FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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
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 33-11013
ASSOCIATED PLANNERS REALTY INCOME FUND
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-4120092
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5933 W. CENTURY BLVD., SUITE 900
LOS ANGELES, CALIFORNIA 90045
(Address of principal executive offices)
(Zip Code)
(310) 670-0800
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
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
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
In the opinion of the General Partner of Associated Planners Realty Income
Fund (the "Partnership"), all adjustments necessary for a fair presentation
of the Partnership's results for the three months ended March 31, 1998 and
1997, have been made in the following financial statements which are normal
recurring entries in nature. However, such financial statements are
unaudited and are subject to any year-end adjustments that may be necessary.
<TABLE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
MARCH 31, 1998 (UNAUDITED) AND DECEMBER 31, 1997
<CAPTION>
MARCH 31, 1998 December 31,
1997
<S> <C> <C>
ASSETS
Rental real estate, less accumulated
depreciation (Note 2) $4,032,571 $4,058,189
Cash and cash equivalents 170,739 230,503
Other assets 10,627 14,486
TOTAL ASSETS $4,213,937 $4,303,178
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Accounts payable:
Trade $ 1,542 $ 4,609
Related party (Note 3) 7,185 8,421
Security deposits 29,400 29,400
TOTAL LIABILITIES 38,127 42,430
PARTNERS' EQUITY (NOTE 6)
Limited partners:
$1,000 stated value per unit - authorized
12,000 units; issued and outstanding 5,096 4,134,130 4,212,880
General partners 41,680 47,868
TOTAL PARTNERS' EQUITY 4,175,810 4,260,748
TOTAL LIABILITIES AND PARTNERS' EQUITY $4,213,937 $4,303,178
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
<CAPTION>
LIMITED PARTNERS GENERAL
TOTAL UNITS AMOUNT PARTNER
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1997 $4,260,748 5,096 $4,212,880 $47,868
Net income 33,969 -- 28,266 5,703
Distributions to limited partners (107,016) -- (107,016) --
Distributions to general partner (Note 3 (a)) (11,891) -- -- (11,891)
BALANCE AT MARCH 31, 1998 $4,175,810 5,096 $4,134,130 $41,680
</TABLE>
<TABLE>
THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<CAPTION>
LIMITED PARTNERS GENERAL
TOTAL UNITS AMOUNT PARTNER
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996 $4,242,067 5,096 $4,205,288 $36,779
Net income 43,586 -- 36,922 6,664
Distributions to limited partners (50,960) -- (50,960) --
Distributions to general partner (Note 3 (a)) (5,662) -- -- (5,662)
BALANCE AT MARCH 31, 1997 $4,229,031 5,096 $4,191,250 $37,781
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
<CAPTION>
Three Three
Months Months
Ended Ended
March 31, March 31,
1998 1997
<S> <C> <C>
REVENUES
Rental $85,006 $101,757
Interest 2,595 260
87,601 102,017
COSTS AND EXPENSES
Operating 8,495 13,778
Property taxes --- 5,045
Property management fees (Note 3 (c) 4,185 4,356
General and administrative 15,334 9,639
Depreciation and amortization 25,618 25,613
53,632 58,431
NET INCOME $ 33,969 $ 43,586
NET INCOME PER LIMITED PARTNERSHIP
UNIT (Note 4) $5.55 $7.25
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
ASSOCIATED PLANNERS REALITY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $33,969 $43,586
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 25,618 25,613
Increase (decrease) from changes in:
Other assets 3,859 (9,414)
Accounts payable (4,303) (2,937)
NET CASH PROVIDED BY OPERATING ACTIVITIES 59,143 56,848
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to limited partners (107,016) (50,960)
Distributions to general partners (11,891) (5,662)
NET CASH (USED IN) FINANCING ACTIVITIES (118,907) (56,622)
NET INCREASE (DECREASE) IN CASH AND CASH (59,764) 226
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 230,503 72,207
CASH AND CASH EQUIVALENTS, END OF PERIOD $170,739 $72,433
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
BUSINESS
Associated Planners Realty Income Fund (the "Partnership), a California
limited partnership, was formed on December 23, 1986 under the Revised
Limited Partnership Act of the State of California for the purpose of
developing or acquiring, managing and operating unleveraged income producing
real estate. The Partnership met its minimum funding of $1,200,000 on
February 26, 1988 and terminated its offering on September 5, 1989. The
Partnership was formed to acquire income-producing real property throughout
the United States with emphasis on properties located in California and
southwestern states. The Partnership purchases such properties on an all
cash basis and intended on owning and operating such properties for
investment over an anticipated holding period of approximately five to ten
years.
