in conjunction with the consolidated financial statements
included elsewhere herein. This data is not covered by the independent
auditors' report.
<TABLE>
<CAPTION>
For the Year Ended December 31,
-----------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
(Amounts in thousands except per unit data)
TOTAL REVENUES............................................. $ 3,094 $ 4,854 $ 3,581 $ 3,491 $ 3,405
======= ======= ======= ======= =======
NET INCOME (LOSS).......................................... $ (152) $ 994 $ (328) $ (245) $ (182)
======= ======= ======= ======= =======
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP ASSIGNEE UNIT(1).............................. -- $ 30.45 $(12.45) $ (9.31) $ (6.89)
======= ======= ======= ======= =======
TOTAL ASSETS............................................... $20,028 $22,082 $24,276 $25,157 $26,162
======= ======= ======= ======= =======
LONG-TERM OBLIGATIONS:
Note payable............................................ $ 7,788 $ 8,756 $10,271 $ 9,237 $ 8,307
======= ======= ======= ======= =======
CASH DISTRIBUTIONS PER LIMITED
PARTNERSHIP ASSIGNEE UNIT
(actual amount based on date ............................ $ 29.99 $ 60.01 $ 61.24 $ 64.99 $ 64.99
of admission to Partnership) ======= ======= ======= ======= =======
</TABLE>
- -----------
(1) $1,000 original contribution per assignee unit, based on
weighted average assignee units outstanding during the
period, after giving effect to the allocation of net income
(loss) to the general partner.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources
The Registrant's remaining properties consist of two apartment
buildings located in Georgia and Ohio. The two remaining properties
generated negative cash flow for the year ended December 31, 1995, due to
required note payable principal payments. The Registrant receives rental
income from its properties and is responsible for operating expenses,
administrative expenses, capital improvements and debt service payments.
The Registrant uses working capital reserves provided from any
undistributed cash flow from operations and sale proceeds as its primary
source of liquidity. For the long term, it is anticipated that cash
from operations will remain the Registrant's primary source of liquidity.
During 1995, the Registrant distributed to the holders of limited
partnership units $29.99 per unit ($799,000 in total) and $16,000 to the
general partner. The distributions were from a combination of both the
current and prior years cash provided from operating activities and the
proceeds from the sale of the Registrant's Lakewood Village Mobile Home Park
property in 1994. To preserve working capital reserves, which will be
required for necessary capital improvements to the properties and in order to
meet the August 1998 mortgage payment, cash distributions were suspended
during the second half of 1995 and will remain suspended through 1998. The
general partner will evaluate the propriety of future cash distributions in
light of property sales and required debt service payments.
The level of liquidity based upon cash and cash equivalents experienced
an $837,000 decrease at December 31, 1995, as compared to December 31, 1994.
The Registrant's $1,413,000 of cash provided by operating activities and
$495,000 of cash from investing activities was substantially offset by
$1,946,000 of repayment of note payable principal (financing activities)
and $799,000 of cash distributions to partners (financing activities).
Investing activities consisted of a net $507,000 from liquidating cash
investments which was only partially offset by $12,000 of improvements to
properties. All other increases (decreases) in certain assets and
liabilities are the result of the timing of receipt and payment of various
operating activities.
Working capital reserves are primarily invested in United States
Treasury bills and in repurchase agreements secured by United States
Treasury obligations. The general partner believes that, if market
conditions remain relatively stable, cash flow from operations, when combined
with working capital reserves, will be sufficient to fund required capital
improvements and debt service payments until August 1998 at which time the
balloon payment on the debt comes due. The Registrant will be required
to arrange further financings or refinancings, or sell a property prior to
the maturity date of the note.
On January 19, 1996, the stockholders of NPI, Inc., the sole
shareholder of NPI Equity II, sold to an affiliate of Insignia all of the
issued and outstanding stock of NPI, Inc. An affiliate of Insignia caused
new officers and directors of NPI Equity II to be elected. The Managing
General Partner does not believe these transactions will have a
significant effect on the Registrant's liquidity or results of operations.
See "Item 1 Business - Change in Control."
At this time it appears that the initial investment objective of
capital growth since the inception of the Partnership will not be attained
and that limited partners will not receive a return of all of their invested
capital. The extent to which invested capital is returned to investors is
dependent upon the performance of the Registrant's remaining properties
and the markets in which such properties are located and on the sales price
of the remaining properties. In this regard, the remaining properties
have been held longer than originally expected. The ability to hold and
operate these properties is dependent on the Registrant's ability to
obtain refinancing or debt modification as required.
REAL ESTATE MARKET
The business in which the Registrant is engaged is highly
competitive, and the Registrant is not a significant factor in its
industry. Each investment property is located in or near a major urban
area and, accordingly, competes for rentals not only with similar properties
in its immediate area but with hundreds of similar properties throughout
the urban area. Such competition is primarily on the basis of location,
rents, services and amenities. In addition, the Registrant competes
with significant numbers of individuals and organizations (including
similar partnerships, real estate investment trusts and financial
institutions) with respect to the sale of improved real properties,
primarily on the basis of the prices and terms of such transactions.
