<PAGE>
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 June 30, 1997
/ / 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 (I.R.S. Employer Identification No.)
of incorporation or organization)
One Seaport Plaza, New York, New York 10292-0128
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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 __
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
<S> <C> <C>
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ASSETS
Investments in mortgage loans $25,724,256 $26,123,955
Cash and cash equivalents 1,297,126 1,708,313
Deferred general partner's fees (net of accumulated
amortization of $2,051,687 and $1,949,939 at
June 30, 1997 and December 31, 1996, respectively) 387,313 489,061
----------- ------------
Total assets $27,408,695 $28,321,329
----------- ------------
----------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Deposits held for tax obligations of underlying properties $ 398,096 $ 88,550
Due to affiliates 93,281 71,794
Accrued expenses 31,235 45,362
----------- ------------
Total liabilities 522,612 205,706
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Partners' capital
Unitholders (54,200 units issued and outstanding) 27,111,466 28,328,711
General partner (225,383) (213,088 )
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Total partners' capital 26,886,083 28,115,623
----------- ------------
Total liabilities and partners' capital $27,408,695 $28,321,329
----------- ------------
----------- ------------
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The accompanying notes are an integral part of these statements
</TABLE>
2
<PAGE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, June 30,
----------------------- ---------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
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REVENUES
Equity income from the underlying properties $730,740 $1,435,618 $263,963 $670,828
Interest income from cash equivalents 29,485 47,196 14,041 24,650
-------- ---------- -------- --------
760,225 1,482,814 278,004 695,478
-------- ---------- -------- --------
EXPENSES
General and administrative 61,449 82,525 31,537 47,366
Amortization of deferred general partner's fees 101,748 101,748 50,874 50,874
-------- ---------- -------- --------
163,197 184,273 82,411 98,240
-------- ---------- -------- --------
Net income $597,028 $1,298,541 $195,593 $597,238
-------- ---------- -------- --------
-------- ---------- -------- --------
ALLOCATION OF NET INCOME
Unitholders $477,047 $1,171,545 $136,632 $534,260
-------- ---------- -------- --------
-------- ---------- -------- --------
General partner:
Special distribution $115,162 $ 115,162 $ 57,581 $ 57,581
Other 4,819 11,834 1,380 5,397
-------- ---------- -------- --------
$119,981 $ 126,996 $ 58,961 $ 62,978
-------- ---------- -------- --------
-------- ---------- -------- --------
Net income per depositary unit $ 8.80 $ 21.62 $ 2.52 $ 9.86
-------- ---------- -------- --------
-------- ---------- -------- --------
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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, 1996 $28,328,711 $(213,088) $28,115,623
Net income 477,047 119,981 597,028
Distributions (1,694,292) (132,276) (1,826,568)
----------- --------- -----------
Partners' capital (deficit)--June 30, 1997 $27,111,466 $(225,383) $26,886,083
----------- --------- -----------
----------- --------- -----------
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The accompanying notes are an integral part of these statements
</TABLE>
3
<PAGE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
---------------------------
1997 1996
<S> <C> <C>
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CASH FLOWS FROM OPERATING ACTIVITIES
Interest received from mortgage loans $ 1,130,439 $ 2,035,655
Interest received from cash equivalents 29,485 47,196
Cash received for tax obligations of underlying properties 309,546 319,157
Cash paid for tax obligations of underlying properties -- (178,861)
General and administrative expenses paid (54,089) (65,486)
----------- -----------
Net cash provided by operating activities 1,415,381 2,157,661
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (1,826,568) (1,792,074)
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Net increase (decrease) in cash and cash equivalents (411,187) 365,587
Cash and cash equivalents at beginning of period 1,708,313 1,963,643
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Cash and cash equivalents at end of period $ 1,297,126 $ 2,329,230
----------- -----------
----------- -----------
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net income $ 597,028 $ 1,298,541
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Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred general partner's fees 101,748 101,748
Equity income from the underlying properties (730,740) (1,435,618)
Interest received from mortgage loans 1,130,439 2,035,655
Changes in:
Deposits held for tax obligations of underlying properties $ 309,546 140,296
Accrued expenses (14,127) 1,387
Due to affiliates 21,487 15,652
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Total adjustments 818,353 859,120
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Net cash provided by operating activities $ 1,415,381 $ 2,157,661
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The accompanying notes are an integral part of these statements
</TABLE>
4<PAGE>
<PAGE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(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 June 30, 1997,
the results of its operations for the six and three months ended June 30, 1997
and 1996 and its cash flows for the six months ended June 30, 1997 and 1996.
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, 1996.
B. Related Parties
Prudential-Bache Properties, Inc. ('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 $26,200 and $36,400 for the six months ended
June 30, 1997 and 1996, respectively, and $13,100 and $18,200 for the three
months ended June 30, 1997 and 1996, 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, an affiliate of the General Partner, owns
835 units at June 30, 1997.
C. Summarized Property Financial Information
Presented below is summarized unaudited financial information for the
Westmont and Pointe Royal Projects representing the properties underlying the
Partnership's two mortgage loan investments.
