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 September 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
September 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 September 30, 1996 and December 31, 1995 3
Statements of Operations -
For the Nine Months Ended September 30, 1996 and 1995 4
Statement of Operations -
For the Three Months Ended September 30, 1996 and 1995 5
Statements of Partners' Equity -
For the Nine Months Ended September 30, 1996 and 1995 6
Statements of Cash Flows -
For the Nine Months Ended September 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
September 30, 1996 December 31, 1995
(Unaudited) Audited
ASSETS
<S> <C> <C>
Aparment Properties, at Cost $22,192,244 $22,114,145
Less - Accumulated Depreciation (5,648,896) (5,129,893)
16,543,348 16,984,252
Cash and Cash Equivalents 1,032,186 978,730
Prepaid Expenses 65,398 584
TOTAL ASSETS $17,640,932 $17,963,566
LIABILITIES AND PARTNERS' EQUITY
Liabilites:
Notes Payable $17,071,047 $16,700,035
Accounts Payable 137,889 49,992
Security Deposits 95,706 95,630
Unearned Rent 16,163 26,735
TOTAL LIABILITIES 17,320,805 16,872,322
Partner's Equity
Limited Partners' Equity (9,407 units
outstanding @ September 30, 1996 and
December 31, 1995 539,610 1,272,172
General Partner's Equity (219,483) (180,928)
TOTAL PARTNERS' EQUITY 320,127 1,091,244
TOTAL LIABILITES AND PARTNERS' EQUITY $17,640,932 $17,963,566
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF OPERATIONS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30
<S> 1996 1995
Property Operations : <C> <C>
Rental Income $2,515,0321 $2,462,921
Miscellaneous 73,114 73,139
2,588,146 2,536,060
Expenses:
Depreciation 519,0032 519,000
Payroll 242,127 226,109
Real Estate Taxes 210,382 212,125
Utilities 158,101 178,468
Repairs & Maintenance 209,432 219,869
Property Management - General Partner129,337 128,060
Landscaping 60,922 62,266
Other 79,959 80,982
1,609,263 1,626,879
Income from Property Operations 978,883 909,181
Interest Income 34,536 34,284
1,013,419 943,465
Other Exenses:
Interest 1,184,455 1.151,735
General & Administrative - Affiliate 3,660 2,220
Other General & Administrative 8,533 13,349
1,196,648 1,167,304
Net Loss $(183,229) $(223,839)
Allocation of Net Loss -
Limited Partners $(174,068) $(212,647)
General Partners (9,161) (11,192)
$(183,229) $(223,839)
Net Loss Per Limited Partnership Unit$(18.50) $ (22.61)
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 SEPTEMBER 30
<S> 1996 1995
Property Operations: <C> <C>
Rental Income $837,807 $829,205
Miscellaneous 18,632 21,928
856,439 851,133
Expenses:
Depreciation 173,001 173,000
Payroll 79,236 86,177
Real Estate Taxes 69,874 72,765
Utilities 61,858 66,662
Repairs and Maintenance 82,863 78,814
Property Management - General Partner 40,948 43,381
Landscaping 18,140 18,291
Other 28,137 30,822
554,057 569,912
Income from Property Operations 302,382 281,221
Interest Income 11,339 10,994
313,721 292,215
Other Expenses:
Interest 397,683 386,524
General and Administrative -Affiliate 950 310
Other General and Administrative 4,721 2,258
403,354 389,092
Net Loss $(89,633) $(96,877)
Allocation of Net Loss-
Limited Partners $(85,151) $(92,033)
General Partners (4,482) (4,844)
$(89,633) $(96,877)
Net Loss Per Limited Partnership Unit $ (9.05) $ (9.79)
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 NINE MONTHS ENDED SEPTYEMBER 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 (540,902) (28,468) (569,370)
Net Loss (212,647) (11,192) (223,839)
Balance, September 30, 1995 $ 1,411,927 $ (173,573) $ 1,238,354
Balance, December 31, 1995 $ 1,272,172 $ (180,928) $ 1,091,244
Distribution to Partners (558,494) (29,394) (587,888)
Net Loss (174,068) (9,161) (183,229)
Balance, September 30, 1996 $ 539,610 $ (219,483) $ 320,127
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<S> 1996 1995
Net Cash Provided by Operating Activities: <C> <C>
Net Loss $ (183,229) $ (223,839)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operating Activities
Depreciation: 519,003 519,000
Changes in Operating Assets and Liabilities:
(Increase) in Prepaids (64,814) (73,576)
Increase in Accounts Payable 87,968 50,871
Increase (Decrease) in Security Deposits 76 881
Increase (Decrease) in Unearned Rents (10,572) 35,531
Net Cash Provided by Operating Activities 348,432 308,868
Cash Flows from Investing Activities:
Improvements to Apartment Properties (78,100) (58,819)
Net Cash Used in Investing Activities (78,100) (58,819)
Cash Flows from Financing Activities:
Proceeds from Notes Payable 398,084 363,041
Payments of Notes Payable (27,072) (24,750)
Distributions to Partners (587,888) (569,370)
Net Cash used by Financing Activities (216,876) (231,079)
Increase (Decrease) in Cash 53,456 18,970
Cash and Cash Equivalents at Beginning of period 978,730 828,960
Cash and Cash Equivalents at End of period 1,032,186 847,930
Supplemental Cash Flow Information:
Interest Paid $ 786,372 $ 788,693
Supplemental Disclosure of Non-Cash
Financing Activities:
Deferred Interest on Mortgage Note Payable 398,084 363,041
</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 $186,222 at September 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
$95,706 at September 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 nine months ended September 30, 1996.
