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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1995
/ / 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 0-19123
FOGELMAN MORTGAGE L.P. I
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(Exact name of Registrant as specified in its charter)
Tennessee 62-1317805
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer
Identification No.)
One Seaport Plaza, New York, New York 10292-0116
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-1016
N/A
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Former name, former address and former fiscal year, if changed since last report
Indicate by check CK 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 _CK_ No __
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Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
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ASSETS
Investments in mortgage loans $27,794,580 $28,520,644
Cash and cash equivalents 2,255,715 1,774,337
Deferred General Partner's fees (net of accumulated
amortization of $1,695,569 and $1,542,947 at
September 30, 1995 and December 31, 1994, respectively) 743,431 896,053
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Total assets $30,793,726 $31,191,034
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Deposits held for tax obligations of underlying properties $ 535,209 $ 199,683
Due to affiliates 117,387 83,933
Accrued expenses 35,741 39,375
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Total liabilities 688,337 322,991
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Partners' capital
Unitholders (54,200 units issued and outstanding) 30,298,581 31,053,609
General Partner (193,192) (185,566)
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Total partners' capital 30,105,389 30,868,043
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Total liabilities and partners' capital $30,793,726 $31,191,034
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<CAPTION>
The accompanying notes are an integral part of these statements
</TABLE>
2
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FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
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1995 1994 1995 1994
<S> <C> <C> <C> <C>
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REVENUES
Equity income from the underlying properties $1,911,071 $1,449,303 $564,946 $344,048
Interest income from cash equivalents 80,082 42,717 26,393 16,758
---------- ---------- -------- --------
1,991,153 1,492,020 591,339 360,806
---------- ---------- -------- --------
EXPENSES
General and administrative 101,674 106,551 31,948 35,821
Amortization of deferred General Partner's
fees 152,622 152,622 50,874 50,874
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254,296 259,173 82,822 86,695
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Net income $1,736,857 $1,232,847 $508,517 $274,111
---------- ---------- -------- --------
---------- ---------- -------- --------
ALLOCATION OF NET INCOME
Unitholders $1,548,472 $1,049,503 $446,426 $214,365
---------- ---------- -------- --------
---------- ---------- -------- --------
General Partner:
Special distribution $ 172,743 $ 172,743 $ 57,581 $ 57,581
Other 15,642 10,601 4,510 2,165
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$ 188,385 $ 183,344 $ 62,091 $ 59,746
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---------- ---------- -------- --------
Net income per depositary unit $ 28.57 $ 19.36 $ 8.24 $ 3.95
---------- ---------- -------- --------
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</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNER TOTAL
<S> <C> <C> <C>
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Partners' capital (deficit)--December 31, 1994 $31,053,609 $(185,566) $30,868,043
Net income 1,548,472 188,385 1,736,857
Distributions (2,303,500) (196,011) (2,499,511)
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Partners' capital (deficit)--September 30, 1995 $30,298,581 $(193,192) $30,105,389
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<CAPTION>
The accompanying notes are an integral part of these statements
</TABLE>
3
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FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30,
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1995 1994
<S> <C> <C>
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CASH FLOWS FROM OPERATING ACTIVITIES
Interest received from mortgage loans $ 2,637,135 $ 2,170,234
Interest received from cash equivalents 80,082 42,717
Cash received for tax obligations of underlying properties 479,079 535,573
Cash paid for tax obligations of underlying properties (143,553) (135,615)
General and administrative expenses paid (71,854) (104,471)
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Net cash provided by operating activities 2,980,889 2,508,438
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (2,499,511) (2,431,077)
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Net increase in cash and cash equivalents 481,378 77,361
Cash and cash equivalents at beginning of period 1,774,337 2,005,450
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Cash and cash equivalents at end of period $ 2,255,715 $ 2,082,811
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RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net income $ 1,736,857 $ 1,232,847
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Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred General Partner's fees 152,622 152,622
Equity income from the underlying properties (1,911,071) (1,449,303)
Interest received from mortgage loans 2,637,135 2,170,234
Changes in:
Deposits held for tax obligations of underlying properties 335,526 399,958
Accrued expenses (3,634) (11,210)
Due to affiliates 33,454 13,290
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Total adjustments 1,244,032 1,275,591
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Net cash provided by operating activities $ 2,980,889 $ 2,508,438
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<CAPTION>
The accompanying notes are an integral part of these statements
</TABLE>
4
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FOGELMAN MORTGAGE L.P. I
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(Unaudited)
A. General
These financial statements have been prepared without audit. In the opinion
of management, the financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the financial
position of Fogelman Mortgage L.P. I (the ``Partnership'') as of September 30,
1995, the results of its operations for the nine and three months ended
September 30, 1995 and 1994 and its cash flows for the nine months ended
September 30, 1995 and 1994. However, the operating results for the interim
periods may not be indicative of the results expected for the full year.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1994.
