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 June 30, 1998
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 Identification No.
Incorporation or Organization
3 World Financial Center,
29th Floor,
New York, NY
Attn.: Andre Anderson 10285
Address of Principal Executive Offices Zip Code
(212) 526-3183
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 June 30, At December 31,
1998 1997
Assets
Real estate assets held for disposition $ 21,542 $ 21,542
Cash and cash equivalents 5,614,020 5,320,317
Prepaid expenses 227,476 204,867
Total Assets $ 5,863,038 $ 5,546,726
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 227,509 $ 180,192
Deferred rent payable 1,259,262 1,236,564
Due to affiliates 15,000 61,973
Security deposits payable 58,849 56,831
Total Liabilities 1,560,620 1,535,560
Partners' Capital:
General Partner _ _
Limited Partners
(4,827,500 units outstanding) 4,302,418 4,011,166
Total Partners' Capital 4,302,418 4,011,166
Total Liabilities and
Partners' Capital $ 5,863,038 $ 5,546,726
Consolidated Statement of Partners' Capital
For the six months ended June 30, 1998
General Limited
Partner Partners Total
Balance at December 31, 1997 $ _ $4,011,166 $4,011,166
Net Income _ 291,252 291,252
Balance at June 30, 1998 $ _ $4,302,418 $4,302,418
Consolidated Statements of Operations
Three months ended June 30, Six months ended June 30,
1998 1997 1998 1997
Income
Rental $1,020,115 $2,818,102 $2,000,221 $5,642,965
Interest and other income 68,488 58,910 136,988 115,892
Total Income 1,088,603 2,877,012 2,137,209 5,758,857
Expenses
Payroll 279,750 771,511 562,052 1,557,912
Rent and utilities 276,940 391,409 552,296 804,641
General and administrative 134,992 416,271 332,081 944,012
Supplies 91,383 265,423 180,464 537,690
Repairs and maintenance 62,805 156,296 133,972 282,297
Real estate taxes 38,187 98,392 76,374 196,783
Loss on real estate
assets held for disposition _ _ _ 48,000
Travel and entertainment 4,210 5,235 8,718 9,813
Total Expenses 888,267 2,104,537 1,845,957 4,381,148
Net Income $ 200,336 $ 772,475 $ 291,252 $1,377,709
Net Income Allocated:
To the General Partner $ _ $ 7,725 $ _ $ 13,777
To the Limited Partners 200,336 764,750 291,252 1,363,932
$ 200,336 $ 772,475 $ 291,252 $1,377,709
Per limited partnership unit
(4,827,500 outstanding) $ .04 $ .16 $ .06 $ .28
Consolidated Statements of Cash Flows
For the six months ended June 30, 1998 1997
Cash Flows From Operating Activities
Net Income $291,252 $1,377,709
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss on real estate assets held for disposition _ 48,000
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Prepaid expenses (22,609) (216,101)
Accounts payable and accrued expenses 47,317 (884,508)
Deferred rent payable 22,698 22,698
Due to affiliates (46,973) 55,908
Security deposits payable 2,018 (8,050)
Net cash provided by operating activities 293,703 395,656
Cash Flows From Investing Activities
Additions to real estate _ (77,000)
Net cash used for investing activities _ (77,000)
Cash Flows From Financing Activities
Distributions paid to partners _ (731,440)
Net cash used for financing activities _ (731,440)
Net increase (decrease)
in cash and cash equivalents 293,703 (412,784)
Cash and cash equivalents, beginning of period 5,320,317 4,104,695
Cash and cash equivalents, end of period $5,614,020 $3,691,911
Notes to the Consolidated Financial Statements
The unaudited financial statements should be read in conjunction with the
Partnership's annual 1997 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 June 30, 1998 and the results of
operations for the three and six months ended June 30, 1998 and 1997, cash
flows for the six months ended June 30, 1998 and 1997 and the statement of
changes in partners' capital for the six months ended June 30, 1998. Results of
operations for the period are not necessarily indicative of the results to be
expected for the full year.