BASIS OF PRESENTATION
The financial statements do not give effect to any assets that the partners
may have outside of their interest in the partnership, nor to any personal
obligations, including income taxes, of the partners.
RENTAL REAL ESTATE AND ESTATE AND DEPRECIATION
Assets are stated at cost. Depreciation is computed using the straight-line
method over estimated useful lives ranging from 31.5 to 40 years for financial
reporting and income tax reporting purposes.
In the event that facts and circumstances indicate that the cost of an asset
may be impaired, an evaluation of recoverability would be performed. If an
evaluation is required, the estimated future undiscounted cash flows
associated with the asset would be compared to the carrying amount to
determine if a write-down to market value is required.
LEASE COMMISSIONS
Lease commissions which are paid to real estate brokers for locating tenants
are capitalized and amortized over the life of the lease.
RENTAL REVENUE
Rental revenue is recognized when the amount is due and payable under the
terms of a lease agreement.
INVESTMENTS
The difference between historical cost and market value are reported
as unrealized gains or losses in the statement of income.
<PAGE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
(CONTINUED)
STATEMENTS OF CASH FLOWS
For purposes of the statements of cash flows, the Partnership considers cash
in the bank and all highly-liquid investments purchased with original
maturities of three months or less to be cash and cash equivalents.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
EARNINGS (LOSS) PER SHARE
On March 3, 1997, the FASB issued Statement of Financial Accounting Standards
No. 128, "Earnings Per Share" (SFAS 128). This pronouncement provides a
different method of calculating earnings per share than is currently used in
accordance with APB 15, "Earnings Per Share". SFAS 128 provides for the
calculation of Basic and Diluted earnings per share. Basic earnings per share
includes no dilution and is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding for
the period. Diluted earnings per share reflects the potential dilution of
securities that could share in the earnings of the entity, similar to fully
diluted earnings per share. Except where the provisions of the Securities
and Exchange Commission's Staff Accounting Bulletin No. 98 are applicable,
common share equivalents have been excluded in all years presented in the
Statements of Operations when the effect of their inclusion would be
anti-dillutive. SFAS 128 is effective for fiscal years and interim periods
after December 15, 1997. The Company has adopted this pronouncement during
the fiscal year ended December 31, 1997. The adoption of SFAS 128 does not
effect earnings per share for fiscal year ended December 31, 1997 and prior
years.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 130 (SFAS No. 130) "Reporting
Comprehensive Income," issued by the Financial Accounting Standards Board is
effective for financial statements with fiscal years beginning after December
15, 1997. Earlier application is permitted. SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. The Company
has not determined the effect on its financial position or results of
operations, is any, from the adoption of this statement.
<PAGE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
(CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS (CONT.)
Statement of Financial Accounting Standards No. 131 (SFAS No. 131),
"Disclosure about Segments of an Enterprise and Related Information," issued
by the Financial Accounting Standards Board is effective for financial
statements with fiscal years beginning after December 15, 1997. The new
standard requires that public business enterprises report certain information
about operating segments in complete sets of financial statements of the
enterprises and in condensed financial statements of interim periods issued
to shareholders. It also requires that public business enterprises report
certain information about their products and services, the geographic areas
in which they operate and their major customers. The Company has not
determined the effect on its financial position or results of operations, if
any, from the adoption of this statement.
<PAGE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1997
NOTE 1 - NATURE OF PARTNERSHIP BUSINESS
Associated Planners Realty Income Fund, a California limited partnership (the
"Fund"), was formed on December 23, 1986 under the Revised Limited Partnership
Act of the State of California for the purpose of acquiring, managing, and
operating income-producing real estate.
The Partnership began accepting subscriptions in October 1987 and closed the
offering on September 5, 1989. The Partnership began operations in
March 1988.
Under the terms of the partnership agreement, the General Partners (West Coast
Realty Advisors, Inc. and W. Thomas Maudlin Jr.) are entitled to cash
distributions from 10% to 15%. The General Partners are also entitled to net
income (loss) allocations varying from 1% to 15% and 1% of depreciation and
amortization in accordance with the partnership agreement. Further, the
General Partners receive acquisition fees for locating and negotiating the
purchase of rental real estate, management fees for operating the Partnership
and a commission on the sale of the partnership properties.
