<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 March 31, 1998
/ / 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 (I.R.S. Employer
incorporation or organization) Identification No.)
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) 214-3500
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>
March 31, December 31,
1998 1997
<S> <C> <C>
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ASSETS
Investments in mortgage loans $25,501,688 $25,701,746
Cash and cash equivalents 823,879 420,884
Deferred General Partner's fees (net of accumulated
amortization of $2,204,309 and $2,153,435 at
March 31, 1998 and December 31, 1997, respectively) 234,691 285,565
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Total assets $26,560,258 $26,408,195
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----------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Deposits held for tax obligations of underlying properties $ 247,024 $ 86,068
Due to affiliates 90,698 73,238
Accrued expenses 246,410 177,179
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Total liabilities 584,132 336,485
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Partners' capital
Unitholders (54,200 units issued and outstanding) 26,210,608 26,305,236
General Partner (234,482) (233,526)
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Total partners' capital 25,976,126 26,071,710
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Total liabilities and partners' capital $26,560,258 $26,408,195
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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>
Three months ended
March 31,
---------------------
1998 1997
<S> <C> <C>
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REVENUES
Equity income from the underlying properties $779,246 $466,777
Interest income 5,585 15,444
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784,831 482,221
-------- --------
EXPENSES
General and administrative 142,364 29,912
Amortization of deferred General Partner's fees 50,874 50,874
-------- --------
193,238 80,786
-------- --------
Net income $591,593 $401,435
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-------- --------
ALLOCATION OF NET INCOME
Unitholders $528,672 $340,415
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-------- --------
General Partner:
Special distribution $ 57,581 $ 57,581
Other 5,340 3,439
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$ 62,921 $ 61,020
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-------- --------
Net income per depositary unit $ 9.75 $ 6.28
-------- --------
-------- --------
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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, 1997 $26,305,236 $(233,526) $26,071,710
Net income 528,672 62,921 591,593
Distributions (623,300) (63,877) (687,177)
----------- --------- -----------
Partners' capital (deficit)--March 31, 1998 $26,210,608 $(234,482) $25,976,126
----------- --------- -----------
----------- --------- -----------
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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>
Three months ended
March 31,
-------------------------
1998 1997
<S> <C> <C>
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CASH FLOWS FROM OPERATING ACTIVITIES
Interest received from mortgage loans $ 979,304 $ 499,914
Interest received from cash equivalents 5,585 15,444
Cash received for tax obligations of underlying properties 160,956 154,773
General and administrative expenses paid (55,673) (18,975)
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Net cash provided by operating activities 1,090,172 651,156
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (687,177) (913,284)
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Net increase (decrease) in cash and cash equivalents 402,995 (262,128)
Cash and cash equivalents at beginning of period 420,884 1,708,313
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Cash and cash equivalents at end of period $ 823,879 $1,446,185
---------- ----------
---------- ----------
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net income $ 591,593 $ 401,435
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Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred General Partner's fees 50,874 50,874
Equity income from the underlying properties (779,246) (466,777)
Interest received from mortgage loans 979,304 499,914
Changes in:
Deposits held for tax obligations of underlying properties 160,956 154,773
Accrued expenses 69,231 1,027
Due to affiliates 17,460 9,910
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Total adjustments 498,579 249,721
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Net cash provided by operating activities $1,090,172 $ 651,156
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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
MARCH 31, 1998
(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 March 31, 1998,
the results of its operations for the three months ended March 31, 1998 and 1997
and its cash flows for the three months ended March 31, 1998 and 1997. 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, 1997.
On January 30, 1998, the Partnership entered into an amended and restated
payoff agreement (the 'Payoff Agreement') with Fogelman Enterprises, L.P., a
Delaware limited partnership ('FELP') and Avron B. Fogelman ('ABF'). Through
Prudential-Bache Properties, Inc. ('PBP' or the 'General Partner'), the
Partnership has advised FELP that the Partnership will accept the Payoff Amount,
as hereinafter defined, in full satisfaction of the mortgage loans in which the
Partnership invested (the 'Mortgage Loans') if the Transactions, as hereinafter
defined, are approved by a majority in interest of the Unitholders of the
Partnership. PBP has received a written opinion from its advisor to the effect
that the offer to pay off the Mortgage Loans pursuant to the terms of the Payoff
Agreement (the 'Transactions') is fair to the Partnership and the Unitholders
from a financial point of view. Pursuant to the Payoff Agreement, FELP has
agreed to pay to the Partnership the payoff amount ('Payoff Amount') of
$48,000,000 and an amount, if any, by which the aggregate amount of interest
paid to the Partnership in respect of the Mortgage Loans for the period from
October 1, 1997, through the closing of the Transactions is less than the
interest on the face amount of the Mortgage Loans during such period calculated
at an annual rate of 7.7%.