RESULTS OF OPERATIONS
1995 COMPARED TO 1994
Operating results declined by $1,146,000 for the year ended December
31, 1995, as compared to 1994, due to the $1,528,000 gain on sale of Lakewood
Village Mobile Home Park in June 1994. With respect to the remaining
properties operating results improved by $253,000 due to an increase in
revenues of $177,000 and a decrease in expenses of $76,000.
With respect to the remaining properties, the increase in revenues is
due to an increase in rental rates at both of the Registrant's properties
coupled with a decrease in concessions at the Registrant's Barrington
Place Apartments which was partially offset by an increase in
concessions at the Registrant's Wood View Apartments. Occupancy remained
relatively constant at both of the Registrant's remaining properties.
In addition, interest income increased by $97,000 due to increases in average
working capital reserves available for investment and the effect of higher
interest rates.
With respect to the remaining properties, expenses decreased
primarily due to a decrease in depreciation expense of $72,000.
Depreciation expense decreased due to a portion of the Registrant's
Barrington Place Apartments prior year assets becoming fully depreciated.
General and administrative expenses, operating expenses, and interest
expense remained relatively constant.
1994 COMPARED TO 1993
Operating results improved by $1,322,000 for the year ended December
31, 1994, as compared to 1993, due to the $1,528,000 gain on sale of Lakewood
Village Mobile Home Park in June 1994. With respect to the remaining
properties, at December 31, 1994, operating results declined by $66,000
due to an increase in expenses of $350,000 which was partially offset by an
increase in revenues of $284,000.
With respect to the remaining properties, revenues increased by
$284,000 due to increases in rental revenue of $177,000 and interest income
of $107,000. Rental revenues increased due to an increase in occupancy and
rental rates at the Registrant's Wood View and Barrington Place
Apartments properties. Interest income increased due to an increase in
working capital reserves available for investment as a result of the
proceeds received from the sale of the Registrant's Lakewood Village Mobile
Home Park property.
With respect to the remaining properties, expenses increased by
$350,000 due to increases in operating expenses of $194,000, interest
expense of $93,000 and general and administrative expenses of $66,000 which
were slightly offset by a $3,000 decrease in depreciation expense. Operating
expenses increased due to an increase in rent up expenses at the Registrant's
Wood View Apartments and an increase in general repair and maintenance
expenses at the Registrant's Barrington Place Apartments property.
Interest expense increased due to the compounding of interest on the zero
coupon mortgage. General and administrative expenses increased due to
costs associated with the management transition, which were partially offset
by a reduction in asset management costs. Depreciation expense remained
relatively constant.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
INDEX
Page
----
Independent Auditors' Reports.............................. F - 2
Consolidated Financial Statements:
Balance Sheets at December 31, 1995 and 1994.......... F - 4
Statements of Operations for the Years Ended
December 31, 1995, 1994 and 1993................... F - 5
Statements of Partners' Equity for the Years Ended
December 31, 1995, 1994 and 1993................... F - 6
Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993................... F - 7
Notes to Consolidated Financial Statements............ F - 8
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated
Depreciation at December 31, 1995.................. F - 15
Financial statements and financial statement schedules not included
have been omitted because of the absence of conditions under which they are
required or because the information is included elsewhere in this Report.
To the Partners
Fox Strategic Housing Income Partners,
a California Limited Partnership
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying consolidated balance sheets of Fox
Strategic Housing Income Partners, a California Limited Partnership (the
"Partnership") and its subsidiary, as of December 31, 1995 and 1994, and the
related consolidated statements of operations, partners' equity and cash
flows for the years then ended. Our audits also included the additional
information supplied pursuant to Item 14(a)(2). These consolidated
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these consolidated financial
statements 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 are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the consolidated financial statements. 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.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Fox Strategic Housing Income Partners, a California Limited
Partnership and its subsidiary, as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
Imowitz Koenig & Co., LLP
Certified Public Accountants
New York, N.Y.
February 6, 1996
To the Partners
Fox Strategic Housing Income Partners
Atlanta, Georgia
Deloitte & Touche
INDEPENDENT AUDITORS' REPORT
Fox Strategic Housing Income Partners, A California Limited Partnership:
We have audited the accompanying consolidated statements of operations,
partners' equity and cash flows of Fox Strategic Housing Income Partners, a
California Limited Partnership (the "Partnership") and its wholly-owned
subsidiary for the year ended December 31, 1993. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of operations and cash flows of the Partnership
and its wholly-owned subsidiary for the year ended December 31, 1993 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
San Francisco, California
March 18, 1994
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
------------------------
1995 1994
----------- -----------
ASSETS
Cash and cash equivalents $ 1,409,000 $ 2,246,000
Cash investments 2,497,000 3,004,000
Receivables and other assets 176,000 195,000
Real estate:
Real estate 21,030,000 21,018,000
Accumulated depreciation (5,183,000) (4,518,000)
----------- -----------
Real estate, net 15,847,000 16,500,000
Deferred financing costs, net 99,000 137,000
----------- -----------
Total assets $20,028,000 $ 22,082,000
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Note payable $7,788,000 $ 8,756,000
Accrued interest 355,000 398,000
Accrued expenses and other liabilities 156,000 248,000
----------- -----------
Total liabilities 8,299,000 9,402,000
----------- -----------
Contingencies
Partners' Equity (Deficit):
General partner (181,000) (13,000)
Limited partners (26,111 units outstanding at
December 31, 1995 and 1994) 11,910,000 12,693,000
----------- -----------
Total partners' equity 11,729,000 12,680,000
----------- -----------
Total liabilities and partners' equity $20,028,000 $22,082,000
=========== ===========
See notes to consolidated financial statements.