Property Management Fees $ 129,337
General and Administrative Costs 3,660
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:
September 30, December 31
1996 1995
Land 3,141,510 3,141,510
Buildings 17,298,118 17,298,118
Furniture & Fixtures 1,752,616 1,674,517
Apartment Properties, at Cost 22,192,244 22,114,145
Less: Accumulated Depreciation (5,648,896) (5,129,893)
16,543,348 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 October 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 nine months ended September 30, 1996 was
$2,515.032 as compared to $2,462,921 for the comparable period ended
September 30, 1995. Income from property operations for the nine months
ended September 30, 1996 was $978,883 as compared to $909,181 for the
comparable period ended September 30, 1995. The increase in rental
income was a result of higher rental rates being in effect in 1996 which
offset slightly lower occupancy levels. Operating payroll cost
increased $16,018 or 7% during the nine month period ended September
30, 1996 when compared to the nine month period ended September
30, 1995. An employee for a newly created position was hired by
the Oakwood Village Apartments in mid-1995. In addition,
annual payroll increases of between 2%-3% were implemented at
both apartment communities.
Interest income increased from $34,284 for the nine months ended
September 30, 1995 to $34,536 for the comparable period in 1996. There was
little change in the investment balance and rate of interest earnings
over the last twenty-four months.
Interest expense increased from $1,151,735 for the nine months ended
September 30, 1995 to $1,184,455 for the nine months ended September
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 nine months ended September 30, 1996 was $183,229 or
$18.50 per Limited Partnership Unit outstanding as compared to a
loss of $223,839 or $22.61 per Limited Partnership Unit for the compar-
able period ended September 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 increased by $39,564 for the
nine month period ended September 30, 1996 as compared to the nine month
period ended September 30, 1995. The change resulted from a decrease in
unearned rents of $46,103 which was offset by a lower net
operating loss of $40,610 for the comparable nine month period. The
final significant change was a result of an increase in the amount of
accounts payable increase of $37,097 for the nine months ending
September 30, 1996 verse the nine months ending September 30, 1995.
Cash used by investing activities totaled $58,819 at September 30, 1995 as
compared to $78,100 at September 30, 1996. The $19,281 increase for the nine
month period ended September 30, 1996 is solely attributable to the in-
crease in the number of carpets replaced in the apartment units of both
apartment communities.
Cash used by financing activities decreased by $14,203 from the nine
month period ended September 30, 1996 when compared to the nine month
period ended September 30, 1995. An increase in the Oakwood Village
purchase money first mortgage interest accrual of $35,043 for the
period offset both an increase in partner distributions of $18,518 and
principal payments on the Oakwood Village purchase money record
mortgage of $2,322 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
11/11/96 J. Robert Love - President
Date (Signature)
11/11/96 Alan G. Lee - Secretary
Date (Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> $1,032,186
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> $1,097,584
<PP&E> $22,192,244
<DEPRECIATION> $5,648,896
<TOTAL-ASSETS> $17,640,932
<CURRENT-LIABILITIES> $249,758
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> $320,127
<TOTAL-LIABILITY-AND-EQUITY> $17,640,932
<SALES> 0
<TOTAL-REVENUES> $2,622,682
<CGS> 0
<TOTAL-COSTS> $1,609,263
<OTHER-EXPENSES> $12,193
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $1,184,455
<INCOME-PRETAX> ($183,229)
<INCOME-TAX> 0
<INCOME-CONTINUING> ($183,229)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> ($183,229)
<EPS-PRIMARY> $(18.50)
<EPS-DILUTED> $(18.50)
</TABLE>
