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, 1997
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 Incorporation or Organization I.R.S. Employer Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn.: Andre Anderson 10285-2900
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 ____
Consolidated Balance Sheets At March 31, At December 31,
1997 1996
Assets
Real estate assets held for disposition $18,301,085 $18,301,085
Cash and cash equivalents 3,814,844 4,104,695
Prepaid expenses 123,032 168,259
Total Assets $22,238,961 $22,574,039
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 410,453 $ 1,033,316
Deferred rent payable 1,202,518 1,191,169
Due to affiliates 233,031 190,609
Security deposits payable 143,200 148,700
Distribution payable 365,720 365,720
Total Liabilities 2,354,922 2,929,514
Partners' Capital (Deficit):
General Partner (52,515) (54,910)
Limited Partners (4,827,500 units outstanding) 19,936,554 19,699,435
Total Partners' Capital 19,884,039 19,644,525
Total Liabilities and Partners' Capital $22,238,961 $22,574,039
Consolidated Statement of Partners' Capital (Deficit)
For the three months ended March 31, 1997
General Limited
Partner Partners Total
Balance at December 31, 1996 $(54,910) $19,699,435 $19,644,525
Net income 6,052 599,182 605,234
Distributions (3,657) (362,063) (365,720)
Balance at March 31, 1997 $(52,515) $19,936,554 $19,884,039
Consolidated Statements of Operations
For the three months ended March 31, 1997 1996
Income
Rental $2,824,863 $2,676,191
Interest and other income 56,982 45,964
Total income 2,881,845 2,722,155
Expenses
Payroll 786,401 758,370
Depreciation -- 373,148
General and administrative 527,741 380,674
Rent and utilities 413,232 408,576
Supplies 272,267 288,546
Repairs and maintenance 126,001 217,473
Real estate taxes 98,391 92,190
Travel and entertainment 4,578 12,173
Loss on real estate assets held
for disposition 48,000 --
Total expenses 2,276,611 2,531,150
Net Income $ 605,234 $ 191,005
Net Income Allocated:
To the General Partner $ 6,052 $ 1,910
To the Limited Partners 599,182 189,095
$ 605,234 $ 191,005
Per limited partnership unit
(4,827,500 outstanding) $.12 $.04
Consolidated Statements of Cash Flows
For the three months ended March 31, 1997 1996
Cash Flows From Operating Activities
Net income $ 605,234 $ 191,005
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation -- 373,148
Loss on real estate assets held for disposition 48,000 --
Increase (decrease) in cash arising from changes in
operating assets and liabilities
Prepaid expenses 45,227 (7,708)
Accounts payable and accrued expenses (622,863) 40,819
Deferred rent payable 11,349 11,348
Due to affiliates 42,422 (33,241)
Security deposits payable (5,500) (3,950)
Net cash provided by operating activities 123,869 571,421
Cash Flows From Investing Activities
Additions to real estate (48,000) (50,011)
Net cash used for investing activities (48,000) (50,011)
Cash Flows From Financing Activities
Distributions paid to partners (365,720) (365,720)
Net cash used for investing activities (365,720) (365,720)
Net increase (decrease) in cash and cash equivalents (289,851) 155,690
Cash and cash equivalents, beginning of period 4,104,695 4,143,727
Cash and cash equivalents, end of period $3,814,844 $4,299,417
Supplemental Disclosure of Non-Cash Investing Activities
Capital expenditures funded through accounts payable $ -- $ 28,195
Notes to the Consolidated Financial Statements
The unaudited financial statements should be read in conjunction
with the Partnership's annual 1996 audited financial statements
within Form 10-K.
The unaudited financial statements include all normal and
reoccurring adjustments which are, in the opinion of management,
necessary to present a fair statement of financial position as of
March 31, 1997 and the results of operations and cash flows for
the three months ended March 31, 1997 and 1996 and the statement
of changes in partners' capital (deficit) for the three months
ended March 31, 1997. Results of operations for the period are
not necessarily indicative of the results to be expected for the
full year.
Reclassification. Certain prior year amounts have been
reclassified in order to conform to the current year's
presentation.
The following significant event has occurred subsequent to fiscal
year 1996, or the following material contingencies exist, which
requires disclosure in this interim report per Regulation S-X,
Rule 10-01, Paragraph (a)(5):
Effective as of January 1, 1997, the Partnership began
reimbursing certain expenses incurred by the General Partner and
its affiliates in servicing the Partnership to the extent
permitted by the partnership agreement. In prior years,
affiliates of the General Partner had voluntarily absorbed these
expenses.
Part 1, Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
At March 31, 1997, the Partnership had cash and cash equivalents
of $3,814,844, largely unchanged from $4,104,695 at
December 31, 1996.
Prepaid expenses were $123,032 at March 31, 1997, compared to
$168,259 at December 31, 1996. The decrease is mainly due to a
refund for workman's compensation insurance in 1996 received in
1997.
Accounts payable and accrued expenses were $410,453 at March 31,
1997 compared to $1,033,316 at year-end 1996. The decrease is
primarily due to the payment of outstanding invoices for services
rendered in connection with the earthquake related repair work at
Prell Gardens and Ocean House.
At March 31, 1997, due to affiliates was $233,031, compared to
$190,609 at December 31, 1996. The increase is mainly due to an
increase in general and administrative expenses as discussed
under the section titled "Results of Operations".