NOTE 2 - RENTAL REAL ESTATE
The Partnership owns the following two rental real estate properties:
Acquisition
Location (Property Name) Date Purchased Cost
Chino, California
(Yorba Center) October 25, 1988 $1,881,147
San Marcos, California (90%) January 9, 1990 2,816,904
San Marcos, California (10%) November 1, 1996 188,001
The major categories of rental real estate:
March 31, 1998 December 31, 1997
Land $1,332,861 $1,332,861
Building and improvements 3,554,327 3,554,327
4,887,188 4,887,188
Less accumulated depreciation 854,617 828,999
Net rental real estate 4,032,571 4,058,189
<PAGE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997(UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1997
(CONTINUED)
NOTE 2 - RENTAL REAL ESTATE (CONTINUED)
A significant portion of the Partnership's rental revenue was earned from
tenants whose individual rents represented more than 10% of total rental
revenue.
Specifically:
One tenant accounted for 58% in 1998
One tenant accounted for 58% in 1997
One tenant accounted for 48% in 1996
On November 1, 1996, Associated Planners Realty Income Fund ("Income Fund")
purchased the remaining real estate asset from Associated Planners Realty
Growth Fund ("Growth Fund"). This asset consisted of the 10% interest that
Income Fund had not already owned in an office building located in San Marcos,
California.
Income Fund paid $185,968 on November 2, 1996 for the 10% interest in the San
Marcos property. This amount consisted of $188,000 for the property itself,
less $2,032 for the share of a cash security deposit from the current tenant
that Growth Fund retained. There is no debt in connection with the property.
NOTE 3 - RELATED PARTY TRANSACTIONS
(a) For Partnership management services rendered to the Partnership,
the General Partner is entitled to receive 10% of all distributions of Cash
from Operations. These amounts totaled $11,891 for the three months ended
March 31, 1998 and $5,662 for the three months ended March 31, 1997.
See Note 6.
(b) For administrative services rendered to the Partnership, the General
Partner, in accordance with the partnership agreement, was reimbursed $3,000
for the three months ended March 31, 1998 and 1997.
(c) Property management fees incurred in accordance with the
Partnership Agreement to West Coast Realty Management, Inc., an affiliate of
the corporate General Partner, totaled $4,185 for the three months
March 31, 1998, and $4,356 for the three months ended March 31, 1997.
<PAGE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1997
(CONTINUED)
NOTE 4 - NET INCOME AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT
The Net Income per Limited Partnership Unit was computed in accordance with
the partnership agreement on the basis of the weighted average number of
outstanding Limited Partnership Units of 5,096 for 1998 and 1997.
The Limited Partner cash distributions, computed in accordance with the
Partnership Agreement, were as follows:
Record Date Outstanding Amount Total
Units Per Unit Distribution
December 30, 1997 5,096 $ 21.000 $ 107,016
June 30, 1997 5,096 10.500 53,508
March 31, 1997 5,096 10.500 53,508
December 31, 1996 5,096 10.000 50,960
Total $ 264,992
September 30, 1996 5,096 $ 10.000 $ 50,960
June 30, 1996 5,096 10.000 50,904
March 31, 1996 5,096 13.000 66,248
December 31, 1995 5,096 12.500 63,700
Total $ 231,812
The Partnership began paying distributions on a semi-annual basis with the
first record date and payment date being December 31, 1997 and February 6,
1998, respectively. This change will permit the Partnership to operate more
efficiently with lower Partnership operating expenses. These semi-annual
distributions will include cash distributions for the previous six months of
operations.
<PAGE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1997 (CONTINUED)
NOTE 5 - NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 130 (SFAS No. 130) "Reporting
Comprehensive Income," issued by the Financial Accounting Standards Board is
effective for financial statements with fiscal years beginning after December
15, 1997. Earlier application is permitted. SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. The
Company has not determined the effect on its financial position or results of
operations, is any, from the adoption of this statement.
Statement of Financial Accounting Standards No. 131 (SFAS No. 131),
"Disclosure about Segments of an Enterprise and Related Information," issued
by the Financial Accounting Standards Board is effective for financial
statements with fiscal years beginning after December 15, 1997. The new
standard requires that public business enterprises report certain information
about operating segments in complete sets of financial statements of the
enterprises and in condensed financial statements of interim periods issued
to shareholders. It also requires that public business enterprises report
certain information about their products and services, the geographic areas
in which they operate and their major customers. The Company has not
determined the effect on its financial position or results of operations, if
any, from the adoption of this statement.
