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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 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, (A CALIFORNIA LIMITED PARTNERSHIP)
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(Exact name of registrant as specified in its charter)
CALIFORNIA 95-4120092
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State or other jurisdiction of (IRS Employer
incorporation or organization Identification)
5933 WEST CENTURY BLVD., 9TH FLOOR, LOS ANGELES, CA 90045-5454
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 670-0800
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
-------------------------------------
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ]
<PAGE> 2
Certain statements in the Annual Report on Form 10-K, particularly under Items 1
through 8, 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 Partnership to be materially different from any future results, performance
or achievements, expressed or implied by such forward-looking statements.
PART I
ITEM 1. BUSINESS
Associated Planners Realty Income Fund (the "Partnership"), was organized in
December 1986, under the California Revised Limited Partnership Act. West Coast
Realty Advisors, Inc. ("WCRA"), a California corporation, and W. Thomas Maudlin
Jr., an individual, are general partners (collectively referred to herein as the
"General Partner").
The Partnership was organized for the purpose of investing in, holding, and
managing improved, unleveraged income-producing property, such as residential
properties, office buildings, commercial buildings, industrial properties,
mini-warehouse facilities, and shopping centers ("Properties"), which are
believed to have potential for cash flow and capital appreciation. The
Partnership intended on owning and operating such Properties for investment over
an anticipated holding period of approximately five to ten years. At December
31, 1998, the Partnership had no employees.
The Partnership's principal investment objectives are to invest the net proceeds
in real 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 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.
On February 26, 1988, the Partnership attained its minimum funding requirement
with the initial release of escrow funds totaling $1,272,000 and terminated its
offering on September 5, 1989. As of December 31, 1989, gross proceeds from
sales of Partnership units totaled $5,106,000 and $4,594,101 net of syndication
costs and sales commissions.
On October 25, 1988, the Partnership acquired a shopping center located in
Chino, California (the "Center"). On January 9, 1990, the Partnership, together
with Associated Planners Realty Growth Fund ("Growth Fund"), purchased a
one-story building located in San Marcos, California. On November 1, 1996,
Associated Planners Realty Income Fund ("Income Fund") purchased the remaining
10% interest in the one story building located in San Marcos, California from
Growth Fund.
At December 31, 1998, all of the Partnership's remaining properties were held
for a sale. The General Partner is negotiating sales contract with potential
buyers of the Yorba Center and San Marcos properties. The General Partner plans
to liquidate the Partnership after the final property is sold. There is no
assurance that the Yorba Center or San Marcos properties will be sold and the
Partnership will be liquidated during 1999. The financial statements do not
contain any adjustments that might result form the liquidation of the
Partnership.
1
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The ownership and operation of any income-producing real estate is subject to
those risks inherent in all real estate investments. These include national and
local economic conditions, the supply of and demand for similar types of real
property, competitive marketing conditions, zoning changes, possible casualty
losses, and increases in real estate taxes, assessments, and operating expenses,
as well as others.
The Partnership is subject to competitive conditions that exist in the local
markets where it operates rental real estate. These conditions are discussed in
ITEM 2 -- "PROPERTIES".
The Partnership is operated by 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 West Coast Realty
Advisors Inc. ("WCRA") - the co-General Partner.
ITEM 2. PROPERTIES
The properties of the Partnership are described below:
YORBA CENTER
On October 25, 1988, the Partnership purchased Yorba Center (the "Center"), a
retail shopping center located in Chino, California.
The Center, constructed in 1988, provides 12,697 rentable square feet located on
a .91-acre parcel of land. As of December 31, 1998, the Center was 100% leased
to nine tenants. The average monthly rent per occupied square foot was $1.15.
All but two tenants are renting space on a "triple net" lease basis, i.e., each
tenant being proportionately responsible for payment of all expenses including
insurance, taxes, maintenance, and other operating expenses. The remaining two
tenants are renting space on a "gross" basis, i.e. the landlord is responsible
for payment of all expenses pertaining to these tenants.
The building and improvements are depreciated over 31.5 to 40 years using a
straight-line method for both financial and income tax reporting purposes. The
financial and income tax basis for the property are the same. In the opinion of
the General Partner, the property is adequately insured. The property is managed
by West Coast Realty Management, Inc. ("WCRM"), an affiliate of the corporate
General Partner.
The Center is dependent upon the vitality of the consumer market in the general
area. Since the City of Chino applies strict building regulations on developers,
it is expected that new development will be limited, thereby preserving the
Center's competitive edge during the Partnership's intended holding period.
Although all areas of Southern California have occasionally been affected by the
economic slowdowns, layoffs, plant closings and military cutbacks, these
economic factors are not expected to significantly impact the occupancy of the
shopping center.
Tenants occupying 10% or more of rental square footage as of December 31, 1998:
San Bernardino County Superintendent Schools: 17.11% of rental square footage;
$30,488 rent per year; lease expires on June 30, 2000; Renewal Options: Lessee
has one option to extend the lease for one additional year.
Mels Liquor: 15.79% of rental square footage; $43,469 rent per year; lease
expires on May 31, 2002; Renewal Options: Lessee has option to extend lease 5
years to May 31, 2007.
Video Club: 13.69% of rental square footage; $17,730 rent per year; lease
expires on August 31, 1999; Renewal Options: No renewal options.
Descry Cal: 10.04% of rentable square footage; $25,245 rent per year; lease
expires on May 31, 2002.
2
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SAN MARCOS INDUSTRIAL BUILDING
On January 9, 1990, the Partnership together with Associated Planners Growth
Fund (a 90%/10% interest, respectively) purchased the San Marcos Industrial
Building located in San Marcos, California. On November 1, 1996, Associated
Planners Realty Income Fund ("Income Fund") purchased the remaining 10% from
Associated Planners Realty Growth Fund ("Growth Fund"). This asset consisted of
the remaining 10% interest that Income Fund had not already owned in an office
building located in San Marcos, California.