In April 1998, the Partnership mailed to all Unitholders a consent
solicitation statement (the 'Consent Statement') asking for their written
consent to approve the payoff of the Mortgage Loans, as more fully described in
the Consent Statement. If the Transactions are approved by the Unitholders, the
Partnership intends to consummate the Transactions, distribute the Payoff Amount
(net of expenses) and the remaining net assets of the Partnership and liquidate
the Partnership. The Transactions are required to be consummated not later than
May 29, 1998.
B. Related Parties
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. These costs and expenses were approximately $19,800 and
$13,100 for the three months ended March 31, 1998 and 1997, 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 March 31, 1998.
5
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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 investment in the Mortgage Loans.
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------
Westmont (Chesterfield) 1998 1997
<S> <C> <C>
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Revenues:
Rental Income $ 986,053 $ 915,612
Interest and other income 33,819 28,588
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1,019,872 944,200
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Expenses:
Operating 435,904 443,076
Interest 716,557 696,206
Depreciation 213,687 205,247
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1,366,148 1,344,529
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Net loss $ (346,276) $ (400,329)
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---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------
Pointe Royal (Royal View) 1998 1997
<S> <C> <C>
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Revenues:
Rental Income $ 962,897 $ 913,895
Interest and other income 35,250 29,697
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998,147 943,592
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Expenses:
Operating 402,136 603,248
Interest 693,658 661,507
Depreciation 212,855 195,254
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1,308,649 1,460,009
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Net loss $ (310,502) $ (516,417)
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</TABLE>
D. Subsequent Event
In May 1998, distributions of approximately $623,000 and $6,000 were paid to
the Unitholders and General Partner, respectively, for the quarter ended March
31, 1998.
6
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<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 March 31, 1998, the Partnership had $824,000 of funds
available which may be used to pay distributions, unanticipated or extraordinary
expenses, real estate taxes and other costs relating to the operation and
administration of the Partnership's business. Cash expended at the property
level in 1998 for capital expenditures will impact the cash flow received from
the properties.
In April 1998, the General Partner mailed to all Unitholders a Consent
Statement asking for their written consent to approve the payoff of the Mortgage
Loans, as more fully described in the Consent Statement and Note A to the
financial statements.
The level of future distributions will be based primarily on the payoff of
the Mortgage Loans as well as from cash flows from operations of the
Partnership.
Results of Operations
As of March 31, 1998 and 1997, occupancy rates for Westmont were 99.0% and
94.7%, respectively, and 97.7% and 93.1%, respectively, for Pointe Royal. Net
income of the Partnership for the three months ended March 31, 1998 increased
by $190,000 as compared to the same period in 1997.
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) increased by $312,000
for the three months ended March 31, 1998 as compared to the same period in
1997. This increase was primarily due to decreased repairs and maintenance at
Pointe Royal and Westmont of $198,000 and $35,000, respectively. In addition,
rental income increased at Pointe Royal and Westmont by $49,000 and $70,000,
respectively, as a result of increased occupancies and rental rates at both
properties.
Interest received from mortgage loans for the three months ended March 31,
1998 and 1997 of $979,000 and $500,000, respectively, is accounted for as
distributions and, accordingly, reduces the carrying value of the original
investment. Interest received (paid from property cash flow) increased by
$479,000 for the three months ended March 31, 1998 as compared to the same
period in 1997 primarily due to the reasons noted above in addition to a
decrease in capital improvements at the properties.
Interest income from cash equivalents decreased by $10,000 for the three
months ended March 31, 1998 as compared to the same period in 1997 due primarily
to lower cash balances.
General and administrative expenses increased $112,000 for the three months
ended March 31, 1998 as compared to the same period in 1997 due primarily to
professional fees incurred in connection with the Partnership preparing the
Consent Statement to the Unitholders.
7
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<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
There were no matters which were submitted to Unitholders during the
quarter ended March 31, 1998. However, in April 1998, a Consent
Solicitation Statement was sent to all Unitholders. See Note A to the
financial statements filed herewith in Item 1 of Part 1 for further
information.
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)
10.1 Amended and Restated Payoff Agreement dated January 30, 1998
between the Registrant, Fogelman Enterprises, L.P. and ABF
(incorporated by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1997)
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
Registrant's Current Report on Form 8-K dated January 30, 1998, as filed
with the Securities and Exchange Commission on February 5, 1998 relating to
Item 5 regarding the entering into a revised agreement to pay off the
Registrant's Mortgage Loans.
8
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<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: May 15, 1998
----------------------------------------
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-31-1998
<PERIOD-START> Jan-1-1998
<PERIOD-END> Mar-31-1998
<PERIOD-TYPE> 3-Mos
<CASH> 823,879
<SECURITIES> 0
<RECEIVABLES> 25,501,688
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 234,691
<DEPRECIATION> 0
<TOTAL-ASSETS> 26,560,258
<CURRENT-LIABILITIES> 584,132
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 25,976,126
<TOTAL-LIABILITY-AND-EQUITY> 26,560,258
<SALES> 0
<TOTAL-REVENUES> 784,831
<CGS> 0
<TOTAL-COSTS> 193,238
<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> 591,593
<EPS-PRIMARY> 9.75
<EPS-DILUTED> 0
</TABLE>