NOTE 6 - REALLOCATION OF PARTNER BALANCES
Per the provisions of Section 11.1 (V)(ii) of the Partnership Agreement, the
General Partner determined that action was necessary to "cure the ambiguities"
within the Agreement. The ambiguity involved the treatment of the partnership
management fee, being paid to the General Partner, as an expense of the
Partnership, as opposed to a general partner withdrawal of capital. It was
determined that the partnership management fee shall be treated as a
withdrawal of capital in 1996 and beyond with a retroactive reallocation of
capital for partnership management fees paid prior to 1996. In order to
properly reflect this reallocation, a transfer of $170,030 was made from the
General Partner's capital account to the Limited Partners capital account
during the quarter ended March 31, 1996.
<PAGE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements in the Management Discussion and Analysis constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking
statements involve known and unknown risks, uncertainties, and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or
achievements, expressed of implied by such forward-looking statements.
INTRODUCTION
The Partnership began offering for sale limited partnership units in October
1987. On February 26, 1988, the Partnership reached its minimum offer level
of $1,200,000. The Partnership sold units throughout the remainder of the
year, and had raised $3,891,000 in gross proceeds or $3,483,788 net of
syndication costs and sales commissions as of December 31, 1988. During 1989,
the Partnership continued to raise funds through the sale of Units and had
raised $5,106,000 in gross proceeds or $4,594,101 net of syndication costs
and sales commissions as of September 5, 1989, the day the Partnership
terminated its offering of limited partnership units.
The Partnership was organized for the purpose of investing in, holding, and
managing improved, leveraged income-producing property, such as residential
property, office buildings, commercial buildings, industrial properties, and
shopping centers. The Partnership intended on owning and operating such
properties for investment over an anticipated holding period of approximately
five to ten years.
The Partnership's principal investment objectives are to invest in rental
real estate properties which will:
(1) Preserve and protect the Partnership's invested capital;
(2) Provide for cash distributions from operations;
(3) Provide gains through potential appreciation; and
(4) Generate Federal income tax deductions so that during the early
years of property operations, a portion of cash distributions may be
treated as a return of capital for tax purposes and, therefore, may
not represent taxable income to the limited partners.
<PAGE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
The ownership and operation of any income-producing real estate is subject to
those risks inherent in all real estate investments, including national and
local economic conditions, the supply and demand for similar types of
properties, competitive marketing conditions, zoning changes, possible
casualty losses, increases in real estate taxes, assessments, and operating
expenses, as well as others.
The Partnership is operated by West Coast Realty Advisors, Inc. ("WCRA") (the
corporate General Partner) and Mr. W. Thomas Maudlin Jr. (an individual
General Partner), collectively the "General Partner," subject to the terms of
the Amended and Restated Agreement of Limited Partnership. The Partnership
has no employees, and all administrative services are provided by WCRA, the
corporate General Partner.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership began offering for sale limited partnership units in October
1987. On February 26, 1988, the Partnership reached its minimum offering
level of $1,200,000. The Partnership sold units throughout the remainder of
the year, and had raised $3,891,000 in gross proceeds, or $3,483,788 net of
syndication costs and sales commissions, as of December 31, 1988. During
1989, the Partnership continued to raise funds through the sale of Units and
had raised $5,106,000 in gross proceeds, or $4,594,101 net of syndication
costs and sales commissions, as of September 5, 1989 - the day the
Partnership terminated its offering of limited partnership units.
The Partnership began paying distributions on a semi-annual basis with the
first record date and payment date being December 31, 1997 and February 6,
1998, respectively. This change will permit the Partnership to operate more
efficiently with lower Partnership operating expenses. These semi-annual
distributions will include cash distributions for the previous six months of
operations.
During the quarter ended March 31, 1998, the Partnership made distributions to
the general and limited partners totaling $118,907, which represented a income
distribution for the period from July 1, 1997 thru December 31, 1997.
Distributions are determined by management based on cash flow and the
liquidity position of the Partnership and anticipated occupancy of the
properties. It is the intention of management to make semi-annual
distributions of cash, subject to maintenance of reasonable reserves.