The industrial building, constructed in 1986 located on a 2.66 acre parcel of
land, consists of 40,720 rentable square feet including 6,000 square feet of
office area plus 1,300 square feet of mezzanine above the office area.
On February 13, 1995, a triple net lease was executed with No Fear, Inc., which
expired on June 30, 1998. This lease required the tenant to pay insurance,
taxes, maintenance, and all other operating costs. Since the expiration of the
lease on June 30, 1998, the property was leased on a month-to-month basis until
September 30, 1998. The property has remained vacant from October 1, 1998
through December 31, 1998.
The building is located in North San Diego County, in an area of increasing
population and desirability for San Diego area professional and skilled workers
and significant employers. It is expected, that the building will benefit from
the projected growth in the North San Diego County area.
The building and improvements are depreciated over 31.5 to 40 years using a
straight-line method for both financial and income tax reporting purposes. The
financial and income tax basis for the property are the same. In the opinion of
the General Partner, the property is adequately insured. The property is managed
by WCRM.
The San Marcos property (with No Fear being the sole tenant) represented 51.6%
of the Partnership's total rental revenue for 1998, 57.7% for 1997 and 53.7% for
1996.
On March 24, 1999, the General Partner sold the San Marcos property to an
unaffiliated buyer for $2,730,000.
SUMMARY
As of December 31, 1998, the combined occupancy rate for the Partnership's
properties was 24%. The Yorba Shopping Center property is fully leased and is
generating a level of cash flow consistent with the market conditions in which
the properties operate, while the San Marcos property has been vacant from
October 1, 1998 through December 31, 1998. The Partnership continues to market
the San Marcos for sale through a listing agent.
As of December 31, 1998, both properties were held for sale. The General Partner
is negotiating sales contracts with potential buyers of the Yorba Center and San
Marcos Properties. There is no assurance that the Yorba Center or San Marcos
Properties will be sold during 1999.
The total acquisition cost to the Partnership of each property and the date of
acquisition are as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
DESCRIPTION COST DATE
- ----------------------------------------------------------------------------
<S> <C> <C>
Yorba Center $1,532,283 10/25/88
San Marcos Industrial Building (90%) $2,816,904 01/09/90
San Marcos Industrial Building (10%) $ 188,001 11/01/96
- ----------------------------------------------------------------------------
</TABLE>
3
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The schedule below indicates the average occupancy rate expressed as a
percentage of square feet for the last five years:
<TABLE>
<CAPTION>
SAN MARCOS
YEAR YORBA CENTER INDUSTRIAL BUILDING
---------------------------------------------------------------------------
<S> <C> <C>
1998 100% 80%
1997 100% 100%
1996 100% 100%
1995 90% 88%
1994 90% 100%
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
At December 31, 1998, there were 5,096 limited partnership units outstanding and
431 unit holders of record. The units sold are not freely transferable and no
public market for the sold units presently exists or is likely to develop.
Distributions totaling $259,896, $157,976 and $231,812 were made to limited
partners in 1998, 1997 and 1996, to unit holders of record at the end of the
calendar quarters indicated below. These distributions constituted a return of
capital of $65,909, $36,234 and $63,402, in 1998, 1997 and 1996, respectively.
The general partner distributions totaled $28,877, $17,553 and $25,763 for 1998,
1997 and 1996. In addition, $142,688 ($28/limited partnership unit) in
distributions were paid to unit holders subsequent to year-end on February 12,
1999.
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 permitted 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. The
decrease in 1997 distributions was due to the fact that the third and fourth
quarter distributions were paid in February 1998, as the partnership converted
to a semi-annual distribution payment method. If the third quarter distribution
for 1997 had been paid in 1997, the total distribution would have been
approximately $211,484.
The limited partner distribution amounts for 1998, 1997 and 1996 are summarized
below:
<TABLE>
<CAPTION>
PER UNITS TOTAL
RECORD DATE DATE PAID UNIT OUTSTANDING PAID
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12/31/95 02/06/96 $ 12.50 5,096 $ 63,700
03/31/96 04/30/96 13.00 5,096 66,248
06/30/96 08/06/96 10.00 5,096 50,904
09/30/96 11/05/96 10.00 5,096 50,960
12/31/96 02/03/97 10.00 5,096 50,960
03/31/97 05/09/97 10.50 5,096 53,508
06/30/97 08/05/97 10.50 5,096 53,508
12/31/97 02/06/98 21.00 5,096 107,016
06/30/98 08/10/98 30.00 5,096 152,880
12/31/98 02/12/99 28.00 5,096 142,688
</TABLE>
Distributions are made out of the income from operations, before depreciation
and amortization, available as a result of the previous six months of
operations.
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ITEM 6. SELECTED FINANCIAL DATA
The selected financial data should be read in conjunction with the financial
statements and related notes and ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS appearing elsewhere in this
report.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operations for the years ended December 31:
Revenues $ 397,796 $ 421,630 $ 424,537 $ 378,489 $ 474,562
Net income (loss) (156,013) 194,210 168,410 139,678 222,525
Net income per Limited Partner Unit* (25.74) 32.49 27.97 22.94 37.57
Distributions per Limited Partner Unit* 51.00 31.00 45.50 37.16 43.75
Financial position at December 31,
Total assets $ 3,885,374 $ 4,303,178 $ 4,275,221 $ 4,381,018 $ 4,435,929
Partners' equity 3,815,961 4,260,748 4,242,067 4,331,232 4,380,915
</TABLE>
*Net income and distributions per limited partner unit were based on the
weighted average number of outstanding units.