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
-----------------------------------
1995 1994 1993
---------- ---------- -----------
Revenues:
Rental $2,840,000 $3,169,000 $ 3,531,000
Interest 254,000 157,000 50,000
Gain on sale of property - 1,528,000 -
---------- ---------- -----------
Total revenues 3,094,000 4,854,000 3,581,000
---------- ---------- -----------
Expenses (including $364,000, $306,000,
and $ 53,000 paid to the general
partner and affiliates in 1995, 1994
and 1993):
Operating 1,321,000 1,692,000 1,687,000
Interest 977,000 1,095,000 1,133,000
Depreciation 665,000 791,000 870,000
General and administrative 283,000 282,000 219,000
---------- ---------- -----------
Total expenses 3,246,000 3,860,000 3,909,000
---------- ---------- -----------
Net (loss) income $ (152,000) $ 994,000 $ (328,000)
========== ========== ===========
Net (loss) income per limited
partnership assignee unit $ - $ 30.45 $ (12.45)
========== ========== ===========
Cash distributions per limited
partnership assignee unit $ 29.99 $ 60.01 $ 61.24
========== ========== ===========
See notes to consolidated financial statements.
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
General Limited Total
partner's partners' partners'
(deficit) equity equity
--------- ----------- -----------
Balance - January 1, 1993 $(144,000) $15,389,000 $15,245,000
Net (loss) (3,000) (325,000) (328,000)
Cash distributions (33,000) (1,599,000) (1,632,000)
--------- ----------- -----------
Balance - December 31, 1993 (180,000) 13,465,000 13,285,000
Net income 199,000 795,000 994,000
Cash distributions (32,000) (1,567,000) (1,599,000)
--------- ----------- -----------
Balance - December 31, 1994 (13,000) 12,693,000 12,680,000
Net (loss) (152,000) - (152,000)
Cash distributions (16,000) (783,000) (799,000)
--------- ----------- -----------
Balance - December 31, 1995 $(181,000) $11,910,000 $11,729,000
========= =========== ===========
See notes to consolidated financial statements.
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
--------- ---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $(152,000) $ 994,000 $ (328,000)
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Depreciation and amortization 704,000 835,000 922,000
Interest added to note payable
principal 580,000 653,000 614,000
Gain on sale of property - (1,528,000) -
Changes in operating assets and
liabilities:
Receivables and other assets 19,000 (116,000) 5,000
Accrued expenses and other
liabilities 262,000 392,000 465,000
---------- ---------- -----------
Net cash provided by operating
activities 1,413,000 1,230,000 1,678,000
---------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate (12,000) (177,000) (211,000)
Net proceeds from sale of property - 7,026,000 -
Purchase of cash investments (2,497,000) (3,004,000) -
Proceeds from cash investments 3,004,000 - 590,000
---------- ---------- -----------
Net cash provided by investing
activities 495,000 3,845,000 379,000
---------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Partial repayment of note payable
principal (1,946,000) (2,634,000) -
Cash distributions to partners (799,000) (1,599,000) (1,632,000)
---------- ---------- -----------
Cash (used in) financing activities (2,745,000) (4,233,000) (1,632,000)
---------- ---------- -----------
(Decrease) Increase in Cash and Cash
Equivalents (837,000) 842,000 425,000
Cash and Cash Equivalents at Beginning
of Year 2,246,000 1,404,000 979,000
---------- ---------- -----------
Cash and Cash Equivalents at End
of Year $1,409,000 $2,246,000 $ 1,404,000
========== ========== ===========
Supplemental Disclosure of Non-cash
Investing and Financing Activities:
Accrued interest added to
note payable principal $ 398,000 $ 466,000 $ 420,000
========== ========== ===========
See notes to consolidated financial statements.
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Fox Strategic Housing Income Partners (the "Partnership") is a
limited partnership organized under the laws of the State of
California to acquire, manage and ultimately sell income-producing
properties. The Partnership currently owns two apartment buildings
located in Atlanta, Georgia and Westlake, Ohio. Fox Partners VIII,
a California general partnership, is the general partner. The
general partners of Fox Partners VIII are Fox Capital Management
Corporation ("FCMC"), a California corporation, and Fox Realty
Investors ("FRI"), a California general partnership. The Partnership
was organized in 1984 and commenced operations in 1987. The capital
contributions of $26,111,000 ($1,000 per assignee unit) were made by
the limited partners including one limited partnership assignee unit
purchased by an affiliate of FCMC.
