SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996 Commission File Number 0-17717
FOUNDATION REALTY FUND, LTD
(Exact name of Registrant as specified in its charter)
Florida 59-2802896
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
880 Carillon Parkway, St. Petersburg, Florida 33716
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code - (813) 573-3800
Indicate by check mark whether the Registrant (1)
has filed all reports to be filed by Section 13 or
15(d) of the Securites Exchange Act of 1934 during
the preceeding 12 months (or 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
Number of share outstanding of each of Registrant's classes of securites.
Title of Each Class Number of Units
June 30, 1996
Units of Limited Partnership 9,407
Interest: $1,000 per unit
DOCUMENT INCORPORATION BY REFERENCE
Part IV - Registration Statement S-11, File No. 33-13849
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
INDEX TO FINANCIAL STATEMENTS
Part I - Financial Information
Page No.
Balance Sheets as of June 30, 1996 and December 31, 1995 3
Statements of Operations -
For the Six Months Ended June 30, 1996 and 1995 4
Statement of Operations -
For the Three Months Ended June 30, 1996 and 1995 5
Statements of Partners' Equity -
For the Six Months Ended June 30, 1996 and 1995 6
Statements of Cash Flows -
For the Six Months Ended June 30, 1996 and 1995 7
Notes to Financial Statements 8-10
Management's Discussion and Analysis if Financial
Condition and Results of Operations 11-12
<TABLE>
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
<CAPTION>
BALANCE SHEET
June 30, 1996 December 31, 1995
(Unaudited) Audited
ASSETS
<S> <C> <C>
Aparment Properties, at Cost $22,156,931 $22,114,145
Less - Accumulated Depreciation (5,475,895) (5,129,893)
16,681,036 16,984,252
Cash and Cash Equivalents 1,131,357 978,730
Prepaid Expenses 23,098 584
TOTAL ASSETS $17,835,491 $17,963,566
LIABILITIES AND PARTNERS' EQUITY
Liabilites:
Notes Payable $16,944,511 $16,700,035
Accounts Payable 172,651 49,992
Security Deposits 95,930 95,630
Unearned Rent 14,597 26,735
TOTAL LIABILITIES 17,227,689 16,872,322
Partner's Equity
Limited Partners' Equity (9,407 units
outstanding @ June 30, 1996 and
December 31, 1995 812,902 1,272,172
General Partner's Equity (205,100) (180,928)
TOTAL PARTNERS' EQUITY 607,802 1,091,244
TOTAL LIABILITES AND PARTNERS' EQUITY $17,835,491 $17,963,566
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF OPERATIONS
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30
<S> 1996 1995
Property Operations : <C> <C>
Rental Income $1,677,225 $1,633,716
Miscellaneous 54,482 51,211
1,731,707 1,684,927
Expenses:
Depreciation 346,002 346,000
Payroll 162,891 139,932
Real Estate Taxes 140,508 139,360
Utilities 96,243 111,806
Repairs & Maintenance 126,569 141,055
Property Management - General Partner 88,389 84,679
Landscaping 42,782 43,975
Other 51,822 50,160
1,055,206 1,056,967
Income from Property Operations 676,501 627,960
Interest Income 23,197 23,290
699,698 651,250
Other Exenses:
Interest 786,772 765,211
General & Administrative - Affiliate 2,710 1,910
Other General & Administrative 3,812 11,091
793,294 778,212
Net Loss $(93,596) $(126,962)
Allocation of Net Loss -
Limited Partners $(88,916) $(120,614)
General Partners (4,680) (6,348)
$(93,596) $(126,962)
Net Loss Per Limited Partnership Unit$ (9.45) $ (12.82)
Number of Limited Partnership Units 9,407 9,407
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (a Florida Limited Partnership)
STATEMENT OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS ENDED JUNE 30
<S> 1996 1995
Property Operations: <C> <C>
Rental Income $821,656 $804,519
Miscellaneous 26,195 27,330
847,851 831,849
Expenses:
Depreciation 171,002 173,000
Payroll 86,784 72,579
Real Estate Taxes 71,454 71,622
Utilities 48,919 59,848
Repairs and Maintenance 75,702 87,697
Property Management - General Partner 43,498 42,077
Landscaping 17,744 23,489
Other 27,673 26,348
542,776 556,660
Income from Property Operations 305,075 275,189
Interest Income 11,842 12,776
316,917 287,965
Other Expenses:
Interest 394,797 383,872
General and Administrative -Affiliate 2,050 1,700
Other General and Administrative 2,859 9,869
399,706 395,441
Net Loss $(82,789) $(107,476)
Allocation of Net Loss-
Limited Partners $(78,649) $(102,102)
General Partners (4,140) (5,374)
$(82,789) $(107,476)
Net Loss Per Limited Partnership Unit $ (8.36) $ (10.85)
Number of Limited Partnership Units 9,407 9,407
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
<CAPTION>
STATEMENT OF PARTNERS' EQUITY
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Limited General Total
Partners' Partners' Partners'
Equity Equity Equity
<S> <C> <C> <C>
Balance, December 31, 1994 $ 2,165,476 $ (133,913) $ 2,031,563
Distribution to Partners (358,689) (18,873) (377,562)
Net Loss (120,614) (6,348) (126,962)
