UNITED STATES 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, 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: 33-9921
SENIOR INCOME FUND L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3392077
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 World Financial Center, 29th Floor, New York, NY 10285
(Address of principal executive offices) (Zip Code)
(212) 526-3237
(Registrant's telephone number, including area code)
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
INDEX
Page No.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 1995 and 3
December 31, 1994
Consolidated Statement of Partners' Capital
(Deficit) for the three months ended March 31, 1995 3
Consolidated Statements of Operations for the
three months ended March 31, 1995 and 1994 4
Consolidated Statements of Cash Flows for the
three months ended March 31, 1995 and 1994 5
Notes to the Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 7
PART II OTHER INFORMATION
Items 1-6 8
Signatures 9
Consolidated Balance Sheets
March 31, December 31,
Assets 1995 1994
Real estate:
Land $ 4,824,699 $ 4,824,699
Buildings and improvements 37,908,971 37,839,781
42,733,670 42,664,480
Less-accumulated depreciation (14,114,153) (13,665,635)
28,619,517 28,998,845
Cash and cash equivalents 3,618,212 3,305,871
Accounts receivable 679 -
Prepaid expenses 117,021 154,366
Total Assets $ 32,355,429 $ 32,459,082
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 479,958 $ 413,367
Deferred rent payable 1,111,727 1,100,379
Due to affiliates 210,276 215,000
Security deposits payable 150,000 145,775
Distributions payable 365,720 365,720
Total Liabilities 2,317,681 2,240,241
Partners' Capital (Deficit):
General Partner (29,749) (27,938)
Limited Partners 30,067,497 30,246,779
Total Partners' Capital 30,037,748 30,218,841
Total Liabilities and
Partners' Capital $ 32,355,429 $ 32,459,082
Consolidated Statement of Partners' Capital (Deficit)
For the three months ended March 31, 1995
General Limited
Partner Partners Total
Balance at December 31, 1994 $(27,938) $30,246,779 $30,218,841
Net income 1,846 182,781 184,627
Distributions (3,657) (362,063) (365,720)
Balance at March 31, 1995 $(29,749) $30,067,497 $30,037,748
See accompanying notes to the consolidated financial statements.
Consolidated Statements of Operations
For the three months ended March 31, 1995 and 1994
Income 1995 1994
Rental $2,631,174 $2,500,870
Interest 41,475 15,697
Total Income 2,672,649 2,516,567
Expenses
Payroll 718,138 647,865
Depreciation 448,518 451,044
Rent and utilities 393,789 410,198
General and administrative 429,882 397,046
Supplies 256,926 243,695
Repairs and maintenance 132,340 118,767
Real estate taxes 98,042 99,750
Travel and entertainment 10,387 5,294
Earthquake loss - 694,207
Total Expenses 2,488,022 3,067,866
Net Income (Loss) $ 184,627 $ (551,299)
Net Income (Loss) Allocated:
To the General Partner 1,846 -
To the Limited Partners 182,781 (551,299)
$ 184,627 $ (551,299)
Per limited partnership unit
(4,827,500 outstanding) $.04 $(.11)
See accompanying notes to the consolidated financial statements.
Consolidated Statements of Cash Flows
For the three months ended March 31, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income (loss) $ 184,627 $ (551,299)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 448,518 451,044
Provision for earthquake loss - 694,207
Increase (decrease) in cash arising
from changes in operating assets and
liabilities:
Accounts receivable (679) -
Prepaid expenses 37,345 69,962
Accounts payable and
accrued expenses 66,591 153,495
Deferred rent payable 11,348 11,349
Due to affiliates (4,724) (7,705)
Security deposits payable 4,225 (2,075)
Net cash provided by operating activities 747,251 818,978
Cash Flows from Investing Activities:
Additions to real estate (69,190) (78,523)
Net cash used for investing activities (69,190) (78,523)
Cash Flows from Financing Activities:
Distributions paid to partners (365,720) (365,720)
Net cash used for financing activities (365,720) (365,720)
Net increase in cash and cash equivalents 312,341 374,735
Cash and cash equivalents
at beginning of period 3,305,871 2,058,534
Cash and cash equivalents at end of period $3,618,212 $2,433,269
See accompanying notes to the consolidated financial statements.
Notes to the Consolidated Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of March 31, 1995 and the results of operations and cash flows for
the three months ended March 31, 1995 and 1994 and the statement of changes in
partners' capital (deficit) for the three months ended March 31, 1995. Results
of operations for the period are not necessarily indicative of the results to
be expected for the full year.
The following significant events have occurred, subsequent to fiscal year 1994,
or the following material contingencies exist, which would require disclosure
in this interim report per Regulation S-X, Rule 10-01, Paragraph (a)(5):
Earthquake Loss
As a result of an earthquake that struck the greater Los Angeles area on
January 17, 1994, damages were sustained at two of the Partnership's
properties, Ocean House and Prell Gardens. The Partnership has earthquake
insurance with a deductible equal to 5% of the replacement costs of the
properties, as determined by an independent appraisal. The General Partner
engaged an independent appraiser to determine the replacement costs, the
Partnership's deductible portion of which are estimated not to exceed $500,000
and $250,000 for Ocean House and Prell Gardens, respectively, and will be
funded from Partnership cash reserves.
The building basis costs of Ocean House and Prell Gardens have been reduced by
$320,187 and $190,840, respectively, which represent the Partnership's
estimated share of insurance deductibles, net of improvements to date, for
earthquake damage. As these costs continue to be incurred, the buildings will
be brought back to their original basis. As of March 31, 1995, Ocean House and
Prell Gardens incurred earthquake repairs of $179,813 and $59,160,
respectively. Consequently, the net building basis reduction is $511,027 at
March 31, 1995.