No significant events have occurred subsequent to fiscal year 1997, and no
material contingencies exist, which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
On June 9, 1997, the Partnership executed an agreement with an unaffiliated
third party, MBK Senior Properties, Ltd. (the "Buyer"), to sell the
Partnership's four Properties (the "Sale") for $36,300,000, subject to
adjustments and prorations for closing costs, and a credit for the cost to
repair earthquake damage at the Ocean House property. On August 1, 1997, the
Partnership closed the Sale for three of the four Properties _ Prell Gardens,
Nohl Ranch and Pacific Inn, for net proceeds of $30,148,357. The sale of the
Partnership's fourth property, Ocean House, is subject to the satisfaction of
certain conditions of the buyer and approval of certain building repairs by the
City of Santa Monica. Although there have been unexpected delays, it is
anticipated that the sale of Ocean House will occur during 1998. In the
meantime, the Partnership will continue to operate the property and generate
rental income from operations.
As a result of the Sale, the Partnership suspended the payment of quarterly
cash distributions beginning with the second quarter 1997 distribution which
would have been paid on or about August 15, 1997. On August 25, 1997, the
Partnership paid a cash distribution in the amount of $5.75 per Unit,
representing proceeds from the sale of Prell Gardens, Nohl Ranch, and Pacific
Inn and cash flow from operations for the second quarter of 1997. Since
inception, limited partners have received cash distributions totaling $11.235
per $10.00 Unit.
Upon completion of the sale of Ocean House, the General Partner will distribute
the net proceeds from the sale together with the Partnership's remaining cash
reserves (after payment of, or provision for, the Partnership's liabilities and
expenses, and establishment of a reserve for contingencies, if any) and
dissolve the Partnership in accordance with the Partnership Agreement. However,
the timing and amount of the final distribution is subject to operations at
Ocean House, the timing of the closing of the Ocean House sale, closing
adjustments and other factors, all of which remain uncertain. While it is
anticipated that the sale of Ocean House will be completed during 1998, there
can be no assurance that the sale will be consummated, or that the sale will
result in any particular level of net sales proceeds.
At June 30, 1998, the Partnership had cash and cash equivalents of $5,614,020
compared to $5,320,317 at December 31, 1997. The increase is primarily due to
the discontinuation of cash distributions.
Prepaid expenses were $227,476 at June 30, 1998 compared to $204,867 at
December 31, 1997. The increase is due to the timing of property insurance
payments and management fees.
Accounts payable and accrued expenses were $227,509 at June 30, 1998 compared
to $180,192 at December 31, 1997. The change is primarily due to the timing of
property operating expense payments, management fee payments and the timing of
receipt of pre-paid rents, partially offset by a decrease in certain accruals.
Results of Operations
Partnership operations resulted in net income of $200,336 and $291,252 for the
three and six months ended June 30, 1998, compared to $772,475 and $1,377,709
for the three and six months ended June 30, 1997. The decrease is primarily
due to lower rental income as a result of the sale of three of the
Partnership's four properties in 1997, partly offset by lower expenses and an
increase in interest income.
Rental income for the three and six months ended June 30, 1998 was $1,020,115
and $2,000,221 compared to $2,818,102 and $5,642,965 for the corresponding
periods in 1997. The decrease is due to the sale of three of the Properties on
August 1, 1997. Rental income for the six months ended June 30, 1998 at Ocean
House increased by 8% over the same period last year primarily as a result of
increased rental rates on new leases.
As a result of the sale of three of the Partnership's Properties on August 1,
1997, all expense categories decreased from the 1997 periods to the 1998
periods.
Loss on real estate held for disposition was $0 for the six months ended June
30, 1998 compared to $48,000 for the same period in 1997. The 1997 amount
represents costs associated with balcony restoration at Ocean House which were
expensed through the loss provision in compliance with Statement of Financial
Accounting Standards No. 121.
For the six months ended June 30, 1998 and 1997, Ocean House reported average
occupancy of 98% and 95%, respectively.
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: August 14, 1998 BY: /s/Michael T. Marron
Name:Michael T. Marron
Title:Director, President and Chief Financial
Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Jun-30-1998
<CASH> 5,614,020
<SECURITIES> 000
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 227,476
<PP&E> 21,542
<DEPRECIATION> 000
<TOTAL-ASSETS> 5,863,038
<CURRENT-LIABILITIES> 227,509
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 4,302,418
<TOTAL-LIABILITY-AND-EQUITY> 5,863,038
<SALES> 2,000,221
<TOTAL-REVENUES> 2,137,209
<CGS> 000
<TOTAL-COSTS> 1,513,876
<OTHER-EXPENSES> 332,081
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 291,252
<INCOME-TAX> 000
<INCOME-CONTINUING> 291,252
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 291,252
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
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