On December 6, 1993, the shareholders of FCMC entered into a
Voting Trust Agreement with NPI Equity Investments II, Inc. ("NPI
Equity" or the "Managing General Partner") pursuant to which NPI
Equity was granted the right to vote 100 percent of the outstanding
stock of FCMC and NPI Equity became the Managing General Partner of
FRI. As a result, NPI Equity became responsible for the operation
and management of the business and affairs of the Partnership and
the other investment partnerships originally sponsored by FCMC
and/or FRI. NPI Equity is a wholly-owned subsidiary of National
Property Investors, Inc. ("NPI, Inc."). The shareholders of FCMC
retain indirect economic interests in the Partnership and such other
investment limited partnerships, but have ceased to be responsible for
the operation and management of the Partnership and such other
partnerships.
On January 19, 1996, the stockholders of NPI, Inc. sold all of the
issued and outstanding stock of NPI, Inc. to an affiliate of Insignia
Financial Group, Inc. ("Insignia") (see Note 8).
Consolidation
The consolidated financial statements include the statements
of the Partnership and a wholly owned subsidiary. All significant
intercompany transactions and balances have been eliminated.
Distributions
During 1995, the Partnership distributed to the holders of
limited partnership units $29.99 per unit ($783,000 in total) and
$16,000 to the general partner.
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial
Accounting Standards ("SFAS") No.107, "Disclosures about Fair Value
of Financial Instruments," as amended by SFAS No. 119, "Disclosures
about Derivative Financial Instruments and Fair Value of Financial
Instruments", which requires disclosure of fair value information
about financial instruments, whether or not recognized in the balance
sheet, for which it is practicable to estimate fair value. Fair value
is defined in the SFAS as the amount at which the instrument could be
exchanged in a current transaction between willing parties, other
than in a forced or liquidation sale. The Partnership believes that
the carrying amount of its financial instruments (except for the
long-term debt) approximates fair value due to the short term
maturity of these instruments. The debt, with a carrying balance of
$7,778,000 has been calculated to have a fair value of approximately
$8,240,000 after discounting the scheduled loan payments to maturity.
Due to significant prepayment penalties associated with the debt the
Partnership would be unable to refinance this obligation to obtain
such calculated debt amount.
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a
cost of real estate. In 1995, the Partnership adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of ", which requires impairment
losses to be recognized for long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows are
not sufficient to recover the asset's carrying amount. The impairment
loss is measured by comparing the fair value of the asset to its carrying
amount. The adoption of the SFAS had no effect on the Partnership's
financial statements.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with
an original maturity of three months or less at the time of purchase
to be cash equivalents.
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentration of Credit Risk
The Partnership maintains cash balances at institutions
insured up to $100,000 by the Federal Deposit Insurance
Corporation. Balances in excess of $100,000 are usually invested in
United States Treasury bills and repurchase agreements, which are
collateralized by United States Treasury obligations. Cash balances
exceeded these insured levels during the year. At December 31, 1995,
the Partnership had approximately $1,300,000 invested in overnight
repurchase agreements, secured by United States Treasury obligations,
which are included in cash and cash equivalents and $2,497,000
invested in United States Treasury bills maturing in May 1996 which are
included in cash investments.
Depreciation
Depreciation is computed by the straight-line method over
estimated useful lives ranging from 27.5 to 30 years for buildings and
improvements and six to seven years for furnishings.
Deferred Financing Costs
Financing costs relating to the zero coupon mortgage are deferred
and amortized, as interest expense, over the ten year life of the
mortgage. At December 31, 1995 and 1994, accumulated amortization of
deferred financing costs totaled $265,000 and $226,000, respectively.
Net Income (Loss) Per Limited Partnership Assignee Unit
Net income (loss) per limited partnership assignee unit is
computed by dividing the net income (loss) allocated to the limited
partners by 26,111 assignee units outstanding for the years ended
December 31, 1995, 1994, and 1993.
Income Taxes
Taxable income or loss of the Partnership is reported in the
income tax returns of its partners. Accordingly, no provision for
income taxes is made in the financial statements of the Partnership.
Reclassification
Certain amounts from 1994 and 1993 have been reclassified to
conform to the 1995 presentation.
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
In accordance with the partnership agreement, the Partnership
may be charged by the general partner and affiliates for services
provided to the Partnership. From March 1988 to December 1992 such
amounts were assigned pursuant to a services agreement by the general
partner and affiliates to Metric Realty Services, L.P. ("MRS"),
which performed partnership management and other services for the
Partnership.