The Partnership has engaged an independent structural and seismic engineer who
has advised the General Partner, and the City of Santa Monica as it relates to
the Ocean House Property, that the repairs to date, at both Ocean House and
Prell Gardens, have rendered the buildings safe for continued occupancy. The
engineer is in the process of determining the extent of additional work
necessary at both buildings to increase their ability to withstand future
earthquakes. The cost of such work will be determined after further
engineering studies have been completed. The General Partner intends to
aggressively pursue the reimbursement from the insurance carrier for any
additional costs, less the deductible under the Partnership's insurance policy.
If insurance is not available for any reason, the General Partner believes
there are adequate Partnership reserves to cover any work that may be
performed.
Part 1, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
At March 31, 1995, the Partnership had cash and cash equivalents of $3,618,212
compared with $3,305,871 at December 31, 1994. The increase is primarily
attributable to net cash from operations exceeding capital improvement costs
and cash distributions.
As a result of an earthquake that struck the greater Los Angeles area on
January 17, 1994, damages were sustained at two of the Partnership's
properties, Ocean House and Prell Gardens. The Partnership has earthquake
insurance with a deductible equal to 5% of the replacement costs of the
properties, as determined by an independent appraisal. The General Partner
engaged an independent appraiser to determine the replacement costs, the
Partnership's deductible portion of which are estimated not to exceed $500,000
and $250,000 for Ocean House and Prell Gardens, respectively, and will be
funded from Partnership cash reserves.
The Partnership has engaged an independent structural and seismic engineer who
has advised the General Partner, and the City of Santa Monica as it relates to
the Ocean House Property, that the repairs to date, at both Ocean House and
Prell Gardens, have rendered the buildings safe for continued occupancy. The
engineer is in the process of determining the extent of additional work
necessary at both buildings to increase their ability to withstand future
earthquakes. The cost of such work will be determined after further
engineering studies have been completed. The General Partner intends to
aggressively pursue reimbursement from the insurance carrier for any additional
costs, less the deductible under the Partnership's insurance policy. If
insurance is not available for any reason, the General Partner believes there
are adequate Partnership reserves to cover any work that may be performed.
The building basis costs of Ocean House and Prell Gardens have been reduced by
$320,187 and $190,840, respectively, which represent the Partnership's
estimated share of insurance deductibles, net of improvements to date, for
earthquakes damage. As these costs continue to be incurred, the buildings will
be brought back to their original basis. As of March 31, 1995, Ocean House and
Prell Gardens incurred earthquake repairs of $179,813 and $59,160,
respectively. Consequently, the net building basis reduction is $511,027 at
March 31, 1995.
The General Partner declared a cash distribution of $.075 per Unit for the
quarter ended March 31, 1995 which will be paid to investors on or about May
15, 1995. The General Partner anticipates that the Partnership's net cash flow
will be sufficient to maintain this distribution level throughout 1995,
however, the amount and timing of distributions will be reviewed on a quarterly
basis.
Results of Operations
Partnership operations resulted in net income of $184,627 for the three months
ended March 31, 1995, compared with a net loss of $551,299 for the three months
ended March 31, 1994. The increase in net income can be attributed primarily
to the costs associated with the earthquake in the comparable 1994 period, as
discussed, and an increase in 1995 rental income offset partially by higher
payroll, general and administrative, and repairs and maintenance expenses.
Rental income for the three months ended March 31, 1995 was $2,631,174,
compared with $2,500,870 for the corresponding period in 1994. The increase
can be attributed to higher rental income at Pacific Inn and Nohl Ranch due to
improved average occupancy during 1995. Interest income for the quarter ended
March 31, 1995 was $41,475, compared with $15,697 for the quarter ended March
31, 1994. The increase reflects higher average cash balances maintained and
higher interest rates in 1995.
Total expenses were $2,488,022 for the three months ended March 31, 1995,
compared with $3,067,866 for the three months ended March 31, 1994. The
decrease is primarily due to the provision for earthquake loss of $694,207 for
the three months ended March 31, 1994. Payroll expenses were $718,138 for the
three months ended March 31, 1995 as compared to $647,865 for the three months
ended March 31, 1994. The increase is due to higher costs associated with the
assisted living programs instituted at Ocean House and Nohl Ranch. General
and administrative expenses were $429,882 and $397,046 for the three months
ended March 31, 1995 and March 31, 1994, respectively. The increase is
primarily the result of higher insurance costs at all four properties.
Repairs and maintenance expense increased to $132,340 for the three months
ended March 31, 1995 compared to $118,767 from the comparable 1994 period.
The increase is primarily attributable to carpet replacement and plumbing
repairs at Prell Gardens.
For the three months ended March 31, 1995, and 1994, the average occupancy
levels for the properties were as follows:
Property 1995 1994
Ocean House 91% 93%
Pacific Inn 98% 92%
Prell Gardens 92% 96%
Nohl Ranch 91% 79%
Average Occupancy 93% 90%
PART II OTHER INFORMATION
Items 1-5 Not Applicable
Item 6 Exhibits and Reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
three-month period covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Partnership has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SENIOR INCOME FUND L.P.
BY: SENIOR INCOME FUND INC.
General Partner
Date: May 12, 1995 BY: /s/ Moshe Braver
President, Director and
Chief Operating Officer
Date: May 12, 1995 BY: /s/ Sean Donahue
Vice President and
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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