ITEM 7. MANAGEMENT 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
Partnership to be materially different from any future results, performance or
achievements, expressed or implied by such forward-looking statements.
RESULTS OF OPERATIONS - 1998 VS. 1997
Operations for the year ended December 31, 1998 represented a full year of
rental operations for all of the Partnership properties. The net loss for the
year ended December 31, 1998 was $156,013 as compared to net income of $194,210,
for the year ended December 31, 1997. The Partnership incurred a $350,000
impairment loss on the Yorba Center property which negatively impacted the net
loss during the year ended December 31, 1998. All properties owned by the
Partnership have operated at levels equal to current expectations with the
exception of the San Marcos property which was vacant from October 1, 1998
through December 31, 1998. All tenants were current on their lease obligations.
Rental revenue decreased by $30,323 (7%) primarily due to the vacancy of the San
Marcos property from October 1, 1998 through December 31, 1998.
Operating expenses decreased by $24,576 (27%), primarily due to reductions in
leasing commissions, property taxes and common area maintenance fees related to
the San Marcos property. General and administrative costs increased by $947 (3%)
due to an increase in consulting fees offset by a decrease in general business
insurance. Interest income increased by $6,489 (137%) due to the change in mid
1997 from quarterly to semi-annual distributions to limited and general
partners. Hence, additional funds were deposited in interest bearing accounts
during 1998 as compared to 1997. Depreciation and amortization expense was
consistent between 1997 and 1998. An impairment loss of $350,000 was incurred
during the year ended December 31, 1998 on the Yorba Center property, due to the
fair value being below carrying value. The fair value was determined based on a
negotiated sales contract with an unrelated buyer of the property. During
escrow, the buyer revoked the offer and the contact was cancelled.
6
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ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)
Net income per limited partnership unit decreased from $32.49 in 1997 to a net
loss per limited partnership unit of $25.74 in 1998. The number of limited
partnership units outstanding in both years was 5,096.
During the year ended December 31, 1998, the Partnership distributed $259,897 to
the limited partners and $28,877 to the General Partner, as compared to the year
ended December 31, 1997 when the Partnership distributed $157,976 to the limited
partners and $17,553 to the General Partner. Cash basis income for the year
ended December 31, 1998 was $296,458. Cash basis income was derived by adding
depreciation and amortization expense and the impairment loss to net income.
Cash distributions during 1998 were $288,774 which is favorable based on cash
basis net income of $296,458. The record dates for the cash distributions are
December 31, and June 30 with payment dates being February and August,
respectively.
This is comparable to 1997 when cash basis income totaled $296,663 before
depreciation of $102,453.
RESULTS OF OPERATIONS - 1997 VS. 1996
Operations for the year ended December 31, 1997 represented a full year of
rental operations for all of the Partnership properties. However, operations for
the year ended December 31, 1996 represented a full year of rental operations
for all properties expect the San Marcos property which was wholly owned for
only two months, and 90% owned for the other ten months of 1996.
The net income for the year ended December 31, 1997, $194,210 was higher than
the year ended December 31, 1996, $168,410 due to the acquisition of the
remaining 10% interest in the San Marcos property in November 1996, as well as a
decrease in a one-time prior year property tax assessment imposed by the County
of San Bernardino for the Yorba Center property. The Partnership did not have
any adverse events that significantly impacted net income during the year ended
December 31, 1997, and all properties that have been purchased by the
Partnership have operated at levels equal to current expectations. All tenants
were current on their lease obligations.
Rental revenue increased by $6,901 (1.7%) due to the purchase of the remaining
10% of the San Marcos property on November 2, 1996. The purchase generated
additional rental revenue of approximately $3,800 a year and $815 per month
during the year ended December 31, 1997.
Operating expenses decreased by $25,011 (22%) primarily as a result of the
elimination of a one-time prior year property tax assessment imposed by the
County of San Bernardino for the Yorba Center property. General and
administrative costs decreased by $5,943 (15%) due to lower accounting, and
general insurance expense. Interest income decreased by $9,808 (67%) due to
lower cash reserve balances maintained during the year ended December 31, 1997
as compared to year ended December 31, 1996. Depreciation and amortization
expense increased by $2,247 (2%) a result of the purchase of the remaining 10%
in the San Marcos property during 1996.
Net income per limited partnership unit increased from $27.97 in 1996 to $32.49
in 1997. The number of limited partnership units outstanding in each year was
5,096.
During the year ended December 31, 1997, the Partnership distributed $157,976 to
the limited partners and $17,553 to the general partners, as compared to the
year ended December 31, 1996 when the Partnership distributed $231,812 to the
limited partners and $25,763 to the general partners. Cash basis income for the
year ended December 31, 1997 was $296,663. Cash basis income was derived by
adding depreciation and amortization expense to net income. Cash distributions
during 1997 were less ($121,134) than cash basis net income. In contrast,
distributions in 1996 were less than cash basis income of $11,041.
This compares favorably to 1996 when cash basis income totaled $268,616 before
depreciation of $100,206.
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ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)
LIQUIDITY AND CAPITAL RESOURCES
During the year ended December 31, 1998, the Partnership made distributions to
the limited partners totaling $259,897, of which $65,910 constituted a return of
capital. On February 12, 1999, the Partnership made distributions of $28 per
unit to unit holders of record as of December 31, 1998. Distributions are
determined by the General Partner based on cash flow and the liquidity position
of the Partnership and anticipated occupancy of the properties. It is the
intention of the General Partner to make semi-annual distributions of cash,
subject to maintaining a reasonable reserve.
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 permitted 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.