On January 1, 1993, Metric Management, Inc. ("MMI") successor
to MRS, a company which is not affiliated with the general partner,
commenced providing certain property and portfolio management
services to the Partnership under a new services agreement. As
provided in the new services agreement effective January 1, 1993, no
reimbursements were made to the general partner and affiliates after
December 31, 1992. Subsequent to December 31, 1992, reimbursements
were made to MMI. On December 16, 1993, the services agreement with MMI
was modified and, as a result thereof, the Managing General Partner
began directly providing cash management and other Partnership
services on various dates commencing December 23, 1993. On March 1,
1994, an affiliate of NPI Equity, commenced providing certain
property management services (see Notes 1 and 8). Related party
expenses for the years ended December 31, 1994, 1993 and 1992 were as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Property management fees $141,000 $134,000 $ -
Partnership management fees 32,000 52,000 53,000
Reimbursement of expenses:
Partnership accounting and
investor services 96,000 94,000 -
Professional services 12,000 26,000 -
-------- -------- -------
Total $281,000 $306,000 $53,000
======== ======== =======
</TABLE>
Property management fees are included in operating expenses.
Partnership management fees and reimbursed expenses are primarily
included in general and administrative expenses. An affiliate of NPI,
Inc. was paid a fee of $4,000, relating to a successful real estate
tax appeal on a Partnership property during 1995, which has been
included under professional services. In addition, approximately
$83,000 of insurance premiums, which were paid to an affiliate of NPI
Inc. under a master insurance policy arranged by such affiliate, are
included in operating expenses for the year ended December 31, 1995.
In accordance with the partnership agreement, the general
partner was allocated a one percent interest in the Partnership's net
loss and taxable loss during 1993. In 1994 the Partnership's net
income and taxable income, including gain on sale of property, was
allocated 20% to the general partner (until cumulative income
allocated is equal to 2.0408% of the total original limited partner
invested capital). For 1995 the Partnership's net loss and taxable
loss is allocated 100% to the general partner until the cumulative loss
allocated equals cumulative income allocated to the general partner
subsequent to December 31, 1991. In
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES (Continued)
addition, two percent of cash distributions are allocated to
the general partner. As the Partnership has completed the
acquisition phase, a portion of partnership management fees are
subordinated in accordance with the partnership agreement pending
certain returns to the limited partners. At December 31, 1995,
$492,000 of Partnership management fees have been subordinated to an
8% annualized return to the limited partners. As this distribution
level has not been achieved, it is not probable that the fees will be
paid. Accordingly, the subordinated management fee has not been
recorded as a liability. Upon sale of all properties and termination
of the Partnership the general partners may be required to contribute
certain funds to the Partnership in accordance with the partnership
agreement.
3. CASH INVESTMENTS
Cash investments at December 31, 1995 and December 31, 1994
consist of United States Treasury bills and are not considered cash or
cash equivalents, as defined in Note 1. Cash investments at December
31, 1995 mature in May 1996 and bear interest at a rate of 5.334
percent per annum.
4. REAL ESTATE
Real estate, at December 31, 1995 and 1994, is summarized as follows:
1995 1994
------------ -----------
Land $ 3,119,000 $ 3,119,000
Buildings and improvements 16,702,000 16,696,000
Furnishings 1,209,000 1,203,000
------------ -----------
Total 21,030,000 21,018,000
Accumulated depreciation (5,183,000) (4,518,000)
------------ -----------
Real estate, net $ 15,847,000 $16,500,000
============ ===========
5. NOTE PAYABLE
In 1988 the Partnership borrowed $3,625,000 on a zero coupon
mortgage commitment from Metropolitan Life Insurance Company
("Metropolitan") and purchased Wood View Apartments and Lakewood
Village Mobile Home Park properties. In 1989, in connection with the
purchase of Barrington Place Apartments, the Partnership borrowed an
additional $2,675,000 from Metropolitan under this commitment. Each
property acquired by the Partnership is cross-collateralized by a first
mortgage which secures the entire
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. NOTE PAYABLE (Continued)
amount of the loan. Interest accrues on the amount borrowed at a
contract rate of 10.9 percent per annum, with the interest accrued
added to principal each January and July. In order to facilitate
a property sale the Deed to Secure Debt and Security Agreement
contains conditions which, when satisfied, allow for the partial
release of Metropolitan's lien on the property being sold. As
discussed in Note 6, on June 20, 1994, the Partnership sold its
Lakewood Village Mobile Home Park property and, in accordance with the
security agreement, satisfied $2,634,000 (which included $1,221,000 of
accrued interest added to principal) of mortgage principal. On August
1, 1995, the Partnership paid $1,947,000 (which included $970,000 of
accrued interest added to principal) under the terms of the note
agreement. As of December 31, 1995, the remaining principal
balance includes $3,878,000 of accrued interest that has been added
to the principal balance. Accrued interest added to principal bears
interest at the contract rate. The Partnership will be required to
repay a specified percentage of the then outstanding original
principal amount of the loan as follows: 20 percent in August 1996,
and 30 percent in August 1997. In addition, provided that the
Partnership has generated income in an amount as defined in the note
agreement, it will be required to repay a specified percentage of the
then outstanding accrued interest added to principal as follows: 20
percent in August 1996, and 30 percent in August 1997. The remaining
principal balance plus all accrued and unpaid interest is due in
August 1998.
Amortization of deferred financing costs totaled $39,000,
$44,000 and $52,000 for the years ended December 31, 1995, 1994, and
1993.