The Partnership is marketing its four properties for sale and
expects to sell them in 1997. The General Partner has received
numerous bids and serious expressions of interest from
unaffiliated third party buyers. The Partnership is in the
process of analyzing the bids it has received. As a result of
the pending sale, the Properties were reclassified on the
consolidated balance sheet as of December 31, 1996, as "Real
estate assets held for disposition." However, there can be no
assurance that any transaction will be consummated or as to the
price thereof.
As a result of the Northridge earthquake that struck the greater
Los Angeles area on January 17, 1994, damage was sustained at two
of the Properties, Ocean House and Prell Gardens. The General
Partner pursued reimbursement from the insurance carrier for the
repair costs, less the deductible, under the Partnership's
insurance policy. However, the insurance carrier refused to
cover the cost to bring the buildings into compliance with
building codes enacted after the Northridge Earthquake. The
insurance carrier also disputed the amount of damage the
buildings sustained. As a result, on September 15, 1995, the
General Partner initiated litigation against the insurance
carrier and insurance broker. On November 19, 1996, the
Partnership and General Partner, executed a Mutual Release and
Settlement Agreement (the "Settlement Agreement") with the
insurance carrier, whereby the Partnership agreed to release the
insurance carrier from all claims pending under the lawsuit and
to assign its remaining claim against the insurance broker to the
insurance carrier. The Partnership received $3,200,000 from the
insurance carrier pursuant to the Settlement Agreement. Costs
associated with the litigation which include legal, expert
witness and engineering fees were offset against the $3,200,000,
resulting in net insurance settlement income of approximately
$2,318,387.
In light of the Partnership's sales efforts, it is anticipated
that the Partnership will sell all of its properties prior to
beginning repair work at Ocean House. As such, the Partnership
anticipates selling Prell Gardens and Ocean House on an "as is"
and "where is" basis.
The General Partner declared a cash distribution of $.075 per
Unit for the quarter ended March 31, 1997 which was paid to
investors on May 12, 1997. Since inception, limited partners
have received cash distributions totaling $5.485 per original
$10.00 Unit. Until the sale of the Partnership's properties is
complete, the level of future distributions will be determined on
a quarterly basis and will be based on cash flow from operations,
tempered by the Partnership's capital needs.
Results of Operations
Partnership operations resulted in net income of $605,234 for the
three months ended March 31, 1997, compared to $191,005 for the
three months ended March 31, 1996. The increase is primarily due
to the elimination of depreciation expense in 1997 as a result of
reclassifying the real estate assets as held for disposition at
December 31, 1996, and higher rental income in 1997.
Rental income for the three months ended March 31, 1997 was
$2,824,863, compared with $2,676,191 for the corresponding period
in 1996. The increase is primarily attributed to improved
average occupancy at Ocean House and Nohl Ranch, and was
partially offset by the decline in rental income at Prell Gardens
as a result of lower overall occupancy associated with the
earthquake related repair work. Interest and other income for
the quarter ended March 31, 1997 was $56,982, compared with
$45,964 for the quarter ended March 31, 1996. The increase
represents additional insurance proceeds received in 1997 related
to the 1996 termite extermination at Pacific Inn.
Depreciation expense totaled $0 for the three months ended March
31, 1997, compared to $373,148 for the same period in 1996. The
Partnership recorded no depreciation expense in 1997 as a result
of the properties being classified as real estate assets held for
disposition. Repairs and maintenance expense decreased from
$217,473 for the three months ended March 31, 1996, to $126,001
for the comparable period in 1997, as a result of lower expenses
for repairs that were deemed to be non-capital expenditures.
General and administrative expenses for the three months ended
March 31, 1997 were $527,741, compared to $380,674 for the same
period in 1996. During the 1997 period, certain expenses
incurred by the General Partner, its affiliates, and an
unaffiliated third party service provider in servicing the
Partnership, which were voluntarily absorbed by affiliates of the
General Partner in prior periods, were reimbursed to the General
Partner and its affiliates.
For the three months ended March 31, 1997, loss on real estate
assets held for disposition was $48,000 compared to $0 for the
same period in 1996. The 1997 amount represents balcony repairs
at Ocean House that were expensed in accordance with the
Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
For the three months ended March 31, 1997, and 1996, the average
occupancy levels for the properties were as follows:
Property Rental Units 1997 1996
Nohl Ranch 133 98% 97%
Ocean House 121 96% 89%
Pacific Inn 134 98% 98%
Prell Gardens 102 76% 79%
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(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 Exchange Act of
1934, the Registrant 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 14, 1997 BY: /s/ Moshe Braver
Name:Moshe Braver
Title:President, Director and Chief
Operating Officer
Date: May 14, 1997 BY: /s/ Sean Donahue
Name:Sean Donahue
Title:Vice President and Chief
Financial Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Mar-31-1997
<CASH> 3,814,844
<SECURITIES> 000
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 3,937,876
<PP&E> 18,301,085
<DEPRECIATION> 000
<TOTAL-ASSETS> 22,238,961
<CURRENT-LIABILITIES> 1,152,404
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 19,884,039
<TOTAL-LIABILITY-AND-EQUITY> 22,238,961
<SALES> 2,824,863
<TOTAL-REVENUES> 2,881,845
<CGS> 000
<TOTAL-COSTS> 1,700,870
<OTHER-EXPENSES> 527,741
<LOSS-PROVISION> 48,000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 605,234
<INCOME-TAX> 000
<INCOME-CONTINUING> 605,234
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 605,234
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
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