The General Partner uses cash as its primary measure of a partnership's
liquidity. Cash representing 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 factors. The
first factor 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. The 1% property reserve requirement is the
minimum guideline that is disclosed in the Partnership's prospectus; the
Partnership had more than enough funds to meet this requirement as of December
31, 1998. The second factor relates to the condition of the Partnership's
properties. Since the properties are in good condition, no unusual maintenance
and repair expenditures are anticipated. The third factor 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 factor relates to partner
distributions. The Partnership makes semi-annual distributions from the results
of operations. Such distributions are subject to payments of Partnership
expenses and reasonable reserves for expenses, maintenance, and replacements.
The restricted cash of $50,000 received as a deposit from an unaffiliated buyer
of the San Marcos property (Note 3), was forfeited in February 1999 due to
non-performance of the buyer. On March 24, 1999, the General Partner sold the
San Marcos property to a new unaffiliated buyer for $2,730,000.
In February 1999, the General Partner placed the Yorba Center property in escrow
with an unaffiliated buyer. The closure of escrow is dependent upon the buyer
resolving all pending contingencies.
During the year ended December 31, 1998 the Partnership paid the General Partner
a partnership management fee of $28,877 and distributed $259,897 to the limited
partners, of which $65,910 constituted a return of capital. In February 1999,
the Partnership paid the General Partner a partnership management fee of $15,854
and distributed $142,688 to the limited partners. Partnership management fees
were calculated and paid in accordance with the Partnership Agreement.
8
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ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)
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 tenants
that would help alleviate much of the negative impact of inflation.
CASH FLOWS 1998 VS. 1997
Cash resources decreased by $6,995 during 1998 as compared to the $158,296
increase in 1997. The decrease in 1998 was primarily due to distributions to
limited partners increasing by approximately $113,000. In contrast, the increase
in cash resources during 1997, was the result of the Partnership electing to
begin paying distributions semi-annually instead of quarterly beginning with the
first record and payment dates being December 31, 1997 and February 6, 1998,
respectively. Cash provided by operating activities for the year ended December
31, 1998 was $331,779, with the largest contributor being the $452,471 of cash
basis income. In contrast, cash provided by operating activities in 1997 were
$333,825 due primarily to $296,663 in cash basis income. The sole use of cash in
investing activities during 1998 was due to a deposit of $50,000 received from
an unaffiliated buyer for the purchase of the San Marcos property. In contrast,
there were no investing activities during 1997. During 1998, cash used in
financing activities was $288,774 due to cash distributions to the limited and
general partners. In contrast, cash used for financing activities in 1997 was
$175,529 which represented distributions to the limited and general partners.
CASH FLOWS 1997 VS. 1996
Cash resources increased by $158,296 during 1997 compared to the $189,521
decrease in 1996. The increase was primarily due to the Partnership electing to
begin paying distributions semi-annually instead of quarterly beginning with the
first record and payment dates being December 31, 1997 and February 6, 1998,
respectively. This change represented approximately $107,000 of the increase in
cash resources for the year ended December 31, 1997. In contrast, the decrease
in cash resources during 1996 was the result of the investing activity involving
the acquisition of the 10% interest in San Marcos. Cash provided by operating
activities increased by $333,825 with the largest contributor being $296,663 in
cash basis income. In contrast, cash provided by operating activities in 1996
was $256,054 due primarily to $268,616 in cash basis income. During 1997, cash
used in financing activities was $175,529 which represented distributions to the
limited and general partners. In contrast, cash used for financing activities in
1996 was $257,575 due to distributions to the limited and general partners.
There were no investing activities during 1997. In contrast, the sole use of
cash in investing activities in 1996 was the $188,001 expended for the
acquisition of the remaining 10% in San Marcos property.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standard No. 133 (SFAS 133), "Accounting for
Derivative Instruments and Hedging Activities," issued by the Financial
Accounting Standards Board is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The
Partnership does not expect adoption to have any effect on its financial
position, results of operations and cash flows.
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ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)
IMPACT OF YEAR 2000
Many existing computer systems and applications, and other control devices, use
only two digits to identify a year in the date field, without considering the
impact of the upcoming change in the century. As a result, such systems and
applications could fail or create erroneous results unless corrected so that
they can process data related to the year 2000. The General Partner relies on
its systems, applications and devices in operating and monitoring all major
aspects of its business, including financial systems (such as general ledger,
accounts receivable, accounts payable and shareholder servicing), and embedded
computer chips, networks and telecommunications equipment and end products. The
General Partner also relies, directly and indirectly, on external systems of
business enterprises such as its advisor, lessees, suppliers, creditors,
financial organizations, and of governmental entities for accurate exchange of
data. The General Partner's current estimate is that the costs associated with
the year 2000 issue will not have a material adverse effect on the results of
operations or financial position of the General Partner. However, despite the
General Partner's efforts to address the year 2000 impact on its internal
systems, the General Partner may not have fully identified such impact or
whether it can resolve it without disruption of its business and without
incurring significant expense. In addition, even if the internal systems of the
General Partner are not materially affected by the year 2000 issue, the General
Partner could be affected through disruption in the operations of the
enterprises with which the General Partner interacts.