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, June 30,
-------------------------- -------------------------
Westmont (Chesterfield) 1997 1996 1997 1996
<S> <C> <C> <C> <C>
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Revenues:
Rental Income $ 1,813,895 $1,826,523 $ 898,283 $ 908,987
Interest and other income 68,395 61,809 39,807 30,642
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1,882,290 1,888,332 938,090 939,629
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Expenses:
Operating 961,820 783,132 518,744 372,434
Interest 1,409,731 1,369,898 713,525 686,645
Depreciation 414,799 386,495 209,552 194,006
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2,786,350 2,539,525 1,441,821 1,253,085
----------- ---------- ---------- ----------
Net loss $ (904,060) $ (651,193) $ (503,731) $ (313,456)
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, June 30,
-------------------------- -------------------------
Pointe Royal (Royal View) 1997 1996 1997 1996
<S> <C> <C> <C> <C>
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Revenues:
Rental Income $ 1,850,586 $1,863,644 $ 936,691 $ 931,716
Interest and other income 71,947 81,791 42,250 36,975
----------- ---------- ---------- ----------
1,922,533 1,945,435 978,941 968,691
----------- ---------- ---------- ----------
Expenses:
Operating 1,356,302 911,907 753,054 511,553
Interest 1,341,212 1,278,774 679,705 640,494
Depreciation 392,786 368,236 197,532 185,312
----------- ---------- ---------- ----------
3,090,300 2,558,917 1,630,291 1,337,359
----------- ---------- ---------- ----------
Net loss $(1,167,767) $ (613,482) $ (651,350) $ (368,668)
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
</TABLE>
D. Subsequent Event
In August 1997, distributions of approximately $623,000 and $6,000 were paid
to the unitholders and General Partner, respectively, for the quarter ended June
30, 1997.
6<PAGE>
<PAGE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership provides permanent financing for two multi-family residential
apartment complexes. As of June 30, 1997, the Partnership had approximately
$1,297,000 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 in 1997 for capital expenditures will impact 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 June 30, 1997 was funded from current
and prior undistributed cash flow from operations. Because of the increased
competition in the two market areas in which the properties underlying the
Partnership's mortgage loan investments are located, there has been an increase
in the properties' capital expenditures in order to maintain their
competitiveness. As a result of these increased capital expenditures, the
General Partner has lowered the distribution to 4.6% on an annualized basis or
$11.50 per unit per quarter. It is not expected that in future years such
capital expenditures will remain at the 1996-1997 level.
Results of Operations
As of June 30, 1997 and 1996, occupancy rates for Westmont were 96.7% and
90.8%, respectively, and 100% and 98.6%, respectively, for Pointe Royal. Net
income of the Partnership for the six and three months ended June 30, 1997
decreased by approximately $702,000 and $402,000 as compared to the same periods
in 1996.
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. Equity income from the underlying properties (which
increases the carrying value of the original investment) decreased approximately
$705,000 and $407,000 for the six and three months ended June 30, 1997 as
compared to the same periods in 1996. This decrease was primarily due to
increased repairs and maintenance at Pointe Royal and Westmont of approximately
$404,000 and $163,000, respectively. In addition, depreciation expense increased
at Pointe Royal and Westmont by approximately $25,000 and $28,000, respectively,
as a result of increased capital improvements at both properties. Interest
received from mortgage loans for the six months ended June 30, 1997 and 1996 of
approximately $1,130,000 and $2,036,000, respectively, and for the three months
ended June 30, 1997 and 1996 of approximately $630,000 and $960,000,
respectively, is accounted for as distributions and, accordingly, reduces the
carrying value of the original investment. Interest received (paid from property
cash flow) decreased approximately $906,000 and $330,000, respectively for the
six and three months ended June 30, 1997 as compared to the same periods in 1996
primarily due to the reasons discussed above in addition to an increase in
capital improvements at the properties.
At June 30, 1997, the accrued interest liabilities at the property level were
approximately $9,932,000. This accrued interest plus the original principal
balances aggregate approximately $55,997,000. The ultimate collectibility of the
accrued interest as well as full principal balances of the mortgage loans will
depend upon the value of the underlying properties which are estimated, based on
third party appraisals, to be less than the amounts due. However, the estimated
property values exceed the Partnership's carrying amount of the investment in
mortgage loans which is recorded using the equity method.
Interest income from cash equivalents decreased by approximately $18,000 and
$11,000 for the six and three months ended June 30, 1997 as compared to the same
period in 1996 due primarily to lower cash balances.
General and administrative expenses decreased by approximately $21,000 and
$16,000 for the six and three months ended June 30, 1997 as compared to the same
period in 1996 primarily due to decreased professional fees of approximately
$10,000 in addition to lower overall costs associated with administering the
partnership.
7<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings--None
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
<PAGE>
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
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/ Eugene D. Burak Date: August 14, 1997
----------------------------------------
Eugene D. Burak
Vice President
Chief Accounting Officer for the Registrant
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for Fogelman Mortgage L.P. I
and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000800608
<NAME> Fogelman Mortgage L.P. I
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-1-1997
<PERIOD-END> Jun-30-1997
<PERIOD-TYPE> 6-Mos
<CASH> 1,297,126
<SECURITIES> 0
<RECEIVABLES> 25,724,256
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 387,313
<DEPRECIATION> 0
<TOTAL-ASSETS> 27,408,695
<CURRENT-LIABILITIES> 522,612
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 26,886,083
<TOTAL-LIABILITY-AND-EQUITY> 27,408,695
<SALES> 0
<TOTAL-REVENUES> 760,225
<CGS> 0
<TOTAL-COSTS> 163,197
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 597,028
<EPS-PRIMARY> 8.80
<EPS-DILUTED> 0
</TABLE>