<PAGE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
Management uses cash as its primary measure of a partnership's liquidity. The
amount of cash that represents adequate liquidity for a real estate limited
partnership depends on several factors. Among them are:
1. Relative risk of the partnership;
2. Condition of the partnership's properties;
3. Stage in the partnership's life cycle (e.g., money-raising,
acquisition, operating or disposition phase); and
4. Distributions to partners.
The Partnership has adequate liquidity based upon the above four points. The
first point refers to the approximately 1% property reserve requirement of
capital funds raised that the Partnership currently has; this relatively low
reserve level is appropriate since all Partnership properties are acquired
without the use of debt financing. This is a minimum guideline that is
disclosed in the Partnership's prospectus; the Partnership had more than
enough funds to meet this requirement as of March 31, 1998. Related to the
property reserve requirement is the second point, the condition of the
Partnership's properties. Since the properties are in good condition, no
unusual maintenance and repair expenditures are anticipated. The third point
is relevant to the Partnership because after the January 1990 purchase of the
San Marcos property, the Partnership had effectively completed its acquisition
phase, and entered the operating phase. The subsequent purchase of the
remaining 10% interest in San Marcos property was achieved utilizing a
combination of reserves and, undistributed operating profits that were held
back for the purpose of facilitating the acquisition. The fourth point
relates to partner distributions. The Partnership makes distributions from
operations semi-annually. Such distributions are subject to payment of
Partnership expenses and reasonable reserves for expenses, maintenance, and
replacements.
During the quarter ended March 31, 1998 the Partnership paid the General
Partner a partnership management fee of $11,891. Partnership management fees
were calculated and paid in accordance with the Partnership Agreement.
The Tax Reform Acts of 1986 and 1987 and the Revenue Reconciliation Acts of
1990 and 1993 did not have a material impact on the Partnership's operations.
<PAGE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
The effects of the slowdown in the economy, inflation and changing prices have
not had a material impact on the Partnership's revenues and income from
operations. During the years of the Partnership's existence, inflationary
pressures in the U.S. economy have been minimal, and this has been consistent
with the experience of the Partnership in operating rental real estate in
California. The Partnership has several clauses in the leases with its
properties' tenants that would help alleviate much of the negative impact of
inflation.
CASH FLOWS - MARCH 31, 1998 VS. MARCH 31, 1997
Cash resources decreased $59,764 during the three months ended March 31, 1998
compared to a $226 increase in cash resources for the three months ended March
31, 1997. Cash provided by operating activities increased by $59,143 with the
largest contributor being $59,587 in cash basis net income (net income plus
depreciation expense) for the three months ended March 31, 1998. In contrast,
the three months ended March 31, 1997 provided $56,848 in cash from operating
activities due primarily to $69,199 in cash basis net income. During 1998,
$118,907 was distributed to the limited and general partners as noted in a
large use of cash under financing activities. This continues the
Partnership's trend of paying virtually all the cash basis income out to
partners in the form of semi-annual distributions. In contrast, 1997's cash
used for financing activities was $56,622 due to distributions to the limited
and general partners. There were no investing activities during the three
months ended March 31, 1998 or 1997.
RESULTS OF OPERATIONS
Operations for the quarter ended March 31, 1998 represented a full quarter
of rental operations for the Partnership's two properties.
The net income for the quarter ended March 31, 1998 ($33,969) was lower than
the quarter ended March 31, 1997 ($43,586) due to lower rents collected from
the San Marcos property. The Partnership did not have any adverse events that
significantly impacted net income during the quarter ended March 31, 1998, and
all properties that have been purchased by the Partnership have operated at
levels equal to current expectations. All tenants are current on their lease
obligations.
<PAGE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
RESULTS OF OPERATIONS (CONT.)
Rental revenue decreased $16,751 (16%) for the three months ended March 31,
1998 as compared to the three months ended March 31, 1997, due to lower rents
collected from the San Marcos property. Interest income increased $2,335 for
the three months ended March 31, 1998 as compared to the three months ended
March 31, 1997. This increase was due to the Partnership converting from a
quarterly distribution cycle to a semi-annual distribution cycle with the
first record date and payment date being December 31, 1997 and February 6,
1998, respectively. Hence, net income for the third quarter 1997 was held in
a interest bearing account and paid on February 6, 1998. In contrast, the
net income for the third quarter in 1996 was paid in November 1996.