10
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ITEM 8. FINANCIAL STATEMENTS AND SCHEDULE
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Certified Public Accountants ...........................12
Balance Sheets - December 31, 1998 and 1997 ..................................13
Statements of Operations for the years ended
December 31, 1998, 1997 and 1996 ....................................14
Statements of Partners' Equity for the years ended
December 31, 1998, 1997 and 1996.....................................15
Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996 ....................................16
Summary of Accounting Policies ............................................17-18
Notes to Financial Statements .............................................19-22
Financial Statement Schedule
Schedule III-Real Estate and Accumulated Depreciation ...............28
</TABLE>
11
<PAGE> 13
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Associated Planners Realty Income Fund
(a California limited partnership)
Los Angeles, California
We have audited the accompanying balance sheets of Associated Planners Realty
Income Fund (a California limited partnership) as of December 31, 1998 and 1997
and the related statements of operations, partners' equity, and cash flows for
each of the three years in the period ended December 31, 1998. We have also
audited the schedule listed in the accompanying index. These financial
statements and schedule are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and schedule are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
schedule. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As discussed in Note 8, all of the Partnership's remaining properties are held
for sale as of December 31, 1998. The General Partner plans to liquidate the
Partnership after the final property is sold. The financial statements do not
contain any adjustments that might result from the liquidation of the
Partnership.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Associated Planners Realty
Income Fund (a California limited partnership), at December 31, 1998 and 1997,
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1998 in conformity with generally accepted
accounting principles.
Also, in our opinion, the schedule presents fairly, in all material respects,
the information set forth therein.
BDO SEIDMAN, LLP
Los Angeles, California
January 22, 1999 (except for Note 9, as to
which the date is March 24, 1999)
12
<PAGE> 14
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1998 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Rental real estate held for sale, less accumulated depreciation
(Notes 2 and 8) $ 3,605,718 $ 4,058,189
Cash and cash equivalents 223,508 230,503
Restricted cash (Note 3) 50,000 --
Other assets 6,148 14,486
- ----------------------------------------------------------------------------------------------------
Total assets $ 3,885,374 $ 4,303,178
====================================================================================================
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Accounts payable:
Trade $ -- $ 4,609
Related party (Note 5(d)) 5,837 8,421
Security deposits 63,576 29,400
- ----------------------------------------------------------------------------------------------------
Total liabilities 69,413 42,430
- ----------------------------------------------------------------------------------------------------
Contingencies (Note 8)
PARTNERS' EQUITY (Notes 6 and 7):
Limited partners:
$1,000 stated value per unit - authorized 12,000 units; issued
and outstanding 5,096 3,821,794 4,212,880
General partners (5,833) 47,868
- ----------------------------------------------------------------------------------------------------
Total partners' equity 3,815,961 4,260,748
- ----------------------------------------------------------------------------------------------------
Total liabilities and partners' equity $ 3,885,374 $ 4,303,178
====================================================================================================
</TABLE>
See accompanying summary of accounting policies and
notes to financial statements.
13
<PAGE> 15
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years ended December 31, 1998 1997 1996
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Rental (Notes 2 and 4) $ 386,573 $ 416,896 $ 409,995
Interest 11,223 4,734 14,542
- --------------------------------------------------------------------------------------------------
397,796 421,630 424,537
- --------------------------------------------------------------------------------------------------
COST AND EXPENSES
Operating 66,681 91,257 116,268
General and administrative (Note 5) 34,657 33,710 39,653
Depreciation and amortization 102,471 102,453 100,206
Impairment loss (Note 2) 350,000 -- --
- --------------------------------------------------------------------------------------------------
553,809 227,420 256,127
- --------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $(156,013) $ 194,210 $ 168,410
==================================================================================================
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT (Note 6) $ (25.74) $ 32.49 $ 27.97
==================================================================================================
</TABLE>
See accompanying summary of accounting policies and
notes to financial statements.
14
<PAGE> 16
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
Limited Partners
---------------------------- General
Units Amount Partner Total
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1996 5,096 $ 4,124,520 $ 206,712 $ 4,331,232
Net income for the year -- 142,550 25,860 168,410
Distribution to limited partners (Note 6) -- (231,812) -- (231,812)
Distribution to general partners -- -- (25,763) (25,763)
Reallocation of capital (Note 7) -- 170,030 (170,030) --
- ---------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1996 5,096 4,205,288 36,779 4,242,067
Net income for the year -- 165,568 28,642 194,210
Distribution to limited partners (Note 6) -- (157,976) -- (157,976)
Distribution to general partners -- -- (17,553) (17,553)
- ---------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1997 5,096 4,212,880 47,868 4,260,748
Net loss for the year -- (131,189) (24,824) (156,013)
Distribution to limited partners (Note 6) -- (259,897) -- (259,897)
Distribution to general partners -- -- (28,877) (28,877)
- ---------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1998 5,096 $ 3,821,794 $ (5,833) $ 3,815,961
=========================================================================================================
</TABLE>
See accompanying summary of accounting policies and
notes to financial statements.
15
<PAGE> 17
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Years ended December 31, 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(156,013) $ 194,210 $ 168,410
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 102,471 102,453 100,206
Impairment loss 350,000 -- --
Increase (decrease) from changes in operating assets and
liabilities:
Other assets 8,338 27,886 4,071
Accounts payable (7,193) 8,452 (18,918)
Security deposits 34,176 824 2,286
- -------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 331,779 333,825 256,055
- -------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to rental real estate -- -- (188,001)
Deposit on sale of San Marcos property (50,000) -- --
- -------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (50,000) -- (188,001)
- -------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to limited partners (259,897) (157,976) (231,812)
Distributions to general partners (28,877) (17,553) (25,763)
- -------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (288,774) (175,529) (257,575)
- -------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (6,995) 158,296 (189,521)
CASH AND CASH EQUIVALENTS, beginning of year 230,503 72,207 261,728
- -------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of year $ 223,508 $ 230,503 $ 72,207
=============================================================================================================
</TABLE>
See accompanying summary of accounting policies and
notes to financial statements.
16
<PAGE> 18
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 estate throughout the United States with an
emphasis on properties located in California and the southwestern states. The
Partnership purchased 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 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
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.