6. GAIN ON SALE OF PROPERTY
On June 20, 1994, the Partnership sold its Lakewood Village Mobile
Home Park, located in Melbourne, Florida for $7,400,000. After
payment of mortgage principal, closing costs and expenses the
Partnership received net proceeds of $4,007,000. In addition, in
April and May 1994, the Partnership sold a portion of its inventory
of mobile homes and received $143,000 of net proceeds. The
Partnership recognized a gain of $1,528,000 on sale of their Lakewood
Village Mobile Home Park property. Net proceeds realized from the sale
were retained by the Partnership to satisfy future debt service
requirements.
7. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING
The differences between the accrual method of accounting for
income tax reporting and the accrual method of accounting used in the
consolidated financial statements are as follows:
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
7. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING (Continued)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net (loss) income - financial statements $ (152,000) $ 994,000 $ (328,000)
Differences resulted from:
Gain on sale of property - (271,000) -
Depreciation (61,000) (7,000) 5,000
Other - 4,000 4,000
----------- ---------- -----------
Net (loss) income - income tax method $ (213,000) $ 720,000 $ (319,000)
=========== ========== ===========
Taxable income (loss) per limited partnership assignee
until after giving effect to the allocation to the
general partner $ (8) $ 22 $ (12)
Partners' equity - financial statements $11,729,000 $12,680,000 $13,285,000
Differences resulted from:
Organization expenses 11,000 11,000 11,000
Capital account adjustment 1,030,000 1,030,000 756,000
Payments credited to rental property 143,000 143,000 417,000
Depreciation (321,000) (260,000) (253,000)
Gain on sale of property (271,000) (271,000) -
Other taxes expensed (12,000) (12,000) (12,000)
Other 12,000 12,000 8,000
----------- ---------- -----------
Partners' equity - income tax method $ 12,321,000 $13,333,000 $14,212,000
=========== ========== ===========
</TABLE>
8. SUBSEQUENT EVENT
On January 19, 1996, the stockholders of NPI, Inc. sold all of the
issued and outstanding stock of NPI, Inc. to an affiliate of Insignia.
As a result of the transaction, the Managing General Partner of the
Partnership is controlled by Insignia. Insignia affiliates now provide
property and asset management services to the Partnership, maintain
its books and records and oversee its operations.
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
REAL ESTATE AND ACCUMULATED DEPRECIATION SCHEDULE III
DECEMBER 31, 1995
<TABLE>
<CAPTION>
COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN
A B C D E F G H I
Cost capitalized
Initial cost subsequent Gross amount at which
to Partnership to acquisition carried at close of period(1)
-------------- -------------- ------------------------------
Life
on which
deprecia-
Accumu- Date tion is
Buildings Buildings lated of Date computed
and and Deprecia- Con- of in latest
Encum- Improve- Improve- Carrying Improve- Total tion struc- Acqui- statement of
Description brances(4) Land ments ments Costs Land ments (2) (3) tion sition operations
- ----------- ---------- ---- ----- ----- ----- ---- ------ ---- ----- ----- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(Amounts in thousands)
PARTNERSHIP:
Wood View
Apartments
Atlanta,
Georgia $3,713 $1,982 $ 7,365 $413 $ - $1,981 $ 7,779 $ 9,760 $2,296 5/82 9/87 6 to 30 yrs.
SUBSIDIARY:
Barrington
Place
Apartments
Westlake,
Ohio 4,075 1,152 10,180 81 (143) 1,138 10,132 11,270 2,887 4/89 7/89 6 to 30 yrs.
------- ------ ------- ----- ------ ------ ------- ------- ------
TOTAL $ 7,788 $3,134 $17,545 $494 $(143) $3,119 $17,911 $21,030 $5,183
======= ====== ======= ===== ====== ====== ======= ======= ======
</TABLE>
See accompanying notes.
SCHEDULE III
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
NOTES:
(1) The aggregate cost for Federal income tax
purposes is $21,178,000.
(2) Balance, January 1, 1993 $26,935,000
Improvements capitalized subsequent to acquisition 211,000
-----------
Balance, December 31, 1993 27,146,000
Improvements capitalized subsequent to acquisition 177,000
Cost of property sold (6,305,000)
-----------
Balance, December 31, 1994 21,018,000
Improvements capitalized subsequent to acquisition 12,000
-----------
Balance, December 31, 1995 $21,030,000
===========
(3) Balance, January 1, 1993 $ 3,720,000
Additions charged to expense 870,000
-----------
Balance, December 31, 1993 4,590,000
Additions charged to expense 791,000
Accumulated depreciation of property sold (863,000)
-----------
Balance, December 31, 1994 4,518,000
Additions charged to expense 665,000
-----------
Balance, December 31, 1995 $ 5,183,000
===========
(4) Amount shown represents the property's approximate share of loans under
the zero coupon mortgage (see Note 5 to the Consolidated Financial
Statements).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.