B. Related Parties
Prudential-Bache Properties, Inc. (``PBP'' or the ``General Partner'') and
its affiliates perform services for the Partnership which include, but are not
limited to: accounting and financial management; registrar, transfer and
assignment functions; asset management; investor communications; printing and
other administrative services. The General Partner and its affiliates receive
reimbursements for costs incurred in connection with these services, the amount
of which is limited by the provisions of the Partnership Agreement. The costs
and expenses were approximately $62,000 and $61,000 for the nine months ended
September 30, 1995 and 1994, respectively, and $21,000 and $20,000 for the three
months ended September 30, 1995 and 1994, respectively.
The Partnership maintains an account with the Prudential Institutional
Liquidity Portfolio Fund, an affiliate of PBP, for investment of its available
cash in short-term investments pursuant to guidelines established by the
Partnership Agreement.
Prudential Securities Incorporated (``PSI''), an affiliate of the General
Partner, owns 835 units at September 30, 1995.
C. Contingencies
There are no material legal proceedings pending by or against the Partnership
or its properties.
PSI, certain of its present and former employees and PBP, among others, have
been named defendants in a putative class action filed in U.S. District Court
for the Southern District of New York under the caption In re Prudential
Securities Incorporated Limited Partnerships Litigation (MDL Docket 1005). The
complaint is a consolidation for pretrial proceedings of previously filed
complaints in several federal district courts around the country that were
transferred to a single judge of the United States District Court for the
Southern District of New York by order of the Judicial Panel on Multidistrict
Litigation in April 1994. The consolidated complaint alleges violations of the
federal and New Jersey RICO statutes, fraud, negligent misrepresentation, breach
of fiduciary duties, breach of third-party beneficiary contracts and breach of
implied covenants in connection with the marketing and sales of limited
partnership interests. Plaintiffs request relief in the nature of rescission of
the purchase of securities and recovery of all consideration and expenses in
connection therewith, as well as compensation for lost use of money invested
less cash distributions; compensatory damages; consequential damages; treble
damages for defendants' RICO violations (both federal and New Jersey); general
damages for all injuries resulting from negligence, fraud, breaches of contract
and breaches of duty in an amount to be determined at trial; disgorgement and
restitution of all earnings, profits, benefits and compensation received by
defendants as a result of their unlawful acts; costs and disbursements of the
action; reasonable attorneys' fees and such other and further relief as the
court
5
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deems just and proper. The Partnership is not named a defendant in the
consolidated complaint, but the name of the Partnership is listed as being among
the limited partnerships at issue in the case.
PSI and PBP, along with other defendants, filed a motion to dismiss the
consolidated complaint on December 20, 1994. By order dated August 29, 1995, the
transferee court granted plaintiffs' motion for temporary class certification,
preliminarily approved a settlement entered into between plaintiffs and PBP and
PSI, scheduled a fairness hearing for November 17, 1995, approved the form and
content of notice to be provided to class members and directed that it be
provided to class members. The full amount due under the settlement agreement
has been paid by PSI.
D. Subsequent Event
In November 1995, distributions of approximately $813,000 and $8,000 were
paid to the Unitholders and General Partner, respectively, for the quarter ended
September 30, 1995.