Operating expenses decreased $5,283 (38%) as a result of lower property taxes
and leasing commission expenses during the quarter ended March 31, 1998
compared to the quarter ended March 31, 1997. General and administrative
expenses increased $5,695 (59%) due to higher legal and accounting fees.
Depreciation expense remained constant for the quarters ending March 31, 1998
and March 31, 1997.
During the quarter ended March 31, 1998, the Partnership distributed $107,016
to the limited partners and $11,891 to the general partners, as compared to
the quarter ended March 31, 1997 when the Partnership distributed $50,960 to
the limited partners and $5,662 to the general partners. This increase was
due to the Partnership converting from a quarterly distribution cycle to a
semi-annual distribution cycle with the first record date and payment date
being December 31, 1997 and February 6, 1998, respectively. Cash basis
income for the quarter ended March 31, 1998 was $59,587. This was derived by
adding depreciation and amortization expense to net income. In contrast,
cash basis income for the quarter ended March 31, 1997 was $69,199.
Overall, the Partnership generated $59,587 in income from operations before
depreciation expense of $25,618 for the quarter ended March 31, 1998. This
compares unfavorably to the quarter ending March 31, 1997 when income from
operations totaled $69,199 before depreciation of $25,613. Net income per
limited partnership unit decreased from $7.38 in 1997 to $5.55 in 1998. The
number of limited partnership units outstanding in each quarter was 5,096.
In summary then, despite lower rents at the San Marcos property all properties
and the Partnership itself, were operating profitably.
<PAGE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
SALE OF PROPERTIES
The Yorba Center located in Chino, California was listed for sale with a
commercial real estate broker in October 1997. The acquisition cost of this
property was $1,882,283. There is no debt associated with the property. At
this time, there is no clear indication as to the amount of net proceeds to be
realized from the sale of the property. However, the General Partner expects
to be able to consummate a sale of the property during 1998. The proceeds
from the sale of the property will be distributed to the limited partners and
the General Partner in accordance with the terms of the Partnership Agreement.
Although the Partnership intends to aggressively market the Yorba Center
property, there is no guarantee that a sale will actually take place, within
the time frame mentioned above, and at a sales price acceptable to the
Partnership.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 130 (SFAS No. 130) "Reporting
Comprehensive Income," issued by the Financial Accounting Standards Board is
effective for financial statements with fiscal years beginning after December
15, 1997. Earlier application is permitted. SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. The
Company has not determined the effect on its financial position or results of
operations, is any, from the adoption of this statement.
Statement of Financial Accounting Standards No. 131 (SFAS No. 131),
"Disclosure about Segments of an Enterprise and Related Information," issued
by the Financial Accounting Standards Board is effective for financial
statements with fiscal years beginning after December 15, 1997. The new
standard requires that public business enterprises report certain information
about operating segments in complete sets of financial statements of the
enterprises and in condensed financial statements of interim periods issued
to shareholders. It also requires that public business enterprises report
certain information about their products and services, the geographic areas
in which they operate and their major customers. The Company has not
determined the effect on its financial position or results of operations, if
any, from the adoption of this statement.
<PAGE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
PART II
O T H E R I N F O R M A T I O N
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. EXHIBIT AND REPORTS ON FORM 8-K
(a)Information required under this section has been included in the
financial statements.
(b)Reports on Form 8-K
None
<PAGE>
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
S I G N A T U R E S
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.
ASSOCIATED PLANNERS REALTY INCOME FUND
A California Limited Partnership
(Registrant)
May 5, 1998 By: WEST COAST REALTY ADVISORS, INC.
A California Corporation,
A General Partner
Neal E. Nakagiri
Director and Executive Vice President/Secretary
May 5, 1998
Michael G. Clark
Vice President/Treasurer
<TABLE> <S> <C>
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<CIK> 0000808420
<NAME> ASSOCIATED PLANNERS REALTY INCOME FUND
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 170,739
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 189,394
<PP&E> 4,887,188
<DEPRECIATION> (854,617)
<TOTAL-ASSETS> 4,213,937
<CURRENT-LIABILITIES> 38,127
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,175,810
<TOTAL-LIABILITY-AND-EQUITY> 4,213,937
<SALES> 85,006
<TOTAL-REVENUES> 87,601
<CGS> 53,632
<TOTAL-COSTS> 53,632
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 33,969
<INCOME-TAX> 0
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<EXTRAORDINARY> 0
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