Effective April 22, 1994, the Registrant dismissed its prior Independent
Auditors, Deloitte & Touche LLP ("Deloitte") and retained as its new
Independent Auditors, Imowitz Koenig & Company, LLP. Deloitte's Independent
Auditors' Report on the Registrant's financial statements for calendar
year ended December 31, 1993, did not contain an adverse opinion or a
disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope or accounting principles. The decision to change
Independent Auditors was approved by the Managing General Partner's
Directors. During calendar year ended 1993 and through April 22,
1994, there were no disagreements between the Registrant and Deloitte on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope of procedure which disagreements if not
resolved to the satisfaction of Deloitte, would have caused it to make
reference to the subject matter of the disagreements in connection with
its reports.
Effective April 22, 1994, the Registrant engaged Imowitz Koenig &
Company, LLP as its Independent Auditors. The Registrant did not consult
Imowitz Koenig & Company, LLP regarding any of the matters or events set
forth in Item 304(a)(2)(i) and (ii) of Regulation S-K prior to April 22, 1994.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Neither the Registrant nor Fox Partners VIII ("Fox VIII"), the general
partner of the Registrant, nor FRI, the general partner of Fox VIII, has
any officers or directors. NPI Equity Investments II, Inc. ("NPI Equity
II"), the Managing General Partner of FRI, manages and controls
substantially all of the Registrant's affairs and has general
responsibility and ultimate authority in all matters affecting its business.
NPI Equity II is a wholly owned subsidiary of National Property Investors,
Inc. ("NPI, Inc.") , which in turn is owned by an affiliate of Insignia (See
"Item 1, Business - Change in Control"). Insignia is a full service real
estate service organization performing property management, commercial and
retail leasing, partnership administration, mortgage banking, and real
estate investment banking services for various entities. Insignia
commenced operations in December 1990 and is the largest manager of
multifamily residential properties in the United States and is a significant
manager of commercial property. It currently provides property and/or
asset management services for over 2,000 properties. Insignia's properties
consist of approximately 300,000 units of multifamily residential housing and
approximately 64 million square feet of commercial space.
As of March 1, 1996, the names and positions held by the officers and
directors of NPI Equity II are as follows:
Has served as a
Director and/or
Officer of the Managing
Name Positions Held General Partner since
---- -------------- ---------------------
William H. Jarrard, Jr. President January 1996
and Director
Ronald Uretta Vice President January 1996
and Treasurer
John K. Lines, Esquire Vice President January 1996
and Secretary
Kelley M. Buechler Assistant January 1996
Secretary
William H. Jarrard, Jr., age 49, has been President of NPI Equity II
since January 1996 and Managing Director - Partnership Administration of
Insignia since January 1991.
Ronald Uretta, age 40, has been Insignia's Chief Financial Officer
and Treasurer since January 1992. Since September 1990, Mr. Uretta has also
served as the Chief Financial Officer and Controller of Metropolitan Asset
Group.
John K. Lines, Esquire, age 36, has been Vice President and
Secretary of NPI Equity II since January 1996, Insignia's General Counsel
since June 1994, and General Counsel and Secretary since July 1994. From
May 1993 until June 1994, Mr. Lines was the Assistant General Counsel
and Vice President of Ocwen Financial Corporation, West Palm Beach,
Florida. From October 1991 until May 1993, Mr. Lines was a Senior Attorney
with Banc One Corporation, Columbus, Ohio. From May 1984 until October
1991, Mr. Lines was an attorney with Squire Sanders & Dempsey, Columbus,
Ohio.
Kelley M. Buechler, age 38, has been Assistant Secretary of NPI
Equity II since January 1996 and Assistant Secretary of Insignia since 1991.
No family relationships exist among any of the officers or directors of
NPI Equity II.
Each director and officer of the NPI Equity II will hold office
until the next annual meeting of stockholders of NPI Equity II and until
his successor is elected and qualified.
ITEM 11. EXECUTIVE COMPENSATION
The Registrant is not required to and did not pay any compensation to
the officers or directors of NPI Equity II. NPI Equity II does not presently
pay any compensation to any of its officers or directors. (See "Item 13,
Certain Relationships and Related Transactions").
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
There is no person known to the Registrant who owns beneficially or of
record more than five percent of the voting securities of the Registrant.
Neither the Registrant's general partners nor affiliates of the
Registrant's general partners have contributed capital to the Registrant.
The Registrant is a limited partnership and has no officers or
directors. The managing general partner has discretionary control over most
of the decisions made by or for the Registrant in accordance with the terms
of the Partnership Agreement. The partners and officers of the Registrant's
general partners and its affiliates, as a group, own less than one percent of
the Registrant's voting securities.