RENTAL REVENUE
Rental revenue is recognized when the amount is due and payable under the terms
of a lease agreement and collection is probable.
STATEMENTS OF CASH FLOWS
For the 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.
17
<PAGE> 19
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT
Net income (loss) per limited partnership unit is calculated by dividing the
limited partners' share of net income (loss) by the weighted average number of
limited partnership units outstanding for the period.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standard No. 133 (SFAS 133), "Accounting for
Derivative Instruments and Hedging Activities," issued by the Financial
Accounting Standards Board is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The
Partnership does not expect adoption to have any effect on its financial
position, results of operations and cash flows.
18
<PAGE> 20
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
NOTE 1--NATURE OF PARTNERSHIP
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.
NOTE 2--RENTAL REAL ESTATE
The Partnership owns the following two rental real estate properties:
<TABLE>
<CAPTION>
Location (Property Name) Date Purchased Cost
-----------------------------------------------------------------------------
<S> <C> <C>
Chino, California (Yorba Center) October 25, 1988 $ 1,532,283
San Marcos, California (90%) January 9, 1990 2,816,904
San Marcos, California (10%) November 1, 1996 188,001
</TABLE>
During 1998, the General Partner decided to list both properties for sale with a
commercial real estate broker. Both properties are in escrow pending the
resolution of buyer contingencies. (See Note 9)
The major categories of rental real estate are:
<TABLE>
<CAPTION>
December 31, 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Land $1,237,407 $1,332,861
Buildings and improvements 3,299,781 3,554,327
- --------------------------------------------------------------------------------
4,537,188 4,887,188
Less accumulated depreciation 931,470 828,999
- --------------------------------------------------------------------------------
Rental real estate, net $3,605,718 $4,058,189
================================================================================
</TABLE>
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:
Two tenants accounted for 55% and 11% in 1998;
One tenant accounted for 58% in 1997;
One tenant accounted for 48% in 1996;
During the quarter ended September 30, 1998, the Partnership determined that the
total expected future cash flows from the disposition of the Yorba Center
Property are less than the carrying value of the property. As a result, an
impairment loss of $350,000 was recorded, measured as the amount by which the
carrying amount of the asset exceeded its fair value less cost to sell. The fair
value was determined based on a negotiated sales contract with an unrelated
buyer of the property. During escrow, the buyer of the property revoked the
offer and the contract was cancelled. The Partnership has negotiated other sale
offers from potential buyers to purchase the property. However, there is no
assurance that such a sale will ultimately close escrow.
NOTE 3--RESTRICTED CASH
Restricted cash of $50,000 was received as a deposit from an unaffiliated
prospective buyer of the San Marcos property as discussed in Notes 8 and 9.
19
<PAGE> 21
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
NOTE 4--FUTURE MINIMUM RENTAL INCOME
As of December 31, 1998, future minimum rental income under existing leases,
excluding month to month rental agreements, that have remaining noncancelable
terms in excess of one year are as follows:
<TABLE>
<CAPTION>
Years ending December 31, Amount
------------------------------------------------------------------------
<S> <C>
1999 $142,517
2000 113,885
2001 92,840
2002 56,222
-----------------------------------------------------------------------
Total $405,464
=======================================================================
</TABLE>
Future minimum rental income does not include lease renewals or new leases that
may result after a noncancelable-lease expires.
NOTE 5--RELATED PARTY TRANSACTIONS
(a) In accordance with the partnership agreement, compensation earned by or
services reimbursed to the General Partner consisted of the following:
<TABLE>
<CAPTION>
Year ended December 31, 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Partnership management fees $28,877 $17,553 $25,860
Administrative services:
Data processing 4,800 4,851 4,805
Postage 2,550 2,363 2,387
Investor processing 1,950 1,961 1,999
Duplication 850 833 898
Investor Communications 1,400 1,497 1,405
Miscellaneous 450 495 506
- --------------------------------------------------------------------------------
$40,877 $29,553 $37,860
================================================================================
</TABLE>
(b) On November 1, 1996, the Partnership purchased the remaining real estate
asset from Associated Planners Realty Growth Fund ("Growth Fund"). This asset
consisted of the 10% interest in an office building located in San Marcos,
California that was not already owned. The Partnership paid $185,968 in cash on
November 2, 1996 which consisted of $188,001 for the property less $2,033 for
the share of a cash security deposit from the current tenant.
(c) Property management fees incurred in accordance with the partnership
agreement with West Coast Realty Management, Inc., an affiliate of the corporate
General Partner, totaled $19,182, $21,068 and $20,054 for 1998, 1997 and 1996.
(d) Related party accounts payable are as follows:
<TABLE>
<CAPTION>
December 31, 1998 1997
---------------------------------------------------------------------------
<S> <C> <C>
West Coast Realty Advisors, Inc. $3,000 $3,000
West Coast Realty Management, Inc. 2,837 5,421
---------------------------------------------------------------------------
$5,837 $8,421
===========================================================================
</TABLE>
20
<PAGE> 22
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
NOTE 6--NET INCOME AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT
The Limited Partner cash distributions, computed in accordance with the
Partnership Agreement, were as follows:
<TABLE>
<CAPTION>
Outstanding Amount
Record Date Distribution Units Per Unit Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
June 30, 1998 5,096 30.00 $152,880
December 31, 1997 5,096 21.00 107,017
--------
Total $259,897
========
June 30, 1997 5,096 $ 10.50 $ 53,508
March 31, 1997 5,096 10.50 53,508
December 31, 1996 5,096 10.00 50,960
--------
Total $157,976
========
September 30, 1996 5,096 $ 10.00 $ 50,960
June 30, 1996 5,096 10.00 50,904
March 31, 1996 5,096 13.00 66,248
December 31, 1995 5,096 12.50 63,700
--------
Total $231,812
========
</TABLE>
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 permitted 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.