6
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FOGELMAN MORTGAGE L.P. I
(a limited partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Unaudited)
Liquidity and Capital Resources
The Partnership provides permanent financing for two multi-family residential
apartment complexes. As of September 30, 1995, the Partnership has approximately
$2,256,000 of funds available which may be used to pay distributions,
unanticipated or extraordinary expenses and other costs relating to the
operation and administration of the Partnership's business. Cash expended at the
property level for improvements impacts the cash flow received from the
properties.
The Partnership's future operating cash requirements and quarterly
distributions are expected to be funded by Partnership operations. The
distribution for the three months ended September 30, 1995 was funded from
current and previous quarters' cash flow from operations.
Results of Operations
As of September 30, 1995 and 1994, occupancy rates for Westmont were 97.5%
and 96.9%, respectively, and 97.5% and 98.6%, respectively, for Pointe Royal.
Net income of the Partnership for the nine and three months ended September 30,
1995 increased by approximately $504,000 and $234,000 as compared to the same
periods in 1994.
For financial reporting purposes, the Partnership's mortgage loans are
considered, in substance, to be investments in real estate and are accounted for
using the equity method. Interest received from mortgage loans for the nine
months ended September 30, 1995 and 1994 of approximately $2,637,000 and
$2,170,000, respectively, and for the three months ended September 30, 1995 and
1994 of approximately $621,000 and $716,000, respectively, is accounted for as
distributions and, accordingly, reduces the carrying value of the original
investment. The increase in interest payments of approximately $467,000 for the
nine months ended September 30, 1995 as compared to the nine months ended
September 30, 1994 was the result of improved rental revenues at both
properties. The decrease in interest payments of approximately $95,000 for the
three months ended September 30, 1995 as compared to the three months ended
September 30, 1994 was primarily due to the timing of the cash expended by the
underlying properties for improvements in the respective quarters. Equity income
from the underlying properties (which increases the carrying value of the
original investment) increased approximately $462,000 and $221,000 for the nine
and three months ended September 30, 1995 as compared to the same periods in
1994. These increases were primarily due to increased rental revenues and
decreased depreciation at both properties due to significant amounts of assets
becoming fully depreciated.
Interest income from cash equivalents increased by approximately $37,000 and
$10,000 for the nine and three months ended September 30, 1995 as compared to
the prior year primarily due to higher average cash balances and interest rates.
7
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings--This information is incorporated by reference to Note
C to the financial statements filed herewith in Item 1 of Part I of the
Registrant's, Quarterly Report.
Item 2. Changes in Securities--None
Item 3. Defaults Upon Senior Securities--None
Item 4. Submission of Matters to a Vote of Security Holders--None
Item 5. Other Information--None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 Amended and Restated Certificate and Agreement of Limited Partnership
dated November 12, 1986 (incorporated by reference to Registration
Statement No. 33-8596 dated November 24, 1986)
3.2 Second Amendment to Amended and Restated Certificate and Agreement of
Limited Partnership dated December 24, 1992 (incorporated by
reference to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992)
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K--None
8
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Fogelman Mortgage L.P. I
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<S> <C>
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/ Eugene D. Burak Date: November 14, 1995
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Eugene D. Burak
Vice President
Chief Accounting Officer for the
Registrant
</TABLE>
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for Fogelman Mortgage L.P.
and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000800608
<NAME> Fogelman Mortgage L.P.
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jul-01-1995
<PERIOD-END> Sep-30-1995
<PERIOD-TYPE> 9-Mos
<CASH> 2,255,715
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 28,538,011
<DEPRECIATION> 0
<TOTAL-ASSETS> 30,793,726
<CURRENT-LIABILITIES> 688,337
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 30,105,389
<TOTAL-LIABILITY-AND-EQUITY> 30,793,726
<SALES> 0
<TOTAL-REVENUES> 1,991,153
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 254,296
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,736,857
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,736,857
<EPS-PRIMARY> 28.57
<EPS-DILUTED> 0
</TABLE>