There are no arrangements known to the Registrant, the operation of
which may, at a subsequent date, result in a change in control of the
Registrant.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In accordance with the partnership agreement, the Registrant may be
charged by the general partner and affiliates for services provided to the
Registrant. From March 1988 to December 1992 such amounts were assigned
pursuant to a services agreement by the general partner and affiliates to
Metric Realty Services, L.P. ("MRS"), which performed partnership
management and other services for the Registrant. On January 1, 1993,
Metric Management, Inc., successor to MRS, a company which is not
affiliated with the general partner, commenced providing certain property
and portfolio management services to the Registrant under a new services
agreement. As provided in the new services agreement effective January 1,
1993, no reimbursements were made to the general partner and affiliates in
1993. Subsequent to December 31, 1992, reimbursements were made to Metric
Management, Inc. On December 16, 1993, the services agreement with Metric
Management, Inc. was modified and, as a result thereof, the Registrant's
general partner assumed responsibility for cash management of the
Registrant as of December 23, 1993, and began directly providing cash
management and other partnership services on various dates commencing
December 23, 1995. Related party expenses for the years ended December 31,
1995, 1994, and 1993 are as follows:
1995 1994 1993
---- ---- ----
Property management fees (1) $141,000 $134,000 $ -
Partnership management fees 32,000 52,000 53,000
Reimbursement of expenses:
Partnership accounting and
investor service 96,000 94,000 -
Professional Services 12,000 26,000 -
-------- -------- -------
Total $281,000 $306,000 $53,000
======== ======== =======
(1) As compensation for NPI-AP's services as property manager of
the Registrant's remaining properties, NPI-AP is entitled to
receive 5% of the gross annual receipts from all properties
it manages for the Registrant.
In accordance with the partnership agreement, the general partner
was allocated its one percent continuing interest in the Registrant's net
and taxable income (loss) and two percent of cash distributions. The
Registrant's net income and taxable income, including gain on sale of
property, is allocated 20% to the general partners until cumulative income
allocated is equal to 2.0408% of the total original invested capital. As
the Registrant has completed the acquisition phase, a portion of
Partnership management fees are subordinated in accordance with the
Partnership Agreement pending certain returns to the limited partners. At
December 31, 1995, $492,000 of Partnership management fees have been
subordinated to an 8% annualized return to the limited partners. As this
distribution level has not been achieved, it is not probable that the fees
would be paid.
An affiliate of NPI, Inc. was paid a fee of $4,000 relating to a
successful real estate tax appeal on the Registrant's Wood View Apartments
during 1995 which has been included under professional services. In
addition, approximately $83,000 of insurance premiums were paid to an
affiliate of NPI, Inc. under a master insurance policy arranged by such
affiliate for the year ended December 31, 1995.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) (1) (2) Financial Statements and Financial Statement Schedules
See "Item 8" of this Form 10-K for the Consolidated Financial
Statements of the Registrant, Notes thereto, and Financial Statement
Schedules. (A table of contents to Consolidated Financial Statements and
Financial Statement Schedules is included in "Item 8" and incorporated herein
by reference.)
(a) (3) Exhibits
2. NPI, Inc. Stock Purchase Agreement, dated as of August 17, 1995,
incorporated by reference to the Registrant's Current Report on
Form 8-K dated August 17, 1995.
3.4. Agreement of Limited Partnership, incorporated by reference to
Exhibit A to the Prospectus of the Registrant dated March 24, 1987,
and thereafter supplemented, included in the Registrant's Registration
Statement on Form S-11 (Reg. No. 33-8481).
16. Letter dated April 27, 1994 from the Registrant's Former Independent
Auditors incorporated by reference to the Registrant's Current Report
on Form 8-K dated April 22, 1994.
(b) Report on Form 8-K:
None.
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.
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California Limited Partnership
By: Fox Partners VIII
Its General Partner
By: Fox Capital Management
Corporation
A General Partner
By: /s/ William H. Jarrard, Jr
William H. Jarrard, Jr.
President and Director
Date: March 29, 1996
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 date indicated.
Signature Title Date
- --------- ----- ----
Signature/Name Title Date
/s/ William H. Jarrard, Jr. President and March 29, 1996
William H. Jarrard, Jr. Director
/s/ Ronald Uretta Principal Financial March 29, 1996
Ronald Uretta Officer and Principal
Accounting Officer
EXHIBIT INDEX
Exhibit
2. NPI, Inc. Stock Purchase Agreement (1)
3.4. Agreement of Limited Partnership (2)
16. Letter dated April 27, 1994, from the Registrant's Former
Independent Auditors (3)
_____________________
(1) Incorporated by reference to Exhibit 2 to the Registrant's
Current Report on Form 8-K dated August 17, 1995.
(2) Incorporated by reference to Exhibit A to the Prospectus
of the Registrant dated March 24, 1987, and thereafter
supplemented, included in the Registrant's Registration
Statement on Form S-11 (Reg. No. 33-8481).
(3) Incorporated by reference to the Registrant's Current Report
of Form 8-K dated April 22, 1994.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Fox Strategic
Housing Income Partners and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 3,906,000 <F1>
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 21,030,000
<DEPRECIATION> (5,183,000)
<TOTAL-ASSETS> 20,028,000
<CURRENT-LIABILITIES> 0
<BONDS> 7,778,000
<COMMON> 0
0
0
<OTHER-SE> 11,729,000
<TOTAL-LIABILITY-AND-EQUITY> 20,028,000
<SALES> 0
<TOTAL-REVENUES> 2,840,000
<CGS> 0
<TOTAL-COSTS> 1,986,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 977,000
<INCOME-PRETAX> (152,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (152,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (152,000)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> Cash includes cash investments of $2,497,000.
</FN>
</TABLE>