NOTE 7--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.
NOTE 8--LIQUIDATION OF PARTNERSHIP
At December 31, 1998, all of the Partnership's remaining properties were held
for sale. The General Partner is negotiating sales contracts with potential
buyers of the Yorba Center. The General Partner plans to liquidate the
Partnership after the final property is sold. There is no assurance that the
Yorba Center property will be sold and the Partnership will be liquidated during
1999. The financial statements do not contain any adjustments that might result
from the liquidation of the Partnership.
21
<PAGE> 23
ASSOCIATED PLANNERS REALTY INCOME FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
NOTE 9--SUBSEQUENT EVENTS
(a) The restricted cash of $50,000 received as a deposit from an unaffiliated
potential buyer of the San Marcos property (Note 3), was forfeited in February
1999 due to non-performance of the buyer. On March 24, 1999, the General Partner
sold the San Marcos property to a new unaffiliated buyer for $2,730,000.
(b) In February 1999, the General Partner placed the Yorba Center property in
escrow with an unaffiliated buyer. The closure of escrow is dependent upon the
buyer resolving all pending contingencies.
(c) On February 12, 1999, the Partnership distributed $142,688 to the unit
holders of record as of December 31, 1998. This represented the operating
results of the Partnership for the six months ending December 31, 1998.
22
<PAGE> 24
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
23
<PAGE> 25
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership is managed by the General Partners and the Limited
Partners have no right to participate in the management of the Partnership or
its business.
Resumes of the General Partners' principal officers and directors and a
description of the General Partners are set forth in the following paragraphs.
See description below.
WEST COAST REALTY ADVISORS, INC.
West Coast Realty Advisors, Inc. ("WCRA") is a California corporation
formed on May 10, 1983 for the purpose of structuring real estate programs and
to act as general partner of such programs. It is a subsidiary of Associated
Financial Group, Inc.
PHILIP N. GAINSBOROUGH (Born 1938) is Chairman and a Director of West
Coast Realty Advisors, Inc. Mr. Gainsborough is also currently the President of
Associated Financial Group, Inc., Associated Securities Corp., Associated
Planners Insurance Services, Inc., and Associated Planners Investment Advisory,
Inc. In addition, from January 1981 to the present, he has served as President
of Gainsborough Financial Consultants, Inc., a financial planning firm located
in Los Angeles, California. From January 1981 to December 1982, Mr. Gainsborough
served as a Registered Principal of Private Ledger Financial Services, Inc. From
January 1977 to December 1980, he was employed by E.F. Hutton & Co. as a
Registered Representative.
W. THOMAS MAUDLIN, JR. (Born 1936) is a Director and President of West
Coast Realty Advisors, Inc. ("WCRA"). He is also co-General Partner (with WCRA)
of the Partnership. Mr. Maudlin has been active in the real estate area for over
30 years, serving as co-developer of high-rise office buildings and
condominiums. He has structured transactions for syndicators in apartment
housing, including sale leasebacks, all-inclusive trust deeds, buying and
restructuring transactions to suit a particular buyer, and as a buyer acting as
a principal. Mr. Maudlin was co-developer of the Gateway Los Angeles office
building, a 165,000 square foot, fourteen-story office building located in West
Los Angeles. From 1980 to 1985, in partnership with the Muller Company, he
developed eleven acres in San Bernardino which included a 42,000 square-foot
office building, a six-plex movie theater and two restaurants. From 1980 to
1985, Mr. Maudlin was involved in building a 134-unit condominium development in
San Bernardino, California, a shopping center, and a restaurant in Ventura. He
is a graduate of the University of Southern California.
NEAL NAKAGIRI (Born 1954) serves as Executive Vice President, General
Counsel, Chief Operating Officer and Secretary of Associated Financial Group,
Inc. He is Vice President for two subsidiaries, Associated Securities Corp. and
Associated Planners Investment Advisory, Inc. He joined the "Associated" group
of companies in March 1985. He was Vice President of Compliance with Morgan,
Olmstead, Kennedy & Gardner from 1984 to 1985. He was First Vice President and
Director of Compliance with Jefferies and Co., Inc. from 1981 to 1984. He was
Vice President and Director of Compliance at W & D Securities, Inc. from 1980 to
1983. He was an Investigator with the National Association of Securities
Dealers, Inc. from 1976 to 1980. He has a B.A. degree in Economics from UCLA
(1976) and a J.D. from Loyola Law School of Los Angeles (1991). He is a member
of the California Bar and the Compliance and Legal Division of the Securities
Industry Association.
JOHN R. LINDSEY (Born 1946) serves as Senior Vice President/Treasurer.
He is responsible for all facets of financial management of the Associated
Financial Group. Previously, Mr. Lindsey was a consultant specializing in
financial services, worked for a large financial institution and performed
audits and consulting assignments for Price Waterhouse. He is a Certified Public
Accountant and a member of the California Society of CPAs and the American
Institute of CPAs. He received a BS in Business Administration and Accounting
from the University of Southern California in 1968.
24
<PAGE> 26
ITEM 11. EXECUTIVE COMPENSATION
During its last calendar year, the Registrant paid no direct or
indirect compensation to directors or officers.
The Registrant has no annuity, pension or retirement plans, or existing
plan or arrangement pursuant to which compensatory payments are proposed to be
made in the future to directors or officers.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Registrant is a limited partnership and has no officers or
directors. The Registrant has no outstanding securities possessing general
voting rights.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Registrant was organized in December 1986 as a California Limited
Partnership. Its General Partners (collectively referred to herein as the
"General Partner") are West Coast Realty Advisors, Inc. and W. Thomas Maudlin
Jr., an individual. The Registrant has no executive officers or directors.