Balance, June 30, 1995 $ 1,686,173 $ (159,134) $ 1,527,039
Balance, December 31, 1995 $ 1,272,172 $ (180,928) $ 1,091,244
Distribution to Partners (370,354) (19,492) (389,846)
Net Loss (88,916) (4,680) (93,596)
Balance, June 30, 1996 $ 812,902 $ (205,100) $ 607,802
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
<S> 1996 1995
Net Cash Provided by Operating Activities: <C> <C>
Net Loss $ (93,596) $ (126,962)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operating Activities
Depreciation: 346,002 346,000
Changes in Operating Assets and Liabilities:
(Increase) in Prepaids (22,514) (20,465)
Increase in Accounts Payable 122,729 143,930
Increase (Decrease) in Security Deposits 300 2,080
Increase (Decrease) in Unearned Rents (12,138) 21,407
Net Cash Provided by Operating Activities 340,783 365,990
Cash Flows from Investing Activities:
Improvements to Apartment Properties (42,786) (32,214)
Net Cash Used in Investing Activities (42,786) (32,214)
Cash Flows from Financing Activities:
Proceeds from Notes Payable 262,321 239,229
Payments from Notes Payable (17,845) (16,314)
Distributions to Partners (389,846) (377,562)
Net Cash used by Financing Activities (145,370) (154,647)
Increase (Decrease) in Cash 152,627 179,129
Cash and Cash Equivalents at Beginning of period 978,730 828,960
Cash and Cash Equivalents at End of period 1,131,357 1,008,089
Supplemental Cash Flow Information:
Interest Paid $ 524,451 $ 525,982
Supplemental Disclosure of Non-Cash
Financing Activities:
Deferred Interest on Mortgage Note Payable 262,321 239,229
</TABLE>
FOUNDATION REALTY FUND, LTD
A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1 - ORGANIZATION
Foundation Realty Fund, Ltd., (the "Partnership"), a Florida Limited
Partnership, was formed April 14, 1987 under the laws of Florida.
Operations commenced on January 12, 1988. The Partnership operates
two apartment properties. The Partnership will terminate on
December 31, 2020, or sooner, in accordance with the terms of the
Limited Partnership Agreement. The Partnership has received Limited
and General Partner capital contributions of $9,407,000 and $1,000
respectively. J. Robert Love, an individual, and RJ Properties,
Inc., a majority-owned subsidiary of Raymond James Financial, Inc.
are the General Partners and they manage and control the business of
the Partnership.
Operating profits and losses are allocated 95% to the Limited Part-
ners and 5% to the General Partners. Cash from operations will be
shared 95% by the Limited Partners and 5% by the General Partners;
however, distributions to the General Partners are subordinated to
certain preferred returns to the Limited Partners. Profit or loss
and cash distributions from sales of property will be allocated as
formulated in the Limited Partnership Agreement.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting
The Partnership utilizes the accrual basis of accounting whereby
revenues are recongized when earned and expenses are recognized as
obligations are incurred.
Cash and Cash Equivalents
It is the Partnership's policy to include short-term investments
with an original maturity of three months or less in Cash and Cash
Equivalents. These short-term investments are comprised of money
market funds, and repurchase agreements.
Restricted Cash
Cash and Cash Equivalents include $132,942 at June 30, 1996 and
$46,756 at December 31, 1995 of cash held in escrow for the payment
of real estate taxes. Cash and Cash Equivalents also include
$95,930 at June 30, 1996 and $95,630 at December 31, 1995 of tenant
security deposits held in an escrow account.
Income Taxes
No provisions for income taxes has been made in these financial
statements, as income taxes are a liability of the partners rather
than of the Partnership.
Depreciation
The apartment buildings are being depreciated over 35 years using
the straight-line method. Furniture and fixtures are being depreci-
ated over 8 years using the straight-line method.
NOTE 3 - COMPENSATION, REIMBURSEMENTS AND ACCRUALS TO THE GENERAL
PARTNERS AND AFFILIATES:
The General Partners and affiliates are entitled to the following
types of compensation and reimbursment for costs and expenses
incured for the Partnership for the six months ended June 30, 1996.
Property Management Fees $ 88,389
General and Administrative Costs 2,710
NOTE 4 - LEASES AND APARTMENT PROPERTIES:
The Partnership owns apartment complexes leased to residents under
short term operating leases. A summary of the apartment properties
is as follows:
June 30, December 31
1996 1995
Land 3,141,510 3,141,510
Buildings 17,298,118 17,298,118
Furniture & Fixtures 1,717,303 1,674,517
Apartment Properties, at Cost 22,156,931 22,114,145
Less: Accumulated Depreciation (5,475,895) (5,129,893)
16,681,036 16,984,252
NOTE 5 - NOTES PAYABLE
The notes payable are secured by the apartment properties.