Philip N. Gainsborough, an officer of the General Partner, made an original
limited partnership contribution to the Partnership in March 1987, which was
subsequently paid back to him in March 1988 when the Partnership met its minimum
funding requirement. The General Partner and its affiliates are entitled to
compensation from the Partnership for the following services:
1. For Partnership management services rendered to the Partnership, the
General Partner is entitled to receive up to 10% of all distributions of cash
from operations. For the year ended December 31, 1998, the amount paid the
General Partner was $28,877. In addition, the General Partner is entitled to
reimbursement for certain public offering expenses, the cost of certain
personnel employed in the organization of the Partnership, and certain
administrative services performed by the General Partner. For the year ended
December 31, 1998, the Partnership reimbursed approximately $12,000 to the
General Partner for these expenditures.
2. For property management services, the General Partner engaged West
Coast Realty Management, Inc. ("WCRM") an affiliate of the General Partner. For
the year ended December 31, 1998, the Partnership incurred property management
fees of $36,671 with WCRM.
3. The General Partner received a 10% allocation of net income before
depreciation and amortization and 1% of depreciation and amortization. For the
year ended December 31, 1998 this resulted in a $25,849 allocation of net loss
before depreciation and amortization and a $1,025 allocation of depreciation and
amortization, or a net loss allocation of $24,824.
4. On December 31, 1998 the Partnership was indebted to WCRM for $2,837
and to WCRA for $3,000, both of which were paid subsequent to year-end.
25
<PAGE> 27
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The following financial statements of Associated Planners
Realty Income Fund, a California Limited Partnership, are
included in PART II, ITEM 8:
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Certified Public Accountants ..........12
Balance Sheets - December 31, 1998 and 1997 .................13
Statements of Operations for the years ended
December 31, 1998, 1997 and 1996 .....................14
Statements of Partners' Equity for the years ended
December 31, 1998, 1997 and 1996......................15
Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996 .....................16
Summary of Accounting Policies ...........................17-18
Notes to Financial Statements ............................19-22
2. FINANCIAL STATEMENT SCHEDULE
Schedule III-Real Estate and Accumulated Depreciation .......28
</TABLE>
All other schedules have been omitted because they are either
not required, not applicable or the information has been
otherwise supplied.
(b) REPORTS ON FORM 8-K
NONE
(c) EXHIBITS
FINANCIAL DATA SCHEDULE
26
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the 13 or 15(d) 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)
/s/ W. THOMAS MAUDLIN JR.
--------------------------------------
W. THOMAS MAUDLIN JR.
(A General Partner)
By: WEST COAST REALTY ADVISORS, INC.
(A General Partner)
/s/ JOHN R. LINDSEY
---------------------------------------
JOHN R. LINDSEY
(Vice President/Treasurer)
Date: March 30, 1999
27
<PAGE> 29
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1998
INFORMATION REQUIRED BY RULE 12-28 IS AS FOLLOWS
<TABLE>
<CAPTION>
Cost
Initial Cost Capitalized Gross Amount at which Carried at Close of Period
------------------------- Subsequent to -----------------------------------------------------
Building and Acquisition Building and Impairment Total
Description Land Improvements Improvements Land Improvements Loss Cost
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Yorba Center-Chino,
California $ 555,344 $1,295,803 $ 31,136 $ 555,344 $1,326,939 $ (350,000) $1,532,283
San Marcos Industrial
Building-San
Marcos, California 727,517 2,079,388 198,000 777,517 2,227,388 -- 3,004,905
- ------------------------------------------------------------------------------------------------------------------------
Total $1,282,861 $3,375,191 $ 229,136 $1,332,861 $3,554,327 $ (350,000) $4,537,188
========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Life (Years)
on which
Depreciation
is Computed
Year -------------
Accumulated Construction Date Building and
Description Depreciation Completed Acquired Improvements
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Yorba Center-Chino,
California $ 384,507 1987 10-88 31.5-40
San Marcos Industrial
Building-San
Marcos, California 546,963 1986 1-90 31.5-40
- ---------------------------------------------------------------------------------
Total $ 931,470
=================================================================================
</TABLE>
There were no mortgage notes payable on the properties at December 31, 1998.
<TABLE>
<S> <C>
A reconciliation of accumulated depreciation A reconciliation of the total cost is as
is as follows: follows:
Balance at January 1, 1996 $626,340 Balance at January 1, 1996 $ 4,699,187
1996 Depreciation 100,206 1996 Additions 188,001
-------- -----------
Balance at December 31, 1996 726,546 Balance at December 31, 1996 4,887,188
1997 Depreciation 102,453 1997 Additions --
-------- -----------
Balance at December 31, 1997 828,999 Balance at December 31, 1997 4,887,188
1998 Depreciation 102,471 1998 Additions --
-------- 1998 Impairment Loss (350,000)
-----------
Balance at December 31, 1998 $931,470 Balance at December 31, 1998 $ 4,537,188
======== ===========
</TABLE>
28
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 273,509
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 279,658
<PP&E> 4,537,188
<DEPRECIATION> (931,471)
<TOTAL-ASSETS> 3,885,374
<CURRENT-LIABILITIES> 69,413
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,815,961
<TOTAL-LIABILITY-AND-EQUITY> 3,885,374
<SALES> 386,573
<TOTAL-REVENUES> 397,796
<CGS> 203,809
<TOTAL-COSTS> 203,809
<OTHER-EXPENSES> 350,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (156,013)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (156,013)
<EPS-PRIMARY> (25.74)
<EPS-DILUTED> (25.74)
</TABLE>