NOTE 6 - BASIS OF PREPARATION:
The unaudited financial statements presented herein have been pre-
pared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principals. These statements should
be read in conjuction with the financial statements and notes thereto
included in the Partnership's Form 10-K for the year ended December
31, 1995. In the opinion of management, such financial statements
include all adjustments, consisting only of normal recurring adjust-
ments, necessary to summarize fairly the Partnership's financial
position and results of operations. The results of operations for
the periods may not be indicative of the result to be expected for
the year.
NOTE 7 - SUBSEQUENT EVENT:
On July 31, 1996, the Partnership paid distributions of $188,140
to the Limited Partners and $9,902 to the General Partners.
FOUNDATION REALTY FUND, LTD.
(A Florida LImited Partnership)
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Rental income for the six months ended June 30, 1996 was
$1,677,225 as compared to $1,633,716 for the comparable period ended
June 30, 1995. Income from property operations for the six months
ended June 30, 1996 was $636,501 as compared to $627,960 for the
comparable period ended June 30, 1995. The increase in rental
income was a result of higher rental rates being in effect in 1996
Operating payroll cost increased $22,959 or 16% during the six
month period ended June 30, 1996 when compared to the six month
period ended June 30, 1995. An employee for a newly created position
was hired by the Oakwood Village Apartments in mid-1995. In addition,
incentive compensation increased approximately $1,150 at the Oakwood
Village Apartments and annual payroll increases of between 2%-3%
were implemented at both apartment communities.
Interest income changed from $23,290 for the six months ended
June 30, 1995 to $23,197 for the comparable period in 1996. There was
little change in the investment balance and rate of interest earnings
during the period.
Interest expense increased from $765,211 for the six months ended June
30, 1995 to $786,772 for the six months ended June 30, 1996.
This increase in interest expense is a result of increases to the
principal loan balance. The loan balance increases because interest
accrues and is added to the loan balance for the Oakwood Village
First Purchase Money Mortgage.
Net loss for the six months ended June 30, 1996 was $93,596 or
$9.45 per Limited Partnership Unit outstanding as compared to a
loss of $126,962 or $12.82 per Limited Partnership Unit for the compar-
able period ended June 30, 1995.
Liquidity and Capital Resources
In management's opinion, working capital reserves and liquidity are
sufficient to meet the short-term operating needs of the Partnership.
Long-term capital resources will be necessary to cover the mortgage
balloon payments of $8,779,077 in 1997 and $8,825,000 in 1998. In
management's opinion, proposed sources of funding to meet these long-
term obligations will include either a debt refinancing or property
sale.
Cash provided by operating activities decreased by $25,207 for the
six month period ended June 30, 1996 as compared to the six month
period ended June 30, 1995. The change resulted from a decrease in
unearned rents of $33,545 which was completely offset by a lower net
operating loss of $33,366 for the comparable six month period. The
final significant change was a decrease in the accounts payable
increase of $21,201 for the six months ending June 30, 1996 verse the
six months ending June 30, 1995.
Cash used by investing activities totaled $32,214 at June 30, 1995 as
compared to $42,786 at June 30, 1996. The $10,572 increase for the six
month period ended June 30, 1996 is solely attributable to the in-
cease in the number of carpets replaced in the apartment units of both
apartment communities.
Cash used by financing activities decreased by $9,277 from the six
month period ended June 30, 1996 when compared to the six month
period ended June 30, 1995. An increase in the Oakwood Village
purchase money first mortgage interest accrual of $23,092 for the
period offset both an increase in partner distributions of $12,284 and
principal payments on the Oakwood Village purchase money record
mortgage of $1,531 to account for this change.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
FOUNDATION REALTY FUND, LTD.
A Florida Limited Partnership
By: RJ PROPERTIES, INC. a General Partner
8/10/96 J. Robert Love - President
Date (Signature)
8/10/96 Alan G. Lee - Assitant Secretary
Date (Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> $1,131,357
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> $1,154,455
<PP&E> $22,156,931
<DEPRECIATION> $5,475,895
<TOTAL-ASSETS> $17,835,491
<CURRENT-LIABILITIES> $283,178
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> $607,802
<TOTAL-LIABILITY-AND-EQUITY> $17,835,491
<SALES> 0
<TOTAL-REVENUES> $1,754,904
<CGS> 0
<TOTAL-COSTS> $1,055,206
<OTHER-EXPENSES> $6,522
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $786,772
<INCOME-PRETAX> ($93,596)
<INCOME-TAX> 0
<INCOME-CONTINUING> ($93,596)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> ($93,596)
<EPS-PRIMARY> $(9.45)
<EPS-DILUTED> $(9.45)
</TABLE>
